Introduction

Companies that have been struck off the company register maintained by ACRA may be restored in several ways, including by a court order obtained under section 344(5) of the Singapore Companies Act 1967 (“Singapore Companies Act”).

Typically, it is the immediate shareholder or a director of the struck-off company that makes the application to restore the company as the immediate shareholder or director of the struck-off company would be able to show the Court that it has the requisite pecuniary or proprietary interest required by law in restoring the company.

However, can a person or company who is neither the struck-off company’s director or direct shareholder apply to restore the company?

In a recent case, we applied on behalf of a parent company to restore its indirect subsidiary in a situation where its own wholly-owned subsidiary was also struck off.

Nothwithstanding that the parent company was not the immediate shareholder or a director of the struck-off company, we contended that the parent company should be allowed to apply to restore its indirect subsidiary based on the Singapore court’s reasoning on the requirements of an “aggrieved person” in Ganesh Paulraj v Avantgarde Shipping Pte Ltd [2019] 4 SLR 617 (“Ganesh”).

The Court allowed our application. We expand on the relevant legal principles below.

Who qualifies as an aggrieved person? Ganesh Paulraj v Avantgarde Shipping Pte Ltd [2019] 4 SLR 617

One requirement for an application to restore a struck-off company to the company register maintained by ACRA under section 344(5) of the Singapore Companies Act is for the applicant to be an “aggrieved person”.

In Ganesh, the Singapore High Court cited the approach in Re Asia Petan Organisation Pte Ltd [2018] 3 SLR 435 (“Re Asia Petan”) at [31] that for an applicant to have the necessary standing for a restoration application under section 344(5) of the Singapore Companies Act, an applicant must demonstrate some proprietary or pecuniary interest arising from the company’s restoration.

In Re Asia Petan, the Court had found that: (i) a director of a struck-off company which may have possible outstanding claims to pursue would have a pecuniary interest in the restoration of the struck-off company; and (ii) that a shareholder of a struck-off company would have a requisite pecuniary interest in the restoration of the company. From this, the Court reasoned that a director of a company’s shareholder would also have a pecuniary interest.

However, the High Court in Ganesh further observed at [16] that the test for the types of persons who can bring a restoration application need not be as narrow as the formulation in Re Asia Petan may be perceived to be. The Court noted at [18] that an applicant may also be “a person outside the company who has some sort of claim against the company, but exclude someone from within who has no real stake in its restoration”. The Court further observed at [18] that the rationale for the requirement of a proprietary or pecuniary interest on the part of the applicant is to sieve out unmeritorious applications.

In Ganesh, the applicant was a director of a struck-off company, Company A. The shareholders of Company A were a company called Tuff Offshore Engineering Services Pte. Ltd. (“Tuff”) and the Respondent. The applicant was also a beneficial shareholder in Tuff.

Company A had entered into a service contract with the Respondent. Whilst Company A entered into the service contract with the Respondent, it was actually Tuff who provided the services to the Respondent and the Respondent paid Tuff directly for the services provided. At the time Company A was struck off, the Respondent still owed Company A unpaid sums on the service contract and the purpose of the restoration application brought by the Applicant was to enable Company A to pursue those unpaid sums against the Respondent.

An issue arose as to whether the applicant had sufficient pecuniary or proprietary interest in the restoration application.

On the facts of Ganesh, the Court held that the applicant did have sufficient pecuniary interest on the basis he was a director of Company A and hence had an interest in Company A pursuing the unpaid sums owing to it on the service contract.

However, the Court also held the Applicant had an interest as a direct beneficial shareholder of Tuff which gave him an interest through Tuff as a shareholder of Company A and this, coupled with the claim that Tuff may have in Company A pursuing its claim, meant the Applicant had sufficient pecuniary interest in Company A’s restoration.

Similarly in our case, the Court found that the parent company who, like the Applicant in Ganesh, was not the direct shareholder of the struck-off company, had sufficient interest given that the struck-off company was its indirect subsidiary (i.e. the parent company was the shareholder of the struck-off company’s immediate parent company).

Concluding Thoughts

The above shows that the Courts are prepared to regard the requirements of “pecuniary” or “proprietary” interest in applications to restore struck-off companies broadly provided that a legitimate interest in the restoration of the company can be shown.

These terms are wide enough to encompass persons who are not direct shareholders, so long as they are beneficial or indirect shareholders with a legitimate interest in the restoration of the struck-off company. Benefits that accrue to the indirect subsidiary in pursuing its potential claims can eventually accrue to the parent company, constituting the pecuniary interest a parent company has in the restoration of its indirect subsidiary.

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This article is produced by BR Law Corporation. It does not constitute legal advice and is intended to provide general information only.