Restoring a Company That was Struck Off Without You Knowing
If a company is struck off the register, it is removed from the register of companies maintained by the Accounting and Corporate Regulatory Authority (ACRA). This usually occurs when a company director wants to close the company.
There are several ways to strike off a company. For example, a company director can apply to ACRA to strike the company off the register on its behalf. ACRA may then approve the application if it has reasonable cause to believe that the company is not carrying on business and that the company satisfies certain criteria for striking off.
A complication arises when a company has several directors, and one director applies, on the company’s behalf, to strike the company off the register without the other directors’ knowledge. (This will be considered as the company itself applying to strike itself off the register.)
The other directors later find out and want to restore the company to the register. Can they, representing the company, apply to the court to do so?
How Can a Struck Off Company be Restored to the Register?
Any person who is “aggrieved” with the company’s striking off can apply to the court to have the company restored to the register. This provided for under section 344(5) of the Companies Act and has to be done within 6 years of the company’s striking off.
For the “aggrieved” person to have standing to bring the application, he must have some interest in the company being restored.
This interest can be either proprietary or monetary in nature. It does not have to be a very strong one, or highly likely to be realised if the company were restored. However, it cannot be “merely shadowy”, i.e. lacking in substance.
How Does the Court Decide Whether to Restore the Company?
The court has a wide discretion to order the restoration of a company struck off the register. It may make such an order if it is satisfied that:
- The company was carrying on business or was in operation at the time it was struck off; or
- It would otherwise be just to make such an order.
In coming to a decision, the court will evaluate all circumstances of the case. Examples of circumstances it will take into account include:
- The purpose of restoring the company;
- Whether there is any practicable benefit in restoring the company; and
- Whether any persons would be prejudiced if the company were restored.
If the court is satisfied that the company should be restored to the register, it should then order that the company be restored. This is unless there any exceptional countervailing circumstances against the company’s restoration.
Case Study: Re Asia Petan Organisation Pte Ltd
In Re Asia Petan Organisation Pte Ltd, a company director, Tan, applied on the company’s behalf to have it struck off. Song, another company director (who was also a shareholder of the company), did not respond when sent the striking off documents. Tan therefore proceeded with the application on his own.
13 months after becoming aware that the company had been struck off, Song applied on the company’s behalf to have it restored to the register.
The High Court granted Song’s application. First, it found that Song had had standing to bring the application. He had an interest in the company being restored as he intended to use it to bring a lawsuit against Tan. The court held that it can still be just to restore a company even if such restoration is only a means to an end.
In addition, Song’s interest in the company’s restoration was not “merely shadowy”. If the company’s lawsuit against Tan was successful, any resulting benefits the company received would indirectly flow to Song. This was because Song was a shareholder of the company and was asserting his entitlement to the company’s funds before it was struck off.
The court also held that Song’s “not insignificant” delay in applying for the company’s restoration should not prejudice his application. This was because:
- Song had delayed in filing the application as he was deciding whether to bring the lawsuit, in the company’s name, against Tan. As he had already contributed $130,000 to the company, it was not unreasonable for him to want to weigh the costs and benefits of putting in further resources to sue.
- The delay did not prejudice Tan.
- Neither was there any evidence that a third-party would suffer if the company was restored.
- Finally, Song’s application was also within the 6-year period allowed for bringing applications for restoration.
If a company is struck off by a director on the company’s behalf, without the knowledge or consent of the other directors, this is likely because the directors’ business relationship has soured.
Such souring of the directors’ business relationship could potentially lead to many problems. Not just about needing to apply to have the struck off company restored to the register, but possibly also lawsuits being brought by one director, on the company’s behalf, against the other directors.
Should you wish to strike off your company, consider engaging our corporate service, to ensure a smooth and compliant process.
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