[2017] SGHC 202

(a) a declaration that the remaining director of TYC, namely HT, be at liberty to appoint another director of TYC pursuant to Article 8 of the TYC Articles;

Mr Singh submitted that s 148 of the Companies Act (“the CA”) does not automatically disqualify JC from being a director. This misses the point. TYC is not relying on s 148 of the CA, but Article 72 of Table A, to support its case that JC’s directorship was automatically vacated upon the making of the bankruptcy order against her. Be that as it may, I will make some brief observations on s 148. Section 148 makes it an offence for an undischarged bankrupt to act as a director of, or to take part in or be concerned in the management of, any corporation, except with the leave of the court or the written permission of the Official Assignee. Section 148 is a penal provision. Although a person who contravenes s 148 is guilty of an offence, that section does not state that an undischarged bankrupt lacks capacity to be a company director or that his acts on behalf of the company are invalid (see Tan Cheng Han SC et al, Walter Woon on Company Law (Sweet & Maxwell, revised 3rd ed, 2009) at para 7.40). Mere contravention of s 148 does not, on its own, cause an automatic vacation of office by a director, and I do not consider s 148 to be relevant in the present case.

Hence, on the facts and on the construction of the relevant provisions of the TYC Articles and Table A, it is evident that JC and HT were meant to be “permanent” Governing Directors of TYC except upon the occurrence of certain events, such as those specified in Article 8 of the TYC Articles and Article 72 of Table A. Given the manner in which the TYC Articles were structured, and the relevant background as set out above, once the bankruptcy order was set aside, it cannot be likely inferred that the parties intended to depart from the general position with respect to the retrospective effect of the setting aside (or annulment) of the bankruptcy order which would result in the reinstatement of JC to her position as a permanent Governing Director of TYC. To hold otherwise would lead to an unreasonable outcome inconsistent with the intention of JC and HT when they drew up the terms of the TYC Articles, and would severely prejudice JC’s position.

Whether clause 10 of the SSD is frustrated by reason of the bankruptcy order made against JC

At the hearing before me, parties agreed that I need not deal with the fourth prayer sought by TYC, namely for a declaration that it be at liberty to reimburse Amstay for payments made by it on TYC’s behalf in the ordinary course of TYC’s business. In my view, TYC should first attempt to utilise the mechanisms already available to resolve this. The parties agreed. In the present case, given that I have held that JC is reinstated as a director of TYC, the approval mechanism under clause 10 of the SSD should first be employed. Failing that, the Court of Appeal in Chan Siew Lee v TYC has held that shareholders have, in certain limited circumstances, the reserve power to authorise payments where there is a deadlock within the board which cannot be broken by the appointment of additional directors and/or the removal of directors. Likewise, even if I had decided that JC was not reinstated to the board and that clause 10 of the SSD had been frustrated, TYC should first deploy mechanisms under its articles to resolve the issue of reimbursement or payments by Amstay. I make no comments on whether and how TYC can or should resolve this issue, as this is no longer a live issue before me.

Suffice to say, the relief prayed for by TYC is, in my view, premature. The court should only step in when the company cannot resolve the matter after having employed the appropriate powers and mechanisms given under its articles and by law, and even then, there are limits to the types of relief that the court can grant. It is not the task of the court to manage the affairs of a company (Shuttleworth v Cox Brothers and Company [1927] 2 KB 9 at 23), such powers being the preserve of the board of directors (Chan Siew Lee v TYC at [1]).

Declaration that JC be reinstated as permanent Governing Director, in the event that there is no automatic reinstatement or that JC was no longer a director