IDEAGLOBAL.COM Ltd: Application for Relief under Section 391(2) of the Companies Act for Loan to Director's Company
IDEAGLOBAL.COM Ltd applied to the High Court of Singapore on 22 April 2000, seeking relief under Section 391(2) of the Companies Act for a potential breach of Section 163(1) concerning a loan made to Pinewood Investments Pte Ltd (PIPL), a company owned by one of its directors, Shirish Modi. The High Court, presided over by Justice Lee Seiu Kin, dismissed the application, holding that Section 391 does not apply to criminal proceedings and therefore the court lacked jurisdiction to grant the relief sought.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
IDEAGLOBAL.COM Ltd sought relief under s 391(2) of the Companies Act for contravening s 163(1) regarding a loan to a director's company. The application was dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| IDEAGLOBAL.COM Ltd | Applicant | Corporation | Application Dismissed | Lost | Nish Shetty |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lee Seiu Kin | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Nish Shetty | Wong Partnership |
4. Facts
- The applicant company provides financial information and analyses.
- The company was incorporated on 5 July 1995.
- The company was granted `Pioneer Service` status under the Economic Expansion Incentives (Relief from Income Tax) Act.
- The company paid a dividend of USD4m on 3 June 1998.
- A second payment of USD7.75m was made on 4 August 1998.
- Pinewood Investments Pte Ltd (PIPL) is owned and controlled by a director of the company, Mr Shirish Modi.
- The company made a loan to PIPL.
5. Formal Citations
- Re IDEAGLOBAL.COM Ltd, OS 289/2000, [2000] SGHC 65
6. Timeline
| Date | Event |
|---|---|
| Company incorporated | |
| Company commenced operations | |
| Extraordinary general meeting convened to approve payment of tax exempt dividends | |
| Dividend of USD4m paid out | |
| Advisors brought to company's attention that there were insufficient tax credits | |
| Second payment of USD7.75m made | |
| Application dismissed | |
| Judgment issued |
7. Legal Issues
- Contravention of Section 163(1) of the Companies Act
- Outcome: The court found that the loan extended by the Company to PIPL, which is owned by one of the directors of the Company, put them in breach of s 163(1) of the Companies Act.
- Category: Substantive
- Jurisdiction to Grant Relief under Section 391(2) of the Companies Act
- Outcome: The court held that it did not have the power to grant relief under s 391 from prosecution for an offence.
- Category: Jurisdictional
8. Remedies Sought
- Relief from prosecution under s 391(2) of the Companies Act
9. Cause of Actions
- Breach of Companies Act
10. Practice Areas
- Corporate Law
- Criminal Litigation
11. Industries
- Financial Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Barry and Staines Linoleum Ltd | English Court | Yes | [1934] Ch 227 | England | Discusses whether the English equivalent of s 391 applies to relieve a person of criminal liability. |
| Re Gilt Edge Safety Glass Ltd | English Court | Yes | [1940] Ch 495 | England | Discusses whether the English equivalent of s 391 applies to relieve a person of criminal liability. |
| Lawson v Mitchell | Full Court of the Supreme Court of Victoria | Yes | [1975] VR 579 | Victoria | Held that the equivalent of s 391 does not apply to criminal proceedings. |
| Customs and Excise Commissioners v Hedon Alpha Ltd | English Court of Appeal | Yes | [1981] QB 818 | England | Discusses the application of the English equivalent of s 391 and its limitations. |
| Swee Leong Cheng v Project Aqua Culture & Trading Co Pte Ltd | High Court | Yes | [1988] SLR 557 | Singapore | Discusses whether s 391 applies to criminal proceedings but declines to make a finding. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Rev Ed) s 163(1) | Singapore |
| Companies Act (Cap 50, 1994 Rev Ed) s 163(7) | Singapore |
| Companies Act (Cap 50, 1994 Rev Ed) s 391 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Section 163(1) Companies Act
- Section 391(2) Companies Act
- Loan to director
- Pioneer Service status
- Tax exempt dividends
- Breach of duty
- Relief from liability
- Criminal proceedings
15.2 Keywords
- Companies Act
- Section 163
- Section 391
- Directors
- Loan
- Relief
- Criminal
- Singapore
16. Subjects
- Companies Act
- Directors' Duties
- Corporate Governance
- Criminal Liability
17. Areas of Law
- Companies Act
- Company Law
- Criminal Law