Ganesh Paulraj v A&T Offshore Pte Ltd: Statutory Derivative Action under Companies Act
In the High Court of Singapore, Ganesh Paulraj, the beneficial owner of a shareholder of A&T Offshore Pte Ltd, applied for leave to commence a statutory derivative action against Avantgarde Shipping Pte Ltd, the other shareholder, under Section 216A of the Companies Act. The court, presided over by Aedit Abdullah J, granted the application, finding that sufficient notice was given, the applicant was acting in good faith, and the action was prima facie in the interests of A&T Offshore. The claim was for breach of contract.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Application to commence a statutory derivative action allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Leave was granted to Ganesh Paulraj to commence a statutory derivative action on behalf of A&T Offshore against Avantgarde Shipping for breach of contract.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Ganesh Paulraj | Applicant | Individual | Application allowed | Won | Vijai Dharamdas Parwani, Chang Guo En Nicholas Winarta Chandra |
| A&T Offshore Pte Ltd | Respondent | Corporation | Absent and unrepresented | Neutral | |
| Avantgarde Shipping Pte Ltd | Respondent | Corporation | Application allowed against respondent | Lost | Tan Wen Cheng Adrian, Low Zhi Yu Janus |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Vijai Dharamdas Parwani | Parwani Law LLC |
| Chang Guo En Nicholas Winarta Chandra | Parwani Law LLC |
| Tan Wen Cheng Adrian | August Law Corporation |
| Low Zhi Yu Janus | August Law Corporation |
4. Facts
- The applicant was the beneficial owner of Tuff, a 40% shareholder of A&T Offshore.
- A&T Offshore was incorporated in October 2014 with Avantgarde Shipping and Tuff as shareholders.
- The applicant sought leave to commence a statutory derivative action against Avantgarde Shipping.
- The claim was for unpaid debts arising from an agreement purportedly entered into on 22 April 2015.
- The first respondent was voluntarily wound up and struck off the register in April 2017 but was restored.
- The applicant was appointed as one of the three directors of the first respondent.
5. Formal Citations
- Ganesh Paulraj v A&T Offshore Pte Ltd and another, Originating Summons No 933 of 2018, [2019] SGHC 180
- Unknown, Civil Appeal No 54 of 2018, Civil Appeal No 54 of 2018
- Unknown, Originating Summons No 1260 of 2017, Originating Summons No 1260 of 2017
6. Timeline
| Date | Event |
|---|---|
| A&T Offshore Pte Ltd incorporated | |
| A&T Offshore Pte Ltd voluntarily wound up | |
| Original application to restore the first respondent was filed | |
| Applicant's solicitors informed the second respondent of intention to apply for leave to commence a statutory derivative action | |
| Applicant's solicitors sent a more detailed letter regarding the intended actions | |
| Application filed | |
| Hearing date | |
| Hearing date | |
| Hearing date | |
| Judgment issued |
7. Legal Issues
- Compliance with Section 216A of the Companies Act
- Outcome: The court found that the requirements of Section 216A were met, or could be dispensed with, allowing the application.
- Category: Procedural
- Sub-Issues:
- Sufficiency of notice to directors
- Good faith of applicant
- Action being prima facie in the interests of the company
- Related Cases:
- [2011] 3 SLR 980
- [2019] SGHC 38
- [2013] 2 SLR 340
- [2011] 1 SLR 552
- [2004] 3 SLR(R) 1
- Locus Standi
- Outcome: The court was satisfied that the applicant had sufficient standing to bring the application.
- Category: Jurisdictional
8. Remedies Sought
- Leave to commence a statutory derivative action
9. Cause of Actions
- Breach of Contract
- Breach of Fiduciary Duties
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Shipping
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Fong Wai Lyn Carolyn v Airtrust (Singapore) Pte Ltd and another | High Court | Yes | [2011] 3 SLR 980 | Singapore | Cited for the approach that the notice requirement could be dispensed with pursuant to s 216A(4) of the Companies Act. |
| Jian Li Investment Holdings Pte Ltd & 2 Ors v Healthstats International Pte Ltd & 2 Ors | High Court | Yes | [2019] SGHC 38 | Singapore | Cited for summarising the good faith requirement in the context of a statutory derivative action under s 216A of the Companies Act. |
| Ang Thiam Swee v Low Hian Chor | Unknown | Yes | [2013] 2 SLR 340 | Singapore | Cited for the requirement that the applicant convince the court that the company’s claim is legitimate and arguable. |
| Urs Meisterhans v GIP Pte Ltd | Unknown | Yes | [2011] 1 SLR 552 | Singapore | Cited for the principle that the company’s claim must have a reasonable semblance of merit and must not be frivolous, vexatious, or bound to be unsuccessful. |
| Pang Yong Hock and another v PKS Contracts Services Pte Ltd | Unknown | Yes | [2004] 3 SLR(R) 1 | Singapore | Cited for the principle that the motivations of an applicant will only amount to bad faith in so far as they go to show that his judgment has been clouded by purely personal considerations. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap. 50) | Singapore |
| Section 216A of the Companies Act (Cap. 50) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Statutory derivative action
- Section 216A Companies Act
- Good faith
- Prima facie interest
- Notice requirement
- Locus standi
15.2 Keywords
- Companies Act
- Statutory derivative action
- Shareholder rights
- Corporate governance
16. Subjects
- Company Law
- Civil Procedure
17. Areas of Law
- Company Law
- Statutory Derivative Action