Chen Songlin Michael v Attorney-General

Mr Chen Songlin Michael applied in Originating Application No 561 of 2023 for the court's permission to act as a director of, or take part in managing, CEASY Tech Pte Ltd under s 155(1) of the Companies Act 1967 (2020 Rev Ed). The Attorney-General appeared for the Minister for Finance as respondent and did not object.

Mr Chen holds 80 per cent of the shares of Eri Organisation Pte Ltd, which owns two other Eri companies; the Eri business helps clients start and incorporate companies in Singapore, including by supplying nominee directors. On 21 October 2020 he pleaded guilty to 13 offences under s 197 of the Act because nine client companies for which he was a nominee director had not lodged annual returns on time, and he was fined. That conviction disqualified him automatically for five years. On 1 November 2021 the High Court, in OS 785, gave him permission to act for the Eri entities. He then sought the same permission for CEASY, a company incorporated in October 2022 in which he is the majority shareholder. The parties agreed that the court could rely on the material from OS 785.

1. Whether there is a framework for deciding applications for permission under s 155 of the Companies Act, and what factors it involves
2. Whether Mr Chen had shown the capacity to comply with filing requirements in the future and any mitigating circumstances for his defaults
3. Whether the structure of CEASY, the interests of its stakeholders and the necessity of his involvement favoured granting permission

Because no settled test existed for s 155, the court looked to the factors used under s 154(6) and s 155A(3). It held that s 155, enacted in 1984 to deal with directors who failed to hold general meetings or file returns, is mainly protective, like s 154, since it rests on the director's own persistent defaults. Drawing on Huang Sheng Chang and Kardachi, it set out non-exhaustive factors: future capacity for compliance, mitigating circumstances, the structure and business of the company, the interests of stakeholders, and whether permission is necessary, all weighed holistically against the regulatory interest in protection.

On compliance, the circumstances of the conviction did not on their face show a strong record, but the Eri entities had always filed properly, Mr Chen had attended compliance courses in 2021, and the Eri entities and their clients had stayed compliant since November 2021; the Minister agreed he had shown capacity for future compliance. As to mitigation, Mr Chen said Eri had sent reminders that went unanswered and that he could not reach the foreign directors or shareholders or strike the companies off. He accepted he should have been more diligent, but the court accepted he had taken some steps and that the foreign parties' silence contributed to the breaches.

CEASY is an exempt private company with three directors, two of whom Mr Chen had caused to be appointed to Eri boards, and he holds a controlling stake. Since he could already influence it indirectly, permission would make him directly accountable, though the court stressed this is only one factor. Risk to stakeholders was low. His claim that a bank had refused CEASY an account because of his disqualification was unsupported by any correspondence, so necessity did not help him. The other factors, the Minister's lack of opposition and the time already served favoured permission.

The High Court allowed the application and granted Mr Chen permission to act as a director of, and to take part in the management of, CEASY Tech Pte Ltd.