SINGAPORE Trends and Developments Contributed by: Mark Lee and Sarah Yeo, WMH Law Corporation
in a shareholders’ agreement, a shareholder is entitled to the following: • Every shareholder has a statutory right to have the company’s constitution observed by every other shareholder and to restrain ultra vires and illegal acts. • Rights to Requisition, Attend Meetings and Vote: Shareholders are entitled to attend an annual general meeting (AGM) which must be held by the company after the end of each financial year (see section 175 of the Act). Shareholders holding not less than 10% of the total number of paid-up shares of the company are also entitled to requi- sition for an extraordinary general meeting to be convened (see Section 176 (1) of the Act). • Rights to Information: (a) Along with a shareholder’s right to attend an AGM, they are entitled to access the com- pany’s financial statements for the particular financial year in which the AGM is held. Such financial statements “must comply with the requirements of the Accounting Standards and give a true and fair view of the financial position and performance of the company” (see Section 201 of the Act). (b) A shareholder is also entitled to inspect and have copies of the company’s minute books which will include “minutes of all proceedings of general meetings and of meetings of its directors …” (see Section 189 of the Act). (c) Unlike a director, shareholders do not have an “unqualified right to [the company’s] financial information” ( Ezion Holdings v Teras Cargo Transport Pte Ltd [2016] SGHC 175) • Reserve Management Powers: In exceptional cir- cumstances, reserve powers may be implied (as a matter of necessity) in favour of the shareholders in general meeting subject to the following principles ( Chan Siew Lee v TYC Investment Pte Ltd and Ors [2015] SGCA 40 cited in • Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd [2020] SGCA 44): (a) Management powers are reserved to the share- holders in a general meeting only where the board of directors is deadlocked or is unable or unwilling to act.
(b) Such reserve management powers’ scope is limited to what is necessary to resolve the deadlock. (c) Reserve powers may not be exercised to contravene an express term in a company’s articles. (d) Reserve power must be limited in that: (i) the dispute must relate to the performance of a bona fide obligation owed by the company to a third party; and (ii) there is no material sug- gesting that it will not be in the company’s best interest to honour these obligations. (e) Reserve powers are not meant to allow share- holders to “step into the shoes of the board”. Rather, “it is limited to the minimum necessary to keep the company going by enabling it to meet its bona fide obligations as long as it is not shown that the company would be better off not meeting them.” • Shareholder Actions (focusing on Section 216 and Section 216A of the Act). Minority Oppression – Section 216 of the Act Section 216 of the Act provides an avenue for a minor- ity shareholder who has been “suffering” at the hands of the controlling majority to seek redress. Such spe- cific remedies available to a “suffering” minority share- holder are listed at Section 216 (2) of the Act, including to compel a share buy-out, provide that the company be wound up, etc. A shareholder with less than 50% shareholding in the company is naturally understood to be a “minority” shareholder entitled to file a minority oppression law- suit. That said, the express language of Section 216 does not preclude a majority shareholder from bring- ing an oppression claim. Quite to the contrary, Sec- tion 216 stipulates that “any member… of a company” may bring an action for relief under that provision with no further qualification that the same is only reserved for minority shareholders. This was confirmed by the Singapore Court of Appeal in Ng Kek Wee v Sim City Technology Ltd [2014] SGCA 47. The Court of Appeal explained that “… the touchstone is not whether the claimant is a minority shareholder of the company in question, but whether he lacks the power to stop the allegedly oppressive
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