SINGAPORE Trends and Developments Contributed by: Mark Lee and Sarah Yeo, WMH Law Corporation
Pte Ltd v Wealthplus Pte Ltd [2016] SGCA 17) (“Pet- roships Investment”): • A complainant must first apply to the Singapore High Court for leave/permission to bring a deriva- tive action (Section 216A(2) of the Act). • To do so, the complainant must have first given 14 days’ notice to the directors of the company of his/her intention to commence a derivative action. Simply, the directors of the company must first be given a chance to decide whether or not to vindi- cate the alleged corporate wrong (Section 216A(3) (a) of the Act). • The Court must be satisfied that the complainant is “acting in good faith” (Section 216A(3)(b) of the Act). At the High Court level of Petroships Invest- ment, the Hon. Judge accepted that a shareholder acted in good faith so long as its “dominant pur- pose” was to benefit the company. • The Court must be satisfied that the complain- ant’s application is “prima facie in the interests of the company” (Section 216A(3)(c) of the Act). Again, at the High Court level of Petroships Invest- ment, the Hon. Judge stated that the question of
whether a proposed derivative action was prima facie in the company’s interests involved not just an assessment of the legal merits of the action to determine if it was “legitimate and arguable” but also a holistic consideration of whether the action was in the “practical and commercial interests of the company”. Whilst it is trite that it would be an abuse of process to allow an essentially corporate wrong to be pursued under Section 216, there can be cases where what appears to be a corporate wrong can plausibly also be a personal wrong – ie, overlapping wrongs. Not- withstanding, the Court of Appeal in Suying Design Pte Ltd v Ng Kian Huan Edmund and other appeals [2020] SGCA 46 emphasised that “it remains a pre- requisite, even where ‘overlapping’ wrongs are con- cerned, that a distinct injury must be suffered by the shareholder. The injury to the minority shareholder thus cannot merely reflect the injury suffered by the company. It must further be shown that the distinct injury amounts to commercial unfairness against the plaintiff as a member of the company.”
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