Shareholder Litigation Personal Wrongs
STATUTORY RELIEF: s216 CA
Preliminary
Issues
Standing
Member:
Majority Shareholder:
19(6) name MUST be registered if
not no locus standing (Tan Chin
Hoon v Tan Choo Suan)
Nothing in s216 precludes
a majority shareholder
from invoking relief,
although rare.
HOWEVER, some cases where
estoppel will arise because it is
unjust for party to say that
applicant has no locus stand
(Kitnasamy v Nagatheran)
Rendered invaluable service on
the belief that it would be
awarded shares. Element of
detriment + reliance (causation)
Ng Kek Wee v Sim City
Technology: "Touchstone is
not whether claimant was
a minority...but whether
he lacks the power to stop
the allegedly oppressive
acts..."
E.g Majority causes or
agrees to grant specific
veto powers to the
minority
Ambit of
Remedy
REQUIREMENTS
The
applicant's
conduct
Applicant with
collateral
purpose
Type of
Companies
Relevant acts
of company
Acts that had
ceased, remedied
or did not
eventually happen
Oppressive, in
disregard of interests,
unfairly
discriminates,
prejudicial
"he who comes into equity
must come with clean
hands"
Tang Choon Keng
(Realty) v Tang
Wee Cheng:
Court observed
that there would
be no abuse of
the process if the
applicant
genuinely
desired the
remedies he
could obtain
"companies" means
those incorporated in
SG (s4 CA)
1. Distinction between company's affairs and
shareholder disputes
DOES NOT AFFECT
CLAIM! Courts
generally ask whether
the interest would have
been affected IF the act
had been carried out. It
does not exclude the
court's jurisdiction, but
will change the type of
remedy given (Re
Kenyon Swansea Ltd)
SEE NOTES
Lack of clean hands will
not on its own bar an
action, but because
FAIRNESS IS A RELATIVE
CONCEPT (Tan Yong San v
Neo Kok Eng), the conduct
of the applicant naturally
plays a role in
determining whether
there was oppression/
unfair discrimination
E.g. Applicant who has
condoned or participated
in the act will not be
granted relief (Lim Chee
Twang v Chan Shuk Kuen
Helina - Applicant did not
commence action for 10
years , although had full
knowledge)
BUT: A genuine
desire is
sometimes no
guarantee that
the REAL object
is proper (you
can really desire
the remedy but
because it is a
tactical ploy to
evince a
takeover bid - UK
case of Re Astec
(BSR) plc
Although usually
more applicable to
private/unlisted
companies where
shares are not freely
transferable (no
effective exit option)
Also, success under
216 often depends on
est. of legitimate
expectations that are
not necessarily
subsumed under the
Constitution. Harder
to establish in public
cpys where investors
are expected to
assume that the sum
of their legal rights
are defined by
publicly available
documents
-> Lim Cheng Huat Raymond v Teoh Siang Teik:
Refusal to transfer the shares had "nothing to do
with the conduct of affairs of the company" and
was not done in his directorial powers. "There is
nothing to prevent Teoh from taking out an action
to vindicate his claim for the shares." (element of
power to stop the oppressive acts!!!)
2. Acts of related companies
-> yes VERTICAL (Nicholas v Soundcraft
Electronics)
In SG: Ng Kek Wee v Sim City Technology
"Commercially unfair conduct in the management
of a subsidiary would be relevant so long and to
the extent that
such conduct affected or impacted the holding
company whose member was the party claiming
relief from oppression"
-> yes HORIZONTAL (Lim Chee Twang v Chan Shuk
Kuen Helena), provided that it can show the
affairs of the other company affected the interest
QUA shareholder
Not a rigid test. Much too legalistic approach to
focus on the separate legal personalities doctrine
so as to deny the relevance of the impugned acts.
Go back to purpose of s216.
3. Acts done BEFORE the applicant was a member
SG Lim Seng Wah v Han Meng Siew: Yes, even prior
to membership CAN be relied on. s216 only
requires membership at time of application. The
question to ask then is whether the past acts
constitutes unfairness to him as a shareholder
Also in Kong Thai
Sawmill v Ling Beng
Sung: Some acts may be
held to be "oppressive"
or "in disregard" even
though a particular
objectionable act may
have been remedied.