Written by Team Farallon
Minority oppression refers to situations where the majority or equal shareholders of a company use their position to put other shareholders in an unfair position. A claim for minority oppression falls under Section 216 of the Companies Act (Cap. 50) of Singapore. The Singapore High Court recently reiterated that Section 216 has four limbs:
These four limbs guide the Singapore Courts when deciding whether a claimant should succeed in a claim for minority oppression.
Section 216 of the Singapore Companies Act (Cap 50) (the Companies Act) provides that any shareholder of a company (including a minority shareholder) can apply to the Singapore Court on either of the following grounds:
Generally, minority oppression applies to minority shareholders (i.e. parties who own less than 50% of the company’s shares). However, equal shareholders (i.e. parties who own 50% of the company’s shares) are not barred from a claim in minority oppression. The touchstone of minority oppression claims is whether the oppressed party lacked the power to stop the oppressive act, not the proportion of shares held by him/her.
This was the case in Ascend Field Pte Ltd v Tee Wee Sien  SGCA 14 where the plaintiff was an equal shareholder and started a claim for minority oppression. The Singapore Court of Appeal (SGCA) held that his status as an equal shareholder did not bar him from his claim. Instead, the Court placed emphasis on how he did not have majority voting power to remove the oppressor as a Director of the company, and could not participate in major decision-making processes to find that Section 216 of the Companies Act applied to his case.
Therefore, a party who holds 50% of the company’s shares but was not in any control of the company’s affairs is more likely to show that he/she was unable to stop the oppression. He/she may be allowed to claim for minority oppression despite not being a minority shareholder.
Minority oppression can involve a wide spectrum of acts done by the oppressive party. The party alleging minority oppression must generally show that the wrong done by the oppressive party was a personal wrong. This means that the wrong affected him/her as a minority shareholder. This is distinguished from corporate wrongs, which are wrongs done to the company.
In some cases, corporate wrongs may shade into personal wrongs. It must then be shown that the shareholder suffered a distinct injury from what was suffered by the company. The oppressor’s acts must also have been commercially unfair.
There may also be cases where a company is managed like a quasi-partnership. This means that the company’s affairs are dealt with based on mutual trust and confidence. There may be no written contract on the rights of shareholders. Thus, it may be unclear whether a wrong was done to him/her in the capacity of a minority shareholder. In such cases, the Singapore Courts place more emphasis on the legitimate expectations that a shareholder in the quasi-partnership should have. If there has been a breach of such legitimate expectations, minority oppression is more likely to be found.
Examples of oppressive acts may involve the oppressing party:
For instance, in Wei Fengpin v Low Tuck Loong Raymond  SGHC 90, the Singapore High Court ruled that minority oppression occurred because the defendants had done a series of acts that were commercially unfair to the plaintiff. These acts included: unduly paying dividends to themselves while failing to pay the same dividends to the plaintiff, deliberately withholding information from the plaintiff, failing to call for Annual General Meetings (AGMs) and audits of financial statements, and diverting corporate opportunities to other businesses for their benefit.
The leading case in Singapore is Over & Over v Bonvests Holdings Ltd  SGCA 7, where the Court of Appeal held that:
These are just some examples of oppressive acts brought before the Singapore Courts. It is by no means exhaustive. An act included in this list is also not immediately indicative that a majority shareholder has been oppressive. Much depends on the entire factual matrix of the case. If you are unsure of whether there has been minority oppression in your circumstances, you can consult a lawyer for detailed advice on this matter.
The remedies for minority oppression are set out in Section 216(2) of the Companies Act. If a claim for minority oppression succeeds, the Court may issue an order to do any of the following:
We have been instructed on several minority oppression cases:
A claim for minority oppression is highly dependent on a variety of factors. This includes the type of partnership between you and the oppressive party, the alleged acts of the oppressive party and the effect of such acts on you as a shareholder.
It is important to take legal advice so that you do not communicate wrongly or act improperly in relation to your dispute, as it may weaken your case unnecessarily.
If you would like to get legal advice for a potential case of minority oppression, please contact us to schedule a legal consultation.
Minority oppression of shareholders in Singapore occurs when the majority shareholders in a company take action that unfairly prejudices the minority.
It most commonly occurs in Private Limited companies, because the lack of a public market for shares leaves minority shareholders particularly vulnerable, since minority shareholders cannot escape mistreatment by selling their shares and exiting the company.
The majority shareholders may harm the economic interests of the minority by refusing to pay the minority shareholder fairly, treating him in an unjust manner, and attempting to squeeze him out of the company.
In some case, the majority shareholders may physically lock the minority out of the corporate premises.
But most of the time, the majority does not update the minority about what goes on in the company, and when the time comes, they even deny the minority the right to inspect corporate records and books, making it necessary for the minority to take legal action every time it wants to look at them.
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