Minority Shareholder Oppression in Singapore

Written by Team Farallon

  • Farallon Law Corporation
  • August 1, 2017

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.

Fortunately, the law in Singapore is clear about this.

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:

  • That the affairs of that company are being conducted, or the powers of the directors are being exercised, in a manner oppressive to one or more of the shareholders or in disregard of his interest as a shareholder of the company.
  • That there is an act of the company which has been done or is threatened, or that some resolution of the shareholders has been passed or is proposed to be passed, which would be unfair, discriminate against or be otherwise prejudicial to one or more of the shareholders of the company.

This is not an exhaustive list.

The leading case in Singapore is Over & Over v Bonvests Holdings Ltd [2010] SGCA 7, where the Court of Appeal held that:

  • The court, where oppression is alleged, has to have regard to all the circumstances and take into consideration the cumulative effect of the impugned conduct.
  • The touchstone in any oppression action is fairness. By any yardstick, HN, and the shareholders he represented, had repeatedly conducted (in the instances referred to above) the affairs of Richvein in a commercially unfair manner that has also occasioned grave prejudice to O&O. We also find that as a quasi-partnership between Bonvests and O&O existed, the Rights Issue alone – as an instance of “single act” injustice – would have been sufficient basis for a finding of oppression pursuant to s 216.
  • The appropriate order is to have the fair market value of Richvein ascertained by an independent valuer. The parties are to agree on the appointment of an independent valuer and if they are unable to do so within 14 days from the date hereof they are to write to this court to appoint same. The independent valuer is to assess the value of Richvein on the basis of the fair market value of its assets as of the date of this decision. Within 14 days of receipt of this independent valuer’s valuation, Bonvests is to decide whether it will purchase the entire shareholding of O&O on the basis of this valuation.

We successfully acted for a minority shareholder in achieving a buy out of his shares at a premium, and majority shareholders against spurious claims by minority shareholders against the majority and the company.

If you need a company lawyer in Singapore, please feel free to contact us for a legal consultation.

We would require the following information:-

  • Name of the Company
  • Names of the Shareholders who are against you (the Adverse Parties)
  • Description of the unfair treatment which you have received or has been alleged against you

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