Corporate Law, Debt Recovery
Shareholders’ Disputes in Singapore
Written by Team Farallon | July 17, 2018
Shareholders’ Disputes commonly occur in Singapore companies.
One of the main reasons is because the shareholders have disagreed on how the business should be managed.
Such disagreements and differences manifest themselves in various forms:
- who should be appointed as director of the Company
- who should call the shots or run the show as CEO or managing director of the Company
- which markets should the Company target
- who the Company should employ or terminate
- how the profits should be distributed
- whether the Company should broaden its product lines or service offerings
- whether the Company should remain in Singapore or expand overseas
- whether the Company should enter into joint venture or partnership with another company
- whether the Company should be wound up
- whether the Company should increase, decrease or dilute its share capital
- whether the Company should allow shareholders to charge their expenses to the company
- whether the Company would allow shareholders to give preferential treatment to their children as shareholders or directors of the company
- whether there has been a management deadlock
- whether there has been minority oppression of the minority shareholder
- whether any of the shareholders has acted against the interests of the Company
- whether any of the shareholder directors has acted against the interests of the Company
- whether any of the shareholder directors have acted in breach of sections 156 or 157 of the Companies Act of Singapore, i.e. failed to declare their interests in any contract or transaction to the Board of Directors of the Company
- whether any shareholders have diverted business and/or profits away from the Company
- whether any shareholders have committed any fraud on the minority
- whether any shareholder director has been unfairly dismissed or terminated
- whether any shareholders have used the Company to evade or avoid tax
- whether any shareholder has leaked confidential information
- whether any shareholder has mismanaged the Company and caused it to suffer losses
- whether any shareholder has joined or assisted a direct competitor of the Company
The first thing you should do is to consult us so you know what rights you have and what options there are.
Typical options which we have advised, structured or commenced would include:
- Buying out the shares of the other shareholder(s)
- Selling your shares to the other shareholder(s)
- Resigning as director of the Company
- Terminating a director of the Company
- Filing a police report
- Filing a report with ACRA
- Filing a report with MOM
- Filing a report with IRAS
- Filing a report with MAS
- Filing a lawsuit in the High Court or State Courts of Singapore
- Proceeding to arbitration in the SIAC
- Proceeding to mediation in the SMC or SIMC
To best assess your position, you would need to share with us the Constitution, the Memorandum and Articles of Association, any Shareholders’ Agreements, any board minutes, any shareholder resolutions, and any employment contracts relating to the Company.
Any recent emails or letters between the parties are also important for your lawyer to assess the strengths and weaknesses of your case.
By understanding where you stand with these, you may be able to resolve the situation in an amicable and time friendly manner. If not, you need to be prepared for a major battle, which could cost you some money and a lot of your time.