Minority shareholders of companies in Singapore are generally shareholders with a non-controlling stake of less than 50% of a company’s voting shares.
Shareholders of a company who hold less than 50% of the company’s voting shares are considered minority shareholders. These group of shareholders are vulnerable to oppression by the controlling shareholders of the company.
One such example is minority shareholders can simply be outvoted in shareholder meetings, leaving them with little or no say in the company’s affairs, which may be constituted as unfairness.
This can lay the foundation for minority shareholders to commence legal action for the purpose of obtaining relief.
In Singapore, shareholders’ general rights are set out in the constitution of the company and apply to holders of ordinary and preferred shares.
Preferred shareholders may have additional rights as set out in the constitution.
In Singapore, shareholder rights in private limited companies are also governed by common law under the Companies Act.
Shareholders, in general, have the following rights (among others):
Common disagreements between shareholders are generally considered to be insufficient grounds to constitute minority oppression by the courts.
It is also worth noting that oppression may be considered as a single act, or as a sequence of actions or oppressive conduct over a prolonged period of time, as highlighted by The Singapore Court of Appeal in “Over & Over Ltd v Bonvests Holdings Ltd  SGCA 7”.
Although prejudice is a factor, and perhaps, a very important one in the overall assessment of the merits of a matter, commercial unfairness is the touchstone by which the court determines whether to grant relief under section 216 of the Companies Act.
In other words, behaviour on the part of the majority shareholders or the controllers of a company that departs from the standards of fair play amongst commercial parties is considered to be oppressive.
Below are some examples of acts that have triggered minority protection remedies or actions:
Disagreements between shareholders are inevitable when conducting business, therefore it is important for all parties to implement safeguards to prevent future:
One of the most widely accepted ways to avoid shareholder disagreements is to have a shareholder’s agreement that will outline how potential future disputes are to be resolved.
However, in Asia, it’s common for companies (quasi-partnerships) to be formed on the basis of mutual trust and confidence, with an understanding that they will all participate in decisions made for the management of the business.
The affairs of such companies are typically conducted in an informal manner, with a lack of written agreements to outline how future disputes should be resolved.
The Singapore Courts have consistently applied a stricter yardstick of scrutiny because of the increased vulnerability of minority shareholders in such companies, due to the informal nature in which business is conducted in such companies.
The Singapore courts have wide discretionary powers of the under
section 216 of the Companies Act and may order any remedy which it deems appropriate to provide relief to the complainant(s).
The Court may make an order that may:
If you feel that you’ve been unfairly treated as a minority shareholder in a company, it’s best to consult a lawyer that specializes in Company Law, or minority shareholder oppression in Singapore.
Your lawyer will then be able to advise you on the best course of action, and based on the merits of your case, advise you if you even have a fair chance at obtaining a favourable judgement for your matter.