Lim Swee Khiang v Borden Co: Minority Shareholder Oppression & Company Act Remedies
Lim Swee Khiang and C H Lim Pte Ltd, minority shareholders of Borden Company (Private) Limited, appealed to the Court of Appeal of Singapore against the dismissal of their application under s 216(1) of the Companies Act. They alleged oppression and disregard of their interests by the majority shareholders. The Court of Appeal, delivered by Chan Sek Keong CJ, allowed the appeal, finding that the respondents had acted in disregard of the appellants' interests and ordered the respondents to purchase the appellants' shares in Borden.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal allowed. The court found the respondents had acted in disregard of the appellants' interests as minority shareholders and ordered the respondents to purchase the appellants' shares in Borden.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Minority shareholders sue Borden Co for oppression. The court examines breaches of Companies Act and orders buyout of shares.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Lim Swee Khiang | Appellant | Individual | Appeal Allowed | Won | Lok Vi Ming, Ajinderpal Singh, Edric Pan, Sun Ru-Shi |
| C H Lim Pte Ltd | Appellant | Corporation | Appeal Allowed | Won | Lok Vi Ming, Ajinderpal Singh, Edric Pan, Sun Ru-Shi |
| Borden Co (Pte) Ltd | Respondent | Corporation | Shares to be purchased by respondents | Lost | Justin Yip |
| Yeo Swee Tee & Tan Lak Tho | Respondent | Partnership | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Tan Lak Tho | Respondent | Individual | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Lim Kha Eng alias Mengalina Halim | Respondent | Individual | Shares to be purchased by respondents | Lost | Alvin Tan |
| Chew Joo Kiang Rachel | Respondent | Individual | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Yeo Siew Khoon & Yeo Yong Kian | Respondent | Partnership | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Yeo Siew Khoon | Respondent | Individual | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Yeo Yong Kian | Respondent | Individual | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Ong Kim Gek | Respondent | Individual | Shares to be purchased by respondents | Lost | Foo Say Tun |
| Lim Kheng Puan | Respondent | Individual | Shares to be purchased by respondents | Lost | Foo Say Tun |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | No |
| Chan Sek Keong | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lok Vi Ming | Rodyk & Davidson |
| Ajinderpal Singh | Rodyk & Davidson |
| Edric Pan | Rodyk & Davidson |
| Sun Ru-Shi | Rodyk & Davidson |
| Justin Yip | Drew & Napier |
| Foo Say Tun | Wee Tay & Lim |
| Alvin Tan | Wong Thomas & Leong |
4. Facts
- The appellants are minority shareholders in Borden, a family-owned company.
- The respondents are the majority shareholders of Borden.
- Borden's main business is medicinal and pharmaceutical products, most successfully its 'Eagle Brand' medicated oil.
- PT Eagle was licensed to manufacture and distribute Borden's medicated oil in Indonesia.
- Mdm Halim, a director of Borden, was also a commissioner of PT Eagle.
- The respondents failed to terminate PT Eagle's license despite advice to do so.
- The respondents settled a Malaysian action with PT Eagle, paying US$900,000.
5. Formal Citations
- Lim Swee Khiang and Another v Borden Co (Pte) Ltd and Others, CA 88/2005, [2006] SGCA 33
- Lim Swee Khiang v Borden Co (Pte) Ltd, , [2005] 4 SLR 141
6. Timeline
| Date | Event |
|---|---|
| Borden was incorporated | |
| Borden granted a license to PT Eagle to manufacture and distribute Eagle brand medicated oil in Indonesia | |
| Borden authorised PT Eagle to use the Eagle Brand trade mark, subject to payment of royalty | |
| Payment of royalty ceased | |
| Borden complained to the Drug Control Authority of Malaysia about PT Eagle’s infringement of Borden’s trade mark | |
| TLT requisitioned an extraordinary general meeting of Borden to remove Mdm Halim as a director of Borden | |
| PT Eagle commenced the Malaysian action to nullify Borden’s trade mark | |
| SKL filed an affidavit in the Malaysian action | |
| PT Eagle’s action was dismissed in the Malaysian action | |
| Borden was advised that the licence agreement with PT Eagle should be terminated | |
| Mdm Halim requisitioned an EGM of Borden | |
| Notice of an EGM of Borden was given | |
| EGM was held and resolutions were passed | |
| Another EGM was held | |
| A directors’ meeting was held | |
| D&N advised that steps should be taken to oppose the trade marks in order to preserve Borden’s position | |
| A directors’ meeting was held | |
| D&N provided advice to Borden | |
| A shareholders’ meeting was held | |
| A shareholders’ meeting was held | |
| Proceedings commenced by way of originating summons | |
| A shareholders’ meeting was held | |
| The Malaysian action was settled | |
| Proceedings were converted into a writ action | |
| The fourth respondent applied to court to strike out the appeal | |
| The Court of Appeal dismissed the applications to strike out the appeal | |
| Judgment reserved |
7. Legal Issues
- Oppression of Minority Shareholders
- Outcome: The court found that the majority shareholders had acted in disregard of the minority shareholders' interests.
- Category: Substantive
- Sub-Issues:
- Disregard of minority interests
- Unfair discrimination against minority shareholders
- Appropriate Remedy for Oppression
- Outcome: The court ordered the majority shareholders to purchase the minority shareholders' shares instead of winding up the company.
- Category: Substantive
- Sub-Issues:
- Winding up of company
- Purchase of shares by other members
- Submission of No Case to Answer
- Outcome: The court noted that the respondents' submission of no case to answer was a high-risk strategy.
- Category: Procedural
8. Remedies Sought
- Winding up of the company
9. Cause of Actions
- Oppression of minority shareholders
- Disregard of minority interests
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Pharmaceuticals
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Central Bank of India v Hemant Govindprasad Bansal | High Court | Yes | [2002] 3 SLR 190 | Singapore | Cited for the principle that a defendant's decision not to adduce evidence is a high-risk strategy if the plaintiff has presented a prima facie case. |
| Ebrahimi v Westbourne Galleries Ltd | House of Lords | Yes | [1973] AC 360 | United Kingdom | Cited to support the view that Borden is to be regarded as a quasi-partnership. |
| Ladd v Marshall | Court of Appeal | Yes | [1954] 1 WLR 1489 | England and Wales | Cited for the conditions for the admission of fresh evidence on appeal. |
| Re Kong Thai Sawmill (Miri) Sdn Bhd | Federal Court | Yes | [1978] 2 MLJ 227 | Malaysia | Cited for the principle that courts should examine the conduct of majority shareholders to determine whether they have departed from the proper standard of commercial fairness. |
| In re Five Minute Car Wash Service Ltd | High Court | Yes | [1966] 1 WLR 745 | England and Wales | Cited for the principle that a director must have acted unscrupulously, unfairly, or with any lack of probity for their actions to be considered oppressive. |
| O’Neill v Phillips | House of Lords | Yes | [1999] 1 WLR 1092 | United Kingdom | Cited for the principle that fairness is the criterion by which the court must decide whether it has jurisdiction to grant relief. |
| Tang Choon Keng Realty (Pte) Ltd v Tang Wee Cheng | High Court | Yes | [1992] 2 SLR 1114 | Singapore | Cited for the principle that the court’s discretion under s 216 of the CA should be exercised with a view to bringing to an end or remedying the matters complained of. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
| Section 216(1) Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
| Section 216(2) Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Minority shareholders
- Oppression
- Companies Act
- Quasi-partnership
- Eagle Brand medicated oil
- PT Eagle
- Licence termination
- Royalty
- Malaysian action
- Conflict of interest
15.2 Keywords
- Minority shareholder oppression
- Companies Act
- Winding up
- Share valuation
- Corporate governance
- Fiduciary duty
16. Subjects
- Corporate Governance
- Shareholder Rights
- Commercial Disputes
17. Areas of Law
- Civil Procedure
- Companies Law
- Minority Shareholders Rights