MAS v Huang Zhong Xuan: Injunction for Securities Act Breach & Beneficial Ownership Dispute
The Monetary Authority of Singapore (MAS) applied for a permanent injunction against Huang Zhong Xuan (D1) and Build Up International Investments Limited (D2) to prevent them from disposing of funds in a Credit Suisse bank account held by D2, arguing that D1 was the beneficial owner and was potentially in breach of the Securities and Futures Act (SFA) due to ongoing investigations into China Sky Chemical Fibre Co Ltd. The High Court granted the injunction, finding that D1 was indeed the beneficial owner of the account and D2.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Order in terms of prayers 1(a) and 1(b) of OS 311/2012 is granted. The defendants are to bear the costs of OS 311/2012.
1.3 Case Type
Regulatory
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court granted MAS a permanent injunction against Huang Zhong Xuan, restraining him from dealing with funds in a bank account due to suspected Securities and Futures Act breaches.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Monetary Authority of Singapore | Plaintiff | Government Agency | Judgment for Plaintiff | Won | |
| Huang Zhong Xuan | Defendant | Individual | Injunction Granted | Lost | |
| Build Up International Investments Limited | Defendant | Corporation | Injunction Granted | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | Judge | Yes |
4. Counsels
4. Facts
- MAS investigated China Sky and its former directors for interested-party transactions and a failed land purchase.
- D1 was the executive director and CEO of China Sky until his resignation on 8 February 2012.
- D2 is a BVI company and the named account holder of the Bank Account.
- The assets in the Bank Account were Trony Solar Shares, dividends, and proceeds from the sale of shares.
- D1 transferred approximately US$10m from the Bank Account on 5 March 2012.
- D1 instructed the Bank on 27 March 2012 to transfer the remaining US$3.7m.
- The authorized signatories of the Bank Account were D1 and Ms. Huang.
5. Formal Citations
- Monetary Authority of Singapore v Huang Zhong Xuan and another, Originating Summons No 311 of 2012, [2013] SGHC 242
6. Timeline
| Date | Event |
|---|---|
| D1 transferred approximately US$10m from the Bank Account. | |
| D1 gave further instructions to the Bank to transfer the account balance sum of US$3.7m. | |
| MAS obtained ex parte an interim order restraining the defendants from disposing of money in the Bank Account. | |
| The Interim SFA Injunction against the defendants was ordered to continue until further order. | |
| MAS filed Summons No 6168 of 2012 for cross-examination of some of the defendants’ deponents of various affidavits. | |
| MAS filed Summons No 20 of 2013 for cross-examination of some of the defendants’ deponents of various affidavits. | |
| D2 filed Summons No 153 of 2013 to set aside the Interim SFA Injunction. | |
| Amendments to s 324 of the SFA came into effect. | |
| SUM 153/2013 was dismissed. SUM 6168/2012 and SUM 20/2013 were allowed for the cross-examination of the defendants’ witnesses on their affidavits. | |
| Orders to cross-examine Ms Liao on her affidavits were made. | |
| Cross-examination took place. | |
| Cross-examination took place. | |
| Judgment reserved. |
7. Legal Issues
- Beneficial Ownership
- Outcome: The court found that D1 was the beneficial owner of the Bank Account and D2.
- Category: Substantive
- Breach of Securities and Futures Act
- Outcome: The court granted the injunction based on potential breaches of the SFA.
- Category: Substantive
8. Remedies Sought
- Permanent Injunction
9. Cause of Actions
- Application for Injunction under s 324 of the Securities and Futures Act
10. Practice Areas
- Regulatory Enforcement
- Commercial Litigation
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| In re B (Children) (Care Proceedings: Standard of Proof) (CAFCASS intervening) | House of Lords | Yes | [2009] AC 11 | United Kingdom | Cited for the approach to assessing the credibility of witnesses. |
| Armagas Ltd v Mundogas SA | Court of Appeal | Yes | [1985] 1 Lloyd’s Rep 1 | United Kingdom | Cited for the approach to testing conflicting evidence. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities and Futures Act (Cap 289, 2006 Rev Ed) | Singapore |
| Securities and Futures (Amendment) Act 2012 (Act 34 of 2012) | Singapore |
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Beneficial Ownership
- Securities and Futures Act
- Injunction
- Trony Solar Shares
- Bank Account
- Nominee
- Corporate Vehicle
- Interested-party transactions
15.2 Keywords
- Securities
- Injunction
- Beneficial Ownership
- Singapore
- MAS
- Huang Zhong Xuan
17. Areas of Law
16. Subjects
- Securities Regulation
- Injunctions
- Beneficial Ownership
- Financial Regulation