Lim Yew Ming v Aik Chuan Construction: Quorum for Shareholder Meeting & Minority Veto

In Lim Yew Ming v Aik Chuan Construction Pte Ltd, the High Court of Singapore addressed an application by Lim Yew Ming, the majority shareholder of Aik Chuan Construction Pte Ltd, for an order to allow a quorum of one at a general meeting, due to the refusal of the minority shareholders (his mother and siblings) to attend. Lim sought to expand the company's activities into the renewable energy sector, which was opposed by the other shareholders. The court granted the application, allowing the meeting to proceed with a quorum of one, and the minority shareholders appealed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application granted to have a quorum of one.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Lim Yew Ming sought a quorum of one for a shareholder meeting to pursue renewable energy investments, opposed by minority shareholders.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Lim Yew MingPlaintiffIndividualApplication GrantedWonJeffrey Ong Su Aun, Nichol Yeo
Aik Chuan Construction Pte LtdDefendantCorporationNeutralNeutral
Lim Yew SoonDefendantIndividualAppeal PursuedLostDaniel Koh, Favian Kang
Lim Yew GheeDefendantIndividualAppeal PursuedLostDaniel Koh, Favian Kang
Lim Yew CheeDefendantIndividualAppeal PursuedLostDaniel Koh, Favian Kang
Lim Po LinDefendantIndividualAppeal PursuedLostDaniel Koh, Favian Kang
Lim Yu LinDefendantIndividualAppeal PursuedLostDaniel Koh, Favian Kang
Neoh Siew InnDefendantIndividualAppeal PursuedLostDaniel Koh, Favian Kang

3. Judges

Judge NameTitleDelivered Judgment
Aedit AbdullahJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Jeffrey Ong Su AunJLC Advisors LLP
Nichol YeoJLC Advisors LLP
Daniel KohEldan Law LLP
Favian KangEldan Law LLP

4. Facts

  1. Plaintiff, holding 51.5% shares, sought to move Aik Chuan into the renewable energy sector.
  2. The 2nd to 7th defendants, holding the remaining 48.5% shares, opposed the Plaintiff's plans.
  3. Defendants refused to attend two EGMs called by the Plaintiff, depriving him of the needed quorum.
  4. Plaintiff sought an order under s 182 of the Companies Act for a quorum of one.
  5. The Plaintiff incorporated AC Global Energy Pte Ltd in December 2013 to enter the renewable energy business.
  6. A contract was entered into on 1 February 2014 to construct a biomass plant in Tennessee, the United States.
  7. The UOB facility required a personal guarantee from the Plaintiff, and a corporate guarantee from Aik Chuan, which the 2nd and 5th Defendants declined to sign.

5. Formal Citations

  1. Lim Yew Ming v Aik Chuan Construction Pte Ltd and others, Originating Summons No 1043 of 2014, [2015] SGHC 101

6. Timeline

DateEvent
Plaintiff sought to get into the renewable energy business.
AC Global Energy Pte Ltd incorporated.
Contract entered into to construct a biomass plant in Tennessee, the United States.
EGM convened for the removal of the 2nd and 5th Defendants as directors.
Second EGM convened to consider the appointment of other persons as directors of Aik Chuan.
Originating Summons 1043 of 2014 filed.
Judgment reserved.

7. Legal Issues

  1. Quorum Requirements
    • Outcome: The court held that the refusal of minority shareholders to attend meetings, rendering them inquorate, constituted an impracticability under s 182 of the Companies Act, justifying the court's intervention to order a quorum of one.
    • Category: Substantive
    • Sub-Issues:
      • Minority shareholder veto
      • Impracticability of calling a meeting
  2. Minority Shareholder Rights
    • Outcome: The court determined that minority shareholders do not have a right of veto through quorum requirements and cannot obstruct the desires of the majority shareholder.
    • Category: Substantive
    • Sub-Issues:
      • Right to boycott meetings
      • Veto power through quorum requirements
  3. Section 182 of the Companies Act
    • Outcome: The court interpreted s 182 of the Companies Act, stating that refusal to attend, causing a failure to meet quorum requirements, is an impracticability.
    • Category: Procedural
    • Sub-Issues:
      • Impracticability
      • Court's discretion

8. Remedies Sought

  1. Order for a quorum of one at a general meeting

9. Cause of Actions

  • Application for an order under s 182 of the Companies Act

10. Practice Areas

  • Commercial Litigation
  • Corporate Law

11. Industries

  • Construction
  • Renewable Energy

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Union Music Limited v Russell John Watson & AnorEnglish Court of AppealYes[2003] EWCA Civ 180England and WalesInterpreted a provision in pari materia with s 182 of the Companies Act, supporting the argument that the inability to convene a meeting with a quorum amounts to an impracticability.
Re El Sombrero LtdEnglish CourtYes[1958] 3 WLR 349England and WalesEstablished that impracticability arises if a meeting cannot be practically conducted, with refusal to attend being sufficient.
Re Woven Rugs LimitedN/AYes[2002] 1 BCLC 324N/AFollowed Re El Sombrero Ltd, reinforcing the principle that refusal to attend can give rise to impracticability.
Phuar Kong Seng v Lim HuaMalaysian High CourtYes[2005] 2 MLJ 338MalaysiaAffirmed that quorum provisions cannot be regarded as conferring a form of veto on a minority party in a situation where a deadlock exists.
Re Success Plan LtdN/AYes[2002] 3 HKLRD 610Hong KongStated that the refusal of another shareholder to form a quorum for a meeting is an example of a situation where it would be impracticable to call a meeting of the company.
Beck v Tuckey Pty Ltd and OthersSupreme Court of New South WalesYes(2004) 49 ACSR 555AustraliaDiscussed the concept of deadlock and the court's reluctance to intervene when negotiations are possible.
Re Opera Photographic LtdN/AYes[1989] 1 WLR 634N/AAddressed a situation of deadlock in the meeting of members, focusing on the setting of a direction for the company by its members.
Re Sticky Fingers RestaurantN/AYes[1992] BCLC 84N/ADiscussed the obstruction of the business of the company due to the inability to conduct meetings.
Jenashare Pty Ltd v Lemrib Pty LtdSupreme Court of New South WalesYes(1993) 11 ACSR 345AustraliaRecognized that impracticability covers a wide range of circumstances, from the death of all corporators to situations where it is extremely inconvenient for a meeting to be called.
Chang Benety and ors v Tang Kin Fei and orsCourt of AppealYes[2012] 1 SLR 274SingaporeDealt with irregularities, including absence of quora, and whether a substantial injustice results.
Tang Kin Fei and others v Chang Benety and othersHigh CourtYes[2011] 1 SLR 568SingaporeAddressed the legitimacy of defensive tactics, such as refusing to attend meetings, and the potential for injustice.
The Oriental Insurance Co Ltd v Reliance National Asia Pte LtdN/AYes[2008] 3 SLR (R) 121N/AMentioned in the context of a holistic weighing and balancing of various interests in a s 392 application.
Re Goodwealth Trading Pte LtdHigh CourtYes[1990] 2 SLR(R) 691SingaporeMentioned a defensive tactic of refusing to attend directors’ meetings, but not as an endorsement of the tactic.
Chua Kien How v Goodwealth Trading Pte Ltd and anotherCourt of AppealYes[1992] 1 SLR(R) 870SingaporeFocused on winding up on just and equitable grounds.
Sum Hong Kum v Li Pin Furniture Industries Pte LtdN/AYes[1996] 1 SLR(R) 529SingaporeConcerned a company which had been incorporated specifically to take over the business of a partnership, with the partners’ respective positions in the partnership being carried over into the company.
Chow Kwok Chuen v Chow Kwok Chi and anotherCourt of AppealYes[2008] 4 SLR(R) 362SingaporeDiscussed that family run companies are in a special class of their own.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, Rev Ed 2006)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Quorum
  • Extraordinary General Meeting
  • Impracticability
  • Minority Shareholder
  • Majority Shareholder
  • Companies Act
  • Renewable Energy
  • Biomass Plant
  • Shareholder Agreement

15.2 Keywords

  • quorum
  • shareholder meeting
  • minority veto
  • companies act
  • singapore
  • renewable energy
  • corporate governance

16. Subjects

  • Company Law
  • Corporate Governance
  • Shareholder Rights

17. Areas of Law

  • Company Law
  • Shareholder Rights
  • Corporate Governance