Lim Kok Wah v Lim Boh Yong: Minority Oppression & Control of Siem Seng Hing & Kenson
In Lim Kok Wah and others v Lim Boh Yong and others, the High Court of Singapore dismissed the plaintiffs' minority oppression claim against the defendants. The plaintiffs, Lim Kok Wah, Lim Kok Khee, Lim Hoo Sig, and Lim Beng Tuan, sought relief under s 216 of the Companies Act, alleging oppressive conduct by the defendants, Lim Boh Yong and Lim Kok Leong, in managing Siem Seng Hing & Company (Pte.) Limited and Kenson Enterprise (Pte) Ltd. The court also granted the defendants the relief sought in Originating Summons No 1042 of 2012 and Originating Summons No 1050 of 2012, declaring the Extraordinary General Meeting of SSH on 25 October 2012 and the meeting of the directors of Kenson held on 25 October 2012 invalid. The court found no unfair conduct warranting relief under s 216.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiffs’ minority oppression claims are dismissed; relief sought by the first and second defendants in Originating Summons No 1042 of 2012 and Originating Summons No 1050 of 2012 granted.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Minority oppression claim by Lim Kok Wah against Lim Boh Yong dismissed. Court found no unfair conduct in managing Siem Seng Hing & Kenson.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| LIM KOK WAH | Plaintiff | Individual | Claim Dismissed | Lost | Hee Theng Fong, Toh Wei Yi |
| LIM KOK KHEE | Plaintiff | Individual | Claim Dismissed | Lost | Hee Theng Fong, Toh Wei Yi |
| LIM HOO SIG | Plaintiff | Individual | Claim Dismissed | Lost | Hee Theng Fong, Toh Wei Yi |
| LIM BENG TUAN | Plaintiff | Individual | Claim Dismissed | Lost | Hee Theng Fong, Toh Wei Yi |
| LIM BOH YONG | Defendant, Plaintiff | Individual | Judgment for Defendant, Relief Granted | Won, Won | Lee Hwee Khiam Anthony, Cheng Geok Lin Angelyn, Quek Jun Haw Joey |
| LIM KOK LEONG | Defendant, Plaintiff | Individual | Judgment for Defendant, Relief Granted | Won, Won | Lee Hwee Khiam Anthony, Cheng Geok Lin Angelyn, Quek Jun Haw Joey |
| SIEM SENG HING & COMPANY (PTE.) LIMITED | Defendant | Corporation | Neutral | Neutral | |
| KENSON ENTERPRISE (PTE) LTD | Defendant | Corporation | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Vinodh Coomaraswamy | Justice | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Hee Theng Fong | Harry Elias Partnership LLP |
| Toh Wei Yi | Harry Elias Partnership LLP |
| Lee Hwee Khiam Anthony | Bih Li & Lee LLP |
| Cheng Geok Lin Angelyn | Bih Li & Lee LLP |
| Quek Jun Haw Joey | Bih Li & Lee LLP |
4. Facts
- The litigation is between two sets of brothers who share a father but have different mothers.
- The brothers are locked in a struggle for control of Siem Seng Hing & Company (Pte.) Limited and Kenson Enterprise (Pte) Ltd.
- The plaintiffs sought relief under s 216 of the Companies Act, alleging oppressive conduct by the defendants.
- The defendants sought declarations that meetings of SSH and Kenson were invalid.
- LKH had two wives and 13 children, with the parties to the proceedings being his sons from both marriages.
- Cracks in the relationship between the two branches of the family started to surface a decade after LKH’s death.
- LHS and LBT were not re-elected to SSH’s board in 2012, which was the catalyst for the minority oppression claim.
5. Formal Citations
- Lim Kok Wah and others v Lim Boh Yong and others and other matters, Suit No 1005 of 2012, Originating Summons No 1042 of 2012 and Originating Summons No 1050 of 2012, [2015] SGHC 211
6. Timeline
| Date | Event |
|---|---|
| Siem Seng Hing & Company (Pte.) Limited incorporated | |
| Kenson Enterprise (Pte) Ltd incorporated | |
| LKH's sons allotted shares in Kenson | |
| All of LKH's sons appointed as directors of Kenson | |
| Lim Khai Huat @ Lim Ngam (LKH) died | |
| Special resolution passed at an EGM of SSH approving a rights issue | |
| Shareholders notified of the 2008 Rights Offer | |
| Deadline for SSH’s shareholders to accept their entitlement to the rights shares | |
| Kenson appointed LKL as its corporate representative to attend and vote for Kenson at all meetings of the shareholders of SSH | |
| LKH’s shares in SSH distributed to his beneficiaries | |
| Court ordered the estate to transfer the shares earmarked for LMK to her | |
| Plaintiffs convened an EGM of SSH to consider and pass an ordinary resolution to return the sum of $852,300 that had been received by SSH under the 2008 Rights Offer | |
| Plaintiffs commenced a suit against LMK claiming that she had reneged on an agreement to sell her shares to them | |
| Transfer of shares earmarked for LMK to her was effected | |
| LHS and LBT were not re-elected to SSH’s board | |
| Court ordered LMK to transfer her shares in SSH to Mdm Choo | |
| Transfer of shares from LMK to Mdm Choo was effected | |
| Notice for board meeting issued | |
| Notice of meeting served | |
| Meeting of the directors of SSH to implement the 2008 Rights Offer | |
| Meeting of the directors of Kenson | |
| EGM of SSH | |
| Plaintiffs convened a meeting of the directors of SSH to pass a resolution to convene an EGM on 5 November 2012 | |
| Defendants commenced OS1042 against the plaintiffs | |
| Proposed EGM of SSH | |
| Defendants commenced OS1050 against the plaintiffs | |
| AEIC of Lim Boh Yong filed | |
| Closing submissions of the plaintiffs filed | |
| Decision Date |
7. Legal Issues
- Minority Oppression
- Outcome: The court found that the plaintiffs were not oppressed and dismissed their claims.
- Category: Substantive
- Sub-Issues:
- Unfair treatment of minority shareholders
- Breach of legitimate expectations
- Inadequate dividends
- Excessive director fees
- Exclusion from management
- Validity of Board Meetings
- Outcome: The court declared the Kenson board meeting on 25 October 2012 and the resolutions passed in the meeting invalid due to inadequate notice. The court also declared the EGM of SSH on 25 October 2012 and the resolutions passed therein invalid because the notice of the meeting was defective.
- Category: Procedural
- Sub-Issues:
- Inadequate notice of meeting
- Irregular service of notice
- Substantial injustice caused by irregularity
- Curing irregularities under Section 392 of the Companies Act
- Legitimate Expectations
- Outcome: The court found that the plaintiffs did not have any legitimate expectation that they are entitled to participate in the management of SSH or Kenson or to be appointed as directors of the companies for so long as they wished.
- Category: Substantive
- Sub-Issues:
- Right to participate in management
- Right to hold office as director
- Informal agreements and understandings
8. Remedies Sought
- Relief under s 216 of the Companies Act
- Declaration that EGM of SSH is invalid
- Declaration that directors’ meeting of SSH is invalid
- Injunction restraining LHS and LBT from acting as directors of SSH
- Injunction restraining the plaintiffs from proceeding with the EGM fixed for 5 November 2012
- Declaration that the meeting of the directors of Kenson on 25 October 2012 is invalid
- Injunction restraining LHS from representing himself as Kenson’s corporate representative
9. Cause of Actions
- Minority Oppression
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Chow Kwok Ching v Chow Kwok Chi and others and other suits | High Court | Yes | [2008] 4 SLR(R) 577 | Singapore | Cited for the principle that reasonable notice must be given for board meetings when the articles of association do not prescribe notice periods. |
| Tan Choon Yong v Goh Jon Keat and others and other suits | High Court | Yes | [2009] 3 SLR 840 | Singapore | Cited for the principle that notice of a board meeting may be called at short notice as long as it is sufficient to enable directors to attend it. |
| Chang Benety and others v Tang Kin Fei and others | Court of Appeal | Yes | [2012] 1 SLR 274 | Singapore | Cited for the principles in determining whether an irregularity is procedural or substantive. |
| Thio Keng Poon v Thio Syn Pyn and others and another appeal | Court of Appeal | Yes | [2010] 3 SLR 143 | Singapore | Cited for the principles in determining whether an irregularity is procedural or substantive and for guidance on what constitutes substantial injustice. |
| Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd | New South Wales Supreme Court | Yes | [2005] NSWSCC 1005 | Australia | Cited for the principles in determining whether an irregularity is procedural or substantive. |
| Ebrahimi v Westbourne Galleries Ltd and others | House of Lords | Yes | [1973] AC 360 | United Kingdom | Cited for the elements which may result in the superimposition of equitable considerations on a company, particularly in the context of quasi-partnerships. |
| Lim Swee Khiang and another v Borden Co (Pte) Ltd and others | Court of Appeal | Yes | [2006] 4 SLR(R) 745 | Singapore | Cited for the principle that where a company has the characteristics of a quasi-partnership, the courts will insist upon a high standard of corporate governance. |
| Over & Over Ltd v Bonvests Holdings Ltd and another | Court of Appeal | Yes | [2010] 2 SLR 776 | Singapore | Cited for the principles that govern a minority oppression claim, emphasizing that the touchstone is fairness and that the applicable standard of fairness differs depending on the nature of the company and the relationships of the shareholders. |
| Chow Kwok Chuen v Chow Kwok Chi and another | High Court | No | [2008] 4 SLR(R) 362 | Singapore | Cited for the proposition that Kenson has always been a quasi-partnership while SSH became a quasi-partnership between LKH and his sons in 1993 when LKH bought out all the other shareholders who were unrelated to the Lim family, but the court disagreed with this proposition. |
| Fisher v Cadman | High Court | No | [2005] EWHC 377 (Ch) | England and Wales | Cited for the proposition that Kenson has always been a quasi-partnership while SSH became a quasi-partnership between LKH and his sons in 1993 when LKH bought out all the other shareholders who were unrelated to the Lim family, but the court disagreed with this proposition. |
| O’Neill v Phillips | House of Lords | Yes | [1999] 1 WLR 1092 | United Kingdom | Cited for the principle that the concept of fairness has to be applied judicially and the content which it is given by the courts must be based upon rational principles. |
| Re Saul D Harrison & Sons plc | Court of Appeal | Yes | [1995] 1 BCLC 14 | England and Wales | Cited for the principle that conduct that is technically unlawful may not be unfair; in the same vein, conduct may be unfair without being unlawful. |
| Re a Company (No 00477 of 1986) | Unknown | No | [1986] BCLC 376 | Unknown | Cited for the concept of legitimate expectations, but the court cautioned against using the concept too loosely. |
| Burland v Earle | Privy Council | Yes | [1902] AC 83 | Canada | Cited for the principle that directors have no obligation to declare dividends and shareholders correspondingly have no right to receive dividends. |
| In re Gee Hoe Chan Trading Co Pte Ltd | High Court | Yes | [1991] 2 SLR(R) 114 | Singapore | Cited for the principle that a policy of declaring inadequate dividends coupled with an overly generous policy of remunerating directors may cumulatively result in conduct that is oppressive or commercially unfair. |
| Re Sam Weller & Sons Ltd | Chancery Division | Yes | [1990] Ch 682 | England and Wales | Cited for the principle that a policy of declaring inadequate dividends coupled with an overly generous policy of remunerating directors may cumulatively result in conduct that is oppressive or commercially unfair. |
| Re Kong Thai Sawmill (Miri) Sdn Bhd | Federal Court | Yes | [1978] 2 MLJ 227 | Malaysia | Cited for the test of commercial unfairness, involving a consideration of whether there has been a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect. |
| Elder v Elder & Watson Limited | Court of Session | Yes | [1952] SC 49 | Scotland | Cited for the test of commercial unfairness, involving a consideration of whether there has been a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) s 216 | Singapore |
| Companies Act s 392 | Singapore |
| Companies Act s 177(2) | Singapore |
| Companies Act s 177(3) | Singapore |
| Companies Act s 157A(1) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Minority oppression
- Quasi-partnership
- Legitimate expectations
- Commercial unfairness
- Board meeting
- Extraordinary General Meeting
- Directors’ fees
- Dividends
- Shareholding
- Corporate governance
- Companies Act
- Procedural irregularity
- Substantial injustice
15.2 Keywords
- Minority oppression
- Family business
- Corporate governance
- Shareholder dispute
- Board meeting
- Companies Act
- Singapore
16. Subjects
- Corporate Law
- Shareholder Rights
- Directors' Duties
- Meetings
- Notice
17. Areas of Law
- Company Law
- Minority Oppression
- Corporate Governance
- Civil Procedure