Naseer Ahmad Akhtar v Suresh Agarwal: Quorum, Director Removal & Companies Act

In Naseer Ahmad Akhtar v Suresh Agarwal and Pang Hee Hon, the Singapore High Court addressed an application by Naseer Ahmad Akhtar, a member and director of Infotech Global Pte Ltd, for an order to convene an extraordinary general meeting (EGM) with a quorum of one to consider resolutions, including the removal of Suresh Agarwal as director. The court granted the application, finding it impracticable to conduct the meeting as prescribed by the articles of association due to the defendants' refusal to attend. The court ordered an EGM to be convened for the purpose of considering the resolution to remove the first defendant as director and to appoint Eric Tiong in his place, with the presence of one member sufficient to form a quorum.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application granted; EGM to be convened with one member sufficient for quorum.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case regarding the removal of a director and the application of Section 182 of the Companies Act.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Suresh AgarwalRespondentIndividualApplication DeniedLost
Naseer Ahmad AkhtarApplicantIndividualApplication GrantedWon
Pang Hee HonRespondentIndividualApplication DeniedLost

3. Judges

Judge NameTitleDelivered Judgment
Hoo Sheau PengJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Ranvir Kumar SinghUniLegal LLC
Khoo Boo Teck RandolphDrew & Napier LLC
Tan Huiru SallyDrew & Napier LLC

4. Facts

  1. Naseer Ahmad Akhtar sought an order to convene an EGM of Infotech to remove Suresh Agarwal as director.
  2. Infotech's Articles of Association require a quorum of two members for general meetings.
  3. The relationship between Akhtar and Agarwal deteriorated, leading to allegations of malfeasance.
  4. Akhtar requisitioned the BOD to convene an EGM to consider resolutions, including Agarwal's removal.
  5. Agarwal objected to the resolutions and refused to attend meetings.
  6. The BOD meeting and EGM were dissolved due to a lack of quorum.
  7. Akhtar commenced the present application under s 182 of the Companies Act.

5. Formal Citations

  1. Naseer Ahmad Akhtar v Suresh Agarwal and another, Originating Summons No 217 of 2015 (Summonses Nos 4299 and 2918 of 2015), [2015] SGHC 256

6. Timeline

DateEvent
Infotech incorporated
Suresh Agarwal appointed managing director of Infotech
Agarwal Shilpa Suresh appointed as company secretary
Pang See Hon appointed as advisor to Infotech
Naseer Ahmad Akhtar requisitioned BOD to convene an EGM
Naseer Ahmad Akhtar requisitioned BOD to circulate a notice of resolutions
Unilegal replied on Suresh Agarwal's behalf objecting to the resolutions
Drew & Napier LLC responded on Naseer Ahmad Akhtar's behalf
Naseer Ahmad Akhtar called for an EGM to be held on 11 March 2015
Unilegal replied refusing to pass resolutions by way of writing
BOD meeting and EGM dissolved due to lack of quorum
Naseer Ahmad Akhtar commenced the present application
Pang See Hon resigned
Defendants filed Summons No 2918 of 2015
Suresh Agarwal commenced Suit No 631 of 2015
Hearing of SUM 2918/2015
SUM 2918/2015 dismissed
Orders made
Oral application for a stay of execution of the order pending an appeal
Plaintiff served on both defendants a notice of EGM calling for a meeting to be held on 14 September 2015
Plaintiff lodged Summons No 4299 of 2015
Parties attended before the court
Defendants wrote to the court to indicate their intention to file a separate application to the Court of Appeal for a stay of execution of the order pending appeal
Parties saw the court
Decision Date

7. Legal Issues

  1. Impracticability of Calling or Conducting a Meeting
    • Outcome: The court found it impracticable to conduct the meeting as prescribed by the articles of association due to the defendants' refusal to attend.
    • Category: Substantive
    • Sub-Issues:
      • Failure to meet quorum requirements
      • Deliberate refusal of shareholders to attend meetings
  2. Exercise of Court's Discretion under Section 182
    • Outcome: The court exercised its discretion in favor of the plaintiff, finding that the defendants' reasons did not bar the grant of relief.
    • Category: Procedural
    • Sub-Issues:
      • Majority rule principle
      • Existence of oral agreements affecting management participation
      • Disputes as to shareholding
      • Alleged contravention of foreign law
      • Allegation of bad faith

8. Remedies Sought

  1. Order to convene an extraordinary general meeting
  2. Order that one person be sufficient to constitute a quorum at the EGM

9. Cause of Actions

  • Application under Section 182 of the Companies Act

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Software Consultancy
  • System Integration

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tay Say Geok & Anor v Tay Ek Seng Co Sdn BhdHigh CourtYes[1974] MLJ 70MalaysiaCited to establish that Section 182 only applies to general meetings, not board meetings.
Union Music Ltd and another v Watson and anotherEnglish Court of AppealYes[2003] 1 BCLC 453England and WalesCited to explain the purpose of Section 182 as a procedural section intended to enable company business to be conducted at a general meeting.
Re Success Plan LtdHong Kong Court of First InstanceYes[2002] 3 HKC 610Hong KongCited to establish the two-stage approach for relief under Section 182: first, impracticability, then discretion.
Lim Yew Ming v Aik Chuan Construction Pte Ltd and othersHigh CourtYes[2015] 3 SLR 931SingaporeCited for the principle that inability to satisfy quorum requirements due to intransigence of members suffices the test of impracticability.
Leong Ah Hong v Hup Seng Co LtdHigh CourtYes[1963] MLJ 164MalaysiaCited to establish that the burden of proof falls on the applicant to show impracticability and that the court should exercise its discretion in their favor.
In re El Sombrero LtdHigh CourtYes[1958] 3 WLR 349England and WalesCited to support the wide and generous construction of the expression 'impracticability'.
Re Opera Photographic LtdHigh CourtYes[1989] 1 WLR 634England and WalesCited to establish that the deliberate refusal of other shareholders to form a quorum can constitute impracticability under Section 182.
Harman and another v BML Group LtdEnglish Court of AppealYes[1994] 1 WLR 893England and WalesCited to establish that Section 371 should not override class rights attached to a class of shares which have been deliberately imposed for the protection of the holders of those shares.
Ross v Telford and anotherEnglish Court of AppealYes[1998] 1 BCLC 82England and WalesCited to establish that Section 371 is a procedural section not designed to affect substantive voting rights or to shift the balance of power between shareholders.
Re Woven Rugs LtdHigh CourtYes[2002] 1 BCLC 324England and WalesCited for the principles to be applied where the object of the application was to convene a meeting for the removal of a director.
Phuar Kong Seng v Lim HuaHigh CourtYes[2005] 2 MLJ 338MalaysiaCited for the principle that shareholdings are a species of property and members may exercise the attendant voting rights that accompany them in their own self-interest.
Alvona Developments Ltd v Manhattan Loft Corporation (AC) Ltd and anotherEnglish High CourtYes[2005] EWHC 1567 (Ch)England and WalesCited to establish that the purport of the oral agreement was that the defendant had the right to jointly appoint a director to manage the company and that this right could not be taken away through a Section 371 application.
Alberto Forchielli v Francesco Della Valentina and anotherHong Kong Court of First InstanceYes[2011] HKCFI 262Hong KongCited to establish that strong evidence would be required of an unqualified right on the part of a respondent to participate in the management of a company all the time that he remained a shareholder.
J T Limited v Kung Tat ChowHong Kong Court of First InstanceYes[2014] HKCFI 1556Hong KongCited to reiterate that the mere assertion of a quasi-partnership or an oral agreement or understanding between the two shareholders as to joint management of the company is normally not a sufficient ground for refusing to order a meeting under Section 114B.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealCourt of AppealYes[2009] 2 SLR(R) 332SingaporeCited to establish that there was a contract: ie, that the negotiations between the parties had crystallised to a point where there was consensus ad idem to be bound by terms which are both certain and complete.
Vectone Entertainment Holding Ltd v South Entertainment Ltd and othersHigh CourtYes[2004] 2 BCLC 224England and WalesCited to establish that, short of situations involving a clear case of oppression or unfairly prejudicial conduct, the court should not normally deny the relief sought.
Re Sticky Fingers Restaurant LtdHigh CourtYes[1992] BCLC 84England and WalesCited to establish that the presence of extant oppression proceedings meant that any orders granted should be limited to enable an effective board to be brought into being without giving the plaintiff the opportunity of harming the first defendant pending the outcome of the proceedings.
Re Whitchurch Insurance Consultants LtdHigh CourtYes[1993] BCLC 1359England and WalesCited to establish that it cannot be the case that the mere existence of oppression proceedings is inevitably a bar to the grant of Section 182 relief.
Pacific Recreation Pte Ltd v S Y Technology Inc and another appealCourt of AppealYes[2008] 2 SLR(R) 491SingaporeCited to establish that if an expert opinion on foreign law is sought to be admitted, it must be contained in an affidavit sworn by the expert himself, and not in the affidavit of the person to whom the opinion was addressed.
Vita Health Laboratories Pte Ltd and other v Pang Seng MengHigh CourtYes[2004] 4 SLR(R) 162SingaporeCited to establish that generally speaking, the graver the allegation the higher the standard of proof.
Ting Siew May v Boon Lay Choo and anotherHigh CourtYes[2014] 3 SLR 609SingaporeCited to establish that the relevant inquiry is whether the statutory provision concerned is intended to prohibit only the conduct or whether it is, instead, intended to prohibit not only the conduct but also the contract as well.
Lee Kuan Yew v Jeyaretnam Joshua BenjaminHigh CourtYes[1990] 1 SLR(R) 772SingaporeCited to establish that a stay will only be granted if special circumstances can be shown.
Thomas Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte Ltd (in liquidation)High CourtYes[2001] 2 SLR(R) 246SingaporeCited to establish that the court has the inherent jurisdiction to recall its decision and to hear further arguments as long as the order has not yet been perfected.
In re L and another (Children (Preliminary Finding: Power to Reverse)Supreme CourtYes[2013] 1 WLR 634United KingdomCited to establish that the power of the court in this regard was not limited to exceptional circumstances and that the overriding objective must be to deal with the case justly.
Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd (No 3)English Court of AppealYes[1976] FSR 139England and WalesCited to establish that the plaintiff's offer of an undertaking rendered the grant of a stay unnecessary.
Cropper v SmithCourt of AppealYes(1883) 24 Ch D 305England and WalesCited to establish that the High Court and the Court of Appeal possess concurrent jurisdiction as to the staying of proceedings pending an appeal.
Au Wai Pang v AG and anotherCourt of AppealYes[2014] 3 SLR 357SingaporeCited to establish that an application to the CA for a stay under O 57 r 15 of the ROC is not, strictly speaking, an appeal but an application in the first instance.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

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

15. Key Terms and Keywords

15.1 Key Terms

  • Extraordinary General Meeting
  • Quorum
  • Director Removal
  • Companies Act
  • Impracticability
  • Majority Shareholder
  • Minority Shareholder
  • Oral Agreement
  • Shareholding Disputes
  • State Bank of Pakistan
  • Bad Faith

15.2 Keywords

  • quorum
  • director removal
  • companies act
  • EGM
  • shareholder
  • meeting
  • Infotech

17. Areas of Law

Area NameRelevance Score
Company Law85
Commercial Disputes60
Contract Law30
Arbitration15

16. Subjects

  • Corporate Governance
  • Shareholder Rights
  • Company Meetings