Kiri Industries v Senda International: Minority Oppression & Share Valuation Appeal

The Singapore Court of Appeal heard appeals concerning the valuation of Kiri Industries Ltd's shares in DyStar Global Holdings (Singapore) Pte Ltd, following a finding of minority oppression against Senda International Capital Ltd. The court addressed issues including the appropriate valuation methodology, the application of a discount for lack of marketability (DLOM), and the calculation of a notional license fee for Longsheng's use of a patent. The Court of Appeal dismissed Senda's appeals, allowed Kiri's appeal in part regarding the DLOM and notional license fee, and remitted the matter to the SICC for further determination.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal addresses valuation of shares in minority oppression case, focusing on DLOM and notional license fees.

1.7 Decision Date

5 July 2022

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
DyStar Global Holdings (Singapore) Pte Ltd	Respondent, Defendant	Corporation	Neutral	Neutral	See Chern Yang of Drew & Napier LLC Teng Po Yew of Drew & Napier LLC Audie Wong of Drew & Napier LLC
Kiri Industries Ltd	Appellant, Applicant, Plaintiff, Respondent	Corporation	Appeal allowed in part	Partial	Dhillon Dinesh Singh of Allen & Gledhill LLP Lim Dao Kai of Allen & Gledhill LLP Dhivya Rajendra Naidu of Allen & Gledhill LLP Chee Yi Wen Serene of Allen & Gledhill LLP Toh Jia Yi of Allen & Gledhill LLP Margaret Joan Ling Wei Wei of Allen & Gledhill LLP
Senda International Capital Ltd	Respondent, Appellant, Defendant	Corporation	Appeal dismissed	Lost	Tan Tian Hui of Rajah & Tann Singapore LLP Chew Xiang of Rajah & Tann Singapore LLP Priscilla Soh of Rajah & Tann Singapore LLP Mark Cheng of Rajah & Tann Singapore LLP Toh Kian Sing SC of Rajah & Tann Singapore LLP Darren Lim of Rajah & Tann Singapore LLP

3. Judges

Judge Name	Title	Delivered Judgment
Judith Prakash	Justice of the Court of Appeal	No
Robert French	International Judge	Yes
Jonathan Mance	International Judge	No

4. Counsels

Counsel Name	Organization
See Chern Yang	Drew & Napier LLC
Teng Po Yew	Drew & Napier LLC
Audie Wong	Drew & Napier LLC
Dhillon Dinesh Singh	Allen & Gledhill LLP
Lim Dao Kai	Allen & Gledhill LLP
Dhivya Rajendra Naidu	Allen & Gledhill LLP
Chee Yi Wen Serene	Allen & Gledhill LLP
Toh Jia Yi	Allen & Gledhill LLP
Margaret Joan Ling Wei Wei	Allen & Gledhill LLP
Tan Tian Hui	Rajah & Tann Singapore LLP
Chew Xiang	Rajah & Tann Singapore LLP
Priscilla Soh	Rajah & Tann Singapore LLP
Mark Cheng	Rajah & Tann Singapore LLP
Toh Kian Sing SC	Rajah & Tann Singapore LLP
Darren Lim	Rajah & Tann Singapore LLP

4. Facts

Kiri was a 37.57% shareholder of DyStar.
Senda was a 62.43% majority shareholder of DyStar.
Kiri commenced proceedings against Senda alleging oppressive conduct.
SICC found for Kiri and ordered Senda to purchase Kiri’s shareholding.
The O288 Patent was temporarily assigned to Longsheng.
Longsheng exploited the O288 Patent without accounting to DyStar.
The SICC directed adjustments to DyStar’s enterprise value.
The Nanjing Plant suffered an explosion on 23 February 2018.
DyStar had a plant at Wuxi in China.

5. Formal Citations

Kiri Industries Ltd v Senda International Capital Ltd and another and other appeals and other matters, , [2022] SGCA(I) 5

6. Timeline

Date	Event
2010-08-31	Orange 288 Patent temporarily assigned to Longsheng
2012-01-01	Senda became majority shareholder of DyStar
2015-01-01	Kiri commenced proceedings against Senda alleging oppressive conduct
2017-01-01	Chinese authorities began plan to acquire land where Wuxi Plant was built
2017-01-01	SIC/Suit No 4 of 2017 commenced by Kiri Industries Ltd against Senda International Capital Ltd and DyStar Global Holdings (Singapore) Pte Ltd
2018-02-23	Explosion at DyStar’s plant in Nanjing, China
2018-07-03	SICC found for Kiri and ordered Senda to purchase Kiri’s shareholding
2019-01-01	Chinese authorities expected Wuxi Plant site to be vacated by end of year
2019-05-01	US$4m insurance payout to DyStar
2020-12-21	SICC delivered First Valuation Judgment
2021-01-25	Parties’ experts provided Joint Expert Report
2021-03-17	Oral Judgment delivered by SICC
2021-06-03	SICC delivered Second Valuation Judgment
2021-06-16	Parties’ experts tendered agreed calculation for DyStar’s final valuation
2021-06-21	SICC delivered Final Valuation Judgment
2022-01-26	Court hearing
2022-01-28	Court hearing
2022-07-06	Judgment reserved

7. Legal Issues

Valuation Methodology
- Outcome: The Court of Appeal addressed the appropriateness of Ms. Harfouche's valuation methodology compared to Mr. Lie's, particularly in incorporating adjustments directed by the SICC.
- Category: Substantive
- Sub-Issues:
  - Discounted Cash Flow (DCF) Method
  - Market-Based Approaches
  - Comparable Companies
  - Adjustments to Enterprise Value
Discount for Lack of Marketability (DLOM)
- Outcome: The Court of Appeal set aside the SICC's decision to apply a DLOM, holding that the SICC should have considered the oppressive conduct and the forced sale nature of the buyout.
- Category: Substantive
- Sub-Issues:
  - Applicability in Oppression Cases
  - Exceptional Circumstances
  - Forced Buyout
  - Fair Value
Notional Licence Fee
- Outcome: The Court of Appeal remitted the matter to the SICC for re-determination of the notional license fee, finding that the SICC's treatment of the issue was too brief and that the burden of proof was improperly applied.
- Category: Substantive
- Sub-Issues:
  - Calculation of Quantum
  - Account of Profits vs. Notional Licence Fee
  - Disclosure of Information
  - Exploitation of Patent
Discretionary Enhancement
- Outcome: The Court of Appeal declined to order a discretionary enhancement, finding that the issue was not properly put before the SICC and that it would be exercising original jurisdiction to do so.
- Category: Substantive
- Sub-Issues:
  - Compensation for Deferred Payment
  - Relevance of Valuation Date
  - Use of Interest as a Proxy
  - Res Judicata
Impact of Patent Expirations
- Outcome: The Court of Appeal upheld the SICC's finding that the impact of patent expirations should be modeled for a finite period.
- Category: Substantive
- Sub-Issues:
  - Finite vs. Perpetual Impact
  - Effect on EBITDA
  - Contingency Plans

8. Remedies Sought

Buyout of Shares
Account of Profits
Discretionary Enhancement

9. Cause of Actions

Oppression of Minority Shareholders

10. Practice Areas

Commercial Litigation
Corporate Law
Valuation Disputes
International Arbitration

11. Industries

Chemicals
Manufacturing

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others and another suit	Singapore International Commercial Court	Yes	[2018] 5 SLR 1	Singapore	Established Senda's oppressive conduct and ordered the share purchase.
Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal	Court of Appeal	Yes	[2019] 2 SLR 1	Singapore	Upheld the SICC's decision on oppressive conduct and share purchase order.
Kiri Industries Ltd v Senda International Capital Ltd and another	Singapore International Commercial Court	Yes	[2021] 3 SLR 215	Singapore	Dealt with valuation methodology and adjustments to DyStar’s enterprise value.
Kiri Industries Ltd v Senda International Capital Ltd and another	Singapore International Commercial Court	Yes	[2021] 5 SLR 1	Singapore	Addressed the nine outstanding issues identified in the First Valuation Judgment.
Kiri Industries Ltd v Senda International Capital Ltd and another	Singapore International Commercial Court	Yes	[2021] 5 SLR 111	Singapore	Adjudged the final valuation of Kiri’s shares for the purposes of the buyout order.
Yeo Hung Khiang v Dickson Investment (Singapore) Pte Ltd and others	Court of Appeal	Yes	[1999] 1 SLR(R) 773	Singapore	Established court's discretion to enhance share value in oppression claims.
Poh Fu Tek and others v Lee Shung Guan and others	High Court	Yes	[2018] 4 SLR 425	Singapore	Addressed small stock risk premium in cost of equity calculation.
Thio Syn Kym Wendy and others v Thio Syn Pyn and others	High Court	Yes	[2018] SGHC 54	Singapore	Addressed the distinction between DLOC and DLOM.
Liew Kit Fah and others v Koh Keng Chew and others	Court of Appeal	Yes	[2020] 1 SLR 275	Singapore	Discussed DLOM in the context of a consensual buyout order.
Recovery Vehicle 1 Pte Ltd v Industries Chimiques Du Senegal and another appeal and another matter	Court of Appeal	Yes	[2021] 1 SLR 342	Singapore	Outlined the function of an appellate court.
Wrotham Park Estate Co Ltd v Parkside Homes Ltd	Unknown	Yes	[1974] 1 WLR 798	England and Wales	Established the concept of hypothetical damages.
Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal	Court of Appeal	Yes	[2018] 2 SLR 655	Singapore	Endorsed the Wrotham Park approach.
HT SRL v Wee Shuo Woon	High Court	Yes	[2019] 5 SLR 245	Singapore	Applied the Wrotham Park approach.
One-Step (Support) Ltd v Morris-Garner	UK Supreme Court	Yes	[2018] 2 WLR 1353	United Kingdom	Discussed compensation for breach of restrictive covenants.
Eng Gee Seng v Quek Choon Teck	High Court	Yes	[2010] 1 SLR 241	Singapore	Addressed fairness in forced buyouts.
Lian Hwee Choo Phebe v Maxz Universal Development Group Pte Ltd	High Court	Yes	[2010] SGHC 268	Singapore	Addressed fairness in forced buyouts.
Sharikat Logistics Pte Ltd v Ong Boon Chuan	High Court	Yes	[2014] SGHC 224	Singapore	Addressed fairness in forced buyouts.
Kiri Industries Ltd v Senda International Capital Ltd and another	Singapore International Commercial Court	Yes	[2019] 4 SLR 1	Singapore	Senda's acts of oppression were directed at worsening Kiri’s position.
Senda International Capital Ltd v Kiri Industries Ltd and others	Court of Appeal	Yes	[2020] 2 SLR 1	Singapore	Affirmed the SICC’s findings that Senda’s acts of oppression were directed at worsening Kiri’s position.
Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals	Court of Appeal	Yes	[2016] 1 SLR 373	Singapore	Described the history and purpose of s 216 of the Companies Act.
Over and Over Ltd v Bonvests Holdings Ltd	Court of Appeal	Yes	[2010] 2 SLR 776	Singapore	Set out propositions relating to s 216 of the Companies Act.
Thio Syn Pyn v Thio Syn Kym Wendy and others and another appeal	Court of Appeal	Yes	[2019] 1 SLR 1065	Singapore	Addressed the distinction between quasi-partnerships and other companies in determining whether shares should be valued on a discounted basis.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and another	Court of Appeal	Yes	[2008] 2 SLR(R) 623	Singapore	Addressed the assessment of damages where loss has been suffered but the quantum is difficult to assess.
MFM Restaurants Pte Ltd and another v Fish & Co Restaurants Pte Ltd and another appeal	Court of Appeal	Yes	[2011] 1 SLR 150	Singapore	Addressed the assessment of damages where loss has been suffered but the quantum is difficult to assess.
Biggin & Co Ltd v Permanite, Ld	Unknown	Yes	[1951] 1 KB 422	England and Wales	Addressed the assessment of damages where precise evidence is obtainable.
Scottish Co-operative Wholesale Society Ltd v Meyer and another	House of Lords	Yes	[1959] AC 324	United Kingdom	Addressed the fair price for shares in a buyout order.
In Re Bird Precision Bellows Ltd	Unknown	Yes	[1984] Ch 419	England and Wales	Addressed the fair price for shares in a buyout order.
Diligenti v RWMD Operations Kelowna Ltd (No 2)	Supreme Court of British Columbia	Yes	Diligenti v RWMD Operations Kelowna Ltd (No 2) (1977) CarswellBC 139	Canada	Addressed the fair price for shares in a buyout order.
O’Neill v Phillips	House of Lords	Yes	[1999] 1 WLR 1092	United Kingdom	Addressed the fair price for shares in a buyout order.
Teo Chong Nghee Patrick and others v Han Cheng Fong and another appeal	Court of Appeal	Yes	[2014] 3 SLR 595	Singapore	The s 216 remedy is not compensatory but designed to bring an end to the oppression.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed) s 216(2)(d)	Singapore
Civil Law Act 1909 (2020 Rev Ed) s 12(1)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Oppression
Minority Shareholder
Valuation
Discount for Lack of Marketability
Notional Licence Fee
Enterprise Value
Buyout Order
O288 Patent
EBITDA
DCF Method
Patent Expirations
Country Risk Premium
Size Premium

15.2 Keywords

minority oppression
share valuation
discount for lack of marketability
notional license fee
Singapore
Court of Appeal
DyStar
Kiri Industries
Senda International
buyout order

17. Areas of Law

Area Name	Relevance Score
Minority Oppression	95
Company Law	70
Share Valuation	60
Valuation of Shares	50
Commercial Disputes	30
Duty to Account	25

16. Subjects

Company Law
Minority Oppression
Share Valuation
Corporate Governance