Portcom Pte Ltd v Verrency Group Ltd: Compulsory Share Acquisition under Companies Act s 215

In Portcom Pte Ltd v Verrency Group Ltd, the High Court of Singapore addressed an application by Portcom Pte Ltd, Transworld Holdings PCC Limited, and Dempsey Capital Pty Ltd to prevent Verrency Group Limited (Verrency Australia) from compulsorily acquiring their shares in Verrency Holdings Limited (Verrency Singapore) under Section 215 of the Companies Act. The court, presided over by Justice Philip Jeyaretnam, ruled in favor of the applicants, finding that Verrency Australia had failed to meet the statutory requirements for compulsory acquisition, specifically the absence of a valid offer to the shareholders.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

The court held that the requirements of CA s 215 have not been met, specifically that there was no offer made within s 215(1). Accordingly, the respondents are not entitled to proceed under CA s 215(4).

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case regarding Verrency Australia's attempt to compulsorily acquire shares in Verrency Singapore under Companies Act s 215.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Portcom Pte LtdApplicantCorporationApplication AllowedWon
Transworld Holdings PCC LimitedApplicantCorporationApplication AllowedWon
Dempsey Capital Pty Ltd (as trustee for the Alium Alpha Fund)ApplicantTrustApplication AllowedWon
Verrency Group LimitedRespondentCorporationApplication DismissedLost
Verrency Holdings LimitedRespondentCorporationApplication DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Philip JeyaretnamJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Vincent LeowAllen & Gledhill LLP
Xu JiaxiongAllen & Gledhill LLP
DarylAllen & Gledhill LLP
Nicholas Kam Xuan WeiAllen & Gledhill LLP
Celine Liow Wan-TingK&L Gates Straits Law LLC
Bose RajaK&L Gates Straits Law LLC
Rajaram Murali RajaK&L Gates Straits Law LLC

4. Facts

  1. Verrency Singapore sought to redomicile to Australia to secure funding.
  2. Verrency Australia was incorporated to facilitate the share swap.
  3. Applicants held a minority shareholding in Verrency Singapore.
  4. Verrency Australia sought to compulsorily acquire remaining shares under CA s 215.
  5. Convertible notes were issued and later converted into shares.
  6. Applicants did not approve the share swap.
  7. Verrency Australia claimed 90% approval based on converted noteholders' shares.

5. Formal Citations

  1. Portcom Pte Ltd and others v Verrency Group Ltd and another, Originating Summons No 1142 of 2021, [2022] SGHC 97

6. Timeline

DateEvent
Verrency Singapore issued convertible notes.
Verrency Singapore issued convertible notes.
Verrency Singapore sent letter to convertible noteholders.
Verrency Singapore sent letter to shareholders.
Verrency Australia incorporated.
Deadline for execution of Share Swap Acceptance Deed.
Verrency Singapore sent letter to the convertible note holders.
Directors of Verrency Singapore approved the conversion of all the convertible notes into ordinary shares.
Norwood was the largest shareholder of Verrency Singapore.
Convertible noteholders’ shares in Verrency Singapore were swapped for shares in Verrency Australia.
Share Swap Agreement dated.
Applicants received a letter from Verrency Australia titled “Notice to Dissenting Shareholder”.
Notice to Dissenting Shareholder reissued.
Notice to Dissenting Shareholder reissued.
Mr David Cruzen Link ceased to be CEO.
Applicants took out this application.
Hearing date.
Hearing date.
Judgment reserved.

7. Legal Issues

  1. Compulsory Acquisition of Shares
    • Outcome: The court ruled that the requirements of CA s 215(1) were not met because there was no valid offer made to the dissenting shareholders.
    • Category: Substantive
    • Sub-Issues:
      • Validity of offer
      • 90% approval threshold
      • Fairness of acquisition
  2. Definition of 'Shares' under Companies Act
    • Outcome: The court held that the convertible notes were not 'units of shares' at the time of the alleged offer because the conversion price was not fixed or determinable.
    • Category: Substantive
    • Sub-Issues:
      • Whether convertible notes are 'units of shares'
      • Rights and interests in shares

8. Remedies Sought

  1. Declaration that Verrency Australia is not entitled to compulsorily acquire shares

9. Cause of Actions

  • Application to prevent compulsory acquisition of shares

10. Practice Areas

  • Corporate Law
  • Mergers and Acquisitions
  • Commercial Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Re Chez Nico (Restaurants) LtdN/AYes[1991] BCC 736EnglandCited for the principle that an offer must be capable of being accepted to give rise to a contract for compulsory acquisition of shares.
May and Butcher, Limited v RN/AYes[1934] 2 KB 17N/ACited for the principle that an agreement to agree is unenforceable.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act s 215Singapore
Companies Act s 4Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Compulsory acquisition
  • Share swap
  • Convertible notes
  • Dissenting shareholder
  • 90% approval threshold
  • Offer
  • Redomiciliation

15.2 Keywords

  • Companies Act
  • Section 215
  • Compulsory Acquisition
  • Shareholders
  • Takeover
  • Verrency
  • Singapore
  • Shares
  • Convertible notes

17. Areas of Law

Area NameRelevance Score
Takeovers80
Company Law75
Shares70
Convertible notes65
Units of shares60
Minority Oppression50
Contract Law30
Commercial Disputes25
Corporate Law20
Arbitration10

16. Subjects

  • Company Law
  • Takeovers
  • Shareholder Rights
  • Compulsory Acquisition