Case Update: Seaquest Enterprise v Agile Accomm – SGHC finds minority oppression, orders buyout

Seaquest Enterprise Pte Ltd v Agile Accomm Pte Ltd [2016] SGHC 51

Significance: Singapore High Court found that there was a case of minority oppression, and ordered a buyout of the minority’s shares to be valued by an independent valuator for fair value at the date of the judgment.

The plaintiff alleged that how the majority shareholder of the company, Agile Accomm Pte Ltd and his wife who is also a shareholder had conducted themselves in relation to Agile’s AGM and EGM had been commercially unfair, had departed from the standards of fair dealing, and were violations of the conditions of fair play which a shareholder was entitled to expect. The Court found that resolutions were passed notwithstanding the lack of quorum and, as a result, the plaintiff’s interest in Agile held through a nominee was diluted from 45% to 9%. An additional 400,000 Agile shares were also issued pursuant to an EGM which were never offered to the plaintiff’s nominee. The Court found that this was in breach of Agile’s Articles of Association (“the Articles”). Further, the majority shareholder and his wife, as directors of Agile, chose to pay a large amount of directors’ remuneration to themselves without the concurrent declaration of any dividends, evincing an attempt to distribute the profits of Agile between the directors only.

The Court thus found that there had been a clear breach of the plaintiff’s nominee’s legal rights under the Articles. The Court ordered for the nominee to be bought out to enable her to realise the value of the shares at a fair value pursuant to section 216(2)(d) of the Companies Act (Cap 50, 2006 Rev Ed) as valued by an independent valuer, on the basis of a fair market value as of the date of the Court’s oral judgment. This was on the assumption that the 400,000 new shares had not been issued and the excessive directors’ remuneration for the financial year 2012 had not been paid out: [12].

The High Court’s decision is subject to an appeal.

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