The Companies (Amendment) Bill was introduced in Parliament yesterday (28 February 2017) to amend the Companies Act (the Act) on several significant matters.
What can a shareholder or company member do if the company has a claim against a third party but the directors of the company fail, neglect or refuse to commence action to pursue that claim? What if the claim is against the company’s directors for breach of directors’ or fiduciary duties? Or what if the directors are pursuing a legal action on behalf of the company which does more harm than good to the company?
The member can apply to the Singapore Court to commence, defend or discontinue an action on behalf of the company. Under Singapore law, such an action is known as a derivative action. It’s derivative because under common law principles, the claim strictly speaking belongs only to the company (this is the proper plaintiff rule). However, the common law and the Companies Act in Singapore provide for certain rules to allow a member to bring a derivative action on behalf of the company under Singapore law.
What remedies does a minority shareholder or debenture holder have if he feels aggrieved that he is being treated unfairly by majority shareholders and/or directors of a company?