There are many rules and regulations that a company has to know about when choosing to operate in Singapore. A corporate lawyer can help to guide you with legal advice on how to run your company. If you are starting a company or currently have some issues, speak to our lawyers today.
- Company Formation
- Company Disputes
- Corporate Services
Oppressed or Empowered –the Dual Remedies for Minority Shareholders
By Wang Tianyi
1. Facebook-owner Mark Zuckerburg made the headlines again, this time round for nearly doubling artificial intelligence (AI) spending this year, even as other executives warned of a potential bubble in the industry. This is not the first time he had a significant disagreement with his business partner(s). The Academy Award winning movie The Social Network portrayed the disputes between him and his then-fellow shareholder Eduardo Saverin, who has become a Singapore resident in 2009
2. As much as harmony and cooperation are treasured values in an ideal world, in many companies, given the frequent disproportionate distribution of shares among shareholders, there is often a distinct majority and minority shareholder structure. When disagreements between the majority and minority shareholders become significant, it is not uncommon for the majority shareholder, by simply outvoting the minority shareholder, to force their way through certain decisions.
3. The question, therefore, is what recourse the minority shareholder has, in an event that they feel their position has not been respected by the majority shareholder.
Minority Oppression
4. Under section 216 of the Companies Act, minority shareholders can apply for personal remedies in cases of oppression or injustice. According to the Singapore Court, the touchstone for minority oppression is whether the conduct being complained of is commercially unfair to the minority shareholder. The law adopts a contextual approach in ascertaining commercial unfairness of a party’s conduct, measuring the party’s conduct objectively against the backdrop of the parties’ relationship and from the perspective of a commercial relationship. Things which the Court will look at in determining whether a certain conduct is commercially unfair to the minority shareholder include the following: –
a. The company’s Articles of Association and Shareholders’ Agreement;
b. Whether the company is formed or managed on the basis of personal relationships involving mutual trust and confidence; and
c. In cases where the majority shareholder is a director of the company, whether there has been any breach, by this majority shareholder, of director’s duties and/or fiduciary duties as set out under section 157 of the Companies Act.
5. Common remedies in minority oppression claims focus on restoring fairness and enabling the minority shareholder to exit the company. The most common remedies include a Court-ordered buy-out of the minority’s shares, winding up (liquidating) the company. The law also provides for mandatory/prohibitive injunctions directing/prohibiting any act or cancel or vary any transaction or resolution.
Derivative Action
6. If the minority shareholder feels that the conduct of the majority shareholder is detrimental to the interest of the company as a whole, instead of to the minority shareholder themselves, the minority shareholder may wish to consider bringing an action in the company’s name against the wrongdoer. This is called a derivative action and is provided for under section 216A of the Companies Act.
7. In order to commence a derivative action under section 216A of the Companies Act, the complainant must first give 14 days’ notice to the directors of the company of the complainant’s intention to apply to the Court for permission to bring the derivative action.
We at Salem Ibrahim LLC stand ready to advise and help you to take this step forward with employing the appropriate steps to pursue your interest, whether as a minority shareholder, or on behalf of the company.
Wang Tianyi is a Senior Associate at Salem Ibrahim LLC.
Salem Ibrahim LLC is your go-to business lawyer in Singapore and corporate lawyer in Singapore.
Defamation in the Age of Social Media (Part 1)
By Henna Nandrajog
Social Media and the Rise in Defamation
Social media has transformed the way we communicate. Platforms like Facebook, X, Instagram and TikTok allow anyone with an internet connection to publish content instantly and broadcast it to a vast audience within seconds.
It is now easier than ever to share information and express opinions online. Yet, this unprecedented freedom comes with a cost. There has been a noticeable rise in defamation claims, with individuals and businesses increasingly finding their reputations harmed by misleading, careless or false online statements.
Unlike traditional media, social media moves fast. Posts can be shared and reposted almost instantaneously, often spreading far beyond their intended audience. Once published, the resulting reputational damage can be swift and difficult to contain. It is therefore unsurprising that the courts are seeing a growing number of disputes arising from what is said (or typed) online.
The Law on Defamation
In Singapore, defamation is governed primarily by common law principles, and supplemented by the Defamation Act 1957. At its core, the law seeks to protect the reputation of person(s) against false statements that lower them in the estimation of right-thinking members of society.
To succeed in a defamation claim, a claimant must establish three elements: (i) that a statement bearing a defamatory meaning was made, (ii) that it was published to at least one third party, and (iii) that the statement refers to the claimant.
Whether a statement is defamatory is assessed objectively, based on how the words would be understood by an ordinary, reasonable reader. The courts consider the natural and ordinary meaning of the publication as a whole, taking into account its context, tone and manner of publication. While such a reader is not unduly suspicious or eager to assume the worst, they are entitled to read between the lines and draw reasonable inferences. Importantly, a claimant need not be expressly named in the publication. It is sufficient if ordinary readers would understand the statement to refer to the claimant.
Defendants are not without protection. One common defence is justification, which applies where the statement complained of is true. Another is qualified privilege, which protects statements made in circumstances where free communication is important, such as in legal proceedings or reports to authorities, provided the statement was not made maliciously. Finally, the defence of fair comment protects honest opinions based on true facts. Even if an opinion is critical or unpopular, it will be protected so long as it is clearly presented as an opinion rather than a statement of fact.
Legal Consequences and Remedies
When defamation is established, the courts have a range of remedies to address the harm caused. Monetary damages are the most common, designed to compensate the claimant for the reputational harm suffered. In cases where the defamatory conduct is particularly serious, persistent, or malicious, the court may award aggravated damages.
Beyond financial compensation, the courts can also order non-monetary remedies. For instance, a defendant may be required to issue a public apology, acknowledging the falsity of the statement and expressing regret for the damage caused. The court can also grant injunctions to prevent further publication of defamatory statements or to remove existing harmful content.
We at Salem Ibrahim LLC stand ready to advise and help you to take this step forward with employing the appropriate steps to pursue your interest, whether as a minority shareholder, or on behalf of the company.
Henna is a Senior Executive at Salem Ibrahim LLC.
Salem Ibrahim LLC is your go-to business lawyer in Singapore and corporate lawyer in Singapore.