Over & Over Ltd v Bonvests: Minority Oppression & Rights Issue Dispute

In Over & Over Ltd v Bonvests Holdings Ltd and Richvein Pte Ltd, the High Court of Singapore dismissed Over & Over Ltd's claim against Bonvests Holdings Ltd for relief against oppressive and unfairly prejudicial conduct under Section 216 of the Companies Act. Over & Over, a minority shareholder in Richvein Pte Ltd, alleged that Bonvests, the majority shareholder, engaged in oppressive conduct through a share transfer, a rights issue, and related party transactions. The court, presided over by Justice Woo Bih Li, found no evidence of unfairness warranting intervention under Section 216 and dismissed the claim.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Claim Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Minority shareholder Over & Over Ltd's claim against Bonvests for oppressive conduct regarding a share transfer, rights issue, and related party transactions was dismissed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Over & Over LtdPlaintiffCorporationClaim DismissedLost
Bonvests Holdings LtdDefendantCorporationJudgment for DefendantWon
Richvein Pte LtdDefendantCorporationJudgment for DefendantNeutral

3. Judges

Judge NameTitleDelivered Judgment
Woo Bih LiJudgeYes

4. Counsels

Counsel NameOrganization
Loong Tse ChuanAllen & Gledhill LLP
Ang Cheng HockAllen & Gledhill LLP
Paul Ong Min-TseAllen & Gledhill LLP
Derrick WongDerrick Wong & Lim BC LLP
Tan Whei Mien JoyWongPartnership LLP
Alvin Yeo SCWongPartnership LLP
Chang Man PhingWongPartnership LLP
Lim Shack KeongDrew & Napier LLC
Albert LooDrew & Napier LLC

4. Facts

  1. Over & Over is a minority shareholder in Richvein, which owns Sheraton Towers Singapore.
  2. Bonvests is the majority shareholder of Richvein.
  3. A rights issue was conducted by Richvein in October 2006.
  4. Over & Over declined to extend guarantees for a refinancing package.
  5. Over & Over consented to the share transfer from Unicurrent to Bonvests after negotiating the removal of pre-emption rights.
  6. Richvein entered into contracts with companies related to Bonvests and/or HN.
  7. HN stated that the Rights Issue was called because he was frustrated with JL.

5. Formal Citations

  1. Over & Over Ltd v Bonvests Holdings Ltd and Another, Suit 449/2007, [2008] SGHC 226

6. Timeline

DateEvent
Sianandar family considered buying land along Scotts Road.
Richvein Pte Ltd incorporated as a joint venture.
Construction of Sheraton Towers Singapore completed.
Richvein terminated hotel management agreement with ITT Sheraton.
HN requested Lauw family to sign resolution to allow Richvein to enter into management agreement with HIHR.
JL sought more time to consider management contract with HIHR.
HN gave reasons as to why Richvein should contract with HIHR.
JL reiterated how the proposed contract with HIHR amounted to diverting money of Richvein to its majority shareholder.
JL stated that if HN intended to proceed with the Management Contract, Over & Over was prepared, in principle, to sell all their shares in Richvein.
Richvein stated that it was not possible for Richvein to manage the hotel itself by employing the necessary people.
Over & Over rejected Richvein’s offer.
Richvein stood by its letter dated 2 September 1991.
JL objected to Richvein’s entry into the management contract.
It was resolved that Richvein would incorporate HS.
Richvein entered into a contract with Colex (Singapore).
Richvein entered into a contract with IPM.
HN informed JL that Richvein intended to terminate the management contract with HS.
First mention of share transfer from Unicurrent to Bonvests at AGM of Richvein.
Melvin Lee requested for the resolution to be deleted.
HN called LSL to discuss the proposed Share Transfer.
Extraordinary General Meeting held to discuss the proposed transfer of Unicurrent’s entire shareholdings in Richvein to Bonvests.
Bonvests allegedly offered to buy Over & Over’s stake in Richvein.
Meeting held between LSL and HN to discuss the proposed Share Transfer.
Over & Over rejected Bonvests’ offer.
HN asked for a letter confirming that Over & Over did not intend to sell its shareholding in Richvein to Bonvests, and that Over & Over grant a waiver for Unicurrent to sell its shares to Bonvests.
Over & Over’s solicitors confirmed that Over & Over did not intend to sell its shareholdings in Richvein.
HN stated that the waiver of the transfer is merely a cordiality and there is no real need to await for your clients to revert on it.
Over & Over proposed that the relevant articles in the Articles of Association of the Company be amended so that the shareholders of the Company could freely transfer their shares in the Company to any party.
HN undertook on behalf of Unicurrent to amend Richvein’s Articles to remove all pre-emption rights.
EGM convened and it was resolved that the pre-emption clauses in Richvein’s Articles would be removed.
Richvein obtained banking facilities from DBS Bank.
HN stated that the reason for wanting to liquidate HS was that the original objective of setting it up was no longer relevant.
JL’s solicitors stated that it was not agreeable to the voluntary liquidation of HS.
Share Transfer completed.
HIHR entered into a ‘General Administration Services Agreement’ with Richvein.
Board resolution of HS resolved to terminate the management agreement between Richvein and HS.
Termination of the management agreement took effect.
Contract entered into with Colex Holdings Ltd for waste disposal services.
Contract entered into with Integrated Property Management Pte Ltd for cleaning services.
HN procured from DBS Bank an offer of a revised financing package for Richvein for another five years.
Over & Over and JL declined to extend their respective guarantees to the Refinancing Package.
KBS wrote a memorandum to HN regarding the Rights Issue.
Richvein issued a notice to convene a board meeting for the purpose of convening an EGM to pass a proposed Rights Issue.
JL requested an adjournment in order to appraise the financial and operational performance of Richvein and thus the necessity or usefulness of the rights issue exercise.
JL’s request was rejected by Richvein.
Board meeting held.
Over & Over wrote to Richvein to ask for detailed profit and loss statements of Richvein and HS for 2002 to 2005.
Lee Tiong Choon and two other persons met with Ms Loong Wai Leng, the vice-president of DBS Bank in charge of the loan to Richvein.
Richvein replied, stating that the information Over & Over requested could be found in the audited accounts which Over & Over already had.
Over & Over wrote back, asking for detailed profit and loss statements as it claimed that the audited accounts did not contain the same.
Over & Over again wrote to Bonvests to ask for the profit and loss statements.
Over & Over wrote to Richvein requesting for the Rights Issue EGM to be postponed to the end of that financial year.
Rights Issue EGM held.
Over & Over requested to make payment by telegraphic transfer.
Richvein rejected Over & Over's request to make payment by telegraphic transfer.
Richvein rejected Over & Over's request to make payment by telegraphic transfer.
Over & Over requested for an extension of the last date of payment for the Rights Issue to 9 November 2006.
Over & Over accepted the Rights Issue by submitting its Form of Acceptance with the requisite cheque payment.
Over & Over sent Bonvests a lawyer’s letter alleging oppression and/or unfair prejudice.
High Court dismissed Over & Over’s claim.

7. Legal Issues

  1. Oppression of Minority Shareholders
    • Outcome: The court found no oppression or unfair prejudice.
    • Category: Substantive
    • Sub-Issues:
      • Unfair prejudice
      • Disregard of minority interests
      • Breach of fair dealing standards
  2. Validity of Rights Issue
    • Outcome: The court found the rights issue to be fair.
    • Category: Substantive
    • Sub-Issues:
      • Commercial justification
      • Dilution of shareholding
      • Fairness of process
  3. Related Party Transactions
    • Outcome: The court found no unfairness in the related party transactions.
    • Category: Substantive
    • Sub-Issues:
      • Disclosure of interest
      • Commercial justification
      • Reasonableness of pricing
  4. Share Transfer
    • Outcome: The court found no unfairness in the share transfer.
    • Category: Substantive
    • Sub-Issues:
      • Waiver of pre-emption rights
      • Impact on listing prospects
      • Breach of joint venture agreement

8. Remedies Sought

  1. Relief under Section 216 of the Companies Act

9. Cause of Actions

  • Oppression
  • Unfairly Prejudicial Conduct

10. Practice Areas

  • Commercial Litigation
  • Corporate Law

11. Industries

  • Hospitality
  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Elder v Elder & Watson LtdCourt of SessionYes[1952] S.C. 49ScotlandCited for the principle that oppressive conduct involves a visible departure from fair dealing and a violation of fair play.
Thompson DrysdaleCourt of SessionYes1925 SC 311ScotlandCited to define 'disregard' as involving awareness of the minority's interest and an evident decision to override or brush it aside.
Re Kong Thai Sawmill (Miri) Sdn BhdPrivy CouncilYes[1978] 2 MLJ 227MalaysiaThe locus classicus for an action under s 216 of the Companies Act. Cited for the principle that oppression or disregard must be proven, and majority rule must pass into oppressive rule to invoke the section.
Lim Swee Khiang and Anor v Borden Co (Pte) LtdCourt of AppealYes[2006] 4 SLR 745SingaporeCited for the principle that courts should examine the conduct of majority shareholders to determine whether they have departed from the proper standard of commercial fairness.
In re Five Minute Car Wash Service LtdHigh Court of JusticeYes[1966] 1 WLR 745England and WalesCited for the principle that a director must have acted unscrupulously, unfairly or with any lack of probity.
O’Neill v PhillipsHouse of LordsYes[1999] 1 WLR 1092United KingdomCited for the principle that fairness must be applied judicially and based upon rational principles.
Teo Lay Swee and Ors v Teo Siew Eng and OrsHigh CourtYes[2001] SGHC 29SingaporeCited for the principle that the common thread that runs through the grounds for establishing a case under s 216 of the Act is that there must be some element of unfairness.
Ng Sing King v PSA International Pte LtdHigh CourtNo[2005] 2 SLR 56SingaporeCited for the principle that the common thread underlying s 216(1) was that of unfairness. However, the court did not follow this case because it did not consider the difference between the English position under s 459(1) of the UK Companies Act 1985 and the local position under s 216.
Kumagai Gumi Co Ltd v Zenecon Pte Ltd and OrsCourt of AppealYes[1995] 2 SLR 297SingaporeCited for the principle that breach of the company’s articles of association did not necessarily equate to oppressive conduct.
Re a Company (No. 005685 of 1988), ex parte SchwarczHigh Court of JusticeYes[1989] BCLC 427England and WalesCited for the interpretation of s 459(1) of the UK Companies Act 1985, stating that the relevant conduct must be both prejudicial and unfairly so.
Re Blackwood Hodge plcHigh Court of JusticeYes[1997] 2 BCLC 650England and WalesCited for the principle that the petitioners must establish not merely that the company directors have been guilty of breaches of duty in the respects alleged, but also that those breaches caused the petitioners to suffer unfair prejudice in their capacity as preference shareholders.
Re Saul D Harrison & Sons plcCourt of AppealYes[1995] 1 BCLC 14England and WalesCited for the principle that the relevant conduct must be both prejudicial (in the sense of causing prejudice or harm to the relevant interest) and also unfairly so.
Re Jermyn Street Turkish Baths LtdCourt of AppealYes[1971] 3 All ER 184England and WalesCited for the definition of oppression as occurring when shareholders, having a dominant power in a company, exercise that power to procure that something is done or not done in the conduct of the company’s affairs and when such conduct is unfair to the other members of the company or some of them, and lacks that degree of probity which they are entitled to expect in the conduct of the company’s affairs.
Tong Keng Meng v Inno-Pacific Holdings LtdHigh CourtYes[2001] 4 SLR 485SingaporeCited for the principle that there should be no minute distinction between the individual terms of oppression, disregard of a member’s interest and unfair discrimination or prejudice, and that the common thread underlying the entire section is the element of unfairness.
Low Peng Boon v Low JanieCourt of AppealYes[1999] 1 SLR 761SingaporeCited for the principle of construing s 216 broadly and using “fair dealings” as the litmus test.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed) Section 216(1)Singapore
Companies Act (Cap 50, 2006 Rev Ed) Section 156(4)Singapore
Companies Act (Cap 50) Section 131(4) & (7A)Singapore
Companies Act Section 156(4) and 156(8)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Minority oppression
  • Rights issue
  • Related party transactions
  • Share transfer
  • Pre-emption rights
  • Joint venture
  • Unfair prejudice
  • Commercial justification
  • Dilution of shareholding
  • Corporate guarantee

15.2 Keywords

  • minority shareholder
  • oppression
  • rights issue
  • related party transactions
  • share transfer
  • Companies Act
  • Singapore
  • corporate law

17. Areas of Law

Area NameRelevance Score
Minority Oppression95
Company Law75
Shareholders Agreement60
Related Party Transactions50
Commercial Disputes30
Contract Law25

16. Subjects

  • Companies
  • Oppression
  • Shareholder Rights
  • Corporate Governance