Liew Kit Fah v Koh Keng Chew: Share Valuation Dispute in Minority Shareholder Buyout
The Singapore Court of Appeal heard an appeal by Liew Kit Fah and others against Koh Keng Chew and others regarding the valuation of shares in the Samwoh Group following a consent order to resolve a minority oppression suit. The court considered whether discounts for lack of control and marketability should apply when valuing the shares. The Court of Appeal allowed the appeal, holding that a discount for lack of control should be applied and the independent valuer should decide on the discount for lack of marketability.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed
1.3 Case Type
Civil
1.4 Judgment Type
Written Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal addresses share valuation in a minority buyout, clarifying discounts for lack of control and marketability.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Liew Kit Fah | Appellant | Individual | Appeal Allowed in Part | Partial | |
| Liew Chiew Woon | Appellant | Individual | Appeal Allowed in Part | Partial | |
| Pang Kok Lian | Appellant | Individual | Appeal Allowed in Part | Partial | |
| Soh Kim Seng | Appellant | Individual | Appeal Allowed in Part | Partial | |
| Soh Soon Jooh | Appellant | Individual | Appeal Allowed in Part | Partial | |
| Poh Teck Chuan | Appellant | Individual | Appeal Allowed in Part | Partial | |
| Koh Keng Chew | Respondent | Individual | Appeal Allowed Against | Lost | |
| Koh Oon Bin | Respondent | Individual | Appeal Allowed Against | Lost | |
| Koh Hoon Lye | Respondent | Individual | Appeal Allowed Against | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Justice of the Court of Appeal | Yes |
| Quentin Loh | Judge | No |
| Belinda Ang Saw Ean | Judge | No |
4. Counsels
4. Facts
- Respondents held 28.125% of shares in the Samwoh Group.
- Appellants held the remaining 71.875% of shares in the Samwoh Group.
- Respondents initiated Suit 125 against appellants for minority oppression under s 216 of the Companies Act.
- Suit 125 was compromised shortly before trial, with parties agreeing that mutual trust had broken down.
- Parties could not agree on who should buy out whom, leading to a Consent Order.
- Consent Order stipulated court to order either appellants or respondents to purchase the other's shares.
- Buyout Order directed appellants to buy out respondents' shares.
5. Formal Citations
- Liew Kit Fah and others v Koh Keng Chew and others, Civil Appeal No 115 of 2018, [2019] SGCA 78
- Koh Keng Chew and others v Liew Kit Fah and others, , [2018] SGHC 262
- Koh Keng Chew and others v Liew Kit Fah and others, , [2016] SGHC 140
- Koh Keng Chew and others v Liew Kit Fah and others, , [2018] 3 SLR 312
6. Timeline
| Date | Event |
|---|---|
| Suit 125 filed by respondents against appellants for minority oppression. | |
| Consent Order recorded, dispensing with oppression suit and addressing buyout issue. | |
| Buyout Order issued, directing appellants to buy out respondents' shares. | |
| Directions given regarding the reference date for valuation. | |
| Judge directed that shares not to be discounted for lack of control or marketability. | |
| Independent valuer issued report valuing respondents’ shareholding at about $66m. | |
| Appellants bought out the respondents at the value of about $66m. | |
| Civil Appeal No 115 of 2018 filed against Judge’s direction. | |
| Hearing on 5 July 2019. | |
| Judgment reserved. |
7. Legal Issues
- Share Valuation
- Outcome: The Court of Appeal held that a discount for lack of control should be applied in the valuation of the respondents’ shares in the Samwoh Group and the independent valuer should decide on the discount for lack of marketability.
- Category: Substantive
- Sub-Issues:
- Discount for Lack of Control
- Discount for Lack of Marketability
- Willing Seller vs. Unwilling Seller
- Minority Oppression
- Outcome: The court did not make a finding of minority oppression.
- Category: Substantive
8. Remedies Sought
- Order for Appellants to Purchase Respondents' Shares
- Determination of Fair Value of Shares
9. Cause of Actions
- Minority Oppression (originally)
- Share Valuation Dispute
10. Practice Areas
- Commercial Litigation
- Shareholder Disputes
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Koh Keng Chew and others v Liew Kit Fah and others | High Court | No | [2018] SGHC 262 | Singapore | The High Court decision which directed the independent valuer not to apply a discount for the lack of control and lack of marketability in valuing the shares of the respondents in various companies. |
| Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd and Others | New South Wales Court of Appeal | No | [2001] NSWCA 97 | Australia | Cited regarding the opinion of Fitzgerald JA that majorities should not be encouraged to think that oppression is unlikely to have any more adverse consequences than an obligation to purchase the oppressed minority’s shares. |
| Koh Keng Chew and others v Liew Kit Fah and others | High Court | No | [2016] SGHC 140 | Singapore | The High Court judgment ordering the appellants to buy out the respondents. |
| Koh Keng Chew and others v Liew Kit Fah and others | High Court | No | [2018] 3 SLR 312 | Singapore | The High Court gave certain directions as to the reference date for the valuation as well as its process, and decided against a reasoned valuation. |
| Abhilash s/o Kunchian Krishnan v Yeo Hock Huat and another | Court of Appeal | No | [2019] 1 SLR 873 | Singapore | Cited for the principle that an appellate court will generally be open to consider new arguments where these involve questions of law that can be answered without further evidence. |
| Hoban Steven Maurice Dixon and another v Scanlon Graeme John and others | High Court | No | [2005] 2 SLR(R) 632 | Singapore | Cited for the analysis of the provisions of section 216 of the Companies Act. |
| Abhilash s/o Kunchian Krishnan v Yeo Hock Huat and another | High Court | No | [2018] SGHC 107 | Singapore | Followed the analysis of the provisions of section 216 of the Companies Act in Hoban. |
| Burgess v Morton | House of Lords | No | [1896] AC 136 | United Kingdom | Cited for the principle that where, at the request of the parties, a judge decides a question outside the regular course of judicial proceedings (ie, extra cursum curiae) no appeal lies. |
| Hoare & Co v Moreshead | King's Bench Division | No | [1903] 2 KB 359 | United Kingdom | Cited for the principle that an appeal does not lie from an administrative decision. |
| Henry Peter Pisani v Her Majesty’s Attorney-General for Gibraltar and others | Privy Council | No | (1974) LR 5 PC 516 | Gibraltar | Cited for the principle that where parties by consent invite a court to decide an exceptional matter that severely departs from the court’s regular procedure, they will be taken to have excluded review of that decision by another tribunal. |
| In re Bird Precision Bellows Ltd | Chancery Division | No | [1984] Ch 419 | United Kingdom | Cited for the principle that a shareholder should only be regarded as an unwilling seller if his minority interests have been unfairly prejudiced by the conduct of the majority thereby making it no longer tolerable for him to retain his interest in the company. |
| Re a Company (No 006834 of 1988), ex parte Kremer | High Court | No | [1989] BCLC 365 | United Kingdom | Commented on Nourse J’s decision in In re Bird Precision Bellows Ltd. |
| CVC/Opportunity Equity Partners Ltd and another v Demarco Almeida | House of Lords | No | [2002] 2 BCLC 108 | United Kingdom | Observed that the oppressed minority shareholder in that case is not desirous of disposing of his shares; he would rather keep them and continue to participate in the management of the company. |
| Thio Syn Kym Wendy and others v Thio Syn Pyn and another | High Court | Yes | [2018] SGHC 54 | Singapore | Cited for the principle that the principle of unwillingness or involuntariness applies whether or not the company concerned is a quasi-partnership. |
| Thio Syn Pyn v Thio Syn Kym Wendy and others and another appeal | Court of Appeal | Yes | [2019] 1 SLR 1065 | Singapore | Affirmed the High Court's decision in Thio Syn Kym Wendy and others v Thio Syn Pyn and another and cited for the principle that the principle of unwillingness or involuntariness applies whether or not the company concerned is a quasi-partnership. |
| Chong Barbara v Commissioner of Estate Duties | Court of Appeal | No | [2005] 4 SLR(R) 771 | Singapore | Referred to the terms “lack of control” and “lack of marketability” in the context of share valuation. |
| Re Blue Index Ltd; Murrell v Swallow and others | High Court | No | [2014] EWHC 2680 (Ch) | United Kingdom | Distinguished between a discount for lack of control and a discount for non-marketability in the same manner. |
| Irvine v Irvine (No 2) | Court of Session | No | [2007] 1 BCLC 445 | United Kingdom | Cited for the principle that minority discount for lack of control applies only in respect of a sale to an external party. |
| Over & Over Ltd v Bonvests Holdings Ltd and another | High Court | No | [2010] 2 SLR 776 | Singapore | Where the purchasing majority consolidates control of the company. |
| Re Edwardian Group Ltd; Estera Trust (Jersey) Ltd and another v Singh and others | High Court | No | [2019] 1 BCLC 171 | United Kingdom | Where the purchasing majority consolidates control of the company. |
| O’Neill and another v Phillips and others, Re a company (No 00709 of 1992) | House of Lords | No | [1999] 2 BCLC 1 | United Kingdom | Took the view that the fair value of shares is ordinarily the pro rata value of such shares without a discount, and in that regard was distinct from the market value of such shares. |
| Hinde v Hinde | Court of Appeal | No | [1953] 1 All ER 175 | United Kingdom | The decision in Hinde is a useful illustration of the principle that parties cannot confer jurisdiction upon the court. |
| Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal and other matters | Court of Appeal | No | [2017] 2 SLR 12 | Singapore | This court in Turf Club, after considering the Hoban line of cases, held that Hoban was distinguishable from the case before it, as the order in Hoban was an “order made by the trial judge, albeit premised on a broad agreement between the parties, as opposed to a truly contractual consent order” |
| Haw Par Bros (Pte) Ltd v Dato Aw Kow | High Court | No | [1971–1973] SLR(R) 813 | Singapore | Haw Par Bros concerned a case where an order was made, upon the application of a director, that the accounting and other records of the defendant company be open to inspection by a company auditor appointed by the director. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) s 216 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Minority Discount
- Lack of Control
- Lack of Marketability
- Willing Seller
- Unwilling Seller
- Consent Order
- Buyout Order
- Share Valuation
- Minority Oppression
- Fair Value
- Market Value
15.2 Keywords
- share valuation
- minority discount
- lack of control
- lack of marketability
- companies act
- singapore
- court of appeal
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Minority Oppression | 90 |
| Company Law | 70 |
| Valuation | 60 |
| Shareholders Disputes | 40 |
| Shareholders Agreement | 40 |
| Shareholders Rights | 40 |
| Shareholders | 30 |
| Corporate Law | 30 |
| Civil Procedure | 20 |
16. Subjects
- Company Law
- Share Valuation
- Minority Shareholder Rights