Pearlie Koh

A Director's Duty of Loyalty and the Relevance of the Company's Scope of Business: Cheng Wai Tao v Poon Ka Man Jason

The Hong Kong Court of Final Appeal has utilised a ‘scope of business’ inquiry to delineate the boundaries of the no-conflict rule for the company director. Such an inquiry is directed at discerning the realistic ability of the company to exploit any particular business opportunity and a strict capacity approach is eschewed, at least where the no-conflict rule is concerned. The decision is premised on a bifurcation between the no-conflict and no-profit rules, suggesting that the tests to determine breach of these fiduciary rules are not necessarily the same, thus permitting a more nuanced consideration of directorial breaches.

THE OPPRESSION REMEDY—CLARIFICATIONS ON BOUNDARIES

The impetus behind the introduction of the statutory provision was the perceived need to protect the vulnerable minority shareholder against the unfair manipulation of the majority rule. Its raison d’être is clearly personal. And, as it is an important tool in the minority shareholders arsenal, it is necessary that the scope of its application be sufficiently wide. The provision is therefore couched in expansive terms. This has led to questions being raised as to the scope of its application. Specifically, can a shareholder attempt to vindicate corporate claims through the provision? This short paper considers this issue against the background provided by the recent Singapore Court of Appeal decision of Ng Kek Wee v Sim City Technology Ltd.

Of Links and Legal Merits––Good Faith in the Statutory Derivative Action in Singapore

ABSTRACT An applicant for leave to bring a statutory derivative action in Singapore is required to satisfy the court as to, inter alia, his good faith. Although the statutory language places the burden of doing so on the applicant, Singapore courts have tended to assume the presence of good faith if the claim is a legitimate one. This approach, which denigrates the requirement of good faith, was recently disapproved by the Singapore Court of Appeal. This notwithstanding, subsequent cases have reverted to the earlier position, casting doubt on the utility of the requirement. This paper considers good faith, and argues that it was included to address a distinct concern that cannot be met by a consideration of the viability of the claim and the companys interests in pursuing the same, a concern that arose out of the peculiar function of the statutory derivative action in opening up shareholder access to corporate litigation.