[Slide 7] Rayfield v Hands (1960)

Facts
The company`s articles provided that a member who wished to transfer shares had to inform the directors, who were to
take the shares equally between them at a fair value.
Rayfield wanted to transfer the shares.
He brought an action to compel the defendant directors (which were also members) to purchase the shares in accordance
with the articles.
Issue Were the defendant directors obliged to purchasing the shares from Rayfield?
Decision Yes
Reasoning
The Articles constitute a contract between the individual members of the company, and they regulate the members mutual
rights and duties as members
The court held that there was a contract between Rayfield and the defendants constituted by the articles.
The court then ordered that the defendants purchase Rayfield`s shares in accordance with the articles.
[Slide 7] Wong Kim Fatt v Leong & Co Sdn Bhd (1976)
Facts
The articles provided that the holders of seven-tenths of the issued capital of the company had a right to requisition for the
transfer of the shares of the remaining members.
The second defendant held 250k shares out of 300k.
He served a requisition to buy out Wong`s shares.
Wong objected to this.
Issue Did the second defendant have the rights to buy out Wong`s shares?
Decision Yes
Reasoning
The fairness or unfairness of an article is not relevant in deciding whether it can be enforced.
A member`s rights and liabilities under the articles of association are a matter of contractual obligation.
The court held that Wong was bound to comply with the demand as it was part of what the defendant had bargained for. It
was purely a matter of contractual obligation and Wong must be held to the obligation he had undertaken.
[Slide 8] Raffles Hotel Ltd v Malayan Banking Bhd (1966)
Facts
MBB was the lessor of the land on which Raffles Hotel was built.
It was provided in the hotel`s constitution that the lessor has a right to appoint a director of the company (hotel).
MBB appointed itself as director.
Raffles Hotel Ltd went to get this appointment declared invalid.
Issue Can MBB appoint itself as director of the hotel?
Decision No
Reasoning
Outsiders are not privy to the constitution because the constitution does not form the basis of a contract between the
company and outsiders, and outsiders hence cannot enforce any rights that the constitution purport to confer upon them.
The court held that the constitution could not constitute a contract between a company and outsiders.
Since MBB was not a member of the company, the articles did not confer upon it any enforceable right to appoint a
director of the company.
Accordingly, the appointment was invalid.

[Slide 8] Southern Foundries (1926) Ltd v Shirlaw (1940)

Facts
Shirlaw had been appointed MD under a written contract, for a period of 10 years.
While the agreement was not expressed to be subject to the constitution, one clause in the constitution provided that the
MD was entitled to the benefit of the provisions of any contract between himself and the company.
The constitution was altered to allow Shirlaw to be removed as a director and, as a consequence, as MD.
Issue Can Shirlaw be removed as a director?
Decision Yes, according to the altered constitution, but there is a breach of contract so he is entitled to damages
compensation.
Reasoning
A company has statutory power to alter its articles, even if by such alteration a breach of contract will be involved.
However, if thereby the company acts on the altered constitutions which amount to a breach of contract, it may be liable in
damages to the other party to the contract.
The breach will be a breach of the independent contract to the constitution, rather than the statutory contract.
By effecting alteration in its articles, a company cannot defeat or escape from its contractual obligations.
As the removal of Shirlaw from office through the alteration of the constitution made it impossible for him to complete his
contract of service, the court held that the alteration was an actionable breach of contract, and hence awarded damage
compensation to Shirlaw for breach of contract.

IMPORTANT!!!
It appears that there are two distinct cases which contradict each other.
Eley case suggests that a member cannot enforce rights other than membership rights or insider rights'
Salmon case suggests that a member may enforce outsider rights' as long as he sues the company in his capacity
as a member, and not as an outsider.
It may seem both cases contradict each other, but what is rather interesting in Eley`s case is that, although Eley was a
member at the time of the court case, he did not choose to sue as a qua member to enforce the articles. What is also
further interesting is that the court did not address the point of Eleys membership in the ruling, so it is unclear if this was
intentionally ignored by the court since the suit was from an outsider rights perspective, or if the membership matter was
not brought to the courts attention at all. The question remains, what would have happened if Eley had indeed sued to
enforce his membership rights?
Astbury J addresses this exact point in Browne v La Trinidad [23] : The actual decision amounts to this. An outsider right to
whom rights purport to be given by the articles in his capacity as such and outsider, whether he is or subsequently becomes a
member, cannot sue on those articles treating them as contracts between himself and the company to enforce those rights.
Those rights are not part of the general regulations of the company applicable alike to all shareholders and can only exist by
virtue of some contract between such person and the company, and the subsequent allotment of shares to an outsider in whose
favour such an article is inserted does not enable him to sue the company on such an article to enforce rights which are res
inter alios acta and are not part of the general rights of the corporators as such . [24]
On the other hand, the court decision held in Salmon case can be interpreted as allowing a member to enforce a
constitution that gave him right in his capacity as a MD. This decision also supports the view that each member has the
right to have the constitutions observed by the company.
Conclusion:
A member can enforce any provision in the constitution even though this may incidentally also enforce a right given to a
person in a capacity other than as a member.
Member`s action must be brought in his or her capacity as a member and the enforcement of the non-member right must
be incidental to the enforcement of the member`s contractual right.

[Slide 9 ] Hickman v Kent or Romney Marsh Sheepbreeders` Association (1915)

Facts
The company`s constitution included a clause to the effect that all disputes between the company and its members
were to be referred to arbitration.
Hickman, a member, brought court proceeding against the company.
The company applied for a stay of the action on the grounds that the member was bound by the constitution to
submit the dispute to the arbitration.
Issue Was Hickman bound by the constitution?
Decision Yes
Reasoning
The court granted the stay.
The constitution is a contract between the association and its members.
The provision for arbitration was a binding arbitration agreement and obliged the parties to refer the matter to an
arbitrator.
[WW] Salmon v Quin & Axtens Ltd (1909)
Facts
The constitution provided that certain contracts could not be entered into without the assent of both MD, Salmon
and Axtens.
BOD proposed to acquire certain properties and to let other properties, but Salmon dissented.
The company called a general meeting and Axtens passed an ordinary resolution resolving to acquire the
properties.
Salmon sued for an injunction to restrain the company and directors from acting on the resolution.
Issue Was the veto exercised by Salmon valid?
Decision Yes
Reasoning
A member may enjoin the company and its directors from acting in breach of the constitutions.
The court allowed Salmon suing as a member, to obtain an injunction stopping the company from completing a
transaction, because the constitution stated that the transaction required the consent of two MD, and the company
had acted on a decision which was taken unconstitutionally.
This essentially showed that a member had a membership right to require the company to act in accordance with
its constitution, which right could be enforced by the member even though the result was indirectly to protect a
right which was afforded to him as a director, but only so long as he sues qua member and not qua outsider.

Ordinary resolutions passed by members could not affect the powers conferred by constitutions, as this would
permit the members to alter the constitutions indirectly by ordinary resolution.
It follows from this that a direction from the members passed by a special resolution should be valid, and this is
reflected in S26(1).

[Slide 9 ] Eley v Positive Government Life Assurance Co (1876)

Facts
The company`s constitution provided that Eley was to be the company`s solicitor and could not be removed from
office except for misconduct.
Eley later became a member of the company.
Eley worked for the company for some time, before the company ceased to employ him.
Eley sued the company for breach of contract, relying on the constitution.
Issue Was there a breach of contract?
Decision No
Reasoning
A member cannot enforce provisions of the articles in some capacity other than that of member.
The court held that Eley could not bring action against the company because he was attempting to enforce his
rights as solicitor, not as a member. The right which Eley attempted to enforce was conferred upon him in a
capacity other that of a member, and that the constitution do not constitute a contract between the company and the

[Slide 23] Automatic Self-Cleaning Filter Syndicate Co Ltd v Cunninghame (1906)

Facts
The company`s constitution conferred on the board the powers of management and the specific power to sell company
property on such terms as it thought fit.
Relying on these provisions, the board refused to comply with a general meeting resolution that certain property be sold,
asserting that the sale was not in the company`s best interest.
The members sought a declaration that the directors were bound to carry into effect the resolution passed.
Issue Could the members override the directors` decision?
Decision No
Reasoning
Members cannot override the directors and make themselves involve in the management of the company.
The court held that the BOD was properly exercising the powers of management vested in it by the constitution and the
general meeting could not usurp this power.
The court believed that the management article in the constitution constituted an agreement on the part of
membership to confer the powers of management solely on the board. If the members wished the mandate of the
directors to be altered, it can only be under the machinery of the constitution itself. Until the constitution was
so altered, the membership could not override the board`s decisions.
[Slide 23] TYC Investment Pte Ltd v Tay Yun Chwan Henry (2014)
[Slide 23] Chan Siew Lee v TYV Investment Pte Ltd (2015)
Facts
The case concerned a family holding company, TYC, and a deadlock board comprising just two directors, Tay and Chan,
who are also ex-spouses.
There`s a clause in the business contract that states, either of them could unilaterally cause TYC to withhold payments of
apparently legitimate expenses by simply refusing to sign a corresponding voucher.
The company`s constitution also provided that both Tay and Chan were to be the permanent directors of TYC until they
resigned from office, so they can`t be removed by shareholders.
Issue
Decision
Reasoning
Where there is deadlock in the board of directors which cannot be broken in any other way, shareholders may be vested
with reserve powers of management under the common law in order to break such deadlock.
The general rule is that the powers of management are vested in the directors of a company and not its
shareholders. The corollary of this is that shareholders may not, as a general rule, usurp management powers of the
directors. This position is enshrined in Singapore law under S157A and in the case Automatic Self-Cleansing
(1906). The question was therefore company law recognizes that there exist reserve powers of management
vesting in shareholders that may arise where the board is deadlocked or otherwise refuses to act. From the TYC
case, it can be concluded that reserve powers of management are to be given to the shareholders only in
exceptional circumstances: where it is necessary in order to overcome a deadlock in the board and where there is
no contractual remedy available under the constitution.

[Slide 25] Re Kong Thai Sawmill (Miri) Sdn Bhd (1978)

Reasoning
It was held in Re Kong Thai Sawmill (1978) that the decision of the majority must be honoured by the minority members,
but in the condition that the majority cannot exercise their rights oppressively against any member. In Re Kong Thai
Sawmill (1978) it was held that only when majority passes over into rule oppressive of the minority, or in disregard of
their interests, that the section can be invoked. This position is enshrined in Singapore law under S216.
In Re Kong Thai Sawmill (1978), Lord Wilberforce in the Privy Council stated that for the case to be brought within the
Malaysian equivalent provision, S181 Companies Act (Malaysia), the complainant must:

identify and prove oppression or disregard. The mere fact that one or more of those managing the company possess
a majority of the voting power and, in reliance upon that power, make policy or executive decisions, with which the
complainant does not agree, is not enough.
There must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a
shareholder is entitled to expect before a case of oppression can be made.
And similarly disregard involves something more than a failure to take account of the minority`s interest: there must be
awareness of that interest and an evident decision to override it or brush it aside or to set at naught the proper company
procedure
Neither oppression nor disregard need be shown by a use of the majority`s voting power to vote down the minority:
either may be demonstrated by a course of conduct which in some identifiable respect, or at an identifiable point in time,
can be held to have crossed the line.

[Slide 27] ONeill v Phillips (1999)

Facts
Phillips, the sole owner of all shares of company, gave 25% of shares to ONeill, the company`s key employee, and
appointed him a director.
Phillips stated that he hoped ONeill would take over the management of business and on that basis ONeill would be
allowed to draw 50% of profits.
This came about and Phillips retired for 5 years before the recession came.
During the recession, Phillip took back control and reduced ONeill`s status to branch manager and took away his shares of
profits.
O`Neill left the company and petitioned for unfair prejudice under S459.
Issue Did Phillips act unfairly in legal term?
Decision No
Reasoning
Lord Hoffman came to two conclusions about unfair prejudice:
a) A member will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on
which he agreed that the affairs of the company should be conducted.
b) There will, however, be cases in which equitable considerations make it unfair for those conducting the affairs of the
company to rely upon their strict legal powers.
So one must prove an actual breach of terms on which he agreed that the affairs of the company should be
conducted; or show that they were being used in a way which offends against equitable considerations.
The court held that there was no basis to ONeill claim that Phillips had acted unfairly, that fairness depended on the
context, and that a member of a company will not ordinarily be entitled to complain of unfairness unless there has been
some breach of the terms on which he agreed that the affairs of the company should be conducted, while accepting that
there will be cases in which equitable considerations make it unfair for those conducting the affairs of the company to rely
upon their strict legal powers.
Mr ONeill may have had a legitimate expectation that Mr Phillips, the majority shareholder, would confer various benefits
upon him (eg an increased share of profits and more shares in the company), but he had no formal grounds upon which to
base a claim.
Phillips never agreed to give the shares, and did not make an unconditional promise about the sharing of profits. He only
agreed to share the profits while ONeill managed the company. Therefore, on equitable principles, Phillips did not act
unfairly in withdrawing from the negotiations to give ONeill more shares, or refusing to continue to share profits after he
came back to run the business.
The court advocated a contractual approach to determine whether there was commercial unfairness, thus ensuring that
agreements are honoured and promises kept. They would first look for formal agreements (eg constitutions), and then to

continue looking for informal agreements (often having the characteristics of quasi-partnerships) which supplement the
formal agreements. If there was a serious breach of the terms of such agreements, it was open to the court to grant an
appropriate remedy to the aggrieved party.
[Slide 28] Sim City v Ng Kek Wee (2013); On appeal Ng Kek Wee v Sim City (2014)
Reasoning
Given the persuasion rationales for keeping S216 as a residual remedy, it would seem that this option would generally be
foreclosed to a majority shareholder.
The Court of Appeal in Sim City has astutely noted that there is no blanket prohibition against a majority shareholder
making a S216 claim; rather, the question of standing is to be determined by a fact-sensitive inquiry of whether the
claimant lacks the power to stop the allegedly oppressive acts. It follows that there remains scope for the majority
shareholder to access S216 remedy where self-help remedies are unavailable.
In this case, the Court of Appeal held that the majority shareholder was not entitled to relief under S216 because it had the
power to stop the appellants` oppressive conduct, as it eventually did, by exercising its rights as a shareholder to remove
the appellant as a director.
[Slide 30] Scottish Co-operative Wholesale Society Ltd v Meyer (1959)
Facts
Meyer and the Society formed a private company to manufacture rayon.
The purpose of the Society forming the private company is because it could not get a license to manufacture rayon.
The society held the majority of company`s shares and controlled the board.
Society transferred company`s business to itself and cut off the supply of raw materials to the company.
As a result, the company`s operations ceased and no profits were made.
Issue Is there oppression?
Decision Yes
Reasoning
Relief may be obtained under S216 when the dominant members pursue a course of conduct designed by them to advance
their own interests or the interests of others of their choice to the detriment of the company or to the detriment of the other
shareholders.
Before considering the two major obstacles to relief under S216, we should note in passing two general questions
as to the operation of the section.
The first requirement is that the relief under S216 will only be granted if the petitioner is complaining of
oppression towards him qua member, and not in the character of director or employee of the company.
This requirement caused no problem in this case, since the oppressive conduct resulted in a depression of the value
of the respondents` shareholding in the company and thus injured them as members.
The second question goes to the meaning of the word oppressive.
In this case, Viscount Simonds considered that oppression should be given its dictionary meaning as being the
exercise of authority in a manner which was burdensome, harsh and wrongful to the other members of the
company or some of them.
The court felt that the diversion of business from the company by the Scottish Society could be fairly described as
oppressive conduct of the company`s affairs, because the oppressive conduct has caused the company`s operations
to be ceased and no profits made, leading to a depression in the value of the company`s shares. The two petitioners
were therefore entitled to relief by way of compulsory purchase of the shares by the Scottish Society.
[Slide 30] Re SQ Wong Holdings (Pte) Ltd (1987)
Facts
Directors deliberately refused to make dividend payments. Their motive was to preserve their dominance (because some
strange rules in Articles that if they did not issue dividends, they retained power to vote).
Issue Is there abuse of voting powers?
Decision Yes
Reasoning
Relief may be obtained under S216 where the majority shareholders or directors abuse their voting powers by voting in
bad faith or for a collateral purpose because oppression can be said to have been established.
The court held that the discretion of directors whether or not to recommend a dividend even on the preference shares must
be exercised fairly and honestly in the interests of the company, and for proper purposes. This discretion was not meant to
be used as a device to enable the preference shareholders to retain voting control indefinitely.

 The court further held that the directors had not acted for the benefit of the company. There was therefore a visible
departure from the standards of fair dealing and a violation of fair play which the petitioners were entitled to expect from
the directors. A case of oppression was made out and relief was granted under S216.
[Slide 30] Over & Over Ltd v Bonvests Holdings Ltd and Another (2010)
Facts
Richvein was a company set up as a joint venture between two families, with Lauw family`s Over & Over Ltd as the
minority shareholder holding 30% of its shares, and the Sianander family`s Unicurrent Finance Limited initially holding
the remaining 70% shares.
O&O claimed that three actions taken by respondents amount to oppression:
a) A transfer of Richvein shares by Unicurrent to its related company, Bonvests.
b) A rights issue in Richvein which allegedly was partly intended to dilute O&O`s shareholder in Richvein.
c) Several related party transactions involving Richvein which allegedly benefitted the respondents.
Issue Is there abuse of voting powers?
Decision Yes
Reasoning
Relief may be obtained under S216 where the majority shareholders or directors abuse their voting powers by voting in
bad faith or for a collateral purpose.
The court found that there was a deliberate course of oppressive conduct. It noted that the transformation of Richvein as a
private joint venture company to a semi-public one in which Bonvests would hold Unicurrent`s shares in Richvein
constituted a radically different entity and legal proposition, which amounted to a loss of substratum.
The court also determined that the rights issue, which was done in the absence of commercial justification and amounted to
a scheme to dilute O&O`s shareholding in Richvein, was in and of itself an abuse of rights. This alone would have been
sufficient grounds to find oppression.
[Slide 30] Re A Company (No 00477 of 1986)
Reasoning
The exclusion of a member from management of a company in breach of an express or implied understanding to allow
him to participate in the management of the company have been held to justify relief under S216.
However, such an exclusion may not constitute unfair conduct if it is reasonable for the majority member to ask
the minority member to leave the company by offering to purchase the shares of the minority member at a fair
value.
The court observed that the interests of a member are not necessarily limited to the strict legal rights conferred by the
constitution of a company. Accordingly, a member`s interests can encompass the legitimate expectation that he or she will
continue to participate in management.
A petitioner had to show that the oppression complained about had been suffered in the petitioner`s capacity as a
shareholder/member. Being removed from office as a director was regarded as conduct affecting the petitioner as a
director, not as a shareholder.
The court said that the exclusion from management of a MD of a large public limited company who happens to hold a few
shares would not be able to petition for relief under S216 in the event of being removed from his office as a director.
On the other hand, the same is not true of small private companies in which two or three members have invested their
capital on the footing that dividends were unlikely to be declared, but that each would earn a living by working for the
company and drawing remuneration as a director.
In such cases, if it can be said that the members had a legitimate expectation of continued employment as a director by the
company, dismissal from office and exclusion from management may constitute unfairly prejudicial conduct.

[Slide 30] Ebrahimi v Westbourne Galleries Ltd (1973)

Facts
Nazar and Ebrahimi ran a business as partners for a long time before forming a company to take over the business.
Later Nazar`s son joined the company as a shareholder and director.
There was a disagreement between the parties, and Nazar and his son combined their voting power to remove Ebrahimi
from his office as director.
Ebrahimi petitioned for relief under S216.
Issue Is there exclusion from management in breach of an agreement?
Decision Yes.
Reasoning
In many companies, the rights of the members would be exhaustively stated in the company`s constitution.
However, certain companies, known as quasi-partnerships, also conducted business based on legitimate expectations and
agreements made between the members, and in such companies, effect should be given to such expectations and
agreements.
The court stated that typically quasi-partnerships would display all or some of the characteristics:
a) The company will be an association formed on the basis of mutual trust and confidence.
b) There will be an agreement that some, or all, of the shareholders will be involved in management.
c) A restriction upon the transfer of the members` shares in the company.
The court suggested that a company can be wound up on the just and equitable ground not only where there is a breach of
rights and obligations defined by CA and the constitutions, but also where there is a breach of equitable rights, obligations
and legitimate expectations. This is the case if the company was formed or continued on the basis of a personal
relationship, involving mutual confidence, or if there is an agreement or understanding giving members equitable rights,
obligations, or expectations that all or some of the members participate in the conduct of the business, or if there is a
restriction on the transfer of shares in the company.
This case demonstrates that where a company is a quasi-partnership, the conduct of the majority should not be judged
purely based on the rights of the parties, but also by the legitimate expectations of the parties and any informal agreements
that existed between them.
It was legitimate for the court when considering the just and equitable ground for winding up a company to take into
account the personal relationship between the parties which may suggest it to be inequitable for one party to insist on his or
her legal rights and exercise them in a certain manner.
While the removal was pursuant to the constitution, Ebrahimi had a legitimate expectation that the members` powers
would not be so exercised in the manner to remove him from his office as director due to disagreements, and that the
shared management of the business would continue.
In light of Ebrahimi`s legitimate expectations, the company was clearly a quasi-partnership since it had been formed on the
understanding that all of the shareholders would participate in management. As this understanding has been breached, the
court held that it was just and equitable to wind up the company.
[Slide 30] Re Gee Hoe Chan Trading Co Pte Ltd (1991)
Facts
Majority shareholders caused the company not to declare dividends for five years, while at the same time lined their
pockets with the profits of the company either in the form of salaries, bonuses or directors` fees.
Issue Is there oppression?
Decision Yes
Reasoning
The payment of low or no dividends coupled with other instances of unfair conduct on the part of the majority have been
held to constitute unfair conduct.
The court held that, contrasting the substantial benefits the majority had gained from the company with the nil return for
the minority, the majority had acted oppressively or in disregard of the minority`s interests.
It is clearly unfair to the minority if the majority receive large sums of money from the company while they get nothing.