In the recent case of Ho Yew Kong v Sakae Holdings Ltd  SGCA 33 ("Sakae Holdings"), the Singapore Court of Appeal had the opportunity to clarify the distinction between personal wrongs committed against shareholders of a company and corporate wrongs against the company. This distinction directly relates to the question of whether the appropriate relief in each respective scenario would be by way of an oppression action or a statutory derivative action.
The Singapore Court of Appeal set out a framework to determine whether an aggrieved shareholder could maintain an oppression action or ought to have pursued a statutory derivative action instead.
A FINE LINE BETWEEN THE TWO WRONGS
Under section 216 of the Singapore Companies Act ("Section 216"), aggrieved shareholders can initiate an oppression action in their own names to protect themselves from being unfairly prejudiced by majority shareholders. A successful oppression action would most often result in personal remedies for the aggrieved shareholder. Section 216 is very similar to Malaysia's oppression remedy under section 346 of the Companies Act 2016 ("CA 2016").
On the other hand, the statutory derivative action under section 216A of the Singapore Companies Act ("Section 216A") enables an aggrieved shareholder to bring an action in the company's name. The derivative action is to right the wrongs done to the company, where those in control of the company had caused harm or breached their duties to the company. The derivative action would only ultimately result in remedies to benefit the company. Section 216A is very similar to Malaysia's statutory derivative action provisions found in sections 345, and 347 to 350 of CA 2016.
In simple terms, it could be said that claims for reliefs which are solely for personal wrongs committed against shareholders should be brought by way of an oppression action, whereas corporate wrongs committed against the company should be remedied by way of a statutory derivative action.
This distinction may be challenging to apply in practice. This is because it is common for acts which are alleged to be oppressive to an individual minority shareholder, to concurrently also constitute a wrong to the company. The difficulty in making this distinction was at the heart of the appeal before the Singapore Court of Appeal.
In Sakae Holdings, the plaintiff, Sakae Holdings Ltd ("Sakae"), was a 24.69% shareholder in Griffin Real Estate Investments Holdings Pte Ltd ("Company"). The remaining 75.31% shares in the Company were held by Gryphon Real Estate Investment Corporation Pte Ltd ("GREIC"), an investment holding company whose shareholders included one Andy Ong and his two associates.
Under a joint venture agreement ("JVA") between the Company, Sakae and GREIC, the Company was intended to be the joint...