Lian Hwee Choo Phebe and another v Maxz Universal Development Group Pte Ltd and Others

• Jurisdiction: Singapore
• Judgment Date: 30 June 2008
• Date: 30 June 2008
• Docket Number: Suit No 75 of 2008 (Summons No 663 of 2008)
• Court: High Court (Singapore)

Lian Hwee Choo Phebe and another

Plaintiff

and

Maxz Universal Development Group Pte Ltd and others

Defendant

[2008] SGHC 102

Andrew Ang J

Suit No 75 of 2008 (Summons No 663 of 2008)

High Court

Companies–Memorandum and articles of association–Whether article providing for increase in share capital referred only to authorised share capital–Whether abolition of authorised share capital rendered said article otiose–Companies Act (Cap 50, 1994 Rev Ed) Fourth Schedule Table A Art 40 (a)

The first defendant, Maxz Universal Development Group Pte Ltd (“the Company”), was incorporated in 2000. Article 32 of the Company's articles of association (“Art 32”) provided that “ [t]he Company may from time to time by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe”. On 13 December 2007, the shareholders of the Company passed a resolution authorising its directors to issue shares of the Company (“the Resolution”). The Resolution did not prescribe the number of shares to be issued. Pursuant to O 14 r 12 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), the plaintiffs applied to the court seeking a determination whether the Resolution contravened the Company's articles of association and was therefore invalid.

Held, dismissing the application:

(1) The term “share capital” in relation to a company had several distinct meanings. At the time of the Company's incorporation, Art 32 applied exclusively to an increase in authorised share capital: at [8] and [12].

(2) The abolition of the concept of authorised share capital took place some five years after the Company's articles of association were adopted. That subsequent event did not necessitate a change in the interpretation of Art 32. In the premises, Art 32 had been rendered otiose by the change in the law and ceased to have any practical effect: at [17].

James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 (refd)

Union Insurance Society of Canton, Limited v George Wills & Co [1916] 1 AC 281 (refd)

Companies Act (Cap 50,1994Rev Ed)Fourth ScheduleTable A Art 40 (a) (consd);ss 71 (1) (a) (repealed), 161,161 (2)

Rules of Court (Cap 322, R 5, 2006Rev Ed)O 14r 12

Companies (Tables A to F) Regulations 1985 (SI 1985 No 805) (UK) ScheduleTable Areg 32

Suresh Nair and Tan Chin Kwan Jonathan (Allen & Gledhill LLP) for the plaintiffs

Harpreet Singh Nehal SC, Meyer Bernette Colleen and Dawn Ho (Drew & Napier LLC) for the second and fourth defendants

Siraj Omar and See Chern Yang (Premier Law LLC) for the third defendant.

Andrew Ang J

1 This was the plaintiffs' application for judgment on the determination of a preliminary issue pursuant to O 14 r 12 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed). At the hearing on 3 April 2008, I ruled in favour of the defendants. After reading the plaintiffs' written submissions for further arguments dated 10 April 2008, I ruled that no further arguments on the above matter were necessary. The following are my reasons for so doing.

2 The question for determination was whether the following resolution passed at an extraordinary general meeting of the first defendant Maxz Universal Development Group Pte Ltd (“MDG”) on 13 December 2007 (“the Resolution”) contravened MDG's articles of association and was therefore invalid:

ORDINARY RESOLUTION

SECTION 161 AUTHORITY TO ALLOT AND ISSUE SHARES

RESOLVED THAT pursuant to the provisions of Section 161 of the Companies Act, Cap. 50 (the “Act”) and the articles of association of the company, the Directors be and are hereby authorised to issue shares of the Company to such persons on such terms and conditions and with such rights or restrictions as they may think fit to impose and that such authority shall continue in force until the conclusion of the next Annual General Meeting or the...