PIC Property Ltd v Sing Eng (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JC
• Judgment Date: 30 July 1988
• Neutral Citation: [1988] SGHC 59
• Docket Number: Originating Summons No 1221 of
• Date: 30 July 1988
• Year: 1988
• Published date: 19 September 2003
• Plaintiff Counsel: Philip Pillai and Yvonne Tan (Shook Lin & Bok)
• Citation: [1988] SGHC 59
• Defendant Counsel: Tan Jing Quee (Jing Quee Chin Joo & Teck Hui)
• Court: High Court (Singapore)
• Subject Matter: Pledge shares,Sale of shares by mortgagee to plaintiff,Defendant company not replying to request for transfer of shares by mortgagee,Whether defendant company's articles of association permit transfer of shares to non-member,Companies,ss 128, 130 & 194 Companies Act (Cap 50),Shares,Transfer,Plaintiff applying for rectification of register of shareholders

This was an application made under ss 130 and 194 of the Companies Act (Cap 50) to rectify the register of shareholders of Sing Eng (Pte) Ltd, the defendants herein, and for an order that the defendants do deliver to the plaintiffs new share certificates in the name of the plaintiffs` nominee. The defendants were a private limited company, incorporated in Singapore (hereinafter called `the defendant company`) with an authorized capital of $2.5m of which $1,984,278 was paid up.

One Lie Mo Meng, also known as Lie Moeng Kieng, was the owner of 514,930 shares in the capital of the defendant company. Pursuant to a guarantee and a memorandum of charge on stocks and shares, both dated 16 March 1986 (hereinafter called the `first guarantee` and the `first memorandum`) and for the consideration therein stated, Lie Mo Meng charged, inter alia, the said 514,930 shares in favour of Xiamen International Bank (`XIB`) and also deposited the relevant share certificates with XIB.

Another person, one Lie Mo Kwang (also known as George MK Lee), was the owner of another 514,930 shares in the defendant company. Pursuant to a guarantee and a memorandum of charge of stocks and shares, both dated 21 March 1986 (hereinafter called the `second guarantee` and the `second memorandum`) and for the consideration therein mentioned, Lie Mo Kwang charged, inter alia, the said 514,930 shares in favour of XIB and also deposited the relevant share certificates with XIB.

Both Lie Mo Meng and Lie Mo Kwang were also directors of the defendant company.

On 21 April 1987, both executed, pursuant to the first and second memoranda, a blank instrument of transfer which they delivered to XIB. By a letter dated 9 May 1987, M/s Shook Lin & Bok (SLB) forwarded to the defendant company the relevant share certificates and the two transfer forms, duly completed, in favour of XIB Nominees Ltd. This letter of 9 May 1987 from SLB was as follows:

We refer to the circular resolution of the board of directors approving the transfer of 1,029,860 shares to XIB Nominees Ltd. We now forward herewith:

(1) the two share transfers duly signed by M/s Lie Mo Kwang and Lie Moeng Kieng and stamped;

(2) original share certificates nos 22 and 23 for 514,930 shares each.

Please let us have the share certificates in favour of XIB Nominees Ltd as soon as possible.

No reply was given by the defendant company to the letter of 9 May 1987. On 22 June 1987, SLB, acting on behalf of XIB and without prejudice to the letter of 9 May 1987, gave notice to the defendant company, pursuant to art 34 of the articles of association of the defendant company, that XIB wished to transfer the said shares. This notice was given by XIB as a person entitled to transfer pursuant to the authority given to XIB by the owners of the shares. For this purpose, XIB constituted the defendant company as their agents for the sale of the shares to any member of the defendant company at the fair price of $2,745,000 or at a fair price to be fixed by the auditors of the defendant company. The defendant company did not respond within 14 days as required under art 35. On 20 August 1987, SLB, on behalf of XIB notified the defendant company that XIB had sold the shares to PIC Property Ltd, the plaintiffs herein. The defendant company was requested to issue the new share certificates in favour of XIB Nominees.

It was only on 25 August 1987 that the solicitors for the defendant company, M/s Jing Quee Chin Joo & Teck Hui, replied to SLB in these terms:

We act for Sing Eng (Pte) Ltd and refer to your letter of 20 August 1987 to our clients.

We are instructed by our clients that the shares comprised in the two transfers delivered by you to our clients (are) registered in the names of Lie Mo Kwang and Lie Mo Meng respectively. Xiamen International Bank or XIB (Nominees) Ltd never was the registered proprietor of any part of the said shares. In the circumstances, our clients are unable to consider your request to have the two share transfers registered in the names of PIC Property Ltd or its nominees.

The foregoing were the pertinent facts. Mr Tan Jing Quee for the defendants, raised the following two points in his written skeletal arguments. First, which was basically the same point as contained in the letter of 25 August 1987, was that XIB was not entitled to give notice to the defendant company under art 34. Second, as there were issues relating to the title of the shares and as the guarantees and the memoranda were executed in and subject to the law of Hong Kong, these issues should be determined by the court in Hong Kong and this court should decline to exercise its jurisdiction under s 194. The defendants submitted that the proper procedure should be by way of a prior action against Lie Mo Meng and Lie Mo Kwang for a declaration directing both of them to give notice to the defendant company to transfer the shares to XIB.

Let me first set out the relevant statutory provisions in the Companies Act (Cap 50) which govern this matter:

128(1) If a company refuses to register a transfer of any shares, debentures or other interests in the company it shall, within one month after the date on which the transfer was lodged with it, send to the transferor and to the transferee notice of the refusal.

(2) Where an application is made to a company for a person to be registered as a member in respect of shares which have been transferred or transmitted to him by act of parties or operation of law, the company shall not refuse registration by virtue of any discretion in that behalf conferred by the articles unless it has served on the applicant, within one month beginning with the day on which the application was made, a notice in writing stating the facts which are considered to justify refusal in the exercise of that discretion.

(130)(1) Every company shall ... within one month after the date on which a transfer (other than such a transfer as the company is for any reason entitled to refuse to register and does not register) of any of its shares or debentures is lodged with the company, complete and have ready for delivery all the appropriate certificates and debentures in connection with the allotment or transfer.

(3) If any company...