Re Iniaga Building Supplies (S) Pte Ltd

• Jurisdiction: Singapore
• Judge: L P Thean JA
• Judgment Date: 14 May 1994
• Neutral Citation: [1994] SGHC 142
• Date: 14 May 1994
• Subject Matter: Whether any other relief available to the petitioners,Petitioners ceasing to participate in the conduct of the company's business pursuant to agreement to sell their shares to co-director of company,"Just and equitable" grounds,Whether petitioners "ousted" from participation in conduct of the company's business,Companies,Considerations applicable,Winding up,Co-director subsequently reneging on agreement to buy the shares
• Docket Number: Companies Winding Up No 232 of
• Published date: 19 September 2003
• Defendant Counsel: Shanmugam and Irene Wu (Allen & Gledhill)
• Court: High Court (Singapore)
• Plaintiff Counsel: Tok Boon Leong (RCH Lim & Co)

Cur Adv Vult

This is a petition by two shareholders of Iniaga Building Supplies (S) Pte Ltd (the company), Yang Kwong Nyen Jack (Jack) and Yang Thye Nyen Frederick (Frederick), who are brothers, to wind up the company on just and equitable grounds. The petition was opposed by the other shareholders, Tan Kian Chye (Tan), Lai Sooi Kheng (Lai) and Kok Chee Moon (Kok).

The company was incorporated on 7 February 1987 with an authorized capital of $200,000 divided into 200,000 ordinary shares of $1 each, of which 100,000 shares have been issued and are fully paid. These shares are held in equal proportions by the five shareholders. All five of them, at all material times, were the only directors of the company. The business of the company is import and export of building materials and, in particular, polycarbonated sheets. The company commenced business soon after the incorporation. The five of them also incorporated a few companies in Malaysia, namely: Iniaga (Sdn) Bhd, Imarco Sdn Bhd, Iniaga (Sarawak) Sdn Bhd, Vinatech Sdn Bhd and Iniaga Engineering Sdn Bhd. Iniaga (Sdn) Bhd at all material times carried on the same business in Malaysia as that carried on by the company. As regards the other companies, it is not clear what business they carried on. It is also not clear in what proportions the shares in these Malaysian companies were held and whether there are other persons, apart from the five of them, holding shares in one or more of the Malaysian companies. But these matters are not material to the issue before me.

The business of the company in Singapore was run by Jack and Tan, and that of Iniaga (Sdn) Bhd in Malaysia by Lai and Kok. Frederick appeared to be involved in the businesses of both the companies. At all material times until November 1991, he was co-ordinating the two companies. There was, however, a dispute as to the precise scope of his duties, but for the purpose of this petition the scope of his duties is not material.

In August 1991, differences arose between the Yang brothers and the other three shareholders of the company. These differences centred on the management of Iniaga (Sdn) Bhd but the precise nature of their disagreement was not clear. The petitioners complained that Lai and Kok resorted to a practice of invoicing their customers for materials supplied at a price below cost in order to evade custom duty, but this was denied by Tan. Again, whether this complaint is true or not is not material to these proceedings. The undisputed fact remained that, at about that time, the petitioners were not in good terms with the rest of the shareholders. With the passage of time, their relationship with the other shareholders progressively deteriorated. On 22 November 1991, both of them resigned from their directorships in Iniaga (Sdn) Bhd. On 25 November 1991, the petitioners incorporated a company in Singapore by the name Deo Vante Pte Ltd but no business was carried on by it at that time. There were then verbal discussions between the petitioners and Tan, and probably the other shareholders also, for the sale of the petitioners` shares to Tan and the other shareholders. At about that time, Tan padlocked the cabinets in the office, and the petitioners complained that they were prevented thereby from gaining access to the company`s books and documents.

On 5 December 1991, there was a meeting of the five of them, and following that, on 6 December 1991, all of them signed a `memorandum of understanding` which provided, inter alia, that the petitioners would dispose of their shares in the company to the remaining shareholders at a price based on the value or net worth of the company`s assets as at 30 November 1991. Subsequently there was a variation to this agreement and, at a directors` meeting held on 21 January 1992 presided by Tan, an agreement was reached between the petitioners and Tan whereby the petitioners would sell to Tan all their shares in the company for a total sum of $75,000 payable by six instalments. The following agreement was recorded in the minutes of the meeting:

3 Disposal of shares

M/s Yang Thye Nyen and Yang Kwong Nyen offered to dispose of their respective 20,000 shares of S$1 each in the company to Mr Tan Kian Chye for a total cash consideration of S$75,000 (Singapore Dollars Seventy-Five Thousand only) each to be paid in the following manner:

Due date for payment: Amount (S$)

31 January 1992 5,000.00

29 February 1992 10,000.00

31 March 1992 15,000.00

30 April 1992 15,000.00

30 May 1992 15,000.00

30 June 1992 15,000.00

75,000.00

The offers were accepted by Mr Tan Kian Chye.

Resolved that:

(a)(i) In this respect, a sale and purchase agreement be prepared by a firm of solicitors appointed by Mr Tan Kian Chye for execution by Mr Tan Kian Chye, and M/s Yang Thye Nyen and Yang Kwong Nyen.

(a)(ii) Immediately upon execution of the sale and purchase agreement by parties mentioned in para 3(a)(i) above, the following actions be taken:

&95; M/s Yang Thye Nyen and Yang Kwong Nyen resign as directors of the company.

&95; M/s Yang Thye Nyen and Yang Kwong Nyen withdraw as personal guarantors for the company`s banking facilities with Malayan Banking Bhd, Bukit Timah Branch, and Oversea-Chinese Banking Corp Ltd, East Coast Branch.

&95; Mr Yang Kwong Nyen withdraw as authorized joint-signatory to the company`s bank accounts with Malayan Banking Bhd, Bukit Timah Branch, and Oversea-Chinese Banking Corp Ltd, East Coast Branch.

(b) All the members of the company abide by the terms of the agreement worked out in this meeting.

About two months later, an elaborate draft agreement was prepared by Tan`s solicitors and handed to the petitioners. In response, the petitioners` solicitors on 27 March 1992 proposed certain amendments to the draft. It took another two months or thereabout for Tan`s solicitors to reply. On 20 May 1992, Tan`s solicitors, who then also acted for the company, wrote to the solicitors for the petitioners rejecting the proposed amendments, alleging breaches of duties by the petitioners as directors of the company and maintaining that Tan had no obligation to purchase the petitioners` shares of the company and that there was no concluded agreement. Obviously, by then the differences between the petitioners and their fellow members had come to a head. On 10 June 1992, a notice was issued, which appeared to have been initiated by Tan, calling for an extraordinary meeting of the company to be held on 24 June 1992 for passing two ordinary resolutions: one for the removal of the petitioners as directors of the company and the other for increasing the monthly salary of Tan from $3,200 to $5,000 with retrospective effect from 1 January 1992. Legal proceedings were taken by the petitioners to restrain Tan, Lai and Kok from holding the extraordinary general meeting but were unsuccessful. The resolutions were passed and the petitioners were removed as directors of the company.

Since January 1992, no salaries were paid to the petitioners by the company. Presumably, the reason was that the petitioners had agreed to sell their shares and were leaving the company. At about this time, Jack`s room in the company`s office was demolished and the office was repartitioned. After January 1992, the petitioners proceeded to start their business in the name of Deo Vante Pte Ltd, which on 2 March 1992 changed its name to Tri-Arch Building Supplies (Singapore) Pte Ltd.

On 28 September 1992, the petitioners presented this petition to wind up the company. The principal complaint of the petitioners is stated in para 9 of the petition which may be summarized as follows: that Tan, Lai and Kok, as the majority shareholders of the company, excluded the petitioners from the management of the company, managed the company as if it were their own in disregard of the rights and interests of the petitioners, and acted in breach of the mutual understanding that the petitioners should participate in the management of the business of the company. The petitioners founded their complaint on the basis that the company was set up by the five of them, Jack, Frederick, Tan, Lai and Kok, as a joint venture; that the joint venture was set up on the mutual understanding that each of them would have equal shares in the company and have equal participation in the conduct of the business of the company; that the company was in effect in the nature of a partnership, the continued existence...