Senda International Capital Ltd v Kiri Industries Ltd and others

JudgeJudith Prakash JA
Judgment Date12 February 2020
Neutral Citation[2020] SGCA(I) 1
Citation[2020] SGCA(I) 1
Date12 February 2020
Published date19 February 2020
Hearing Date25 October 2019
Plaintiff CounselToh Kian Sing SC, Mark Cheng Wai Yuen, Chew Xiang, Priscilla Soh Yu Xian, Darren Lim Wee Teck and Wang Yufei (Rajah & Tann Singapore LLP)
Docket NumberCivil Appeal No 23 of 2019
Defendant CounselJimmy Yim Wing Kuen SC, Teng Po Yew and Eunice Lau Guan Ting (Drew & Napier LLC),Dhillon Dinesh Singh, Lim Dao Kai, Margaret Joan Ling Wei Wei, Teh Shi Ying and Dhivya Naidu (Allen & Gledhill LLP)
CourtCourt of Appeal (Singapore)
Subject MatterOppression,Minority shareholders,Civil Procedure,Companies,Costs
Judith Prakash JA (delivering the judgment of the court): Introduction

These appeals arose out of the breakdown of a joint venture between the appellant, Senda International Capital Ltd (“Senda”), and the first respondent, Kiri Industries Ltd (“Kiri”). Together, Senda and Kiri own virtually the entire issued share capital of DyStar Global Holdings (Singapore) Pte Ltd (“DyStar”), the sixth respondent. After disputes arose, Kiri sued Senda for minority oppression in the running of DyStar, and Senda counterclaimed for breaches of the shareholders’ agreement.

The trial of the parties’ various claims was held in stages. The first stage dealt with liability. On the issue of liability, a three-judge coram (“the Judges”) of the Singapore International Commercial Court (“the SICC”) found that minority oppression was established and ordered Senda to buy out Kiri’s shareholding in DyStar. The Judges substantially dismissed Senda’s counterclaim which alleged that Kiri had breached the non-competition clause in the shareholders’ agreement. Their reasons are found in DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others and another suit [2018] 5 SLR 1 (“the Main Judgment”). The parties then returned to the SICC for the second stage: the hearing of evidence and arguments regarding remedies.

The present appeal arises out of the decision of the Judges delivered at the end of the second stage. One important issue dealt with the valuation of Kiri’s shares in DyStar. The SICC decided that no minority discount should be factored into the valuation of Kiri’s shares. This decision was challenged before us. The second part of the appeal is against the costs orders made by the Judges in relation to the actions and the counterclaim.


The facts have been set out in detail in our decision in Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal [2019] 2 SLR 1 (“Main Judgment (CA)”), which is the decision on the appeal against the Main Judgment. For the purposes of this judgment, only very brief details of this case will be repeated.

Kiri is a publicly listed company in India and is a well-established player internationally in the dye industry. The managing director of the company is Manishkumar Pravinchandra Kiri (“Mr Manish”), the second respondent. Senda is a wholly-owned subsidiary of Zhejiang Longsheng Group Co Ltd (“Longsheng”), a listed company incorporated in China. Longsheng is also well-known in the business of making and selling dyes. Mr Ruan Weixiang (“Mr Ruan”) is the Chairman and General Manager of Longsheng.

The joint venture

Before Kiri and Longsheng’s involvement in DyStar, there existed a group of companies (“the Pre-Acquisition DyStar”) which was prominent in the dye business. The Pre-Acquisition DyStar was hit by the 2009 global economic crisis. Kiri saw an opportunity. In 2009, Kiri incorporated DyStar and signed an asset purchase agreement with the insolvency administrators of the Pre-Acquisition DyStar. Under this agreement, DyStar was to buy selected assets of the Pre-Acquisition DyStar.

Kiri, however, needed funding to complete the purchase of the Pre-Acquisition DyStar. Mr Manish therefore discussed with Mr Ruan the possibility of Longsheng investing in DyStar. Following that, Well Prospering Limited (“WPL”), a wholly-owned subsidiary of Longsheng, and Kiri executed a term sheet. It provided for an investment from WPL of €22m comprising equity of €3m and debt under a compulsory convertible zero-coupon bond of €19m issued by DyStar. WPL would have an 18.75% shareholding in DyStar before the conversion of the bond. Kiri would subscribe €13m and would hold 81.25% of the shares in DyStar.

Subsequently, Kiri and Longsheng signed two documents: (a) the Share Subscription and Shareholders Agreement (“the SSSA”); and (b) the Convertible Bond Subscription Agreement. Under these two agreements, WPL would provide funding as follows: WPL would subscribe for one ordinary share in DyStar at a price of S$10, and a €22m convertible zero-coupon bond issued by DyStar that could be converted into ordinary shares of DyStar; the convertible bond would have a maturity period of five years and seven days during which the debt could be converted to equity at any time; and WPL would be entitled to convert all or part of the principal amount outstanding under the convertible bond at S$10 per DyStar share. Any part of the outstanding principal amount not converted into shares would be redeemed by DyStar.

In February 2010, Longsheng appointed three directors (“the Longsheng Directors”) to the DyStar board of directors (“the Board”) while Kiri appointed two directors (“the Kiri Directors”). Thereafter, Longsheng controlled the Board through the Longsheng Directors. Selected assets of the Pre-Acquisition DyStar were eventually acquired by DyStar on 4 February 2010. For the acquisition of DyStar, Kiri invested €13m and arranged for bank finance of €65m. The bank finance, as well as the investment of €22m from Longsheng were guaranteed by Kiri. Those were Kiri’s financial contributions to DyStar.

The first Board meeting took place on 5 March 2010. At this meeting, Mr Manish was appointed Chairman of the Board. Two days later, the Board resolved that Mr Ruan be appointed as its co-Chairman. Mr Ruan then gave an assurance that Longsheng would do its best to provide financial support to DyStar, while Mr Manish emphasised that Kiri could not provide any further financial support for DyStar. On 25 May 2012, Mr Manish stepped down as co-Chairman of the Board, but he remained a director.

On 14 July 2012, the Board passed a resolution approving the transfer of the convertible bond from WPL to Senda. On 26 December 2012, Senda converted all the debt under the convertible bond into equity. This conversion made Senda the majority shareholder of DyStar: Senda held 4,359,520 shares in DyStar, equivalent to about 62.43% of the total number of shares, while WPL held one share, and Kiri held 2,623,354 shares, equivalent to about 37.57% of the total number of shares.

The breakdown in relationship and the ensuing litigation

Kiri’s unhappiness with Senda began after the conversion. In SICC Suit No 4 of 2017 (“Suit 4”), Kiri claimed that Senda had engaged in a sustained course of commercially unfair conduct and detailed many instances of alleged oppressive conduct. The Judges found that the following instances of oppressive conduct had been established: Senda caused DyStar to enter into various transactions with Longsheng and Longsheng-related entities contrary to DyStar’s commercial interests (including, as described below, the Related Party Loans); Senda caused DyStar to make a payment to Mr Ruan of US$2m in 2014 (“the Special Incentive Payment”); Senda caused DyStar to assign a patent to Longsheng on the basis that such assignment would be temporary but Longsheng thereafter wrongly retained and exploited the patent; Senda caused DyStar to make payment of substantial fees in 2015 to Longsheng and to make a provision for substantial fees in 2016 for alleged services and support provided by Longsheng to DyStar (“the 2016 Longsheng Fees” and collectively, “the Longsheng Fees”); Senda caused Kiri and the Kiri Directors to be excluded from meaningful participation in the management of DyStar’s business; and Senda prevented Kiri from enjoying the benefits of its investment in DyStar as a shareholder by refusing to have the DyStar Board declare a dividend for 2014.

As relief for the oppressive acts, the Judges ordered Senda to buy out Kiri’s shares in DyStar.

In Suit 4, Senda counterclaimed against Kiri and its related parties for breaches of the non-compete and non-solicitation clause (cl 15) in the SSSA, and for the tort of lawful and/or unlawful means conspiracy. At the same time as Suit 4 was commenced, DyStar commenced SICC Suit No 3 of 2017 (“Suit 3”) against Kiri and its related parties. DyStar claimed, inter alia, for the same breaches of the non-compete and non-solicitation clause in the SSSA as those in the counterclaim in Suit 4. The Judges held that only one instance of breach of cl 15, in relation to one of DyStar’s customers, called FOTL, was established (Main Judgment at [321]). They decided that the breach was only by Kiri and not by its related parties. Senda and DyStar appealed against the Main Judgment in Civil Appeal No 122 of 2018 (“CA 122”) and Civil Appeal No 126 of 2018 (“CA 126”) respectively.

After the Judges delivered their decisions in Suits 3 and 4, they directed that a case management conference (“CMC”) be held. At the CMC on 23 November 2018, parties submitted on the following issues: whether the valuation of Kiri’s shareholding should be undertaken by (A) the court, (B) a valuer appointed by the court or the parties, or (C) some other method and, if so, what method; whether a discount should be factored into the valuation of Kiri’s shareholding given that Kiri was a minority shareholder and, if so, how this should be assessed in the valuation process (the “Minority Discount Issue”); whether Kiri was entitled to interest on the amount payable to it by Senda pursuant to the buy-out order; how (if at all) the court’s rulings allowing part of DyStar’s claims in Suit 3 and Senda’s counterclaim in Suit 4 might affect the valuation of Kiri’s shareholding (“the Counterclaim Issue”); the process and procedure for assessment of the loss caused by the various acts of oppression by Senda we had found; and the appropriate order for costs in respect of Suits 3 and 4 (“the Costs Issue”). The Judges delivered oral grounds of decision on these issues on 8 January 2019 (“Oral GD”) and issued their written grounds of decision on 12 March 2019, in Kiri Industries Ltd v Senda International Capital Ltd and another [2019] SGHC(I) 02 (“Written GD”). At the time of the Oral GD and the Written GD, the appeal...

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