i-law

Lloyd's Maritime and Commercial Law Quarterly

HOW TO AVOID A DERIVATIVE ACTION: A CAUTIONARY TALE FROM SINGAPORE

Samantha S Tang*and Alan K Koh

Petroships Investments Ltd v Wealthplus
When confronted with a derivative action brought by a disgruntled shareholder, a natural reaction of the defendant directors would be to make it go away—even if it meant erasing the company from existence. In Petroships Investments Pte Ltd v Wealthplus Pte Ltd 1 the defendant directors, who were also in control of the majority of the company’s voting power through holding companies, caused the company to enter members’ voluntary liquidation. Should the directors be allowed to avoid the derivative action by killing the company? The Singapore Court of Appeal seems to have said “yes”. This case should stand as a cautionary tale to Commonwealth observers of how clever lawyers can use “settled” law to force unsettling outcomes.

The facts and procedural history

Wealthplus Pte Ltd (“Wealthplus”) was an investment vehicle established in 1998 by Alan Chan (“AC”) and the Koh Brothers Group Ltd (“KBGL”) to exploit rights to develop land in China. AC held his investment through Petroships Investment Pte Ltd (“Petroships”), which was a 10 per cent shareholder in Wealthplus. KBGL held its investment through Megacity and Koh Brothers Building and Civil Engineering Contractor (Pte) Ltd (“KBBCE”), which collectively held the remaining 90 per cent of shares in Wealthplus.2 From July 1998 to September 2009, Wealthplus’ three directors consisted of two nominees


Case and comment

347

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.

Copyright © 2024 Maritime Insights & Intelligence Limited. Maritime Insights & Intelligence Limited is registered in England and Wales with company number 13831625 and address 5th Floor, 10 St Bride Street, London, EC4A 4AD, United Kingdom. Lloyd's List Intelligence is a trading name of Maritime Insights & Intelligence Limited.

Lloyd's is the registered trademark of the Society Incorporated by the Lloyd's Act 1871 by the name of Lloyd's.