A minority shareholder in a private company incorporated in Singapore generally has to accept the decisions of the directors and the majority shareholders. He does, however, have rights to information and protection from certain conduct. These are set out in the Companies Act. The articles of association of a company also confer further rights to a minority shareholder and it is usual for an investor taking a significant minority stake in a company to negotiate for specific rights (for instance, veto rights on any new issuance of shares) to be included in the articles.

The most important right under the Companies Act is the right to attend and vote at general meetings. A company is required to hold a general meeting annually and the directors are required to lay the company’s financial statements before the shareholders. The financial statements comprise a profit and loss account accompanied by a balance sheet. As they provide critical information about a company’s profits or losses, liquidity and debt leverage, a shareholder should try to understand them. It is commonly accepted that the inability of a company to lay its accounts before its shareholders within the prescribed timeframe without providing any explanation is a “red flag” that warrants shareholders to pay close attention to the company.

A further right of shareholders is to vote on resolutions to pay a dividend and to elect (as well as remove) the company’s directors. The manner in which directors are to be appointed (or removed) is generally stipulated in the company’s articles of association.

Shareholders’ approval also needs to be sought for the payment of directors’ fees in respect of their office. Directors’ fees paid to a director as a director are different from a salary paid to a director as an employee. The company needs to obtain shareholders’ approval for payment of the former, but the directors can approve the latter as that is a management decision that is usually made by the board of directors.

The Accounting and Corporate Regulatory Authority (usually referred to as ACRA) is the regulatory agency entrusted with the administration of the Companies Act. It takes the non-compliance by a company with the provisions of the Companies Act seriously and is known to actively prosecute directors for, among other infringements, the failure to observe the obligations relating to calling of annual general meetings.

A shareholder also has a right to inspect the minutes of a company’s general meetings (but not board minutes). This will, at a minimum, inform him of the resolutions passed by the shareholders. While most resolutions to be passed by the shareholders will require a simple majority vote (that is, more than 50%) of those present and voting, certain resolutions such as those relating to the amendments to the memorandum of association and the winding-up of a company will need a 75% majority vote.

The Companies Act also confers a right on any two or more shareholders with a combined stake of at least 10% of the share capital to requisition a general meeting.

A minority shareholder is entitled to be treated fairly and equitably. This means that an aggrieved shareholder may seek redress from the High Court of Singapore if: -

  1. the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the shareholders including himself, or in disregard of his or their interests as shareholders; or
  2. some act of the company has been done or is threatened or that some resolution has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the shareholders (including himself).

The Court has the discretion to order a wide range of remedies including ordering a “buy-out” of the aggrieved minority shareholder’s stake or order a winding-up of the company.

A minority shareholder is further entitled to have the provisions of the memorandum and articles of association observed. He may therefore apply to court to restrain an impending breach of any such provision or an act which would amount to such a breach.

Additionally, if a minority shareholder feels that a wrong has been done to the company and this has not been redressed, he can apply to the High Court for leave to bring an action in the name and on behalf of the company, or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.

In cases where there are suspected commercial or financial crimes, the Commercial Affairs Department, being the principal white-collar crime investigation agency in Singapore, may be involved.