Nanyang Commercial Management Pte Ltd v Matex International Ltd [2025] SGHC 190

The claimant in this case, Nanyang Commercial Management Pte Ltd (“Claimant”), is the largest shareholder of the defendant company, Matex International Ltd (“Defendant”). Arising from disputes between the Claimant and the Defendant, the Claimant had on 7 July 2025 requisitioned an extraordinary general meeting (“EGM”) of the Defendant’s shareholders, with a view to voting the Defendant’s executive directors off the board. Four days after that, on 11 July 2025, the Defendant entered into two share subscription agreements – one agreement was with one Lim Yan Peng (“Lim”) and the other with one Gan Peiling (“Gan”) (“Subscription Agreements”).

The Claimant filed the present originating application (“OA”) seeking, inter alia, an injunction restraining the Defendant from completing the Subscription Agreements until the EGM requisitioned by the Claimant is held. The Claimant based its application on two grounds.

I heard the parties on 22 August 2025 and reserved my judgment.

In preparation for release of my judgment, I had on 17 September 2025 sought parties’ clarification on a few residual points. Unbeknownst to me, parties had just signed a settlement agreement two days before (ie, on 15 September 2025). On 18 September 2025, Defendant’s counsel responded to my request with a letter updating that parties had reached an amicable resolution and would be applying to discontinue the OA. I thus called for today’s hearing to get more details from parties. The Claimant explained that although the settlement agreement was signed on 15 September 2025, various steps had to be immediately executed before parties could say for sure that the settlement will not fall through. These included the resignation of the Defendant’s executive directors from the board (ultimately effected on 15 September 2025) and the cancellation of the Subscription Agreements (which cancellation was notified to the Claimant on the night of 21 September 2025).

While the Claimant sought to discontinue the OA, Claimant’s counsel nevertheless requested that I publish the judgment which I had already prepared for this case, given the range of legal issues that parties had canvassed in their submissions. Defendant’s counsel agreed.

Having considered the matter, I allow the parties’ application to discontinue the OA.

I also exercise my discretion to publish my judgment in this case, as per parties’ request, notwithstanding the discontinuance of the OA. While parties did not cite any authorities on this, it is clear that the court has a discretion to release its judgment even after amicable resolution has been reached: see Tan Ng Kuang Nicky v Metax Eco Solutions Pte Ltd [2021] 1 SLR 1135 (“Nicky Tan”) at [81]−[84]. One needs to be mindful that the court will not answer hypothetical questions or opine on academic points, just because parties would like it to: Nicky Tan at [85]. However, various factors in this case militate in favour of me releasing my decision. In particular, parties’ submissions had traversed various issues of law, for which there is some benefit to the court publishing its views. Furthermore, by the time I was apprised of parties’ settlement, preparation of this judgment had already progressed to an advanced stage, meaning that release of the judgment would entail the consumption of only marginal judicial resources.

I now move to the merits of this case. Of the two grounds which the Claimant relied on for its application, set out at [2] above, I find as follows:

Accordingly, had the OA not been discontinued, I would have granted an injunction pursuant to the second ground above, restraining the Defendant from completing the Subscription Agreements unless they are approved either by a board resolution complying with the Defendant’s constitution or by the shareholders at a general meeting.

Facts

The Defendant is currently listed on the Catalist board of the Singapore Exchange (“SGX”). Founded in 1989, it is engaged primarily in the supply of textile dyes and speciality chemicals. Its founder, Dr Alex Tan Pang Kee (“Dr Tan”), also serves as the Defendant’s Chief Executive Officer (“CEO”). The Defendant’s board comprises six directors, of whom two are executive directors and four are non-executive:

Prior to the Claimant becoming a shareholder in the Defendant, Dr Tan was the largest shareholder, holding about 24.32% of the Defendant’s shares. On 3 November 2024, the Claimant entered into a subscription agreement with the Defendant, under which it purchased 154,000,000 new shares in the Defendant. This placement of shares diluted Dr Tan’s shareholdings in the Defendant from 24.32% to 17.06%. In turn, the Claimant became the Defendant’s largest shareholder, owning 29.86% of the Defendant’s shares. The Claimant purchased this stake for 2.7¢ per share, being a premium of 50% over the volume weighted average share price at the time.

Under the Catalist Rules, a “controlling interest” is defined to include a stake which confers 15% or more of the voting rights in the issuer. The subscription by the Claimant was thus deemed to be a transfer of a controlling interest which, under Rule 803 of the Catalist Rules, had to be approved by the issuer’s shareholders in general meeting. Consequently, a meeting of the Defendant’s shareholders was held on 15 January 2025, during which the Claimant’s subscription was approved. The subscription was completed thereafter, on 24 January 2025.

Barely six months later, on 28 April 2025, an annual general meeting (“AGM”) of the Defendant was held, at which its shareholders authorised the directors to issue further shares in the Defendant, so long as the issue occurred prior to the next AGM (“Share Issue Mandate”). The terms of the Share Issue Mandate are encapsulated in the following resolution tabled at the AGM:

The Share Issue Mandate was approved by 99.97% of the voting shareholders, including the Claimant.

Sometime towards the end of June 2025, disputes began to brew between the Defendant’s executive directors and the Claimant’s sole shareholder and director, Wang Weidong (“Wang”). On 5 July 2025, a meeting was held at Orchard Hotel, where parties attempted to resolve their differences. During the meeting, which was attended by Wang and the Defendant’s officers, including Dr Tan and GL Tan, various options were canvassed, including the procurement of investors to buy out the Claimant’s stake in the Defendant. After this meeting, the following events transpired:

On 11 July 2025, three of the Defendant’s directors, ie, Chairman Wang and the two executive directors (ie, Dr Tan and GL Tan), signed a paper board resolution purporting to sanction the Subscription Agreements with Lim and Gan (referred to at [1] above). The resolution began by noting that the Share Issue Mandate authorised the directors to issue shares in the Defendant, before purporting to sanction the Subscription Agreements in the following terms:

On the same day that the paper board resolution above was signed (ie, 11 July 2025), the Subscription Agreements were signed by Lim, Gan and the Defendant. The agreement with Lim allotted her 108,000,000 new ordinary shares that gave her a 14.88% stake in the Defendant, while the agreement with Gan allotted her 102,000,000 new ordinary shares that gave Gan a 14.06% stake. If completed, these allotments would dilute Dr Tan’s stake from 17.06% to 12.12% and – critically – dilute the Claimant’s controlling stake from 29.86% to 21.22%. The issue price for the Subscription Agreements was 1.71¢ per share, being at a discount of 10% to the volume weighted average share price.

The next day, on 12 July 2025, the three directors who had signed the paper board resolution (ie, Chairman Wang, Dr Tan and GL Tan) attended a physical board meeting, during which they discussed the Defendant’s obligations under the Catalist Rules to announce the Subscription Agreements.

Parties’ submissions

As alluded to at [2] above, the Claimant challenged the Subscription Agreements on two grounds, which I elaborate on below.

The Subscription Agreements were motivated by an improper purpose

The Claimant alleged that the Subscription Agreements were executed by the Defendant for the improper purpose of diluting the Claimant’s voting power. Specifically, the Claimant alleged that GL Tan had approached both Lim and Gan to acquire shares in the Defendant because these two investors were “friendly” to Dr Tan and GL Tan, the parties having been acquainted with one another for many years. Combining the stakes of the executive directors (ie, 17.06% for Dr Tan and 0.11% for GL Tan) with Lim’s stake of 14.88% and Gan’s stake of 14.06% gave rise to a voting bloc of over 41% – far exceeding the Claimant’s reduced stake of 21.22%. The Claimant contended that the executive directors had obviously enlisted the cooperation of Lim and Gan and planned to pool their collective voting power to defeat the Claimant’s attempt to remove Dr Tan and GL Tan from the board, at the impending EGM requisitioned by the Claimant.

The Claimant further highlighted that the Subscription Agreements were structured in a sinister manner, with Lim and Gan each getting a percentage stake in the Defendant falling just shy of the 15% threshold stipulated in Rule 803 of the Catalist Rules – with Lim acquiring 14.88% and Gan acquiring 14.06%. Had the 15% threshold been crossed, this would have triggered the requirement in Rule 803 of the Catalist Rules (see [10] above) that the issue of shares be approved by the shareholders in a general meeting, in which case the Claimant would certainly have voted against the Subscription Agreements.

To support the inference that the Subscription Agreements were executed for an improper purpose, the Claimant highlighted the following:

The Defendant, on its part, maintained that the allotment of shares to Lim and Gan germinated from an entirely benign impetus. According to the Defendant, the meeting in Orchard Hotel on 5 July 2025 (at [12] above) had galvanised GL Tan into approach Lim and Gan, to see if they were willing to purchase the Claimant’s shares. Both had expressed interest. It was only after Lim and Gan had been approached by GL Tan that the latter came to know that the Claimant had, by its letter of 9 July 2025 (at [12(c)] above), intimated that it was no longer interested in selling its shares in the Defendant. By then, the opportunity for Lim and Gan to buy shares in the Defendant had already been “brought into focus” and, as both investors remained keen on investing in the Defendant, they were onboarded as shareholders – albeit by the placement of new shares rather than by the purchase of the Claimant’s shares.

The Defendant also refuted the factors listed at [19] above, which the Claimant had raised to support its allegation that the Subscription Agreements were executed for an improper purpose. The Defendant explained as follows:

The steps taken by the board to sanction the Subscription Agreements were invalid for failure to comply with the Defendant’s constitution

The second plank in the Claimant’s case was that the steps taken by the Defendant’s board of directors to sanction the Subscription Agreements were invalid, on account of failure to comply with the procedural requirements prescribed by the Defendant’s constitution. For example, the Claimant contended that the paper board resolution of 11 July 2025 (referred to at [13] above) was invalid, as it failed to garner the requisite board majority stipulated in the Defendant’s constitution. While a board meeting was held the next day on 12 July 2025 (see [15] above), the Claimant contended that this meeting could not have ratified the paper board resolution signed the day before, as the meeting failed to meet the constitution’s quorum requirements.38

The Defendant, on its part, insisted that the steps taken by its board to sanction the Subscription Agreements had fully complied with the Defendant’s constitution and that the Subscription Agreements should consequently be regarded as having been validly sanctioned by the board. To that end, the Defendant raised various arguments on how the relevant provisions in its constitution should be properly construed.

My Decision

I will now canvass, in sequence, the two grounds undergirding the Claimant’s challenge to the Subscription Agreements as set out at [2] above, ie:

Whether the Subscription Agreements were motivated by an improper purpose

To recapitulate, the Claimant’s contention was that the issue of shares to Lim and Gan were motivated by the improper purpose of diluting the Claimant’s voting power. That in turn formed the foundation on which the Claimant built the following arguments:

The Claimant thus argued that the issue of shares to Lim and Gan, being for the improper purpose of diluting the Claimant’s voting power, constituted a breach of fiduciary duty by the Defendant’s directors. That consequently violated an implied term in the Defendant’s constitution that shares would be issued only in accordance with the directors’ fiduciary duties. Such a violation of the Defendant’s constitution was something which a shareholder, such as the Claimant, possessed the standing to restrain by way of legal action.

I agree that in the face of a clear violation of a company’s constitution, shareholders do possess the standing – in their capacity as members of the company – to bring a court application to restrain that violation. This stems from the following trite positions at law:

This provision enshrines the principle that a company’s constitution constitutes a contract between its members and itself, as well as between its members inter se.

An example of how a shareholder successfully restrained a violation of the company’s constitution is seen in the case of Ng Tang Hock v Teelek Realty Pte Ltd [2020] SGHC 214 (“Teelek”). In that case, the plaintiff shareholder sued the company and its director seeking, inter alia, cancellation of certain transfers of shares. The plaintiff claimed that the transfers violated the company’s articles of association, under which the plaintiff had a right of first refusal over the shares (Teelek at [1], [26] and [33(b)]). The High Court granted the application to cancel the transfers, holding (at [64]−[66]) that they were invalid for contravening the company’s articles of association. The defendants’ appeal was allowed in part but this aspect of the High Court’s holding was undisturbed: Teelek Realty Pte Ltd v Ng Tang Hock [2021] 2 SLR 719 at [73].

While I have no issues with the proposition that members possess the standing to apply to restrain violations of the company’s constitution, the difficulty I face stems from the Claimant’s submission that the term allegedly violated, which violation it now seeks to restrain, is one which should be implied within the Defendant’s constitution: see [25(b)] above. Specifically, the Claimant asserted that the Subscription Agreements violated an implied term in the constitution that directors issuing new shares must do so in accordance with their fiduciary duties. To support its submission, the Claimant relied on the case of Tianrui (International) Holding Co Ltd v China Shanshui Cement Group Ltd [2024] 3 WLR 986 (“Tianrui”), where the Privy Council observed (at [72]):

With respect, I am not persuaded by the Claimant’s submission that such a term should be implied in the Defendant’s constitution. Any implication of terms should, at the very least, cross the threshold of necessity: Chan Siew Lee v TYC Investment Pte Ltd [2015] 5 SLR 409 at [37]. With that in mind, I see no necessity to imply a term that the allotment of shares must accord with the directors’ fiduciary duties. There is already a sufficient arsenal of remedies which shareholders may avail themselves of when seeking redress for breach of directors’ fiduciary duties:

It also bears highlighting that breaches of directors’ fiduciary duties are typically construed as wrongs against the company. Legal actions seeking redress for purely corporate wrongs should be commenced by the proper plaintiff, being the company itself, or via derivative actions in the company’s name. As explained by the Court of Appeal in Ng Kek Wee v Sim City Technology Ltd [2014] 4 SLR 723 (“Ng Kek Wee”), the proper plaintiff principle is “the consequence of the fundamental doctrine of separation of legal personality that underpins company law” (at [65]). The Court of Appeal went on (in the same paragraph) to highlight the sound practical considerations undergirding the principle:

Shareholders are thus not entitled to bring personal actions under the auspices of s 216 of the Act to remedy breaches of director’s fiduciary duties that are solely corporate wrongs: Ong Heng Chuan v Ong Teck Chuan [2021] 2 SLR 262 (“Ong Heng Chuan”) at [33]. I see good sense in extending that constraint to personal actions by shareholders seeking to restrain breaches of fiduciary duties by prosecuting them as violations of the company’s constitution.

With that in mind, I would exercise caution before acceding to a shareholder’s request to imply terms in a company’s constitution proscribing the directors from doing this or that in breach of their fiduciary duties. An overly indulgent response could potentially pave the way for shareholders to bring personal actions that seek to remedy what are in essence purely corporate wrongs, under the guise of exercising their personal right to restrain a breach of the contract deemed by s 39 of the Act to exist between them and the company. Of course, this concern can be ameliorated by setting up guard rails downstream, such as requiring shareholders bringing such actions to demonstrate that the breach of fiduciary duty was not just a corporate wrong but had impacted them personally: see Ong Heng Chuan at [33]. Still, circumspection is in order when evaluating the upstream issue of whether the floodgates should even be widened to facilitate such actions, through implying terms in a company’s constitution hinging on breaches of directors’ fiduciary duty, when there are no discernible violations of the constitution’s express terms to begin with. One might question the merits of doing so since (as highlighted at [29] above) breaches of fiduciary duties by directors can already be tackled by a suite of established options that come with their own safeguards. Similar concerns were expressed in an article by Chong Kai Sheng & Ezra Lim Pin, “A New Arrow in the Shareholder’s Quiver?” (2025) 37 SAcLJ 563, where the learned authors astutely warned (at para 20):

In any event, I need not express any conclusive views about whether Tianrui should be applied to the present context. Even if a term to the effect that the issue of shares must accord with the directors’ fiduciary duties is implied, the evidence as it currently stands does not permit me to affirmatively conclude that such an implied term was breached in fact. Admittedly, the circumstances of this case may not lend themselves to a particularly charitable view as to why the shares had been issued to Lim and Gan in the way that they were. There is some force in the Claimant’s complaint (at [19(a)] above) about the timing of the share issue being highly coincidental. The Defendant explained that the Subscription Agreements had to be inked on 11 July 2025 because the one-month black-out period was going to kick in the next day (see [21(a)] above). However, Lim had been discussing with the Defendant for around five years as regards purchasing a stake in the Defendant, while Gan had similarly been exploring a collaboration with the Defendant “over the years”. Given these lengthy time horizons, the Defendant would have had ample opportunity to issue shares to Lim and Gan when no blackout period was at issue. Yet, the Defendant chose to issue substantial shareholdings to Lim and Gan just four days after the Claimant requisitioned an EGM to remove the executive directors. In addition, the Claimant rightly queried why shares were issued to Lim and Gan at a 10% discount to the volume weighted average share price (see [14] above) when the Defendant had, just three days before (ie, on 8 July 2025), claimed to have found an investor willing to purchase the Claimant’s stake for a premium, at 2.7¢ per share (see [12(b)] above). The Defendant never saw fit to reveal who the mystery investor was.

Having said that, I am constrained by the fact that the Claimant elected to pursue its claim by way of an OA, rather than an originating claim. The OA process is typically suited for matters that do not involve substantial disputes of fact: see O 6 rr 1(2) and 1(3)(c) of the Rules of Court 2021 (“ROC”). In the present case, both sides filed extensive affidavits portraying their version of the events surrounding the Subscription Agreements. Despite the question marks highlighted in the preceding paragraph, I do not think it is possible for me – given the substantial factual disputes at play – to conclusively rule on the Claimant’s allegation that the Subscription Agreements were motivated by an improper purpose. The true motivations underlying the issue of shares to Lim and Gan would be best determined after the testimonies of the relevant witnesses (such as the directors, Lim and Gan) have been tested on the stand.

I am mindful that one of the key indicators which the Claimant has relied upon, in support of its allegation that the shares had been issued to Lim and Gan for an improper purpose, is that the Defendant was not in need of capital when these shares were issued: see [19(b)] above. This point does not appear to be in dispute, which is of course significant bearing in mind the legal thresholds discussed in the immediately preceding paragraph. As at the point when the Subscription Agreements were signed, the capital previously infused into the Defendant via the Claimant’s purchase of its controlling stake (on 3 November 2024) had not even been subject to any material drawdowns – the Defendant did not refute this. Given the absence of any pressing need for capital when the shares were issued to Lim and Gan, the Claimant submitted that the Subscription Agreements were commercially inexplicable, thus bolstering the inference that they must have been motivated by the improper purpose of diluting the Claimant’s shareholdings. In support of this submission, the Claimant relied on Over & Over Ltd v Bonvests Holdings Ltd [2010] 2 SLR 776 (“Over & Over v Bonvests”), where the Court of Appeal held (at [122]) that:

The question is thus whether issuing new shares when the company is not in need of fresh capital necessarily means that the shares must have been issued for an improper purpose and therefore issued in breach of the directors’ fiduciary duties. That question must be answered in the negative. The passage from Over & Over v Bonvests extracted in the immediately preceding paragraph ought not to be read as standing for any categorical proposition of law that issuing shares for purposes other than to raise capital must necessarily be improper. It is apparent from the judgment that the Court of Appeal was merely explaining how a hasty issue of shares, coupled with the absence of any pressing need for a capital injection, may lend evidential weight to claims that the shares were issued for an improper purpose. This much is clear from the following observation by the Court of Appeal within the same paragraph (at [122]):

As seen from the extract at [34] above, the Court of Appeal in Over & Over v Bonvests had relied on Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 (“Howard Smith”), which is an instructive case for present purposes. In Howard Smith, the Privy Council upheld the lower court’s decision to set aside a share allotment in the face of a positive finding that the allotment was executed with the sole purpose of diluting the majority’s voting power (at 837C). The share allotment was not set aside simply because the company had no immediate need for fresh capital. In fact, the Privy Council in Howard Smith was careful to qualify (at 835C) that it would be too narrow an approach to say that the issue of shares in a company is valid only if the purpose is to raise capital:

In support of its decision, the Privy Council in Howard Smith cited Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co NL (1968) 121 CLR 483 (“Harlowe’s Nominees”). Harlowe’s Nominees involved a shareholder who, in seeking a declaration that an allotment of shares by the company was invalid, made the sweeping submission that any issue of new shares “cannot be maintained as having been bona fide in the interests of the company unless the company had at the time of the exercise an immediate need of the capital to be paid up on the new shares”. The Australian High Court rejected this, holding as follows (at 492−493):

The Australian High Court then made it clear (at 493) that although the power to issue new shares is primarily to enable the raising of capital, there can still be other reasons for which the company can fairly and properly issue shares.

Reverting to the present case, the Defendant explained that the issue of shares to Lim and Gan was not meant to dilute the Claimant’s shareholdings, but rather to build strategic partnerships with entities in which Lim and Gan held major stakes:

Presumably, given that the shares were purchased by Lim and Gan personally rather than by their companies, any such business ventures between their companies and the Defendant would have to be conducted with the appropriate declarations being made by Lim and Gan to their respective boards.

In accordance with the views expressed in Howard Smith and Harlowe’s Nominees, I do not consider it open to me to simply dismiss the commercial considerations listed in the preceding paragraph as improper, simply because they do not relate to the raising of capital. Of course, whether the Subscription Agreements were in fact motivated by these commercial considerations is a separate matter. On that front, I would repeat the view expressed at [33] above: the OA process is not appropriate for me to conclusively determine the veracity of the Defendant’s claims about the commercial motivations underlying the Subscription Agreements. The salient witnesses should preferably have their testimonies tested on the stand.

I would also observe that, as in any instance where “purpose” is introduced as the test for impugning an act, the attendant question which inevitably arises is whether the improper purpose must be the sole purpose or (where it is one of multiple purposes) at least the dominant purpose behind the commission of the act. Indeed, in the context of s 216 of the Act, it has been held that a rights issue would be unfair if there is no commercial reason to raise capital through a rights issue, or if the dominant purpose of the rights issue is to dilute non-subscribing shareholders: see The Wellness Group Pte Ltd v OSIM International Ltd [2016] 3 SLR 729 at [183]. In that vein, even if the improper purpose alleged by the Claimant (ie, diluting the Claimant’s voting power) existed, its relative weight vis-à-vis the other commercial purposes professed by the Defendant at [38] above (if they existed) in motivating the Subscription Agreements is also an issue best determined at a trial.

That the factual underpinnings behind the improper purpose issue are not entirely straightforward is underscored by the fact that the Claimant itself had voted in favour of the Share Issue Mandate, despite the mandate having been procured at a point when (according to the Claimant’s own case ) the Defendant had no need for additional capital. The Claimant had thereafter even recommended, on multiple occasions, that the Defendant issue new shares to various parties, pursuant to the Share Issue Mandate. The Claimant’s course of conduct thus contradicted its contention that it was improper for the Defendant to issue new shares when there was no need for fresh capital.

The Claimant also alleged that the Subscription Agreements failed to comply with the Catalist Rules and that this was indicative of the Defendant’s directors having sanctioned the issue of shares to Lim and Gan for an improper purpose. I am not persuaded that this is a ground for me to grant the reliefs sought by the Claimant. Firstly, it is in dispute whether the Defendant had indeed infringed the Catalist Rules. The Defendant has filed an affidavit containing a point-by-point rebuttal of the Claimant’s arguments, with a view to showing that not one of the Catalist Rules had been infringed. Furthermore, the Claimant has not adduced any evidence showing SGX’s position on this. In fact, the Subscription Agreements have yet to be submitted to SGX for approval. Finally, even if the Subscription Agreements infringed the Catalist Rules, the Claimant failed to explain why that necessarily leads to the conclusion that the shares were issued to Lim and Gan for an improper purpose.

As such, based on the affidavit evidence, I do not think the remedies sought under the OA can be justified by the first ground advanced by the Claimant, ie, that the Subscription Agreements were motivated by an improper purpose. Whether such an improper purpose existed in fact, as well as the weight to be attributed to it (vis-à-vis any other legitimate commercial purposes) in motivating the Subscription Agreements, is best determined at trial.

Whether the board actions purporting to sanction the Subscription Agreements were in compliance with the Defendant’s constitution

I now turn to the second ground raised by the Claimant to challenge the Subscription Agreements, being that the board actions purporting to sanction the Subscription Agreements were invalid on account of failing to comply with the Defendant’s constitution.

By way of background, it is necessary to recapitulate how the Defendant’s board came to be authorised to issue new shares. Section 161 of the Act prohibits company directors from issuing shares without the prior approval of the company in general meeting. Insofar as the Defendant is concerned, the need for compliance with s 161 of the Act is reinforced in its constitution, specifically Art 4(A) – the text of which reads:

The Share Issue Mandate which was obtained at the AGM on 28 April 2025 was expressed to have been procured in compliance with s 161 of the Act. The relevant portion of the Share Issue Mandate (extracted more comprehensively at [11] above) reads:

As seen from the extract, the Share Issue Mandate authorised “the Directors” [emphasis added] to issue fresh shares. The Claimant submitted that the reference to “the Directors” in the Share Issue Mandate means the board of directors of the Defendant. I agree that this must be the case. An analogy can be drawn with s 157A(1) of the Act, which stipulates that “[t]he business of a company is to be managed by, or under the direction or supervision of, the directors” [emphasis added]. The term “directors” in s 157A(1) has been understood to mean the company’s board (see, eg, TYC Investment Pte Ltd v Chan Siew Lee Jannie [2018] 4 SLR 293 at [55]). Consequently, to fall within the authorisation bestowed by the Share Issue Mandate on “the Directors”, any issue of shares must be sanctioned by the Defendant’s board of directors.

It was the Defendants’ case that the Subscription Agreements were indeed sanctioned by the Defendant’s board, by way of the paper board resolution dated 11 July 2025 (referred to at [13] above). I find this submission to be untenable. It was imperative that any board action sanctioning the issue of shares pursuant to the Share Issue Mandate comply with the Defendant’s constitution. This was underscored by the very terms of the Share Issue Mandate itself, para (3) of which explicitly mandated that “in exercising the Share Issue Mandate conferred by this Resolution, the Company shall comply with … the Constitution of the Company” (see extract at [11] above). Yet, as the Claimant correctly pointed out, the paper board resolution of 11 July 2025 was passed in contravention of Art 103 of the Defendant’s constitution. This article, which governs the passing of paper board resolutions (ie, without a physical meeting), requires that the resolution be passed by a majority of the directors. The text of Art 103 is set out below:

As the paper board resolution of 11 July 2025 was signed by only three directors (ie, Chairman Wang and the two executive directors), it clearly failed to qualify as a “majority” of the Defendant’s six-member board (the members of the Defendant’s board are set out at [8] above).

During the hearing before me, Defendant’s counsel contended that one of the three directors approving the paper board resolution of 11 July 2025 was Chairman Wang who, as chairperson of the board, held a casting vote. As such, even if there had been a three-to-three split in the board on whether to approve the Subscription Agreements, Chairman Wang’s casting vote would have carried the day in any event. I should add that the Defendant’s submission on this point ran counter to the advice which its own corporate secretary had rendered during the board meeting on 12 July 2025 (referred to at [15] above). This board meeting was held just one day after the signing of the paper board resolution and attended by the three directors who signed it, ie, Chairman Wang and the two executive directors, Dr Tan and GL Tan. During the meeting, the corporate secretary specifically apprised the directors that the paper board resolution lacked the requisite majority. In response, Dr Tan tried to suggest that the votes of the three directors signing the paper board resolution could be supported by the casting vote of Chairman Wang. The corporate secretary disagreed, explaining that under the Defendant’s constitution, the casting vote is not operative in the case of paper board resolutions. The portion of the board meeting’s minutes capturing the relevant exchange is extracted below:

Having looked at Art 99 of the Defendant’s constitution, which governs the chairperson’s casting vote, I would agree with the Defendant’s corporate secretary that the chairperson’s casting vote cannot be used to support the paper board resolution. Article 99 reads:

A plain reading shows that the chairperson’s casting vote operates only at meetings and not paper board resolutions. This much is clear from how Art 99 is prefaced by a reference to “questions arising at any meeting of the Directors” [emphasis added]. As such, Chairman Wang’s casting vote did nothing to remedy the paper board resolution’s failure to comply with the majority requirement prescribed by Art 103 of the Defendant’s constitution.

The Defendant further argued that during the physical board meeting on 12 July 2025, Chairman Wang and the two executive directors had discussed the Subscription Agreements and implicitly signified their approval thereof, thereby reaffirming the paper board resolution signed the day before. Presumably, the Defendant’s case was that even if the paper board resolution of 11 July 2025 was defective (on account of its failure to garner the requisite majority), the physical meeting on 12 July 2025 (at which Chairman Wang’s casting vote could properly be invoked) had ratified any such defect and thereby clothed the Subscription Agreements with the valid sanction of the board. I reject this argument as well. Preliminarily, on the face of the meeting minutes, there appears to be no clearly discernible resolution by the directors approving the Subscription Agreements. Rather, the meeting focused more on whether the Subscription Agreements could be announced despite the Defendant’s sponsor not having cleared the text of the announcement.

More importantly, even if the three directors attending the board meeting on 12 July 2025 had expressly approved the Subscription Agreements, any such approval would have been invalid for the simple reason that the board meeting lacked a quorum. Article 98 of the Defendant’s constitution provides for two limbs under which a quorum is deemed as met:

During the hearing before me, Defendant’s counsel contended that there was a quorum at the board meeting held on 12 July 2025, under the first limb of Art 98, which requires a simple majority of the “Directors present” plus the CEO. Specifically, Defendant’s counsel construed the term “Directors present” in the first limb to mean the directors in attendance at the board meeting. In this case, there were three directors in attendance, ie, Chairman Wang, GL Tan and Dr Tan. A simple majority of these three directors who were “present” would be constituted by two directors, being Chairman Wang and GL Tan. Defendant’s counsel thus contended that both these directors, together with the CEO (Dr Tan), satisfied the quorum requirement under the first limb of Art 98.

The Defendant’s interpretation, which construed the term “Directors present” in Art 98 to mean the directors in attendance at the meeting, leads to illogical outcomes. Unlike requirements for the passing of resolutions, where the threshold is understandably pegged as a proportion of the number of attendees voting (subject to there being a quorum), pegging the quorum itself as a proportion of the number of attendees – in this case pegging it as a simple majority of the number of directors in attendance – makes no sense. Such a requirement demarcates the quorum with goalposts that keep shifting, with the threshold perpetually hovering just below the actual number of attendees. By that interpretation: (a) if all six directors attend the meeting, the quorum under the first limb of Art 98 would be four directors and the CEO; (b) if four or five directors attend, the quorum drops to three directors and the CEO; and (c) if three directors attend (as was the case here), the quorum drops even further, this time to just two directors and the CEO. This reduces the quorum requirement to nonsense.

For the term “Directors present” to be intelligible, it must (at least in the context of Art 98) refer to the directors “for the time being”. This means that if there are six directors in office for the time being, the quorum under Art 98 would be met by the attendance of:

The attendance of just three directors at the board meeting of 12 July 2025 thus failed to meet either limb of the quorum requirement in Art 98. Contrary to the Defendant’s submission, a quorum under the first limb of Art 98 cannot (at least with the current state of the board) be constituted by just two directors plus the CEO. While that position may hold if there are only three directors on the board, in which case two directors would suffice to comprise a simple majority of the directors on the board, the fact is that the board currently has six directors.

The construction advanced by Defendant’s counsel stemmed from the inelegant placement of the word “present” in the first limb of Art 98. Admittedly, the interpretation which I have suggested in the preceding paragraph – reading the word “present” as “for the time being” (rather than “in attendance”) – is not entirely without difficulty. The phrase “for the time being” is expressly used in the second limb of Art 98 (see extract at [51] above). One might question why, if it was indeed the drafting intent for that phrase to also apply in the first limb, did the drafter not simply extend that phrase to cover both limbs of Art 98.

The only conclusion I can draw is that the term “present” in the first limb of Art 98 of the Defendant’s constitution was inserted in error, with the drafter having meant to refer to the directors “for the time being”. In my view, the mistake should be rectified as a matter of construction, by construing the term “Directors present” in Art 98 in the manner that it was obviously intended to be drafted. This follows the approach in East v Pantiles (Plant Hire) Ltd [1982] 2 EGLR 111 (“East v Pantiles”), where the English Court of Appeal explained that such rectification may be effected if the following two conditions are met:

The above doctrine of rectification, also known as rectification at common law (cf rectification as an equitable remedy), has been invoked in our case law: see, eg, Soon Kok Tiang v DBS Bank Ltd [2011] 2 SLR 716 at [46]−[48], upheld on appeal in Soon Kok Tiang v DBS Bank Ltd [2012] 1 SLR 397 at [56].

I should add that the doctrine has further evolved under English law. In Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 (“Chartbrook”), Lord Hoffman sought to qualify the first condition in East v Pantiles (ie, “a clear mistake on the face of the instrument”) by holding (at [24]) that when the court seeks to determine if there is a clear mistake, it is not confined to examining “the face of the instrument” but must instead have regard to the document’s background or context. It should nevertheless be observed that there may be some constraints to importing this development in English law to our jurisprudence given that, unlike in England, our law of evidence is governed by the strictures of the Evidence Act 1893 (2020 Rev Ed) (“EA”). Specifically, any extraneous evidence that might otherwise be used to paint the background from which the court infers the existence of a “clear mistake” could potentially be caught by the EA’s prohibitions against parol evidence: see Sun Electric Pte Ltd v Menrva Solutions Pte Ltd [2021] 5 SLR 648 (“Sun Electric”) at [66]−[71]. The EA provisions which could potentially prohibit the court from having regard to facets of the background surrounding the instrument being interpreted include ss 95 and 96: see generally Goh Yihan, “Clarifying Rectification in Singapore” (2015) 27 SAcLJ 403 at paras 16–19. Contrarily, some of these background facts may (depending on the factual matrix) be admissible under certain other EA provisions, such as ss 97 and 99: see Sun Electric at [74]−[77].

Reverting to the present case, I find that pursuant to the doctrine of rectification at common law, it is appropriate for me to rectify the mistake in Art 98 of the Defendant’s constitution by construing the term “Directors present” in the first limb to mean “Directors for the time being”. In my view, both the conditions in East v Pantiles (see the extract at [56] above) are satisfied:

The Defendant nevertheless maintained that the drafting of the first limb of Art 98 of its constitution is not necessarily suggestive of a mistake. In support, the Defendant referred to Woon’s Corporations Law (LexisNexis, 2022) (“Woon’s Corporations Law) at Chapter H para 4652, which touches on the passing of resolutions after some attendees have left the meeting. The Defendant suggested that the first limb of Art 98 could have been intended to address just such a scenario, by setting an attendance threshold for instances where some directors leave the meeting midstream. Specifically, the Defendant suggested that the first limb of Art 98 could be construed as prescribing the minimum number of directors who must remain at the meeting after some directors have taken their leave, with the threshold being pegged at a simple majority of the directors who were in attendance at the start of the meeting. The Defendant contended that under such a construction, there would be nothing absurd in interpreting the term “Directors present” in the first limb of Art 98 to mean the directors in attendance. With respect, this is a somewhat contrived construction that finds no support from a plain reading of Art 98:

As such, the drafter could not possibly have intended to prescribe the threshold for a quorum as being a simple majority of the directors present (in the sense of the directors in attendance) at the start of the meeting. The intention must have been to prescribe a simple majority of the directors in office for the time being. The word “present” in the first limb of Article 98 is clearly misplaced.

I should also add that at the Defendant’s board meeting on 12 July 2025, the corporate secretary had from the very outset warned the board that a minimum of four directors was required for a quorum:

As seen from the extract above, the corporate secretary’s position (ie, that the quorum in the first limb of Art 98 required four directors) was premised on the interpretation that a simple majority of the “Directors present” meant a simple majority of all six directors for the time being in office, and not a simple majority of just the directors in attendance at the meeting. This position was not gainsaid by any of the attendees – not even the executive directors who were trying to have the Subscription Agreements sanctioned by the board. Tellingly, there is nothing in the minutes to suggest that the Defendant had ever construed Art 98 in a manner that even vaguely resonates with the unnatural construction which it now seeks to advance, as set out in the preceding paragraph.

The inescapable conclusion must be that there was no valid board action sanctioning the Subscription Agreements. Both the paper board resolution of 11 July 2025 and the board meeting on 12 July 2025 failed to provide any valid sanction, given their non-compliance with the Defendant’s constitution.

As an alternative submission, the Defendant argued that there was no need for a board resolution sanctioning the Subscription Agreements because the board’s powers could be exercised by its CEO, ie, Dr Tan, pursuant to Art 87 of the Defendant’s constitution. The Defendant reasoned that since “there were no restrictions on Dr Tan’s powers” as the CEO, Dr Tan should be regarded as having been empowered to sanction the Subscription Agreements on the board’s behalf. In my view, this submission was plainly based on a misreading of Art 87 of the Defendant’s constitution, which states:

All that Art 87 does is to allow the board to delegate its powers to the CEO. The scope of the CEO’s powers would then depend on exactly what was delegated to him. In this case, the Defendant failed to adduce any evidence showing the range of functions that had been devolved to Dr Tan, in his capacity as CEO, by the board. In particular, there was nothing to suggest that the powers delegated to Dr Tan extended to executing shareholder mandates for the issue of shares.

In light of the above, I arrive at the following determinations:

The Claimant submitted that the Defendant’s attempt to complete the Subscription Agreements when there was no valid sanction from the board infringed s 157A(1) of the Act, which states that the business of a company “is to be managed by, or under the direction or supervision of, the directors”. Following from that, the Claimant sought to invoke s 409A of the Act, which allows affected persons to file applications restraining infringements of the Act. Specifically, the Claimant contended that s 409A of the Act gave it the standing to seek an order restraining the infringement of s 157A(1) that would otherwise occur if the Subscription Agreements were allowed to proceed.

I find the Claimant’s argument on this point difficult to follow. Section 157A of the Act merely sets out, in broad terms, the division of responsibilities within a company. The Claimant failed to explain exactly how s 157A would be infringed by the completion of the Subscription Agreements. This was not a case where a particular obligation prescribed by the Act had not been complied with, or where a particular prohibition was flouted: see also Bhavin Rashmi Mehta v Chetan Mehta [2022] SGHC 173 (“Bhavin”) at [31]. If the Claimant thought it necessary to allege an infringement of the Act as a means of invoking s 409A of the Act, I would have thought that a more fruitful line of inquiry would be to examine if s 161(1) of the Act had been infringed. After all, the Claimant’s case was that the Defendant executed the Subscription Agreements without the valid board sanction required by the Share Issue Mandate, with the effective result being that shares had been issued to Lim and Gan without the shareholder approval required by s 161 of the Act (see [45] above). However, as the Claimant did not argue this point, I say no more on it.

I also find it curious why the Claimant even saw a need to invoke s 409A of the Act, to establish its standing to restrain the completion of the Subscription Agreements. As explained at [63] above, the execution of the Subscription Agreements, not having been sanctioned by the Defendant’s board, violated various articles within the Defendant’s constitution. The Claimant’s capacity as a member of the Defendant would, in and of itself, confer upon it the requisite standing to file an application restraining a violation of the Defendant’s constitution, which is deemed by s 39 of the Act to be a contract between the Claimant (as a member) and the Defendant: see [26] above.

The appropriate remedy

Notwithstanding that the Claimant possesses the standing (in its capacity as a member) to bring an action to restrain a violation of the Defendant’s constitution, it does not follow that such an order will be granted as a matter of course. Even in the face of a violation of an express term in the constitution, the grant of an injunction is a discretionary remedy: see Bhavin at [38], in the analogous context of injunctions granted under s 409A of the Act to restrain infringements of the Act.

In exercising that discretion, it is important to bear in mind that the Court of Appeal has repeatedly taken pains to caution against letting shareholders bring personal actions under s 216 of the Act for what are in essence corporate wrongs: see Ong Heng Chuan at [33]; Ho Yew Kong v Sakae Holdings Ltd [2018] 2 SLR 333 (“Ho Yew Kong”) at [4]; Ng Kek Wee at [63]−[65]. As alluded to at [30] above, that same caution should apply when shareholders bring actions to restrain violations of the company’s constitution. Without attempting to lay down any general standards governing the scope of the court’s discretion in this respect, I take the view (in line with what was stated by the Court of Appeal in Ong Heng Chuan, at [33]) that an application by shareholders to restrain a violation of the constitution may be refused if they fail to sufficiently demonstrate that the violation impacted on their rights personally, as opposed to impacting purely on what are in essence corporate rights. Violations of the constitution falling into the latter instance are more appropriately pursued by the proper plaintiff, being the company itself, or (if the legal prerequisites are met) by a derivative action brought in the company’s name.

Of course, the approach in the preceding paragraph is more easily stated than applied, given that “the distinction between personal and corporate wrongs is rarely clear” (see Ng Kek Wee at [62]). To prevent shareholders from abusing the mechanism under s 216 of the Act by bringing personal actions to redress what are in essence corporate wrongs, the court will look at both the injury complained of, as well as the relief sought. In Ho Yew Kong, the Court of Appeal observed (at [116]):

In my view, both these indicators, ie, the injury and the remedy, are also useful in deciding whether an action to restrain a violation of the company’s constitution may properly be pursued by the shareholder personally.

On the particular facts of this case, it is clear to me that the violation of the Defendant’s constitution was not just a corporate wrong better redressed by way of a derivative action or a suit by the company. The irregular issue of shares trampled directly on the Claimant’s personal rights as a shareholder:

Considering the prejudice that has been caused to the Claimant by the violation of the Defendant’s constitution, I conclude that there is good reason to exercise my discretion in favour of granting an injunction restraining that violation.

Defendant’s counsel contended that any irregularity in the board resolution sanctioning the Subscription Agreements cannot be a valid ground for restraining their completion, as Lim and Gan would be protected by the indoor management rule. In my view, this submission holds no merit. As alluded to by Claimant’s counsel during the hearing, it is for the third party to invoke the indoor management rule: see also Hans Tijo & Daniel Ang, “No Magic to the Indoor Management Rule” [2020] LMCLQ 217 at 223. Here, there is no indication as to whether Lim and Gan (who are not party to these proceedings) ever wished to invoke the indoor management rule (as mentioned at [3] above, the Subscription Agreements have since been cancelled). The affidavits also yielded no insights as to the extent to which Lim and Gan might have lacked notice about the irregularities in the board actions purporting to sanction the Subscription Agreements.

Accordingly, had the OA not been discontinued, I would have been minded to grant an injunction restraining the Defendant from completing the Subscription Agreements. While the Claimant had prayed that the injunction remains in place until the EGM requisitioned by the Claimant has been held (see [2] above), Defendant’s counsel submitted that this would be inappropriate as an injunction must relate to the wrong done, which in this case is the violation of the Defendant’s constitution. Once the violation is remedied, there is no reason to extend the injunction until the EGM. I agree. Consequently I would have ordered that completion of the Subscription Agreements be restrained until they are approved either by a board resolution that complies with the Defendant’s constitution or by a resolution of the Defendant’s shareholders at a general meeting.

Conclusion

Before concluding, I would take the opportunity to remind all counsel that once a settlement is reached between parties to an action, they should inform the court promptly: see also Nicky Tan at [29]. In this case, I was notified of the parties’ settlement on 18 September 2025, ie, three days after the settlement agreement was signed. While this delay was short in absolute terms, it must be noted that parties updated me only after I had reached out to them about the case. If I had not done so, it is unclear just how much longer they would have waited to apprise the court that the matter had been amicably resolved. More to the point, I did not find the reasons proffered for the reticence in updating the court (set out at [3] above) to be particularly compelling. Once a binding settlement agreement has been inked by all parties, the time would generally be ripe to immediately let the court know, so that any further expenditure of valuable judicial resources on the case can be tailored accordingly. Even if there are conditions attached to the (concluded) settlement agreement which have yet to be complied with, the update to the court can always be appropriately qualified.