Singapore: unfairness and section 216 of the Companies Act

In Over & Over Ltd v Bonvests Holdings Ltd and Another [2008] SGHC 226 - a decision of the Singapore High Court handed down last month - there is some interesting discussion of Section 216 of the Companies Act (Cap 50, 2006 Rev Ed) and comparisons with (what is now) Section 994 of the UK's Companies Act (2006). These sections provide minority shareholders with important protection. Section 216(1) provides (emphasis added):

(1) Any member or holder of a debenture of a company or, in the case of a declared company under Part IX, the Minister may apply to the Court for an order under this section on the ground —

(a) that 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 members or holders of debentures including himself or in disregard of his or their interests as members, shareholders or holders of debentures of the company; or
(b) that some act of the company has been done or is threatened or that some resolution of the members, holders of debentures or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures (including himself).

In interpreting Section 216(1), the trial judge agreed (see paras. 66-68) with the following approach adopted by Margaret Chew in Minority Shareholders' Rights and Remedies (Butterworths Asia, 2000, pp. 119-120): 

...rather than distinguishing one ground from the other in section 216, the four grounds set out therein ought to be looked at as a compound one, the purpose of which is to identify conduct which offends the standards of commercial fairness and is deserving of intervention by the courts. To this end, the combined language of section 216 is suggestive, descriptive and evocative.

Section 216 of the Companies Act was conceived and passed with the objective of protecting minority shareholders from majority abuse. In order to offer effective and comprehensive protection, section 216 confers on the courts a flexible jurisdiction to do justice and to address unfairness and inequity in corporate affairs… The discretionary power of the courts under section 216 is notoriously wide. Thus, in determining the scope of section 216, rather than deciphering the precise nuance of each of the expressions ‘oppression’, disregard of interests’, ‘unfair discrimination’ and ‘prejudice’, a compendious interpretative approach, with an emphasis on the rationale and purpose of section 216, is hereby advocated"

The trial judge also considered and rejected the argument that prejudice is required by Section 216 (it is required by Section 994). In the judge's view (para. 76): "...prejudice is a factor, and perhaps, a very important one in the overall assessment, but I do not think that it is an essential element".