Singapore: the oppression remedy - buy out orders, valuation and the discount for lack of marketability

Judgment was given earlier this month by the Court of Appeal in Kiri Industries Ltd v Senda International Capital Ltd and another and other appeals and other matters [2022] SGCA(I) 5. The decision is an important one because of the guidance it provides, when valuing shares that are the subject of a buy-out order under the oppression remedy (section 216 of Companies Act (Cap 50)), about the appropriateness of a discount to reflect the lack of control (DLOC) or the lack of marketability (DLOM). The court observed (para. [241], emphasis in the original): 

The approach to the application of a DLOM in the making of a buyout order under s 216(2) of the Companies Act has not been authoritatively determined by the courts in Singapore. The variety of cases which were cited tended to turn on their own facts or were distinguishable in one way or another without enunciating any general principle. In the view of this court, it is appropriate that courts making buyout orders and referring the question of valuation to an independent expert or experts should first determine whether it is appropriate to order a DLOC and/or a DLOM. The answers to those questions respond to a broader principle than the quantification of the discounts, which is properly within the sphere of the experts. This accords with the approach taken by the House of Lords in O’Neill v Phillips [1999] 1 WLR 1092, dealing with the valuation of shares subject to a buyout order under provisions of the Companies Act 1985 (c 6) (UK) that are analogous to s 216(2) of the Companies Act".