1, 2LEGAL NATURE OF COMPANIES

Which type of company is the best?

Can the corporate veil be lifted and the owners be sued for liabilities?

The functions of company secretary and registered office?

The registers that a company is required to maintain?

3PROMOTION, PRE-INCORPORATION CONTRACTS

Can 3rd party sue company/promoter when company is not formed yet?
o
S41(2) Prior to ratification, person entering into contract in companys name or on
companys behalf is bound by and entitled to benefit of contract unless express agreement to
the contrary

Can company enforce terms of the contract signed before its formation on 3 rd parties?
o
Only if it ratifies once ratified, company can sue and be sued based on contract

Can sue the promoter?

o
S41(2) Prior to ratification, person entering into contract in companys name or on
companys behalf is bound by and entitled to benefit of contract unless express agreement to
the contrary
o
Upon ratification, whether promoter is bound is not stated in CA

Remedies for company?

o
Rescission any bars to rescission?
o
Secret profit (only if property does not belong to promoter)
4, 5CORPORATE CAPACITY, COMPANY CONSTITUTION

Can 3rd party sue company for an ultra vires act? (OR can company claim that an act was ultra vires
and that contract is not valid?)
o
S 25(1) 3rd party can enforce obligation by the company created by an ultra vires act
o
S 25(2) Liquidators/members/agents can sue directors for ultra vires act

Can amend article in the constitution?

o
General procedure to amend article special resolution at GM
o
Check if got any EP
o
Obstacles to alteration (1) Not bona fide (2) If alteration requires to take or subscribe for
more shares

Can a member enforce his members rights against other members?

o
S 39 Members can enforce his rights against other members under the M&A which is a
statutory contract

Can enforce non-members rights in the constitution?

o
Non-members rights (e.g. perks, entitlement to air tickets)
o
Eleys case not clear if it applies in Singapore
o
However, possible that the right as stated in Constitution was incorporated in employment
contract enforce by claiming breach of employment contract
o
Must also determine if (1) terms of contract incorporates terms of constitution (2) terms of
contract change with change of constitution?

How to secure position as director (a non-member right) or protect ones interests?

o
Shareholders agreement e.g. Roger and Quincy must vote for him as director
o
Employment contract e.g. terms of employment, compensation for termination,
remuneration terms
o
Be a shareholder to be able to enforce his rights in constitution (assuming Eleys case
apply)
o
Pass resolution to include EP to protect provision saying Sam is director (assuming Eleys
case apply)
6,7MEMBERSHIP, SHARES AND INTERESTS IN SHARES, CLASS RIGHTS

Prepare Register of Directors/CEOs Shareholdings

o
How much registered shareholdings?
o
How much deemed interest?

S 7(4), S 7(4A)

S 7(5) Definition of associate for purpose of S 7(4)

S 7(6) What constitutes deemed interest?

S 7(9) What does not constitute deemed interest?

Can issue additional preference shares?

o
Is it a variation of class rights? S 74(6) Yes, issue of pref shares parri passu is deemed
variation
o
Procedures to comply with MOR clause
o
Procedures to issue new shares?

For shares with no voting rights S 64A(3) special resolution

For shares with voting rights S 161 ordinary resolution

Can amend rights to Class A shares in the constitution? (e.g. change dividend 5% to 3%)
o
Is it variation of class rights?
o
Procedures to comply with amendment of MOR clause
o
General procedure to amend article in constitution S26 special resolution at GM

Can amend MOR clause?

o
Is it variation of class rights? Yes, S 74(7) amendment of MOR is deemed variation
o
Procedures to comply with amendment of MOR clause
o
General procedure to amend article in constitution S26 special resolution at GM
What are avenues of relief for affected shareholder?
o
S 74(1)-(5) min 5% of total no. of issued shares of that class, must have MOR
o
S 216 no min, no need for MOR
If got EP that protects rights of a Class of shares
o
Then comply with procedures in EP additionally
o
Or remove EP only if all members agree S26A
Converting Class A shares to Class B sharesS74A
o
Check if constitution authorizes conversion of one class of shares to another
o
Check if rights of Class B shares are set out
o
Conversion amounts to variation of Class A rights (because Class A is pref shares) need
Class A consent
o
Conversion amounts to variation of Class B rights (because Class B is pref shares) need
Class B consent
o
Pass special resolution for conversion of shares as required by S74A
Want to amend Table A, Article 4
o
By nature, Article 4 is a MOR clause
o
Amendment of Article 4 is deemed variation of class rights
o
Need to seek 75% of Class A, 75% of Class B
o
General procedures to amend article in constitution S 26 special resolution in GM

8,9CORPORATE ORGANS, LAW OF MEETINGS, CORPORATE CONTRACTING

Is there procedural irregularity?

o
Identify the irregularities
o
Determine using Aim and Purpose test whether (1) Procedural injustice or (2) Substantive
injustice

Aim and purpose test

Gives right/entitlement substantive injustice

Merely a manner of carrying out procedural injustice

If substantive injustice, resolution is invalid

If procedural injustice, determine whether got substantial injustice using Thio Keng
Poon case 3 points:

Link between procedural irregularity and injustice

Injustice must be substantial

May have a different result, but not to show certainly a different result

Corporate contracting
o
Is there actual authority?

Express

Implied (1) Acquiescence (2) By position

o
Is there apparent authority?

Representation to company

Representation made by person with authority

Reliance on representation
o
Can 3rd party use indoor management rule to argue for reliance on representation? No if

Third party knows agent lacked authority

Third party is insider (e.g. director or officer of company)

Third party is put on inquiry by nature of transaction

o
Can 3rd party enforce contract if directors give authority to someone to enter contract when in
fact they do not have the right to do so (e.g. need prior approval of shareholder to
authorize)

S 25BIn favour of a person dealing with a company in good faith, the power of the
directors to bind the company, or authorize others to do so, shall be deemed to be
free of any limitation under the companys constitution Company is not bound to
enquire about directors powers
o
Can PSPL who enters into a contract with 3rd party (who is a company owned by son of PSPLs
director) avoid enforcement of the contract?

S 25CFor transactions whose validity depends on S25B, if the parties to the

transaction include (i) a director of the company or of its holding company, or (ii) a
person connected with any such director, the transaction is voidable at the instance
of the company
10INTRODUCTION TO CORPORATE GOVERNANCE
11OFFICE OF A DIRECTOR
12, 13DIRECTOR DUTIES (PART 1)

What are the possible breaches of duties that a director is liable for?
o
Duty to act with reasonable care and diligence

Objective test

Subjective test

Delegation & reliance

Business judgment rule

S 157(1)
o
Duty to not engage in wrongful/reckless trading

S 339(3)

Business judgment rule

o
Duty to act in good faith in the interests of the company

Whose interests are these interests aligned with companys interests?

Objective test honest and intelligent man test

S 157(1)
o
Duty to retain discretions / not to fetter discretions usually linked to shares

o
Duty to act for a proper purpose usually for issue of shares

2-step analysis under Howard v Ampol

What is the power in question? Legal purpose which power may be used?
as stated in constitution and 157(1)

What is the actual purpose for which the director exercised the power?
use facts of case, AND analyze intention

Proper or improper purpose?

The power to issue shares

Can director be excused from liability arising from breach of duties?
o
Yes Ratification by members ordinary resolution EXCEPT
Can director exempt himself from liability for breach of duties?
o
No S 172(1) and (2)
o
Yes S 172A Can purchase insurance for liability arising from breach of duties
o
Yes S 172 B Can give indemnity to officer for liability incurred by officer to persons other
than the co EXCEPT

14,15DIRECTOR DUTIES (PART 2)

What are the possible breaches of duties that a director is liable for?

Duty to avoid conflict of interests