Ching Nominee

Director Target
Owns
20%
Married

CB Swee Supplies Loan?

Non-
Executive Executive
Director director
Controls
Siblings

TB Swee Managing
Director Growth Controlling
Stake Snoop
Are directors in Snoop
Ltd in breach of any
statutory/common law
duties if company
grants loan to Target
Pte Ltd?
 Sec 163(1)

• Companies (other than exempt private

companies) are not permitted to make a
loan to another company; or enter into any
guarantee or provide any security in
connection with a loan made to another
company by a third party, where its
directors are interested in 20% or more of
the total number of equity shares in that
other company.
 Criteria to Prove Breach of
Statutory Duties
1 Directors Control >20% of Target
2 Snoop Pte Ltd is not a Exempt Private Company
3 Snoop is not a subsidiary of Target & vice versa.
 Ching Nominee
Director Target
Owns
20%
Married

CB Swee Supplies Loan?

Non-
Executive Executive
Director director
Controls
Siblings

TB Swee Managing
Director Growth Controlling
Stake Snoop
 Criteria to Prove Breach of
Statutory Duties
1 Directors Control >20% of Target
2 Snoop Pte Ltd is not a Exempt Private Company
3 Snoop is not a subsidiary of Target & vice versa.
 Definition of Exempt
Private Company

• An exempt private company is a private company

with no corporate shareholders and not more
than 20 shareholders
 Ching Nominee
Director Target
Owns
20%
Married

CB Swee Supplies Loan?

Non-
Executive Executive
Director director
Controls
Siblings

TB Swee Managing
Director Growth Controlling
Stake Snoop
 Criteria to Prove Breach of
Statutory Duties
1 Directors Control >20% of Target
2 Snoop Pte Ltd is not a Exempt Private Company
3 Snoop is not a subsidiary of Target & vice versa.
 Criteria to Prove Breach of
Statutory Duties
1 Directors Control >20% of Target
2 Snoop Pte Ltd is not a Exempt Private Company
3 Snoop is not a subsidiary of Target & vice versa.

Directors might have breached statutory duties to

Company by granting loan to Target Pte Ltd.
 Common Law Duties

• Directors owe fiduciary duties of care, skill

and diligence
• Does the loan in anyway benefit Snoop Pte
Ltd?
• Does the loan expose Snoop Pte Ltd to
unnecessary risk
 - Snoop able to obtain
Benefit supplies at significant
discounted prices.

- Large cash reserve, low

possibility of affecting
Exposure to unnecessary
company’s financial status
risk
 Highlight the disclosure
requirements that had to be
compiled at the time Ching
was appointed to the board of
Snooop Pte Ltd.
 Section 156(5)

• Requires directors to disclose conflict

arising from holding other offices
• Must declare fact, nature, character and
extent of conflict
• Must be made at meeting of directors
 Ching Nominee
Director Target
Owns
20%
Married

CB Swee Supplies Loan?

Non-
Executive Executive
Director director
Controls
Siblings

TB Swee Managing
Director Growth Controlling
Stake Snoop
 Ching’s Declaration
• Nominee Director of Supplier [ Target ]
• Spouse Family a significant shareholder of
Supplier [ Target ]
• Executive Director of Holding Company
[ Growth ]
• Spouse Family controlling interest in
Holding Company [ Growth ]
 When?
First directors’ meeting after
Ching is appointed

Disclosure must be recorded in

meeting
If the loan does proceed, list all
the disclosure and approval
requirements that may need to
be compiled with to properly
proceed with the loan.
 Highlight the disclosure
requirements that had to be
compiled at the time Ching
was appointed to the board of
Snooop Pte Ltd.
 What additional matters
would the directors of Snoop
Ltd need to take into
consideration if Snoop was
already listed by the time the
loan was given?