Towards a "Just and Equitable Remedy" for Companies

It is a truth universally acknowledged, that feuding shareholders locked in bitter conflict must be in want of a business divorce. But how, and on what grounds? Shareholders in the UK and many Commonwealth jurisdictions have access to two statutory solutions: the venerable just and equitable winding up, or the younger, but more popular, unfair prejudice remedy under which the most frequently sought relief is a share buyout. Counterintuitively, a shareholder seeking a corporate divorce on no-fault grounds can avail themselves of the more drastic just and equitable winding up, but not of a buyout under the unfair prejudice remedy; such is the legacy of Lord Hoffmann’s prohibition against shareholder exit “at will” in the landmark House of Lords decision of O’Neill v Phillips [1999] 1 W.L.R. 1092; [1999] 2 All E.R. 961. In a radical departure from UK precedent, Singapore in 2014 attempted to remedy this state of affairs by conferring on the court the additional statutory power to order a buyout under its just and equitable winding up jurisdiction with a new s.254(2A) of the Singapore Companies Act (Cap.50, 2006 Rev. Edn). The existence of the shareholder’s right to apply for a “just and equitable” buyout was confirmed and its ambit clarified by an unprecedented five-judge panel of Singapore’s apex court, the Court of Appeal, in Ting Shwu Ping v Scanone Pte Ltd [2016] SGCA 65; [2017] 1 S.L.R. 95. This welcome development not only strengthens minority shareholder protection in Singapore, but also implicitly challenges Lord Hoffmann’s longstanding and hitherto unchallenged position on exit “at will”.