Court allows firm to hold EGM of one

Majority shareholder seeks court order after others boycott meetings

A MAJORITY shareholder, who could not get the minimum number of people required for his construction firm's general meeting because other family members had boycotted it, got the High Court to approve a meeting of one instead - comprising himself.

In a rare move, managing director Lim Yew Ming, who owns 51.5 per cent of Aik Chuan Construction, sought a court order that one person would be sufficient for the meeting to proceed.

He was fighting six family members - including his mother, Madam Neoh Siew Inn - who together own 48.5 per cent of Aik Chuan.

In the first reported case here of someone seeking court sanction for a minimum number, or quorum, of one, Mr Lim claimed the minority shareholders were trying to block his plans to diversify the company's investments by refusing to attend the meeting.

Two of the family members, his brother Yew Soon and sister Po Lin, are company directors.

In 2013, Mr Lim formed AC Global Energy to get into the renewable energy business and entered into a deal to build a biomass plant in Tennessee in the United States.

The deal involved a $32 million loan from Hitachi Capital Singapore and various guarantees were signed by sister Po Lin and Madam Neoh. Among other things, Mr Lim considered financing the project via UOB, which would let the project get support from International Enterprise Singapore.

But this called for another guarantee, which directors Yew Soon and Po Lin refused to sign. Mr Lim then called two extraordinary general meetings (EGMs) in October and November last year, the first to remove Yew Soon and Po Lin as directors, and the second to appoint other persons friendly to him on the board, but family members did not attend these.

Lawyers Daniel Koh and Favian Kang argued the defendants had a right to use the quorum provision to defend their interests, pointing out this was a family business and Mr Lim wanted to further his personal project. They claimed the initial agreement was that Aik Chuan would not have to lend more than $6.5 million to a related company for the plant project.

As the meetings could not proceed due to the defendants' refusal to attend, Mr Lim's lawyers Jeffrey Ong and Nichol Yeo said, it was impractical to call such meetings and the court should intervene as provided for under Section 182 of the Companies Act.

Judicial Commissioner Aedit Abdullah found that the "upshot" of the EGM boycott is that investments in the biogas project got derailed as the matter could not be put to a vote. "That to my mind is sufficient impracticability, and it is of an appropriate degree as to call for the court to intervene," he wrote in judgment grounds released on Monday.

He made clear a minority shareholder cannot use the quorum provision as a de facto mechanism to block the majority shareholder.

Although he won the case, Mr Lim declined to ask for costs, saying it was "not necessary".

vijayan@sph.com.sg