Introduction
In this case the Singapore Court of Appeal (the “CA”) heard cross-appeals from the Singapore International Commercial Court (the “SICC”) orders in long-running oppression proceedings by minority shareholder Kiri Industries Ltd (“Kiri”) against majority shareholder Senda International Capital Ltd (“Senda”). Kiri commenced action in 2015 alleging oppressive conduct by Senda in DyStar’s affairs. The CA delivered judgment on 31 January 2025 and confirmed that discretionary enhancement of the amount payable in a buy-out order for minority oppression, to account for delays in carrying out the order, is permissible. Thereby, affirming commercial fairness as key under s. 216(2) of the Companies Act.
Background
Minority oppression was found in 2018 DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd 5 SLR 1 (“SICC Main Judgment”) which led to orders that form the subject of the Appeals by both Senda and Kiri. The first set of orders required that Senda buy out Kiri’s shareholding at a valuation to be assessed. Senda did not comply with the Buy-Out Order. On application of parties, the court exercising its inherent jurisdiction substituted the Buy-out Order by an en bloc Order of sale of shareholdings to a third party. The court ordered that Kiri was entitled to receive US$603.8m, the valuation of Kiri’s shares fixed in the Buy Out order from net proceeds on priority. SICC rejected Kiri’s interest claim on buy-out price from 3 Apr 2023 (1 month from the date of valuation) until the date Kiri receives valuation amount from the net proceeds of that sale.
The SICC denied this claim, as the Valuation Amount is substantial and it was not reasonable to expect Senda to complete the buy-out in 1 month from the issuance date of the valuation. In any event, the buy-out order was already replaced by the en bloc sale order. In addition, the SICC opined that the timely completion of the en bloc sale now depended on both parties, unlike a buy-out order, so it would not be fair for Senda alone to bear the consequence of the delay.
Why the Appeal
Sendachallenged the priority order, which allowed Kiri to claim US$ 603.8m over Senda as unfair penalty, arguing it elevates Kiri to secured creditor status. They argued that the net proceeds of sale should be distributed in proportion to the parties’ respective shareholdings in DyStar. On the other hand, Kiri sought reversal of no-interest ruling by SICC, and argued that at the very least, it is entitled to interest at 5.33% per annum, the statutory interest rate in Singapore.
Decision of Court of Appeal
The Court of Appeal ordered a discretionary enhancement on the Valuation Amount which Kiri would receive in priority from the en bloc sale, calculated at 5.33% per annum but only running from 3 September 2023 (6 months after the date of the valuation).
First, the Court held that the claim for a buy-out remedy is not in the nature of a claim for debt or damages and so was not a judgment debt on which the court may award post-judgement interest. The court held that the priority order was fair under s 216(2) remedial discretion stating that it reserved Kiri’s assessed exit value despite substitution of mode of sale. The court reasoned that there is nothing unfair in holding Senda to the financial obligation imposed on it by the original Buy-out Order, the monetary quantum of which was determined by the previous order of the SICC. This includes ordering a discretionary enhancement of the amount to be paid to Kiri to account for the delay in the realisation of the value of its shares.
The court held that the principle of “fairness” underpinning the remedial discretion to formulate relief under s 216(2) of the Companies Act allowed the Court to make orders enhancing the amount to be paid for the shares of the oppressed shareholder, taking into account any period of delay in their realisation. The court ordered 5.33% p.a. on US$603.8m from 3 Sep 2023 (6 months post-Valuation) until payment, paid in priority from sale proceeds.
Remarks
This reinforces courts’ broad s 216(2) discretion for equitable remedies like interest-like enhancements in oppression cases, balancing delays without full commercial rates. Highlights priority mechanisms in failed buy-outs to ensure oppressed shareholders’ fair exit.
