The seminal ruling dictates when a buyout order under the new Section 254(2A) may be made as an alternative remedy to a winding up order.
Ting Shwu Ping (Administrator of the estate of Chng Koon Seng, deceased) v. Scanone Pte Ltd & Anor  SGCA 65 centered on the widow of a former shareholder of Autopack and Scanone (the Companies) who, following her husband’s death, brought proceedings to wind up the Companies on “just and equitable” grounds under Section 254 of the Companies Act.
The Companies resisted the applications on the basis of abuse of process—in particular, because there were buyout provisions in the Companies’ articles of association (providing for the exit of a shareholder with the price of the shares to be determined by the Companies’ auditors) that the widow did not avail herself of.
The High Court ruled against the widow, and she appealed to the Court of Appeal.
The Court of Appeal made the following key observations about the applicability of Section 254(2A):
On the facts of the case, the Court of Appeal agreed with the Companies that the widow’s application for a just and equitable winding up was not justified and dismissed the appeals.
The case represents the first instance that the Singapore Court of Appeal examined the effect of the new provisions on allowing a buyout of shares in a Section 254 application.
Before the Companies Act was amended to include the Section 254(2A) relief, the Singapore courts (as in the case of Sim Yong Kim v. Evenstar Investments Pte Ltd  3 SLR(R) 827) would typically grant a winding up order but would stay it for 30 days to allow parties to come to a “settlement” that usually includes the contemplation of a buyout of shares. With the express power to order a buyout now available under Section 254(2A), Singapore courts no longer need to adopt this order-and-stay approach.
What appears to have weighed heavily in the Court of Appeal’s consideration against the application in Ting Shwu Ping was that the Companies’ articles of association provided for a fair and independent buyout mechanism.
Moving forward, shareholders should consider introducing buyout provisions (where appropriate) in their contractual or constitutional documents to provide more certainty in the parties’ positions when their relationship comes to an end. Contested winding up applications are usually damaging to all parties and potentially result in expensive and unpredictable litigation over a company’s future.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers, who are solicitors of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated with Morgan Lewis & Bockius LLP: