One of the founding families of construction and infrastructure company Samwoh Corporation has gone to court accusing other shareholders of excluding them from management decisions and generally freezing them out of the day-to-day running of the firm.
The Koh family also alleges that the majority shareholders engineered the removal of one of their members, Mr Elvin Koh, as managing director in 2013.
They want relief from minority oppression and to be granted an order to buy out the majority shareholders. But the majority investors say such an order is legally unjustified, and there was no reported precedent.
The parties were in court yesterday on the second day of the hearing.
Samwoh, which has its roots in a transport and logistics business founded in 1975, has 1,800 staff and aggregate net tangible assets of nearly $150 million. It posted a net profit of $23.4 million in 2014.
The company, then known as Samwoh Transport and Trading, was founded by three close friends - Mr Koh's father, Mr Koh Keng Chew, Mr Pang Chok and Mr Soh Kim Seng. As the company grew, three others who were close friends or relatives of the founding members joined the business.
The Koh family now holds a 28.125 per cent stake in the company, the Pang family has 37.125 per cent, the Soh family 24.75 per cent and another defendant, Mr Poh Teck Chuan, has 10 per cent.
Samwoh's business started from a partnership in Samwoh Trading and the working relationship was based on personal relationship, mutual trust and confidence, the plaintiffs allege.
However, some disagreements along the way saw the relationship break down, they say. Eventually, a deadlock between the four-man board of directors resulted in Mr Soh's son, Eric, and Mr Pang's daughter, Madam Pang Kok Lian, who were both on the board, calling for a shareholder's meeting in April 2013.
Matters escalated and an extraordinary general meeting was held in May 2013 to vote for a new board of directors.
Mr Elvin Koh was removed from his post at this meeting, the plaintiffs say. He had been managing director since 2000.
The Koh family members claim that they have been excluded from information relating to the business since the 2013 EGM, behaviour they describe as "unfair, oppressive, improper or inequitable use of their voting power".
However, the other shareholders say decisions were taken in the best interests of Samwoh Group by its board, and "accorded with the letter and spirit of commercial fairness".
They note that the company is a corporate business, not a partnership or quasi-partnership. This means the Koh family cannot legitimately expect to participate in management, be consulted on major decisions or be informed of the performance of the firm.
They also allege that Mr Elvin Koh's non-election at the EGM was precipitated by his demand to have a final say as MD when there was a deadlock within the board of directors. The plaintiff's claim to buy out the shares of the rest is an attempt to take over Samwoh's business, they say.
Mr Elvin Koh's younger brother remains on the board and is not excluded from the management of the company, they say.
They claim that the Koh family has always been granted sufficient access to the relevant records of Samwoh.
The defendants also say that even if the court rules in favour of the Koh family on certain key points, they would only be entitled to have their shares bought out by the majority shareholders.
The companies forming the Samwoh group are not taking a position on the dispute but note that the ideal outcome would be a buyout of the Koh family stake by the majority shareholders.
The plaintiffs are represented by senior counsel Alvin Yeo of WongPartnership, the other families and defendants by senior counsel Francis Xavier of Rajah & Tann, and Samwoh Group of companies by senior counsel Thio Shen Yi of TSMP.
This article was first published on February 18, 2016.
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