Shareholders' reserve power: Implied terms and public policy

• Main Author: LEE, Pey Woan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: company law; shareholders' reserve power; division of power between management and shareholders; terms implied in corporate constitution; public policy; Asian Studies; Business Organizations Law; Commercial Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/2327
• Institution: Singapore Management University

Do shareholders have reserve or residual powers of management when the board is unable or unwilling to act? In Chan Siew Lee v TYC Investment Pte Ltd [2015] 5 SLR 409, the Singapore Court of Appeal answered this question in the affirmative. In so doing, the court employed a contractarian approach, rationalising the power as one that is conferred on shareholders by a term implied in the company’s constitution on the basis of necessity or business efficacy. But a closer review will demonstrate that the court’s analysis, despite its overt reliance on contractual principles, is ultimately of a hybrid nature that takes on board both contractual as well as public policy concerns. This approach aptly reflects the complex nature of the company’s internal workings and warns against a reductionist approach that tackles the issue from a monolithic (contractual) perspective.