Re Full Apex (Holdings) Ltd

• Jurisdiction: Bermuda
• Judgment Date: 06 February 2012
• Date: 06 February 2012
• Docket Number: Commercial Jurisdiction 2011 No. 191
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Commercial Jurisdiction 2011 No. 191

In the Matter of Full Apex (Holdings) Limited

And in the Matter of the Companies Act 1981

BETWEEN:

Annuity & Life Re Ltd; Madam Loh Yew @ Lau Ah Moi; Koh Tze Chiat

Petitioners

and

Full Apex (Holdings) Limited; Full Excellent Limited; Guan Lingxiang; Liang Huiyang

Respondents

Mr C Luthi for the 1st Respondent

Mr A Martin for the 2nd-4th Respondents

Mr J Riihiluoma for the Petitioners

The following cases were referred to in the judgment:

Bermuda Cablevision Ltd v Colica Trust Co LtdELR [1998] AC 198

Kistefos Investments Holdings Ltd v Chiang and Pacific Investments Holdings LtdBDLR [2002] Bda LR 50

Lloyd v CaseyUNK [2002] 1 BCLC 454

Re Legal Costs Negotiators LtdUNK [1999] BCC 547

Abstract:

Strike-out application - Standing - Adequacy of particulars - Unsustainability

RULING ON STRIKE-OUT of Kawaley, J

Introductory

1. The Company was incorporated in Bermuda on April 5, 2002. It became listed on the Singapore Stock Exchange (SGX) on in June 2003. Mr Guan and Ms Liang Huiyang, directly and through the 2nd Respondent, own approximately 64% of the Company. The 3rd and 4th Respondents are married and serve as Chairman and Vice-Chairman, respectively, of the Company's Board.

2. The 1st Petitioner (Annuity) is a subsidiary of Pope Asset Management LLC (Pope). By March 2011, Pope owned an approximately 13% stake in the Company. Annuity first became a registered shareholder in or about April 2006; according to its own evidence, this registration occurred at the direction of Pope to enable Annuity to qualify as a petitioner for the purposes of the present proceedings.

3. The 2nd and 3rd Petitioners are mother and son. The 3rd Petitioner has no shares registered in his own name, although he beneficially owns shares via the Central Depositary System (CDP) through which shares are traded on the SGX. The 2nd Petitioner petitions on the basis of shares transferred to her in her own name by her children in May 2011, although she first acquired shares in the Company in or about 2004 held in the name of the CDP.

4. The Petition was presented on June 21, 2011. The Respondents challenge the standing of the Petitioners on the following grounds:

i. the Petitioners were not registered shareholders for six months before the Petition was presented as required by section 163(1)(a) of the Companies Act 1981 (all three Petitioners);

ii. the 3rd Petitioner was not a registered shareholder when the Petition was presented, nor even a registered shareholder at the date of the hearing of the strike-out application.

5. The Respondents also apply to strike-out the Petition on the following additional principal grounds:

iii. the Petitioners cannot complain about matters which occurred before they acquired their qualifying shareholding in the Company;

iv. the Petitioners cannot complain about the 2009-2010 delisting proposal and/or the related manipulation of accounts allegations because the proposal was successfully blocked by Pope at a special general meeting on February 25, 2010 held according to SGX rules;

v. the Petitioners cannot complain about the Full Development Ltd. (FDL) transaction being at an undervalue, because no sustainable case of oppression and/or unfair prejudice is pleaded;

vi. the Petitioners cannot complain about the Company's failure to provide an explanation, because no sustainable case of oppression and/or unfair prejudice is pleaded;

vii. the Petitioners' pattern of buying shares is inconsistent with their alleged concerns and demonstrates a collateral purpose or an abuse of process.

The Petitioners' standing to petition

Does section 163(1) (a) apply to section 111 petitions?

6. The Petition is presented under section 111 of the Companies Act 1981 ("Alternative remedy to winding-up in cases of oppressive or prejudicial conduct") and contains no prayer for a winding-up order. The Court is empowered under section 111(2) as follows:

"(2)If on any such petition the Court is of opinion'

(a)that the company's affairs are being conducted or have been conducted as aforesaid; and

(b)that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up,

the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company's capital, or otherwise."

7. The right of petition is conferred by section 111(1) on: "Any member of a company who complains…"1 [emphasis added]. Section 19 (1) of the Act provides that all subscribers to a company's memorandum of association and (2) "[e]very other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company." This definition of "member" extends to the Act generally, "unless the context otherwise provides": section 2(1). Section 111 is found in Part VIII of the Act (INVESTIGATION OF THE AFFAIRS OF A

COMPANY AND PROTECTION OF MINORITIES). There is no obvious basis for displacing the generally applicable definition of member in section 111 or Part VIII.

8. Section 163 is found in Part XIII of the Act (WINDING UP). Section 163 provides in salient part as follows:

"Applications for winding up

163(1) An application to the Court for the winding up of a company shall be by petition, presented either by the company or by any creditor or creditors, including any contingent or prospective creditor or...