Monday, February 23, 2009
Liquidation and winding up
For more information about liquidations and windings up of companies,
please see blog http://windingupsg.blogspot.com/
Directors' duties - Chuan Soon Huat
The recent case involving the directors of listed furniture maker Chuan Soon Huat (CSH) highlighted the issue of reasonable diligence in the discharge of the duties of the directors as required by section 157 of the Companies Act.
The executive chairman of the company was seriously ill and was unable to discharge his duties for a period of over 2 years. The board of directors failed to disclose that there had been a change in effective control of CSH between 1 Jan 2004 and 31 October 2006.
This piece of information is often of great importance to investors and to the market generally. The directors of the company failed to inform the Singapore Exchange (SGX) of this material fact. As a result, they were charged under section 157. They were fined the maximum amounts and were disqualified by the District Court for varying lengths of time.
On appeal to the High Court, Justice of Appeal VK Rajah reduced the disqualification periods for all of the accused except for the the managing director whose disqualification of 5 years was left unchanged. It is unclear if written reasons relatig to the appeal will be released publicly. The decisions of the Subordinate Courts are still available at the website www.subcourts.gov.sg. as at late February 2009.
The directors involved were -Mr Lee Thian Soon who was managing director, then-executive directors Lee Siew Hoe and her husband Lim Kiang Soon, and independent director lawyer Peter Moe
This case therefore illustrates the principle that even non-executive directors are expected to carry out their duties under the Companies Act and any breach will be severely dealt with.
The executive chairman of the company was seriously ill and was unable to discharge his duties for a period of over 2 years. The board of directors failed to disclose that there had been a change in effective control of CSH between 1 Jan 2004 and 31 October 2006.
This piece of information is often of great importance to investors and to the market generally. The directors of the company failed to inform the Singapore Exchange (SGX) of this material fact. As a result, they were charged under section 157. They were fined the maximum amounts and were disqualified by the District Court for varying lengths of time.
On appeal to the High Court, Justice of Appeal VK Rajah reduced the disqualification periods for all of the accused except for the the managing director whose disqualification of 5 years was left unchanged. It is unclear if written reasons relatig to the appeal will be released publicly. The decisions of the Subordinate Courts are still available at the website www.subcourts.gov.sg. as at late February 2009.
The directors involved were -Mr Lee Thian Soon who was managing director, then-executive directors Lee Siew Hoe and her husband Lim Kiang Soon, and independent director lawyer Peter Moe
This case therefore illustrates the principle that even non-executive directors are expected to carry out their duties under the Companies Act and any breach will be severely dealt with.
Aim and Introduction
This blog aims to cover important past and present issues and cases in company law. The target audience is the professional like company secretaries and accountants who may have a need for company knowledge in their jobs and the businessman who very often uses companies as his preferred business vehicle.
The experienced corporate lawyer will not find much of interest here since the discussion is pitched at the level of an intelligent accountant with a basic knowlede of company law but who wishes to know more and to be updated on recent developments.
DISCLAIMER - Please note that the blog only provides general information. Continuing to read this blog means that you agree that you will not hold the authors or contributors in any way responsible for the content and you warrant that you will seek legal advice where necessary.
The experienced corporate lawyer will not find much of interest here since the discussion is pitched at the level of an intelligent accountant with a basic knowlede of company law but who wishes to know more and to be updated on recent developments.
DISCLAIMER - Please note that the blog only provides general information. Continuing to read this blog means that you agree that you will not hold the authors or contributors in any way responsible for the content and you warrant that you will seek legal advice where necessary.
Subscribe to:
Posts (Atom)