Company Law: Members, Directors and Others

Members

Does not necessarily refer to a shareholder. Eg: coy limited by guarantee. No

shareholder but still has members. In the case of coy limited by shares, member
refers to shareholders whose name appears on register of members. However,
people who buy scrip less shares in the market become members without having to
take the trouble to register in the coys register of members.

Number of members
Each coy at least 1 member. No maximum number of members. If more than 50
members, coy cannot be registered as a private company.
Members and management
By virtue of section 157A of the Companies Act, and usually the articles of
association of the company, directors have the power to manage the company.
Thus, members generally cannot tell the directors what to do.
Cite Automatic Self-Cleansing Filter Co Ltd v Cunningham (1906)
HOWEVER, while members generally cannot take on management decisions, they
may embark on certain course of action if they are unhappy over management
decisions.
1. Firstly, the Articles of Association would usually allow members to remove the
directors by ordinary resolution. In fact in the case of the public company, it is not
possible for the articles to provide otherwise. Thus if members are unhappy with the
management decisions, they may exercise this right and remove the directors
(assuming they manage to garner the requisite number of votes) with the hope that
the new directors appointed would make more agreeable decisions.
2. Secondly, members theoretically have the option of altering the articles of
association, if they manage to garner the pre-requisite number of votes, to confer
particular power on themselves, though in practice this is rarely done. On a more

Automatic Self-Cleansing Filter Co Ltd v Cunningham

(1906)
Members passed a resolution asking the directors to sell coy
assets to another party. Directors refused to obey so matter
was brought to court. Court held that directors were
conferred power to determine such issues.

practical side, member who is unhappy with the management may just sell his stake
and place his money elsewhere.
Situations where members must approve decisions
Though generally, members do not have the right to manage the company, the
Companies Act and the articles of association may provide that members must
approve certain decisions. For instance, it is provided in the Companies Act that
when the company wants to issue shares (section 161), or dispose of the whole
or a substantial part of its undertakings or property (section 160), the approval
of members is necessary. Further, if the memorandum or articles of assoc. are to
be amended, approval of members is required.
Members Rights
(a) Right to enforce the memorandum and articles of assoc.
Section 39 of the Companies Act provides that memorandum and articles of assoc.
represents a contract between members and the coy and as between members.
In this regard, the Articles of Assoc. usually provide that when the coy is dissolved,
any assets remaining after liabilities have been met would be distributed to
members. Conversely, articles of assoc. usually do not provide that dividends must
be declared even if there are available profits. Thus the member would usually not
have the right to demand dividends.
(b) Right to amend the memorandum and articles of assoc.
Unless otherwise provided in the Companies Act, section 26 usually provides that
the memorandum of a coy may be amended by a special resolution. Articles of
Assoc. can be removed or altered by means of special resolution as well.
Section 37 provides that subject to the provisions of the Companies Act and the
memorandum, articles of association of a company can be removed or altered by
means of a special resolution. A special resolution would mean that the resolution

has to be passed with at least 75% of majority.

HOWEVER, all this is subject to section 26A which allows companies to declare
certain provisions in the articles or memorandum of assoc. to be entrenched.
These entrenched provisions cannot be altered at all or only altered if further
conditions are satisfied.
(c) Right to attend meetings and vote (pg 261-262)
Another fundamental right of the member is to attend meetings. There are 2 types of
members meetings: Annual General Meeting (AGM) and Extraordinary General
Meeting (EGM)
AGM (Impt):
- Section 175(1) of the Companies Act provides that such a meeting must be held
once every calendar year. Failing to hold it is an offence under section 175(4).
However, section 175A allows private companies to dispense with the need to have
AGM if ALL members agree to it.
- Members have opportunity to query directors on performance of coy and other
issues. B/S must be laid out. Appointment of auditors done here. Articles of Assoc.
typically provide that at AGM, appointment and remuneration of directors must be
determined and members must approve the dividends (if any) declared by directors.
(LINK Members have no right to demand dividends BUT must approve of the
dividends declared by the directors)
EGM (Impt):
- Extraordinary general meetings are where resolutions may be passed. Articles of
Assoc. usually provide that directors could convene such meetings. Members in
certain circumstances (coy act and articles of assoc.) may be allowed to call for
meetings (pg 262). Pte coy in certain circumstances may allow resolution to be
passed by written means.
- When EGM is called, notice of it has to be given to members. Amt of notice
depends on the type of resolution. Special Resolution AT LEAST 21 days notice
for public coy and 14 days notice for pte coy.
Ordinary Resolution AT LEAST 14 day notice.

However, there are provisions that allow for shorter notice in certain circumstances.
Also, the notice has to minimally SET OUT THE TEXT OF RESOLUTION, so
members can decide whether or not to attend the meeting. IF not done, resolution
passed at meeting may be invalidated.
Cite Hup Seng Co Ltd v Chin Yin (1962)
IMPT (pg 262-263)
To successfully pass a special resolution cannot be less than 75% majority of
votes
Ordinary resolution more than 50% of votes
Voting may be done by
Show of hands No. of shares held not important
OR by poll no. of shares matter
Voting is usually a fundamental right of the member BUT in the case of non-voting
preference shares; this right may not be available.
(d) Right to Information
Members have a right to receive info from the coy. For instance, member may
inspect various registers held by the company. In addition, the companys balance
sheet and profit and loss accounts have to be sent to the members prior to the AGM
(section 203). Further members have the right to inspect the minutes of meetings
(section 189). Theoretically, by receiving such information, members can asses
whether the company is being run properly.

Hup Seng Co Ltd v Chin Yin (1962) pg 262

Purpose of the resolution was not made known to members.
As a result, resolution passed at them meeting became
invalidated

(e) Right to be treated fairly

Section 216 of the Coy Act gives members a right to apply to court if the affairs of
the coy are being run oppressively or in disregard of the members interest.
However, for this section to be successfully invoked, there must be more than a
mere disagreement with the decisions made by the majority. There MUST be some
element of unfairness or a visible departure from standards of fair dealing (Ng
Sing King v PSA International Pte Ltd (2005)).
Cite Re HR Harmer Ltd (1958) and Scottish Co-op v Meyer (1959) to show
that minority member can apply for leave and remove majority shareholder/director.

Liabilities of Members (pg 264)

A shareholder may also incur liabilities. If a company is being wound up and a
member is yet to pay up on his shares, he may be called to do so by the company
(section 250)

Re HR Harmer Ltd (1958)

H was a majority shareholder and director. He ran the
business himself without consulting the other directors or
members. He set up branches abroad and dismissed a
director on his own accord without the approval of others.
Further he drew money without the approval of others. The
court held that the minority shareholders could petition for a
relief of a major shareholder and director as there was
oppression
Scottish Co-op v Meyer (1959)
M and S were in business together. S was the majority
shareholder and controlled the board. After some time, S
diverted all the business from the company and M petitioned
for relief on the grounds of oppression and the court granted
it.

Company Secretary

Section 171(1) of the Companies Act provides that every coy shall have one
or more secretaries who must be resident in SG. The company secretary
has to be appointed by the directors (section 171(3)). The company secretary
has the duty to ensure that various administrative matters required
under the Companies Act are adhered to.
Eg: Responsible for organizing meetings, file various documents, send
notices etc
Qualifications
Public coy secretary would need to have certain qualifications set out in
section 171(1AA). Typically, this would mean that the secretary must be a
professionally qualified person, such as an accountant or lawyer.

Company Auditor

Private coy (directors can act as secretary as well) subject to section

171(1AB), it is not necessary to appoint professionally qualified people. Thus
a director (other than a sole director section 171 (1E)) or any person whom
the directors deem fit may act as a company secretary.
Section 205 of the Companies Act requires every Coy to have an auditor /
auditors. Directors appoint the first auditors, but members in the general
meeting appoint subsequent auditors.
Section 205C now provides that an exempt private company may be
exempted from appointing auditors or having audited accounts in respect of a
financial year if its revenue for that year falls below a prescribed amount.

Directors

Section 145(1) of the Companies Act provides that every company shall have
at least 1 director who shall be ordinarily resident in SG. There is no limit
to the number of directors but Articles of Assoc. may have a provision
pertaining to that.
The term director is not restricted to persons appointed as such. Section
4(1) of the Companies Act provides that a person, in accordance with whose
directions or instructions the officers of the company are accustomed to act,
or any person acting as an alternate or substitute director, would also be
considered a director.
Eg: If X indirectly manages coy but is never formally appointed as a director
or if X is gotten to act as a director on behalf of someone subject to all
duties imposed on directors.
Executive vs Non-Executive Directors
Executive directors tend to the day-to-day operations of the company and
works on full time basis.
Non-executive directors do not work on a full-time basis and do not take part
in day-to-day management of the coy. Instead, the provide general advice,
guidance and supervision
HOWEVER in terms of owing duties, the law does not make a distinction
between different categories of directors W & P Piling Pte Ltd v Chew Yin
What (2007)

Qualifications
Section 145(2) of the Companies Act provides that a director must be a
natural person who is at least 18 years of age and who has full legal capacity.
Aside from this, the Companies Act does not prescribe any other necessary
qualifications to be a director. Thus, there is no requirement that the director
must have certain education qualifications or years of experience. However,
the articles of assoc. may have provide for other necessary pre-conditions.
Max age of directors:
For public companies, section 153(1) provides that the maximum age for
directors is 70. However, there are certain provisions in section 153 that allow
a director who has reached 70 years to be re-appointed on a year-to-year
basis if certain conditions are satisfied.
For private companies, Companies Act does not provide any max. age

Disqualification
directors

of

Disqualifications Automatic and Not automatic disqualifications. By

Company Act or Articles of Association. For automatic disqualifications, is it
optional to disqualify a director even though he fits the circumstances?
(a) Section 148 (Automatic Disqualification) pg 267
Section 148(1) of the Companies Act provides that an undischarged
bankrupt cannot be a director or indirectly take part in the management
of a coy; the rationale being that if a person cannot manage his own affairs,
he should not be managing the affairs of a company. The disqualification is
automatic and the person who disobeys the disqualification will be guilty of
an offence.
HOWEVER, the disqualification may be lifted if the leave of court or written
permission of the official assignee is obtained (section 148(2)).
NOTE: not lifting bankruptcy but lifting a disqualification
Link to earlier topic Any part of the world; court has the power to
adjudicate a person to bankruptcy. That person would be considered a
bankrupt in SG as well.
(b) Section 149 (Not automatic disqualification) IMPT
Section 149(1) of the Companies Act allows the minister or official receiver to
make an application to court asking for a disqualification order in certain
circumstances.
For section 149 to be triggered, the circumstances must be that the director
was a director of a company which became insolvent while he was a
director, or within three years of him ceasing to be one, and the directors
conduct was such as to make him unfit to be a director. Matter that have to
be considered in determining whether the directors conduct makes him unfit
to be a director are set out in section 149(6). These include matters like,
whether director breached his fiduciary or other duties, misappropriated
money and whether directors conduct contributed to coys insolvency

If the court is satisfied that he conditions are satisfied, a disqualification order

for up to 5 years may be imposed. If the director disobeys the
disqualification order, that would amount to an offence, unless he has
obtained the leave of court to lift the disqualification.

(c) Section 154

Section 157: director must act honestly and with

reasonable diligence in the discharge of his duties

Section 154(1) (automatic disqualification)

Section 339: Failure to keep proper books of accounts
Section 154(1) of the Companies Act provides that if a person has been guilty
of an offence (In SG or elsewhere) involving fraud or dishonesty punishable
on conviction with imprisonment of 3 months or more, he is
automatically disqualified for 5 years from being a director or taking part in
the management of a company.
Note: involves only fraudulence / dishonesty. Shoplifting etc, not counted.
Section 154 (2) (not automatic disqualification)
Section 154(2) provides that if person committed any offence in SG in
connection with the formation or management of the company, or any offence
under section 157 or 339, he may be disqualified for up to 5 years. If offence
is technical one and not serious, the court may decide not to disqualify him.
If a section 154 disqualification has been imposed, the person concerned
who continues to be a director would be guilty of an offence, unless he has
the leave of court.

(d) Section 155 (IMPT) (Automatic Disqualification)

The Companies Act requires that various documents and notices be filed with
the Registry of Companies. If these documents and notices are not filed,
that may amount to a commission of an offence.
Among other things, section 155 provides that a person who is persistently
default in delivering or filing returns, notices or other documents to the
Registrar, will be automatically subjected to a 5 year disqualification form
managing the company UNLESS he has the leave of court.
The phrase persistently in default has been defined to mean that person
must be guilty of 3 or more offences in relation to the delivery or filing of
such returns, documents or notices, or must have had 3 or more orders
made against him in respect of certain related matters within the last 5
years.
(e) Articles of Association (Automatic disqualification)
Besides the Coy Act, the articles of association may provide for
circumstances in which the director could be disqualified.
Eg: articles may provide that the director would be disqualified if he became
insane or if he has been absent from directors meeting for more than six
months without permission.

Appointment and Removal

Appointment
How directors are appointed / removed commonly found in articles of
association. For instance, articles of assoc. commonly provide that the
directors are to be appointed at the AGM by the members.
Removal/ Resignation
The articles of assoc. also commonly provide that directors may be removed
by means of ordinary resolution. In addition, as already stated, the articles
of assoc. may provide for automatic removal of directors when certain events
happen.
Directors may resign on their own account. However, generally, if the
resignation has the effect of leaving the company with no director who is
ordinarily resident in Singapore, then the director cannot resign (Section
145(5)). Further, if the director is an employee, his resignation must be in
accordance to his employment contract.
Directors and Management
The Companies Act (section 157A) and usually articles of assoc. confer on
directors the power to manage the company.
The board of directors is treated as an agent of the coy and is authorized to
act on behalf of the coy. However, the board may delegate its duties to others
such as individual directors or employees. What they then do binds the coy
provided it is done within their actual, implied or apparent authority.

Actual authority refers to authority that an agent has

expressly been conferred with.
Implied authority refers to authority an agent in a
similar position would usually be conferred with.
Implied authority of a particular director/employee
would depend on the circumstances.
Apparent authority arises if the company or someone
in authority represents to another person that the agent
in question has the authority to do certain acts, and that
other person relies on that representation.

Directors Duties (arise from both case law and statutes)

(a) Duties imposed by case law
i. Duty to avoid conflict of interests
A director owes fiduciary duties to the coy and as such, should not place
himself in a position whereby his duties to the coy and his personal interest
conflict.
Cite Furs Ltd v Tomkies (1935) and Canadian Aero Service Ltd v
OMalley (1973)
Even if the coy does not suffer a loss but there is a conflict and the director
makes a profit, he is still made accountable for that profit as seen in the case
of Industrial Development Consultants Ltd v Cooley (1972)
HOWEVER, liability would generally not arise if there is a potential conflict
and the director gets the approval of members of the coy, allowing him to
go ahead with a particular course of action.
Eg: Director wants to be a director of two competing companies and this is
disclosed to the members, who approve of it, no liability would arise.
Consequences: Account for profit, pay for damages

Furs Ltd v Tomkies (1935) pg 272 IMPT

Breach of fiduciary duties in that Tomkies sold a part of
coys business for a lesser price because he was
bribed. Court held that Tomkies was to return this
money to the coy as he had obtained it in breach of his
fiduciary duties.
Canadian Aero Service Ltd v OMalley (1973)
Defendants duty was to get the project for the coy BUT
their interest was to get it for themselves. Since there
was conflict and the coy lost the opportunity, the
defendants were liable to pay damages.

ii. Duty to Act for Proper Purpose

The articles of association usually confer on the directors various powers.
However, these powers have to be used for proper purposes.
Cite Howard Smith Ltd v Ampol Petroleum Ltd (1974) and Punt v
Symons & Co Ltd (1903)

Howard Smith Ltd v Ampol Petroleum Ltd (1974) pg

272
Directors issued new shares for the wrong purpose
even though that was thought to be the best for the
coy. Court held that the powers of directors had not
been exercised for a proper purpose.
Punt v Symons & Co Ltd (1903)
The court held that this duty to act for proper purpose
was breached when the directors issued new shares
for the sake of self-interest.

iii. Duty to Act in the Best Interests of the Company

Another aspect of fiduciary duties is that directors must act in the best
interests of the company. If this is not observed, liabilities can arise.
Cite Re W & M Roith Ltd (1967) and Chew Kong Huat v Ricwil (2001)
to show that directors breached a duty to act in best interest of company and
duty to avoid conflict of interest.
In these 2 cases, there was conflict of interests as well. However, there could
be cases where this duty is breached without there being such conflicts.
Cite Walker v Wimborne (1975)
Consequences
If any of the above mentioned fiduciary duties are breached, the director
may have to account for profits he made, returned any property he
obtained in breach of those duties, or pay damages to the company for
its losses. Further, any resolutions passed in breach of these duties may be

Issuing new shares are usually used to raise money.

But in the above 2 cases, it can be seen that it was
used for the wrong purpose. (Potential common misuse
of power?)
Re W & M Roith Ltd (1967) pg 273
Director made a provision enabling his wife to draw
pension on his death. The court held that this was in
the interest of his wife and NOT in the best of the coy
and hence it was held that the company did not have to
pay it.
Chew Kong Huat v Ricwil (2001)
Two directors of Ricwil transferred some contracts
entered into by Ricwil to another company in which
they had an interest in (they were stakeholders of that
other company), the court held that this duty was
breached.
Walker v Wimborne (1975)
Directors in coy made an interest free loan without
taking any security in return. The court held that the
directors were not acting in the best interest of their
company in the circumstances of the case.

declared invalid. In addition, if the coy enters into contract with a third party in
breach of his fiduciary duties, the contract may be set aside if 3rd party
knows or ought to have known of that breach.
iv. Duty to act with due care, skill and diligence
As stated in Re City Equitable Fire Insurance Co Ltd (1925), a director also
has the duty to act with due care, skill and diligence. If this duty is breached
and the company suffers losses, the director could be liable for those
losses.
Cite Re City Equitable Fire Insurance Co Ltd (1925) and Jurong
Readymix Concrete Pte Ltd v Kaki Bukit Industrial Park Pte Ltd (2000)
Further, while directors can delegate their duties, if they delegate their duties
to someone to whom a reasonable person would not have delegated their
duties, there could be liability.
Even if there is proper delegation, but director fails to supervise, there could
still be liability (Re Barrings PLC (1999)).

Re Railway and General Light Improvement Co

(1880)
Director signs a cheque without checking why the
money is being paid out.
Jurong Readymix Concrete Pte Ltd v Kaki Bukit
Industrial Park Pte Ltd (2000)
Director in question got his coy to give guarantee which
was not necessary, without fully understanding the
background, without consulting the other directors and
without getting legal advice, it was held that he had
indemnify the company for the losses suffered as a
result.

(b) Duties Imposed by the Company Act

In addition to duties imposed by case law, there are various duties imposed
on directors by virtue of the Companies Act. Breach of these duties may lead
to civil or criminal liabilities or both.
i) Section 156
Under section 156(1), when a coy enters into a transaction or is proposing to
enter into a transaction and a director has directly or indirectly an interest
in that transaction, he must declare the nature of his interest at the
meeting of directors as soon as the relevant facts have come to his
knowledge.
Section 156(2) states that interest shall be taken to mean material interest.
(Note the difference between majority and minority shareholder)
Eg: If coy A enters into contract with coy B, and X a director of A, is the
majority shareholder in B, he has to disclose this to the directors of coy A.
However, if Coy B was a public listed coy and X on the other hand is only a
minority shareholder in company B, he need not make a disclosure as he
would not be considered to have material interest.
Section 156(8) also provides that interest of the director includes the interest
of his family.
Consequence of breach
Section 156(10) provides that breach of section 156 results in the
commission of an offence.
Cite Yeo Geok Seng v Public Prosecutor (2000)

Yeo Geok Seng v Public Prosecutor (2000) pg 275

Director entered in a construction contract and got a
construction coy in which he was also a director in to
do the actual construction without disclosing this to the
board.
The Court held there was a breach of section 156 and
hence he was convicted and fined (criminal liability)

ii) Section 157

Section 157(1) of the Companies Act states that a director must act honestly
and use reasonable diligence in the discharge of his duties.
The term act honestly covers a multitude of matters, such as that the
director must act in the best interest of the company, must not place himself
in a position of conflict of interest, and must not use his powers for improper
purpose.
The term reasonable diligence is apt to cover due care, skill and diligence.
THUS, pair section 157(1) with civil law director duties.
Section 157(2) of the Companies Act states that an officer of a company
(such as a director) shall not make improper use of any information acquired
by virtue of his office to gain an advantage for himself or any other person, or
to cause detriment to the coy.
Eg: Director leaks out confidential info to another competitor, this section
could be breached.
Consequence of breach (impt)
Section 157(3) states that if section 157 is breached, the director would have
to return profits made by him or be liable for losses suffered by the company
and that he would be guilty of an offence.
Cite Lim Weng Kee v PP (2002)

Lim Weng Kee v PP (2002) pg 276 IMPT

Director of a pawnshop released pawn items before the
cheque presented for repayment of the loans were
cleared, it was held that he was in breach of section
157(1), and hence was convicted and fined.

iii) Section 162

Section 162(1) provides that a company other than an exempt private
company shall not make a loan or provide a guarantee or any security in
respect of a loan to a director.
Section 162(6) extends the term director to include his family.
Extension of section 162
Section 163 extends section 162 to situations where loan, guarantee or
security is given to another company in which director has a material interest.
Material interest Director has 20% or more of equity shares of that other
coy.
Exceptions
There are certain exceptions to 162 and the details of which are contain in
sections 162(1) and (2).
(1) If members approve AND the purpose of the transaction is to place with
the director funds to meet expenditures incurred by him for the purposes of
the company, or for properly performing his duties as the officer of the
company, that will not raise an liabilities.
(2) If members approve AND the purpose of the transaction is to place with
the director, who is a full-time employee, funds to purchase a home or, if it is
a loan given to a director who is a full-time employee and the loan is in
accordance with the loan scheme which is open to all employees. That would
not raise liabilities.
(3) Loan is made to a director of a company in the ordinary course of
business, and the business of the company includes granting such loans, as
would be the case with a bank, that would not raise liabilities.
Consequences of breach
Section 162(3) provides that directors who authorize any transaction in
breach of section 162 would be liable for any losses suffered by the company,
and further, section 162(4) provides that they will be guilty of an offence.

iv) Section 168

Section 168(1) provides that any compensation for loss of office of the
director has to be approved by members.
Eg: director decides to retire early and declares himself and enormous sum
of money, he has to seek approval from members
Exceptions:
There are exceptions to section 168(1), and these are contained in section
168(5). If there was an agreement prior to the director becoming a director
AND the payment was consideration or party of the consideration for
agreeing to be a director, such a payment need not have to be approved by
members.
Consequence of breach
If this section is breached, the money received will have to be held on trust
for the company, and thus the director will have to return it to the company.
v) Section 169
Section 169 effectively provides that any emoluments given to directors, such
as directors fees and allowances, have to be approved by the members.
Director may sometimes also be an employee and in that capacity, he is
entitled to receive salary. Members need not approve such payments. ONLY
WHEN payment is received in his capacity of director that section 169 would
be triggered. However, articles of assoc. may provide that even such
payments have to be approved by members.
THERE IS ALSO DUTY TO ACT IN THE BEST INTEREST OF COY
Consequence of breach
If section 169 is not observed, the money received would be held on trust for
the company and thus the directors would have to return it to the company.

(c) Duties imposed by the Securities and Futures Act (IMPORTANT)

Prohibition of insider trading
Section 218(1) of the Securities and Futures Act provides that if a person
connected to a corporation possesses information concerning that
corporation that is not generally available, and the information is such that
a reasonable person would expect it to have a material effect on the price or
value of securities of that corporation and the connected person knows or
ought to reasonably know that the information is not generally available
and might have a material effect on the price or value of those securities, the
he should not among other things:
(1) Subscribe for, purchase, sell or enter into an agreement to subscribe for,
purchase or sell any such securities (section 218(2)).
(2) Procure another person to subscribe for, purchase, sell or enter into an
agreement to subscribe for, purchase or sell any such securities (section
218(2)).
(3) Directly or indirectly communicate the information or cause the
information to be communicated to another person, if the connected person
knows, or ought reasonably to know that, the other person would or would be
likely to subscribe for, purchase, sell or enter into an agreement to subscribe
or, purchase or sell or procure another person to do the same (section
218(3)).
The phrase a person connected to a corporation is defined in section
218(5) and this includes officers of the corporation. Officers has been
defined in section 218(6) to include directors, secretaries and employees of
the corporation.
Section 219 of the Securities and Futures Act provides that even persons
not connected to a corporation or persons who receive price-sensitive
information from persons not connected to the corporation, come under a
similar prohibition.

Eg: if X is a director of a coy and has price-sensitive information relating to

the coy, which is not generally available and he passes the information to Y
who passes it to Z, Y and Z may fall under prohibition stated in section 219,
for instance if they purchase shares of the company

Consequences of breach (choose (1) or (2) and pair with (3))

(1) If section 218 or 219 is breached, that could result in criminal liability.
Section 221 provides that a person who contravenes section 218 or 219 shall
be guilty of an offence and shall be liable on conviction to a fine not
exceeding $250,000 or to imprisonment for a term not exceeding 7 years, or
both.
Cite Public Prosecutor v Koh Soe Khoon (2006)
(2) Alternatively, under section 232, Monetary Authority of Singapore
may bring a civil claim for a civil penalty to be imposed against any person
who breached section 218 or 219. However, since section 232 involves a civil
claim, it would suffice to establish on the balance of probabilities that a
contravention has taken place. This is unlike criminal proceedings
pursuant to section 221 where it must be established beyond
reasonable doubt that a contravention had taken place. The amount of civil
penalty is provided for in section 232(2), and it states that it,
Shall not exceed three times the amount of profits gained or losses
avoided by the contravener, or
Shall be an amount equal to $50,000 (in the case of individuals) or
$100,000 (in the case of corporations)
WHICHEVER IS GREATER. CHOOSE 1.
(3) Section 234 states that a person who has contravened section 218 or
219 could face civil liability to a person who has, contemporaneously with the
contravention subscribed for, purchased or sold securities and who has
suffered a loss. Section 234(6) provides for a maximum amount that is

Public Prosecutor v Koh Soe Khoon (2006)

Defendant was the managing director of a listed
company. He had confidential price-sensitive
information. Before the information was made public,
he bought more of the companys shares. When the
information was made public, the share price went up
and he made profits. The defendant was charged with
insider trading. On conviction, he was fined $160,000
and in default, 16 months imprisonment for the breach
of section 218.

recoverable under this section. Amt. recoverable is restricted to the amount of

profits gained or losses avoided by the contravener.
Thus, if X, in contravention of section 218 or 219, sold securities to Y at a
inflated price because X had inside information which would greatly lower the
price of the securities had the information been made public, Y may bring an
action against X and claim the difference between the price he paid and the
price the securities would have been likely to be traded at, had the
information been made public.
Prohibition of market rigging/market manipulation
The Securities and Futures Act also prohibits other unfair practices that may
arise in a stock market, such as market rigging (section 197) or market
manipulation (section 198).
For eg: if A and B by prior arrangement buy and sell the same shares to
and from each other repeatedly, so as to create an impression of active
trading in that counter, these sections could be breached.
The making of false or misleading statements pertaining to securities is
also prohibited (section 199).
Cite Public Prosecutor v Wang Ziyi Able (2008)

Public Prosecutor v Koh Soe Khoon (2006)

Online posting of false information that a particular
listed company was raided without caring whether the
information was true or false and which information
could have likely induced persons to sell their shares in
a company, resulted in a commission of an offence.