Dec 2012
BERMUDA
SUPREME COURT
COMPANIES – MINORITY SHAREHOLDER OPPRESSION – RIGHT OF COMPANY TO PARTICIPATE IN LITIGATION
In this case, Full Apex Holdings Limited (“Apex”) applied for an Order permitting and/or authorising it to take an active role in existing litigation involving a minority shareholder oppression application. The Petitioner in the existing litigation complained about a transaction (the “FDL Transaction”) which was alleged to have merged three subsidiaries of Apex which generated 98% of its profits. The then sale of 22% of the merged subsidiaries was alleged to have been on un-commercial terms which unfairly diluted the value of the Petitioner’s shareholding. It was also alleged that Apex’s Directors breached their fiduciary duty to act in good faith in the best interests of Apex.
Counsel for Apex stated that the existing litigation was not an ordinary shareholder dispute but one in which Apex had an independent position to advance and, as such, the starting assumption (that Apex should play no active role during substantive adjudication of a shareholder dispute) should be modified. It was further outlined that the main reason Apex sought to play an active role in the litigation was the risk that findings might be made on issues that its majority Shareholder could otherwise address in a different way and which would adversely affect the Company’s SGX listing status. Apex contended that the Company had a distinctive role to play in the litigation in advancing the argument that it: “has acted in accordance with the letter and spirit of the listing rules”.