Shareholder Rights in Singapore Private Companies

Last updated on July 31, 2019

shareholders in a meeting.

You are a shareholder if you own shares in publicly-listed companies (acquired through the stock exchange) or shares in a private company (e.g. when your friend starts a small business and you invest in it, in exchange for part-ownership).

Being a shareholder confers a number of rights and responsibilities, and this article will explain what your rights are. For more information on your responsibilities as a shareholder, please read our other article.

Note: Some of the provisions discussed below may not apply in the event that you do not have your name entered into the company’s register of members despite being a shareholder. This may happen if,for instance, your shares are bought or owned through a nominee. The following discussion may also not apply to companies other than those limited by shares. If in doubt, please consult a lawyer.

Right to Expect Dividends only upon Declaration of Final Dividend

Shareholders have no automatic right to expect declaration of dividends, regardless of whether the company makes a profit. This also includes interim dividends, which are dividends declared by a company before its full-year financial statements have been issued.

Dividend declarations may be made based on promising quarterly or half-yearly results, but are revocable at any time before payment.

Courts will generally not intervene to compel declaration of dividends, save in exceptional circumstances where such non-declaration of dividends amounts to oppression. For instance, where a company’s director pays himself excessively high salaries or bonuses without declaring any dividends for shareholders.

However, shareholders have an irrevocable right to final dividend after it is declared. Final dividends are dividends declared by a company after its full-year financial statements have been issued.

Final dividends cannot be revoked, and shareholders will have a right to receive such dividends after the declaration, barring subsequent insolvency (see below).

Right to Observance of Company Constitution and the Companies Act

Right to demand adherence to company’s constitution

Every shareholder has the right to ensure that the company and all other shareholders adhere to all the provisions of the company’s constitution.

For instance, if the company states clearly in its constitution that its main business objectives is to sell clothing, but it later decides to venture into a different and unrelated business (e.g. going into an airline business), a shareholder will have the right to object to this new business venture.

Right to demand adherence to the Companies Act

Any shareholder whose interests are or may be affected by the company contravening any provision in the Companies Act may apply to court for an injunction to restrain such a contravention.

Access to meetings and information

Right to expect Annual General Meeting (AGM)

Shareholders of public companies have the right to expect at least one general meeting per year – the AGM. However, private companies may by resolution dispense with holding AGMs.

Right to call for or convene an Extraordinary General Meeting (EGM)

In addition to the AGM, 2 or more shareholders who collectively hold 10% or more of the company’s vote-carrying shares also have the right to requisition the company directors to convene an EGM, or to themselves convene such meetings.

Right to attend meetings

Shareholders have the right to attend all of the company’s general meetings, and to speak on any resolution tabled at the meeting.

Right of access to important information

Shareholders have the right to access and inspect:

  • The electronic register of members (for private companies)
  • The register of members kept by the company itself (for public companies)
  • Minutes of general meetings (however, members usually do not have the right to access minutes of board meetings)
  • The company’s register of charges, to find out which (if any) of the company’s assets are encumbered
  • The registers of key management personnel, directors’ shareholdings, substantial shareholders, and debenture holders

Right to financial statements

Shareholders have the right to receive a copy of financial statements, balance sheets, and auditors’ report at least 14 days before the documents are to be presented at a general meeting.

In the case of a private company which has dispensed with the holding of an AGM, shareholders have the right to receive a copy of financial statements and related documents within 5 months after the end of the financial year.

Right to vote

Each share normally entitles the shareholder to one vote on any resolution, on any issue that has been tabled for a vote. This is unless the company’s constitution states otherwise, or if the type of share owned does not carry voting rights. Shareholders are free to vote in any way they see fit and purely in their self-interests.

Right to demand a poll if voting via a show of hands is not conclusive

Usually, voting on any resolution is done via a show of hands. However, where a show of hands is not conclusive as to the actual balance of votes, any shareholder may demand that a poll be taken, unless such a right is curtailed by the company’s constitution.

However, regardless of what the company’s constitution states, a demand for a poll cannot be denied if it is made by:

  • 5 or more shareholders with voting rights;
  • 1 or more members who hold 5% or more of the voting rights; or
  • 1 or more members whose shares in total constitute 5% or more of the total sum paid on all shares conferring voting rights.

Pre-emption rights

Pre-emption rights are rights giving existing shareholders priority in acquiring new shares issued by the company. The existence of such rights are not guaranteed, and depends on the individual company’s constitution.

Bringing of Legal Proceedings – Against or On Behalf of the Company

Right to bring legal action against the company

A shareholder has the right to apply to court to restrain the company from doing any act, or to seek any appropriate relief where the:

  • Company’s affairs are conducted, or where the directors’ powers are exercised, in a manner oppressive to one or more shareholders; or
  • Where the company has acted or threatens to act in a way that is unfairly discriminatory to one or more members.

Right to bring legal action on behalf of the company

A shareholder has the right to apply to court for permission to commence legal action or arbitration on behalf of the company, or to intervene in a lawsuit or arbitration which the company is a party of, provided that the action is good faith and appears to be in the interests of the company.

Adequate notice must be given to the directors, and the directors must have decided not to commence the necessary proceedings, before the individual member can commence such action.

Right to apply for “just and equitable” winding up

A shareholder has the right to apply to court to wind up the company on “just and equitable grounds” in exceptional cases, such as where:

  • Equal shareholders are at complete odds as to a company’s direction and therefore no decision can be made in terms of this or daily operations;
  • Relations between shareholders have completely broken down; or
  • The company is no longer able to carry out the main business for which it was formed.

Rights in the Event of Company’s Winding Up due to Insolvency

Right to recover sums owed to you (subject to other creditors’ rights)

If a company you invested in is being wound up due to insolvency, you may have a right to recover a portion of the dollar value of your shares, alongside other sums owed to you (e.g. where final dividends were declared but not yet paid to you).

However, it is important to note that your rights as a shareholder to such amounts rank below the claims of all other creditors who are not shareholders, such as secured creditors and employees who are owed wages.

As a result, you will only be paid if the company has any remaining assets after satisfying the claims of these other creditors. You may thus receive less than the sums that you invested or which were promised to you, or even nothing at all.

Right to protection of personal assets from company’s creditors

Shareholders have the right to have their personal assets protected in the event of the company’s insolvency. No person or company will be allowed to seize your personal assets to help satisfy the company’s outstanding debts.

Thus, the maximum financial loss that you may experience in the event of the company’s insolvency and winding up is the full amount that you’ve spent to purchase your shares.

Compliance
  1. What are Annual General Meetings (AGMs) in Singapore?
  2. Anti-Money Laundering Regulations and Your Business: What You Need to Know
  3. Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
  4. Dividend Payments Guide for Singapore Business Owners
  5. Company Audits in Singapore: Requirements and Exemptions
  6. Guide to Transferring Shares in a Singapore Private Company
  7. How to Hold an Extraordinary General Meeting (EGM) in Singapore
  8. How to Issue Shares in a Singapore Private Company
  9. How to Reduce the Share Capital of Your Singapore Company
  10. How Businesses Can Legally Conduct Lucky Draws in Singapore
  11. Dormant Companies and Their Filing Obligations in Singapore
  12. How to Hold a Board Meeting in Singapore
  13. Paid-Up Capital in Singapore: A Complete Guide (Is $1 Enough?)
  14. Essential Regulatory Compliance Guide for Singapore Companies
  15. Finding a Suitable Corporate Secretarial Firm in Singapore
  16. Oppression of Minority Shareholders
  17. Process Agents in Singapore
Company Documents
  1. Company Constitution in Singapore: What It is and How to Draft One
  2. How to Set Up a Register of Controllers
  3. How to Set Up a Register of Nominee Directors
  4. Memorandum of Understanding (MOU): Does Your Business Need One?
  5. Minutes of Company Meeting in Singapore: How to Record
  6. Guide to Filing Financial Statements for Singapore Business Owners
  7. Company Resolutions: What are They?
  8. Board Resolutions in Singapore
  9. Company Memorandum and Articles of Association
  10. Filing Annual Returns For Your Business
Company Management
  1. Shadow Directors: Who are They and What Duties Do They Owe to the Company?
  2. Guide to Directors' Remuneration in Singapore
  3. How to Remove a Director from a Company in Singapore
  4. Appointing Company Directors in Singapore: Eligibility, Process etc.
  5. Company Loans to Directors/Shareholders (& Vice Versa) in Singapore
  6. Share Transmission: What Happens If a Shareholder Dies in Singapore?
  7. Business Will: How to Pass on Your Business to Your Successors in Singapore
  8. Shareholder Rights in Singapore Private Companies
  9. Removal and Resignation of Company Auditor in Singapore
  10. What Responsibilities Do Company Shareholders Have in Singapore?
  11. Creating and Registering Charges in Singapore: Guide for Companies
  12. How to Commence a Derivative Action on Behalf of a Company in Singapore
  13. Managing Director vs CEO in Singapore: Roles and Obligations
  14. Appointing a Company Secretary: Roles and Responsibilities
  15. Directors' Duties in Singapore
Tax and Accounting
  1. What is Withholding Tax and When to Pay It in Singapore
  2. Singapore Influencers: Here's How to Calculate Your Income Tax
  3. Corporate Tax in Singapore: How to Pay, Tax Rate, Exemptions
  4. When to Register for GST, How and Responsibilities after Registration
Data Protection
  1. Essential PDPA Compliance Guide for Singapore Businesses
  2. Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
  3. How Can Companies Dispose of Documents Containing Personal Data?
  4. Here's a 7-Step Plan for Companies to Prevent Unauthorised Disclosure When Processing and Sending Personal Data
  5. Appointing a Data Protection Officer For Your Business: All You Need to Know
  6. Summary: Your Organisation's 9 Main Obligations under the Personal Data Protection Act
  7. Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
  8. GDPR Compliance in Singapore: Is it Required and How to Comply
  9. Drafting a Comprehensive Privacy Policy For Your Singapore Website
  10. Is It Legal for Businesses to Ask for Your NRIC in Singapore?
  11. PDPA Consent Requirements: How Can Your Business Comply?
  12. Legal Options If Employees Breach Confidentiality in Singapore
Marketing
  1. How Can You Comply with Singapore Law When Sending Email Newsletters?
  2. Outdoor Advertising: How to Legally Display Public Ads in Singapore
  3. A legal guide to drafting a social media policy for your company
  4. Dealing with Defamation of Your Business: Can You Sue?
Franchising
  1. Starting a Franchise in Singapore: What Franchisors Should Look Out For
  2. Running a Franchise in Singapore: What To Look Out for as a Franchisee
Debt Restructuring
  1. Informal Debt Restructuring and Workout in Singapore
  2. What is a Scheme of Arrangement, How it Works and How to Apply for One
  3. Judicial Management: What is It and How Does it Work?
Ending a Business
  1. Insolvency: Claw-back of Assets from Unfair Preference and Undervalue Transactions
  2. Striking Off a Company
  3. What Should a Creditor Do When a Company Becomes Insolvent?
  4. Dissolution of partnerships in Singapore
  5. Validation of Payments Made by Companies Being Wound Up
  6. Can a Company that Struck Itself Off the Register Later Apply to Restore Itself?
  7. Are You Closing Your Singapore Business? Have You Settled All of the Following?
  8. How to File a Proof of Debt against a Company in Liquidation
  9. Winding Up a Company