Lawlines Volume 9 Issue 4 - eOASIS

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LawLinesVol 9 . <strong>Issue</strong> 4 • December 2007Around Rajah & TannRound Up – 2007 InPerspectiveFeature ArticlesTo Withhold Or Not ToWithhold – That Is TheQuestionAll Abuzz About GamesCorporate SocialResponsibility UnderThe New IndonesianCompany LawCase BitesLegislation Bitesall the management functions of P, except for thesigning of cheques and giving instructions to thebank, and that he took all effective decisions. Whenpayments needed to be made, R did not require Mto produce receipts or invoices. Accordingly, theCourt found that M was a de facto director, and itfollowed that he was in breach of duty by enrichinghimself at the expense of P in paying large sums tohimself which he was not entitled.Application For Unfair Prejudice PetitionSeeking Damages For Company For BreachOf Directors’ DutiesIn Gamlestaden Fastigheter AB v Baltic PartnersLtd (2007), the key issue before the Privy Councilon appeal from the Court of Appeal of Jersey waswhether a member could make an unfair prejudiceapplication for relief where the company in questionwas insolvent and would remain so regardless of theorder made on the application and where the reliefsought would accordingly confer no fi nancial benefi ton the applicant in its capacity as member. Theorder sought by the applicant was for the directorsof the company to pay damages to the company forbreach of directors’ duties. The applicant, who wasalso a creditor of the company, stood to gain as suchpayment would produce a considerable sum whichwould be available to the creditors of the company.The Privy Council allowed the application.The Court found that under the Jersey equivalentof section 216 of the Singapore Companies Act,there was nothing to suggest that a cause ofaction allegedly vested in the company could notbe prosecuted to judgment in an unfair prejudiceapplication. The Court also found it artifi cial torequire that the qualifying loss had to be a loss thatreduced the value of the applicant’s equity capital,rather than a loss which reduced the recoverabilityof its loan capital.Whether Directors Were Shadow DirectorsIn Re Mea Corp Ltd (2007), it was necessaryto establish that two individuals were shadowdirectors of three related companies in orderfor disqualifi cation orders to be grated againstthem. A claimed that he had never been formallyappointed as director of two of the companies,while B claimed that he had never been appointedas director of any of the companies.page 30 of 44 pages | print | comments | close
LawLinesVol 9 . <strong>Issue</strong> 4 • December 2007Around Rajah & TannRound Up – 2007 InPerspectiveFeature ArticlesTo Withhold Or Not ToWithhold – That Is TheQuestionAll Abuzz About GamesCorporate SocialResponsibility UnderThe New IndonesianCompany LawCase BitesLegislation BitesThe evidence was that A and B dictated companypolicy and instructed the directors of the threecompanies, who were accustomed to act uponsuch instructions. The English High Court found itparticularly signifi cant that two of the companiesadopted a policy that would result in the two payingtheir recoveries into a central treasury and furtherthat moneys would be paid out of the treasury tocompanies outside the group, in which A had asubstantial interest. Although the directors of thecompanies protested that control over paymentof creditors had been taken out of their hands,their protests were overridden by A and B and thedirectors complied with the instructions of A andB. Accordingly, they were found to be shadowdirectors of the companies.Dispute ResolutionNo Statutory Jurisdiction To Grant Stay OfCourt ProceedingsIn Albon v Naza Motor Trading Sdn Bhd (No 3)(2007) the English High Court held that it had nostatutory duty under Section 9 of the Arbitration Act1996 (the equivalent of Section 6 of the SingaporeArbitration Act) to grant the defendant company’sapplication for stay of court proceedings. Itexplained that the language of section 9 establishedtwo threshold requirements. The fi rst was that therehad been concluded an arbitration agreement, andthe second was that the issue in the proceedingswas a matter which under the arbitration agreementwas to be referred to arbitration. In the case at handthere was an unresolved issue of fact as to whetherthe arbitration agreement had been concluded dueto the alleged forgery of the subject agreement.Accordingly, there was as yet no jurisdiction underSection 9 to grant a stay. The Court then statedthat the absence of jurisdiction under Section 9 toorder a stay did not preclude the existence andexercise by the court of its inherent jurisdiction togrant a stay. The Court, however, was of the viewthat this case was not one of those exceptionalcircumstances where the exercise of its inherentjurisdiction was called for.Arbitration Award Not Procured By FraudThe English High Court in Elektrim SA v VivendiUniversal SA (2007) was confronted with the issueof whether an arbitration award was obtained byfraud due to the alleged concealment by the otherparty of a relevant memorandum at the arbitrationpage 31 of 44 pages | print | comments | close
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Lawlines Volume 9 Issue 4 - eOASIS

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