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The general rights of all shareholders are set out in the constitution. This applies to the rights of holders of ordinary shares as well as those for holders of preference shares. The company’s constitution will set out certain additional rights which preference shareholders can have (as required by the Companies Act) as a result of the class of shares which they hold. The rights and obligations of shareholders can be further provided for or varied by way of shareholders’ agreements.
Apart from the constitution, shareholder rights and protections are also governed by various statutory and non-statutory instruments as well as under common law.
The relevant main statutes are:
Companies Act (Chapter 50). This is the principal legislation governing companies.
Securities and Futures Act (Chapter 289) (SFA). This sets out the obligations of companies seeking to raise financing from the public market.
These are supplemented by non-statutory instruments such as the:
Listing Rules of the Singapore Exchange (SGX) (Listing Rules), which govern the requirements and obligations of companies seeking listing or those already listed on SGX.
Singapore Code of Corporate Governance (Governance Code), which focuses on providing corporate governance principles and provisions for listed companies on SGX.
Singapore Code on Takeovers and Mergers (Takeover Code), which aims to achieve fair and equal treatment of all shareholders in a takeover or merger. The Takeover Code applies to all companies with primary listings on the SGX as well as unlisted companies that meet the minimum criteria laid down by the Takeover Code.
As the constitution represents a contract among the shareholders and between the shareholders and the company, each shareholder has a general right to have the provisions of the constitution observed by every other shareholder and the company. This means that a shareholder can apply to court to restrain an impending breach of the constitution or to set aside an act which has been committed in breach of the constitution.
A shareholder also has a right of access to various registers and records of the company, such as the registers of:
Members, directors, secretaries, managers and auditors.
Substantial shareholders (in the case of a listed company or a company declared to be subject to an obligation to maintain such a register).
Debenture holders and charges.
Directors’ and CEO’s shareholdings.
A shareholder is also entitled to receive a copy of the company’s audited financial statements (or in the case of a parent company, its consolidated financial statements) and balance sheet together with a copy of the auditor’s report not less than 14 days before the general meeting at which the statements are to be presented. A shareholder also has a right to attend any general meeting and to speak at such meetings.
It is not uncommon for variations of shareholder rights to be set out in the constitution and in the shareholders’ agreement. For example, various terms attaching to preference shares are required to be set out in the constitution. However, such variations are subject to any mandatory provision of law, for example, the Companies Act provides that the director of a public company can be removed by an ordinary resolution of its shareholders regardless of anything in its constitution or in any agreement between the company and the director.
For companies listed on SGX, the Listing Rules further prescribe various mandatory provisions to be included in their constitutions.