REGULATING SQUEEZE-OUTS IN SINGAPORE: A CASE FOR IMPOSING FIDUCIARY DUTIES ON CONTROLLING SHAREHOLDERS

Abstract

Squeeze-outs entail the forcible acquisition of minority shares, thereby enabling the controlling shareholder to gain complete control of the company. They epitomise the controller-minority agency problem, having the tendency to generate opportunistic behaviour on the part of the controlling shareholders. Despite Singapore’s generally robust framework towards corporate governance, the regulation of squeeze-outs in Singapore is surprisingly deficient. While commentators are generally cognizant of this problem, there has not been any substantive reform proposals. This Paper aims to fill the gap by proposing a novel set of reforms for regulating squeeze-outs in Singapore, viz. the imposition of fiduciary duties on controllers in squeeze-out transactions. Drawing on the U.S. regulation of squeeze-outs through fiduciary duty class actions, this Paper argues that the notion of controlling shareholder fiduciary duties is not inconsistent with existing Singapore jurisprudence, and that there are strong justifications for its adoption in the Singapore context. This Paper then advances a framework for the imposition of controlling shareholder fiduciary duties in Singapore.