Lim Cheng San v Soup Empire Holdings Pte. Ltd.

Lim Cheng San (Edger), a director of Soup Empire Holdings Pte Ltd (SEH) and of its wholly-owned subsidiaries Lao Huo Tang Restaurant Pte Ltd and Lao Huo Tang Group Pte Ltd, brought three applications under ss 199(3) and 396A of the Companies Act 1967 to inspect and copy specified documents kept by the three companies: HC/OA 867/2022, HC/OA 51/2023 and HC/OA 52/2023. Edger beneficially owned 39.6% of SEH through his wife, who held the shares on trust for him; SEH's co-founder, Thomas Hong, held the rest beneficially through another trustee.

In 2021 Edger, through his wife, sued for minority oppression in HC/S 465/2021. Thomas then ended Edger's employment and tried to remove him as a director, but the High Court granted and later upheld an injunction preventing his removal. SEH also brought a counterclaim alleging that Edger and others had conspired to injure its business by unlawful means. From April 2022, Edger received letters from the Inland Revenue Authority of Singapore and court summonses, as an officer of the companies, over the non-filing of tax returns and non-payment of GST. When he could not resolve this with the companies, he filed the applications in December 2022. Goh Yihan JC allowed them after a hearing on 2 March 2023, and gave these grounds after the companies appealed.

1. Whether Edger had a presumptive right as a director to inspect the documents
2. Whether the applications were a fishing expedition in aid of the oppression suit
3. Whether the risk of sharing documents with alleged co-conspirators justified refusing inspection
4. Whether Edger's reduced role and the companies' steps on the tax matter defeated his right to inspect

Applying Mukherjee Amitava v DyStar Global Holdings (Singapore) Pte Ltd and others [2018] 2 SLR 1054, the court held that a director has an almost presumptive right to inspect records within s 199, and the burden lies on the company to show an abuse of process or privilege. The companies did not dispute that the documents fell within s 199, and the court was satisfied that Edger needed documents beyond the tax categories to check whether tax returns were being filed properly.

The fishing-expedition objection failed. Unlike in Mukherjee, Edger had made no overlapping discovery application in the oppression suit, and in any event the real question was whether he needed the documents to discharge his duties. Possible relevance to the suit did not by itself prove an ulterior motive, and the court found none.

On the alleged conspiracy, there had been no finding of conspiracy, and the court declined to speculate on affidavit evidence, including video said to show Edger working at a competitor's outlet, which he said was simply a job. The companies also showed no harm, and as a 39.6% shareholder Edger had no reason to destroy SEH's value.

Edger remained a director owing duties, the earlier injunction court had linked his continued access to information to that role, and the tax period fell when he was active in the business. Since the tax letters might lead to charges against him, he was entitled to satisfy himself that the issues had been resolved, whatever steps the companies said they had taken.

The court allowed all three applications and granted an order in terms of each. Disclosure under the first prayer could be made to Edger and to public accountants acting for him, who had to give the undertaking required by s 199(5) before disclosure. The companies were ordered to pay Edger costs of the three applications fixed at $12,000 all-in.