Shareholders’ Roles, Responsibilities, and Rights in Singapore

Shareholders' roles, responsibilities, and rights in Singapore

In general, Singapore companies treat their shareholders fairly and equally, enabling them to use their rights and communicate their views on relevant matters involving their respective companies. However, there are also obligations that these shareholders have to meet. This article will explain the roles, responsibilities, and privileges of a shareholder in a Singapore company.

Shareholders roles and responsibilities in Singapore companies

Despite having privileges, shareholders in Singapore are subject to several obligations that are governed under common law.  The Companies Act (CA) and the Securities and Futures Act (SFA) both comprise the core statutory framework and are aptly supplemented by the Singapore Code of Corporate Governance 2012 (the Governance Code), the Listing Manual of the Singapore Exchange (the Listing Manual), and other non-statutory instruments. 

Below are some roles and responsibilities of a shareholder:

Paying for shares

Shareholders in Singapore have to pay the company the entirety of the sum agreed in exchange for the shares allotted to them. Alternatively, they may also pay for a portion of the shares and subsequently pay the remaining amount. However, keep in mind that if the company makes a call for payment of the unpaid shares, these outstanding shares must be paid.

Approving of dividend declarations

If the board has suggested a dividend declaration, it is the responsibility of the shareholders to approve or decline the declaration at the Annual General Meeting (AGM).

Appointing and removing directors

Unless the company’s constitution provides otherwise, shareholders are generally responsible for appointing directors by exercising their voting rights at general meetings. Aside from that, shareholders are also responsible for removing directors who perform poorly or are involved in misconduct.

Voice opinions and interests

As a shareholder, you should be able to voice your opinions and interests regarding company matters. In addition, you are also obliged to cast your votes based on your views on how the company can be run most effectively and profitably. Whether it is about the company’s general business,  amendments to the company’s constitution, or issuance of new shares,  you should consider your votes carefully.

Attending general meetings

It is also a responsibility of a shareholder to attend and participate in the company’s shareholders’ meetings like the Annual General Meeting and Extraordinary General Meeting. 

During these general meetings, the shareholder can approve or disapprove of the company’s matters. These are also appropriate forums for shareholders to voice their opinions on related issues concerning the company’s management. 

For example, if the company is issuing a share, but you believe that the company has not provided sufficient information about the proposal, you are responsible for clarifying the commercial justification for the share issuance.

Furthermore, you may want to inquire whether and how the proposed share issuance will increase shareholder value. On the other hand, if the company does not articulate a convincing justification for issuing the share, it is your responsibility to ask questions and raise your concerns to reach a more informed voting decision.

Overseeing the company’s matters

Shareholders may take legal action on behalf of the company, known as a derivative action, where the company has suffered an error, but it does not want to sue for the wrongdoing. For example, suppose a director abuses their position by accepting personal financial incentives that cause the company to experience an unprofitable transaction, resulting in a loss. In such a case, shareholders may pursue legal action against the errant director via the derivative action provisions provided in the Companies Act.

Shareholders’ rights in Singapore companies

Companies in Singapore, in general, give their shareholders several privileges, including:

The right to vote

In accordance with the company’s constitution, a shareholder is generally entitled to voting rights by the number and types of shares owned in the company. Besides, they can exercise this voting right when a resolution has to be passed at a general meeting.

The right to approve of and receive dividends

While the company’s directors have the right to recommend the payment of a fixed amount of dividends, shareholders have the right to approve or disapprove of the final dividend payment at general meetings. Note that the amount of dividends received by each shareholder will be subject to the company’s constitution.

The right to be treated fairly

Shareholders may seek redress from the Singapore government if the actions of directors oppress or ignore the interests of one of the shareholders. They also have the right to take legal action if the company, directors, or other shareholders harm or unfairly discriminate against them.

The right to protection of personal assets from the company’s creditors

Shareholders have the right to protect their personal assets in the event of company bankruptcy. In other words, no person or company is allowed to seize their personal assets to help pay off unpaid company debt.

You may also want to read a related article:

Roles and Duties of Singapore Company Directors

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