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Most companies depend on the default Table A found in the Singaporean Companies Act as their Articles of Association. While that is a good starting point for showing how the shareholders agreed to conduct themselves, there is much more that a standalone shareholders agreement can offer to reduce and de-escalate the risk of future shareholder disputes.

There are several areas where Table A is silent and therefore leaves a gap for many disputes to arise from. Such disputes are time-consuming and expensive to litigate because the parties' rights and obligations are often heavily disputed, and especially in smaller companies where parties once relied on mutual trust and confidence, there is a lack of documentary records and therefore many witnesses are required to testify on past events leading up to the suit. Having a shareholders' agreement which expressly set out the shareholders' rights and obligations is a major factor in reducing the chance and scope of such disputes.

I. Unanimity in Business Decisions

Companies in Singapore are required to declare to the Accounting and Corporate Regulatory Authority ("ACRA") the types of businesses which they run. However, they are not bound to only run the declared business(es) or to not enter into new businesses without making a declaration to ACRA.

Many shareholders become involved as investors with the expectation that the company will carry on a specific business until it makes a profit, instead of expanding or diversifying too quickly which may deplete their contributions even before the company can break even. However, the concept of majority rule applies to shareholders and the minority may find that they dragged along to a new direction, which creates unhappiness and a desire to exit in order to avoid getting mired in unfamiliar waters.

One solution is to have a clause to require all shareholders to consent to any change in the company's business. Not only does this prevent the majority from unilaterally changing the company's direction and business plan, but it also encourages the majority to obtain buy-in from the majority. This also benefits the majority because they will be able to detect early signs of dissension or dissatisfaction, and manage the minority shareholders before the dispute escalates to letters of demand and eventually, litigation.

II. Representation of All Shareholders

Under company law doctrine, the company's management is left to the directors, while the shareholders only get a say in the bigger picture, such as when the company intends to sell a substantial part of its assets. Shareholders also are only entitled to financial statements on an annual basis, as well as to vote at annual and extraordinary general meetings. Therefore, in order to have a bigger say in the company's affairs, shareholders must obtain additional rights.

One way of achieving more control is to give each shareholder the right to appoint, or be appointed as a director of the company. This ensures that there will be a man in the management to watch out for their interests, or at least provide them with a regular stream of information. Practically, in smaller companies the shareholders would want to be directly involved in running the business, and naturally they would be directors as well. Having this right expressly stated in the shareholders' agreement leaves no room for doubt, and creates confidence that they will not be kept in the dark.

III. Resolving Deadlock

While Table A requires a quorum (minimum attendance) of 2 persons at any meeting, it stops there without providing a solution for a company where shareholders continuously refuse to attend meetings and therefore cannot carry on any business - therefore resulting in a deadlock between shareholders with differing views. Often, this results in some of the shareholders applying for a court order to have the company wound up, which often invites counter-allegations and eventually escalates the entire dispute into a drawn-out trial.

打破僵局程序的步骤，以便大家和好或道别

1. The events which would show that they are unable to work together - for example, a series of meetings which were invalid due to unfulfilled quorum,
2. The steps for getting them to work out their differences, or to allow them to part ways, and
3. How to invoke the deadlock breaking procedure.

There is no one-size-fits-all solution for such deadlock procedures because shareholders may have different tolerance for non-action, and the quorum may change depending on the number of shareholders who insist on being present and having a say.

More importantly, deadlock is often a symptom of underlying tensions between shareholders which they are unable to resolve themselves. This can be addressed by the following 2 aspects which are also frequently litigated.

IV. Exit and Valuation

Surprisingly, Table A does not envisage that a shareholder will exit the company. This presents a challenge for the minority shareholder of a private company because the market for his shares would be very limited, as not many outsiders would be interested in entering a business if they do not have relevant knowledge or experience, or if they perceive the shares to be difficult to trade. It is also not necessarily in the majority's interests to have a new shareholder enter the fray, especially if they do not already have a personal relationship with the potential entrant.

In order to resolve such difficulties, shareholders agreements should clearly provide for when shareholders may exit the company, give the first right of refusal to existing shareholders and specify a method of valuation. This prevents a minority shareholder from being stuck in a company, and allows the majority to limit the participation of outsiders. Most importantly, it reduces disputes over the price of the shares, given the wide range of valuation methods.

V. Alternative Dispute Resolution

Finally, the clause which has the greatest effect on containing and de-escalating disputes. An alternative dispute resolution clause can prevent parties from starting litigation at the drop of a hat, and in close-knit organisations, can preserve relationships by mandating that a dispute be referred to mediation first. Arbitration is also a good way to preserve confidentiality and prevent one party from airing dirty laundry, since the proceedings will be confidential and there is no public gallery to an arbitration hearing.

Are you about to form a company and wish to avoid spending time and money fighting your fellow shareholders? Email me ([email protected]) or message me on LinkedIn (Boon Gan Ng) for a free initial consultation.

许多公司会完全采纳新加坡公司法律提供的模范宪章。虽然模范宪章包含公司基本操作程序，但并不全面的规划股东之间的权利与义务。在许多中小企业里，股东因为互相信任而忽略记录的维持工作，一旦关系破裂就会勾起过去的不满，因此造成股东纠纷诉讼耗费许多金钱、时间。有了股东合约，就能减少、避免纠纷的引起机率。

【一】 取得全体的同意

虽然新加坡公司必须向会计与企业管理局（“ACRA”）声明经营的各项生意，但可以经营其他生意。许多投资者因为希望公司维持某生意而取得利润，才以股东的身份参入公司，但大部分的股东如果决定改变公司的商业方向，那么少数的股东也无可奈何，阻止不了多数。在这种情况下，少数可能会为了退股，决定起诉其他股东。

如果股东合约设定必须取得股东全体的同意，才能改变公司的方向，这不但能防止多数股东气压少数，也能鼓励大家维持同心协力的精神。同时，多数股东能经过谈论提早察觉少数的不满，避免把纠纷闹大。

【二】 股东的代表

在新加坡公司法律下，公司应当由董事经理，而股东只在某些情况有决定权，例如当公司有意售卖大部分的资产。股东有权力要求公司提供常年财务报告，在常年、特殊会议投票。因此，为了维护自己的利益，股东合约必须包括股东代表授权的条例。

如果股东有委任董事的权力，就能保证有维护利益的经理人，提供公司操作的咨询。在中小企业里，股东当董事相当普遍，因为股东希望能直接经营生意。有了该条例，能增加股东对公司经理层的信心。

【三】打破僵局

模范宪章指定，无论董事、股东会议都必须有2位参与才能实效，但是它并不提供董事或股东连续不出席，而造成僵局的解决方案。为了打破僵局，有些股东直接向法庭申请公司清盘的庭令，不但类似用牛刀杀鸡，还可能引起其他股东利用次机会告状，造成纠纷变得更加激烈。

为了避免纠纷恶化，股东应当规划以下事项：

1. 僵局的定义
2. 打破僵局程序的步骤，以便大家和好或道别
3. 如何启动打破僵局的程序

起草打破僵局的条例时，必须考虑股东是否要参与每个会议，或对公司无法操作期间的看法。更重要的时，僵局代表股东之间意见分歧，不早日化解就会造成诉讼。

【四】退股、估价

模范宪章也缺少退股、股价条例。一般私人公司的股票不会吸引投资者的兴趣·，不易售卖，何况少数的股票。多数股东同行也不欢迎陌生股东的参与，因此股东之间顶下买卖条件、股价程序，能一箭双雕。

【五】纠纷解决方式

纠纷解决模式条例是一项防范纠纷的措施，能及时防止股东马上互相起诉。在关系密切的中小企业里，此条例也能通过和解模式保持良好关系的作用。为了避免家丑往外杨，纠纷也可以通过仲裁解决。此条例的内容将成为维持股东之间的和平的关键。

您是否即将立公司，希望避免与其他股东拼搏？可通电邮([email protected]) 或 LinkedIn (Boon Gan Ng) 寻求咨询。