27 February 2025

Kiri Industries Limited v Senda International Capital Limited & Anor
[2025] SGCA(I) 1

On 31 January 2025, the Singapore Court of Appeal comprising Senior Judge Judith Prakash, International Justice Robert French, and International Justice Sir Bernard Rix handed down its decision in Kiri Industries Limited v Senda International Capital Limited & Anor (“CA Decision”).

This decision follows a series of decisions by the Singapore International Commercial Court (“SICC”) and the Singapore Court of Appeal relating to shareholder oppression litigation between Kiri Industries Limited (“Kiri”) as minority shareholder and Senda International Capital Limited (“Senda”) as majority shareholder in DyStar Global Holdings (Singapore) Pte Ltd (“DyStar”).

Allen & Gledhill has represented Kiri throughout this long-standing dispute.

In this litigation, Kiri successfully established its claim for minority oppression and Senda was ordered to buy out Kiri’s shareholding in DyStar at US$603.8 million (“Buy-out Order”). Following delays in fulfilling the Buy-out Order, in Kiri Industries Limited v Senda International Capital Limited & Anor [2024] SGHC(I) 14, the SICC ordered Kiri’s and Senda’s total shareholding in DyStar to be sold via an en bloc sale, that receivers conduct the sale, and that Kiri shall receive US$603.8 million in priority from the proceeds of sale (“Priority Order”). However, the SICC declined to award interest on the sum of US$603.8 million (“Interest Issue”).

Kiri appealed against the SICC’s decision on the Interest Issue, while Senda appealed against the SICC’s decision on the Priority Order. Kiri has prevailed on both appeals before the Court of Appeal.

The Interest Issue

In the CA Decision, the Court of Appeal awarded interest to Kiri at the rate of 5.33% per annum on US$603.8 million running from 3 September 2023 (a date six months from the final valuation of Kiri’s minority shareholding) until the date of payment. Interest was awarded as a discretionary enhancement of the sum to be paid to Kiri following the en bloc sale, and not as post-judgment interest in the strict sense.

In declining to award interest, the SICC held, in its decision below, that it did not have the power to award post-judgment interest as the value of Kiri’s shareholding in the Buy-out Order was not a judgment debt on which interest may run, nor was the Buy-out Order in the nature of a claim for debt or damages within the meaning of section 18(2) of the Supreme Court of Judicature Act 1969, read with paragraph 6 of the First Schedule to the Supreme Court of Judicature Act 1969, or section 12(1) of the Civil Law Act 1909.

Nevertheless, the SICC held that section 216(2) of the Companies Act 1967 allowed the court to make orders enhancing the amount to be paid for the shares of the oppressed shareholder reflecting an interest factor, to compensate the oppressed shareholder for any delay in the realisation of its shareholding. In other words, the court had the power to adjust the purchase price of the shares to account for interest. However, the SICC declined to enhance the value of Kiri’s shareholding on the basis that Kiri had not sought post-judgment interest when the Buy-out Order was first made.

On appeal, Kiri explained that it had sought post-judgment interest earlier, around the time that the Buy-out Order was made, but the SICC reserved the issue to a later date.

On this basis, the Court of Appeal accepted that Kiri was not precluded from asserting a claim for discretionary enhancement of the value of its shares reflecting an interest factor.

In awarding interest at the rate of 5.33% per annum, the Court of Appeal said that the appropriate reference rate for the discretionary enhancement did not have to be “fully compensatory” and did not have to correspond to “the higher interest rates applicable to commercial borrowings”.

The Priority Order Issue

Senda also appealed against the Priority Order arguing that the substitution of the en bloc sale order for the Buy-out Order relieved Senda of its obligation to pay Kiri US$603.8 million for its shares. In support of this argument, Senda contended that the primary decision by the SICC was only that of minority oppression and not the remedial orders which could be varied without disturbing the primary decision.

The Court of Appeal rejected Senda’s arguments, holding that the substitution of the Buy-out Order with the en bloc sale order did not discharge the buy-out obligation imposed on Senda. Upholding the Priority Order made by the SICC, the Court of Appeal accepted Kiri’s submission that the Priority Order preserves Kiri’s right to receive the valuation price for the disposition of its shares in DyStar, which formed part of the SICC’s primary decision. The Court of Appeal also said that there was no unfairness in holding Senda to the financial obligation imposed on it by the original Buy-out Order.

Significance of the CA Decision

This decision is significant as it appears to be the first Court of Appeal decision in Singapore which explains the legal basis for the enhancement of the value of shares ordered to be acquired as relief for minority oppression, reflecting an interest factor to account for any delay in completing the buy-out order. Previous decisions in Singapore in which post-judgment interest on the buy-out price was awarded did not explain the legal basis and reasoning for such awards.

Further, the Court of Appeal’s decision to uphold the Priority Order highlights the broad powers available to a court to under section 216(2) of the Companies Act 1967 to fashion a remedy for minority oppression, and the court’s continuing power to make further orders to ensure that remedies are carried into full effect.

Reference materials

The judgment is available on the Singapore Courts website www.judiciary.gov.sg.

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