In the recent case of Ma Wai Fong Kathryn v Trillion Investment Pte Ltd and others and another appeal [2019] SGCA 18, Singapore’s apex court clarified the guiding principles behind an application to wind up a company for loss of substratum, under “just and equitable grounds” as per section 254(1)(i) of the Companies Act (Cap. 50, 2006 Rev. Ed.).


The appellant is the widow of WKN, who was a shareholder and director of inter alia two Singapore companies, Trillion Investment Pte Ltd (“Trillion”) and Double Ace Trading Company (Private) Limited (“Double Ace”) (collectively the “Companies”), which were part of the Wong family’s group of businesses, prior to his passing. Following WKN’s passing, the appellant acquired WKN’s shares in the Companies in her capacity as executrix of his estate.

Following internal disagreements relating to the Companies, including whether they should continue to exist, the appellant filed originating summonses to wind up the company under section 254(1)(i) of the Companies Act for the Court to decide if the Companies should be wound up on just and equitable grounds.

At the High Court (“HC”), the appellant argued that the companies ought to be wound up based on three broad arguments.[1] Of interest in this case is her argument that the Companies ought to be wound up due to a loss of substratum, as it had “abandoned the business that the corporators [had] agreed amongst themselves that [the Companies] should do”.[2]

The respondents, namely the contributories of the Companies, denied that there was a loss of substratum and relied on the presence of an exit mechanism in Double Ace’s Articles of Association (“Articles”) which should be utilised, and on an offer made to buy out the appellant’s shares in the Company in lieu of winding up.

The claim of loss of substratum was dismissed at the HC on the basis that the appellant did not have any standing to raise the argument, as her participation in the Companies, as executrix of WKN’s estate, was not based on the assumption that the Companies would be conducting any specific business.


The appellant appealed. On appeal, the Court of Appeal (“CA”) held that the guiding principle when assessing whether to wind up a company on the loss of substratum is whether there is unfairness in keeping the aggrieved shareholder locked into a company which is no longer carrying out/ can no longer carry out the business it was incorporated to do.

The CA reasoned that as the company’s substratum is the main object which the company was formed to achieve, it would be unfair to hold any of the members to the association if that main object is no longer capable of being carried out through no fault of the parties. Thus, in such a case, any member, and not just a founding shareholder, may petition for a winding up order under just and equitable grounds. The CA also noted that loss of substratum may be argued in cases where a company is effectively dormant at the time of the application and its finances are poor such that the company is no longer viable, as there is no reasonable prospect that the company will achieve its substratum.

The appeal against Trillion was dismissed. The CA accepted that Trillion had been acquired to be an investment holding company, and held somewhat narrowly that by purchasing a property in 1984, which it had been renting to Double Ace since, Trillion continued to fulfil its substratum, which was to invest in real estate.

However, the CA allowed the appeal for the winding up of Double Ace, which was set up for the purposes of trading in spare parts to other companies within the group, for loss of substratum on the basis that the company’s declining revenue after 2012 showed that no business had been transaction through Double Ace since WKN took ill in 2011.

As a parting note, the CA considered that where a member establishes unfairness through showing a loss of substratum, the court will move to determine whether there is an exit mechanism, for example, whether a member is allowed to give the company notice of his desire to transfer his shares at a fair price for purchase by the other members.

in the company’s Articles which would provide a reasonable alternative which would negate the unfairness caused.


This case reiterates the importance of ensuring that a company incorporated under the common intention and understanding of the members of the company remains engaged in acts relating to the fundamental purpose intended by its members, and strikes a good balance between protecting the rights of a minority shareholder in a situation where s/he has reasonable grounds to exit and protecting the sanctity of contractual agreements through considering the viability of exit mechanisms put in place.

John Sze



[1] Namely, the irretrievable breakdown of the relationship of trust and confidence between the Wong brothers, which extended to each brother’s families; mismanagement by the directors and/or employees; and the loss of substratum of the Companies.

[2] Ma Wai Fong Kathryn v Trillion Investment Pte Ltd [2018] SGHC 88 at [16].