Consequences Of Keeping Minority Shareholders Out In The Cold

The case of Tempo Group Limited & Ors v Fortuna Development Corporation & Ors1 centred on a dispute between the three principal owners of Fortuna Development Corporation ("Fortuna"), a Cayman Islands incorporated holding company. The main issues in question were whether the three owners had agreed that one of them, Dr Chen, was to be guaranteed a seat on the board of directors and whether his subsequent removal from the board at the extraordinary general meeting ("EGM") was valid. On the first point, the Court found that there was no agreement which entitled Dr Chen to a position on the board. However, Dr Chen was re-instated to the board because the EGM at which he was removed was found to be a nullity.

Background

Fortuna was established in 1994 to hold various significant investments in Vietnam including amongst others a power plant, a large land development and other infrastructure. Its three major shareholders were holding companies, each of which owned by Dr Chen, Mr Ting and Mr Tsien, respectively. On 22 June 2004, an EGM was held in Beijing. Despite Dr Chen's objections, Mr Ting and Mr Tsien were successful in passing a number of special and ordinary resolutions. These included the removal of Dr Chen from his position as a member of the board and greatly restricted his right to deal with his...