Corporate Governance in Winding Up — Statutory Derivative Actions and Professional Liquidators

NUS Law Working Paper No 2020/012

EW Barker Centre for Law & Business Working Paper 20/06

30 Pages Posted: 27 Apr 2020

See all articles by Meng Seng Wee

Meng Seng Wee

National University of Singapore (NUS) - Faculty of Law; National University of Singapore (NUS) - Centre for Law & Business

Yan Yu Kiu

National University of Singapore - Faculty of Law

Date Written: April 27, 2020

Abstract

Events in Singapore have shone a spotlight on the rarely discussed issue of corporate governance in a members’ voluntary winding up and the related question of corporate governance in insolvent liquidation. First, a series of related litigation concerning the liquidator’s conduct and the right of minority shareholder/creditor led to the question of whether the statutory derivative action is available in a winding up. The Singapore Court of Appeal concluded that it is not. Second, the recently passed Insolvency, Restructuring and Dissolution Act 2018 continued with the old policy of excluding members’ voluntary winding up from the requirement that the liquidator must be a licensed insolvency professional. This article discusses the two questions within the broader context of corporate governance in winding up. Through analysing the governance structures in winding up and comparing that with governance structures in going concerns, this article supports the Court of Appeal’s decision beyond the specific reasons given in the judgment, and argues that sound governance in members’ voluntary winding up is seriously undermined by allowing non-professionals to act as liquidators.

Keywords: corporate governance; members’ voluntary winding up; insolvent winding up; insolvency proceedings; derivative actions; liquidators; Petroships v Wealthplus

Suggested Citation

Wee, Meng Seng and Kiu, Yan Yu, Corporate Governance in Winding Up — Statutory Derivative Actions and Professional Liquidators (April 27, 2020). NUS Law Working Paper No 2020/012, EW Barker Centre for Law & Business Working Paper 20/06, Available at SSRN: https://ssrn.com/abstract=3586127 or http://dx.doi.org/10.2139/ssrn.3586127

Meng Seng Wee (Contact Author)

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

National University of Singapore (NUS) - Centre for Law & Business ( email )

Eu Tong Sen Building
469G Bukit Timah Road
259776
Singapore

Yan Yu Kiu

National University of Singapore - Faculty of Law ( email )

Eu Tong Sen Building
469G Bukit Timah Road
259776
Singapore

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