Statutory derivative actions and the regulation of liquidators in a members voluntary winding up: the Petroships Investment Pte Ltd v Wealthplus Pte Ltd saga

Abstract

Events in Singapore have shone a spotlight on aspects of the rarely discussed matter of corporate governance in members’ voluntary winding up (MVWP). First, a series of related litigation led to the issue of whether statutory derivative action is available in MVWP and the broader issue of control over liquidators’ conduct in MVWP. Both issues are of general relevance to all forms of winding up, ie, court-ordered winding up or voluntary winding up, and solvent or insolvent winding up. The Singapore Court of Appeal (SCA) concluded that the statutory derivative action is simply not available in winding up, period. Second, the Insolvency, Restructuring and Dissolution Act 2018 which came into force on 30 Jul 2020 made the debatable choice of excluding MVWP from the requirement that the liquidator must be a licensed insolvency practitioner (IP), which continued the old law. This paper argues that the SCA’s decision is to be welcomed and provides normative justifications to support its technical reasoning, but the same cannot be said for IRDA’s continuation of the old law of allowing non-IPs to act as liquidators in MVWP.

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