160. Approval of company required for disposal by directors of company’s undertaking or property Flashcards
- Approval of company required for disposal by directors of company’s undertaking or property
General overview
[160.01] This section provides that the directors shall not dispose of the whole of or substantially the whole of the company’s undertaking or property without a general meeting’s approval by shareholders: see Falmac Ltd v Cheng Ji Lai Charlie [2013] SGHC 113, HC where it was held that a conditional agreement to sell two subsidiaries of the company which formed the core of its business did not contravene s 160(1). The proposed transaction may be restrained by the courts, upon an application by any member of the company, if the directors have not entered into it yet: s 160(2). On the other hand, a transaction that has been entered into by the directors will be valid and binding on the company in favour of a person dealing with the company for valuable consideration and without actual notice of the contravention. Since s 25A has abolished constructive notice, the only type of notice that may invalidate the contract would be “Nelsonian” notice, i.e. that there are “red flags” that are obvious to a person dealing with the company that he should be put on notice. In view of thesection expressly providing for “actual” notice, it becomes a matter of statutory interpretation whether “Nelsonian” notice is excluded.
