76A. Consequences of company financing dealings in its shares, etc.

Question 1

76A. Consequences of company financing dealings in its shares, etc.

Answer 1

General overview
[76A.01] This section provides for the legal consequences when s 76 is breached. It provides that a contract which infringes s 76(1) is voidable whilst one which infringes s 76(1A) is void. However, to preserve any book-entry securities whose disposition is void by virtue of subsection (1), s 76A(1A) empowers the court, on the application of the registrar or any other person, to order the transfer of such shares to another. Book-entry securities refer to shares listed on the Singapore Exchange.

Question 2

Consequences of contravention of s 76

Answer 2

[76A.02] Other than a contract or transaction by which a company acquires or purports to acquire its own shares or units of shares or shares or units of shares in its holding company or ultimate holding company; or a contract or transaction by which a company lends money on the security of its own shares or units of its own shares, or on the security of shares or units of shares in its holding company or its ultimate holding company, any contract or transaction made in contravention of s 76 is voidable at the option of the company: s 76A(1) and (2).

Question 3

Contracts for financial assistance are voidable

Answer 3

[76A.03] In other words, the giving of financial assistance by a company to acquire its own shares is voidable at the option of the company. Cf in the UK, a transaction which infringes s 76 is illegal and unenforceable by either party

Question 4

Third parties liable

Answer 4

[76A.04] The company may sue others who have participated in the wrongdoing in an action for conspiracy: Belmont Finance Corp Ltd v Williams Furniture Ltd [1979] Ch 250, CA . The company may sue its directors or other persons implicated for recovery of its property misapplied, on the grounds of breach of trust or constructive trust