Directors Remuneration

S164A, Power to require disclosure of directors' emoluments 1. requiring the emoluments and other benefits received by the directors of the company to be disclosed 1. Questions On Protection Directors interest on their remuneration 1. Relevant Law : S169 remuneration package in respect of their office as such o Only Directors fee need to be approved by members o DOES NOT APPLY TO DIRECTORS EXECUTIVE CONTRACTS OF SERVICE WITH THE COY -CEO fees only need to be approved by the board (Article 92) Therefore, put major portion of salary under CEO remuneration CONTRACT OF SERVICE (Article 92) 2. Article 92 Remuneration in employment contract as executive officer o Can be determine by board without the need for SH approval o Obligatory for board to exercise duties of good faith or risk a minority shareholder action against oppression under s216A or s216 and in (Low Peng Boon v Low Janie & Ors,1999) 3. Become a member first then insert an ENTRENCHING PROVISION in the M&A stating that cannot change the remuneration unless all members agree s26A o Entrenching provision can only be created by unanimous agreement of all members or at the time the coy was incorporated o Entrenching provision can only be removed or altered if all the members of the company agree o An example would be Article 1: Soon Kiat will be king of CEO for life Article 2: Article 1 may not be altered unless 100% agreement o However, it may be argued that according to Eley v Positive Government Security Life Assurance Co Ltd, members can only enforce rights that are personal to members in their capacity as such e.g. right to vote, right to receive notice of meetings - cannot enforce rights they have in other capacities(i.e. as the coy solicitor) o Nevertheless, the CLRFC has recommended that all obligations imposed by the company's constitutional documents be enforceable by members against the company and other members unless the contrary is provided for or where the breach is trivial or the remedy fruitless o As there is no authoritative decision on this in Singapore, each and every provision in M&A should be capable of being enforced by the members 4. Shareholders' Agreement o Proposed as an alternative to protect members' interests o Not linked to membership of company o For changes to be made, all parties must agree Relevant Law : S168 payment for loss of office [s168(1) CA] Company cannot pay director for loss of office or retirement as an officer of the company unless in 168(5). Prevent GOLDEN PARACHUTES o Discuss about the 5 exceptions [s168(5) CA] Payment is disclosed and approved to the members in general meeting by special resolutions Bona fide pension/ retirement benefits for past services not exceeding 3 years income Payment made in consideration of his accepting to be a director (agreement must be made before he is a director) Payment under an agreement entered into before 1 Jan 1967

Bona fide payment by way of damages for breach of contract o For a payment to be under the purview of s168(1), need to ascertain the true nature of the payment. o Eg. Non competition clause - Fasi V Specialty Laboratories Asia Pte Ltd - MD not to engage in any business that is in direct competition with company for a period of 25 months. o Eg. Part of the remuneration package - Grinsted v Britannia Brands Holdings Pte Ltd o Unlawfully payments made shall be deemed to have been received by the director in trust for the company

5. Relevant Law : Section 172 o Company themselves cannot indemnify breach of duty as provisions exempting or indemnifying directors for breach of duty are VOID s172(1) o However, company may take out INDEMNITY INSURANCE FOR DIRECTORS called directors' and officers' liabilities insurance policies s172(2). However, there is a common exclusion from the terms of insurance policies for directors and other officers where the officer has been dishonest or has been in willful of breach of duty

2. Questions On Protection Members' interest on their remuneration 1. S164A, Power to require disclosure of directors' emoluments Members can require the emoluments and other benefits received by the directors of the company to be disclosed 2. Insert an object clause specifying the objects of the company i.e. principal activites and purposes for which the company is formed. This has the effect of lacing limits on the powers of the company as the company was generally not permitted to engage in activites that are not specified in the object clauses. Engaging in such activities would be regarded as ultra vires or beyond the company's capacity However, this can be countered by using s25(1) ca which only applies to sg coys and that it reserces right to say that an ultra vires transaction can still be valid 3. Relevant Law : S169 Remuneration package use S169(1) to prohibit the provision or increment of emoluments for Jack in respect of his office, unless it is approved by a company resolution (>50%) - only effective in controlling director's fees Cannot control officers (CEO) fees which are approved by board Use entrenching provision to control director's salary special resolution i. Done by appointing a nominee to the board ii. 4. Relevant Law : S168 payment for loss of office [s168(1) CA] Company cannot pay director for loss of office or retirement as an officer of the company unless in 168(5). Utilise S168CA to control the payment of compensation for loss of office to Jack Can be bypassed by Grinsted and Fasi and the 5 exceptions above Easy to be bypassed, thus not effective to control potentially huge payout that coy have to make to director for loss of office