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Family-Owned Firms in Singapore – Legal Strategies for Constraining Self-dealing in Concentrated Ownership Structures

Tan Lay Hong

(2011) 23 SAcLJ 890

Ownership in Singapore’s family-owned companies is highly concentrated, giving rise to the agency problem of expropriation of minority shareholders by the controlling shareholders. The problem can be significant as self-dealing transactions in these family-owned companies reached approximately S$1.8bn in 2009/2010. This article analyses specific local cases of expropriation of minority shareholders to expose the doctrinal problem arising therein and also undertakes an evaluation of the governance strategies used by the Singapore Exchange’s Listing Rules to police self-dealing transactions. An economic analysis of the relevant legal rules in terms of “property rules” and “liability rules” highlights the problem areas which are in need of reform.