CDL saga: High Court ordered both sides to withhold action on Singapura Developments, M&C ahead of Tuesday hearing

AHEAD of the City Developments Limited conflict heading to Singapore’s Supreme Court on Tuesday (Mar 4), the High Court has directed both sides to refrain from further action relating to Singapura Developments and Millennium and Copthorne Hotels (M&C). 

Apart from the matter of new director appointments, the High Court directed both sides “to refrain from taking any action in relation to Singapura Developments and Millennium and Copthorne Hotels that will prejudice their respective positions pending the resolution of the application” from last week’s hearing, said CDL in a Monday media statement.

This comes as shares of CDL resumed trading on Monday morning as the company lifted the trading halt it declared on Wednesday, after news of the father-son-tussle between the CDL executive chairman Kwek Leng Beng and CDL group CEO Sherman Kwek broke. 

CDL shares have hit their lowest point since 2009, falling 7 per cent or S$0.36 to S$4.76 after trading resumed on Monday. They last closed 0.4 per cent or S$0.02 lower at S$5.12 on Tuesday before the trading halt.

The conflict centered on the Feb 7 appointments of two new independent non-executive directors Jennifer Duong Young and Wong Su Yen. The elder Kwek said the appointments were made “irregularly and hastily” without going through the proper process, in an attempted “coup” to seize control of the board and the group. 

He said that his son, Sherman Kwek, had bypassed the nominating committee (NC) – which recommends all director appointments to the board – in the approval of their nominations. 

He additionally claimed that the younger Kwek had replaced the NC with a combined nominating and remuneration committee. 

These moves were “contrary to established corporate governance principles”, such as the Singapore Exchanges (SGX) Listing Rules and the Code of Corporate Governance, the CDL executive chairman said. 

Kwek Leng Beng on Feb 25 filed an application with the High Court, alongside an injunction, calling for the two new directors to be restrained from exercising the powers of directors. 

The elder Kwek said the two new directors had undertaken to not exercise any powers as directors until further notice, in a surprise statement on Wednesday night after the Feb 26 injunction hearing. 

Explosive statements from both sides were issued over the following days and have thrown questions over corporate governance, business stability and succession into the limelight.

Sherman Kwek responded with claims that the recent board changes were not about ousting his father but instead were related to “a very serious issue of corporate governance” involving Dr Catherine Wu, who used to have an advisory role in CDL’s Millennium & Copthorne.

However, resolutions to terminate Dr Wu’s advisory agreement with the M&C board and to affirm that she has no power and authority, among other things, to influence or advise the directors, management and staff of the CDL and M&C groups were passed on Feb 21 by a majority of the board.

CDL said on Monday that it would not comment on the validity of media allegations regarding the conflict within the Kwek family-controlled group, as many of the allegations are the subject of the court proceedings that are currently ongoing. 

It also cautioned shareholders to “exercise caution” while dealing with its shares.