BUS205: Mr. Ong Teck Leong Started a Company Bougainville Garden: Company and Tort Law Assignment, SUSS, Singapore

Assignment Details

Mr. Ong Teck Leong Started a Company Bougainville Garden Pte Ltd (Bougainville Garden) selling nuts and biscuits out of his shop located in Geylang in 1968. Through hard work and good business acumen, his company expanded into a large manufacturer of nuts, biscuits, and pre-mixed sauces and these products are packaged under a well-known and registered trademark “Bougainville Garden”. The company had factories in Indonesia, Malaysia, and Singapore.

Mr. Ong died in 1999 and bequeathed his business to his wife and eight children. The siblings could not agree on how the company should be run and there had been a few legal proceedings brought before the court to settle their disputes. The court has made orders for the siblings to buy out each other’s shares. Currently, there are four remaining shareholders: Andy has 40% shares, while Barry, Charles and their mother Mrs. Ong each have 20% shares in the company.

Andy and Barry are executive directors of the company, while Mrs. Ong is listed as a non-executive director. Charles is a lecturer who teaches in a university and he is not on the board of directors. Mrs. Ong has been receiving directors’ fees, but she has never been to any board of directors’ meeting. She rationalizes this by saying she only had four years of primary school education, so she would let her sons manage the business.

Mrs. Ong is happy receiving the director’s fees to fund her mahjong sessions with her friends.

It has come to Charles’ attention that the business of the company has been in decline and is now facing liquidation. Upon investigation, Charles uncovered a few events that took place over the last few years:

• Bougainville Garden products are being manufactured and sold in Singapore and Malaysia by two companies that are not part of Bougainville Garden Pte Ltd, but they bear identical names “Bougainville Garden”. These products are in fact manufactured by two companies called Bougainville Garden Makan (Singapore) Pte Ltd and Bougainville Garden Makan (Malaysia) Sdn Bhd. These companies were incorporated and solely owned by Barry.
• In 2007, Bougainville Garden Pte Ltd sold the “Bougainville Garden” trademark to Forest Holdings, a company registered in The Isle of Man for $100,000. Andy is the director and beneficial owner of Forest Holdings.
• In 2008, Forest Holdings granted a 10-year license to Bougainville Garden Pte Ltd to make and sell “Bougainville Garden” products.
• When the license expired in 2018, Andy and Barry did not renew the license but allowed the company to go into an impending liquidation.
• In 2016, Forest Holdings granted a license to Bougainville Garden Makan (Singapore) Pte Ltd and Bougainville Garden Makan (Malaysia) Sdn Bhd to use the trademark.
• In 2017, the factories in Indonesia and Malaysia were sold to Barry at an undervalued price. Furthermore, Barry was granted a “perpetual, irrevocable and exclusive” license to make and sell “Bougainville Garden” products in these countries for $1.

Charles has come to you for advice.

(a) Discuss what a trademark is and how it is possible for Charles’ brothers to use this trademark for the companies controlled by them.

(b) Explain to Charles if Andy, Barry and his mother Mrs. Ong have breached any director’s duties owed to Bougainville Garden Pte Ltd, and if so, what consequences they might face. You may discuss each director’s conduct separately, i.e., discuss Andy, Barry and Mrs. Ong’s conduct in separate sections.

(c) Describe to Charles what rights he has as a shareholder of Bougainville Garden Pte Ltd and outline what remedies might be available to him under the Companies Act and/or the common law.

You are expected to conduct research beyond your textbook and study guide to answer this sub-question. For the purpose of this sub-question, the terms “shareholders” and “members” are used interchangeably.