Stamford Land Corporation has been awarded nearly S$1.9 million in a legal claim against United Overseas Bank (UOB) after a Singapore High Court ruling found the bank grossly negligent in providing advice on a 2021 rights issue. The court determined that UOB’s allocation method for excess shares did not comply with Singapore Exchange (SGX) rules, resulting in improper share distribution.
The dispute centers on Stamford Land’s rights issue in December 2021, when the property developer offered approximately 703.7 million new shares at 34 cents each, on the basis of nine new shares for every 10 existing shares. The offer was oversubscribed, with valid applications exceeding 1 billion shares. After satisfying valid applications, 106.1 million shares remained as excess rights shares, which were in turn oversubscribed by both restricted shareholders—such as Stamford Land’s controlling and substantial shareholders—and non-restricted minority shareholders.
According to SGX Mainboard Rule 877(10), directors and substantial shareholders who have control or influence over a listed company must rank last in priority for the allocation of excess rights shares. The court found that UOB, acting as the appointed manager of the rights issue, failed to follow this rule. Instead, UOB adopted a “success rate” methodology that allocated a significant portion of excess shares to restricted shareholders before fully satisfying minority shareholders’ applications.
Justice Dedar Singh Gill criticized UOB’s approach as “creative but legally unsound,” emphasizing that the rule clearly mandates that all valid applications from non-restricted shareholders must be fulfilled before any excess shares are allocated to restricted shareholders. The judge noted that UOB had prior internal precedents demonstrating compliance with this approach but failed to consult those cases. He added that given the situation was considered “unprecedented” by UOB, the bank should have conducted more thorough checks including seeking guidance from SGX or market precedents.
The issue came to light following a shareholder complaint and ensuing SGX investigation in 2022, during which Stamford Land was found to have potentially breached the allocation rule. Stamford Land engaged legal counsel to manage the inquiry. Despite this, UOB continued to maintain its compliance position, with senior executives declining to provide written support for Stamford Land’s defense, ultimately leaving the company to respond independently to SGX’s disciplinary proceedings. The regulatory case was resolved in December 2023 without Stamford Land admitting liability; however, its controlling shareholders contributed S$2 million to the SGX Investor Education Fund as part of a settlement.
Stamford Land subsequently sued UOB to recover legal expenses related to the SGX investigation, claiming approximately S$1.89 million. UOB argued its advice had been reasonable and that contractual clauses limited its liability except in cases of “wilful default or gross negligence.” The court agreed that such clauses applied but ruled that UOB’s conduct had crossed the threshold of gross negligence due to its failure to exercise due diligence in ensuring compliance with the SGX rules.
Justice Gill highlighted that UOB’s team had experience in handling rights issues and knew the normal allocation methods but deliberately chose not to follow them. The bank’s disregard of available precedents and its failure to seek external guidance demonstrated serious neglect of the risk of non-compliance. As a result, the court ordered UOB to pay Stamford Land the full amount claimed and cover legal costs.
A UOB spokesperson acknowledged the court’s decision and said the bank was reviewing the judgment before deciding on any further action.