Ong&Ong brothers in legal dispute over shares in family business

FORMER Singapore president Ong Teng Cheong's sons are bringing their rift to the public arena, with the eldest son Ong Tze Guan suing his brother Ong Tze Boon and seven others, claiming his shares in the family business were undervalued when the defendants acquired them.

Mr Ong Tze Guan has launched a lawsuit against his 53-year-old brother and six other shareholders of Ong&Ong Holdings as well as the company itself, claiming that his stake of 28.45 per cent in Ong&Ong Holdings would have been worth S$5.41 million.

But they were acquired by the seven defendants at S$1.65 million in September 2020, based on the company auditor's valuation.

Mr Ong Tze Boon held a 70.43 per cent in Ong&Ong Holdings before the share transfer, and his stake rose to 90.28 per cent post acquisition. The other six defendants are each holding stakes of between 0.12 per cent and 4.96 per cent.

Represented by Daniel Koh of Eldan Law, Mr Ong Tze Guan is seeking the High Court's declaration that the transfer of his shares be rescinded and that his brother and the other six shareholders be ordered to purchase his shares at a price to be agreed on or fixed by a court-appointed independent expert.

Mr Ong Tze Guan also asked that the value to be ascribed to his shares to take into consideration the diminution in its value on account of his brother's "oppressive conduct", the statement of claims filed in April showed.

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Mr Ong Tze Guan alleged that his shares in the family business were undervalued and that his brother had acted in a manner oppressive and unfairly prejudicial to his interests.

He gave a few examples of the alleged oppressive acts including stripping of his directorships within the group so as to deny his access to financial information and documents. His removal came after he questioned certain transactions at these companies, he alleged in the statement of claims.

Mr Ong Tze Boon refuted all the allegations through his lawyers Dentons Rodyk & Davidson, and has countersued his 56-year-old brother for loan recovery and libel.

He charged that the plaintiff - who studied civil and structural engineering - was never actively involved in the running of the full service engineering and architecture group, and thus does not have an accurate understanding of the activities, business and structure.

On the valuation of the shares, Mr Ong Tze Boon pointed out that it has been the practice since 2010 that new share allotments would be allotted to new shareholders at the price of net tangible assets and the average of three years of after-tax profits.

The rationale behind this formula was to incentivise new working shareholders to consistently generate three consecutive years of annual profits, thereby growing the value of the group.

Mr Ong Tze Boon also said that the plaintiff has chosen to pursue his own largely unsuccessful business ventures in Vietnam and China, and that he also cannot possibly have any expectation that he would be involved in the management of the group nor to any bonus payments or monetary remuneration.

He further accused the plaintiff's involvement and interest in Ong&Ong has "solely been a personal financial interest and nothing more".

He disclosed that the group was going through a difficult time during the circuit breaker implemented by the government last year to curb the spread of the novel coronavirus. Then, the company's cash flow required to meet monthly overheads including employees' salaries was "critically low".

Shareholders were asked to loan S$1.1 million to shore up the company's finances and tide it over the period. But Mr Ong Tze Guan was said to be only concerned about dilution of his minority stake as a result of the loan, at a time when jobs and business continuity of the group were at stake, Mr Ong Tze Boon alleged.

Yet Mr Ong Tze Boon has been giving loans to his brother, the counterclaim stated, as most of the business ventures that the plaintiff has been involved in have failed. He claimed he had lent money to the plaintiff without any security in view of their familial ties, and most of the loans were not repaid.

A S$700,000 loan was given with interest compounded at the rate of 7 per cent per annum and repayable on demand in November 2002. Mr Ong Tze Guan has allegedly repaid about S$220,000 in 2004, with the balance still outstanding.

Thus, Mr Ong Tze Boon is now recovering the balance of the loan and also suing Mr Ong Tze Guan for libel over the allegations of minority oppression in a counterclaim.

The civil case is at the pre-trial conference stage.