Silvester Legal LLC on a recent case featured in Lian He Wan Bao 19 Jan 2021.
Though using $1 to transfer the business ownership isn’t illegal, the major shareholder (boss) should always get the consensus from his other shareholders before proceeding with such a major business decision.
Walter Silvester from Silvester Legal LLC commented that using $1 to transfer ownership is legal. And if the company is heavily in debt, then this decision could be a better option. However, because this business decision would affect the other shareholders’ investment and rights, the major shareholder (boss) cannot make the decision on his own. Based on Company Act Chap 216, all business decisions cannot be seen as disadvantageous to the minority shareholder(s) or disregard their interest.
Unless the company’s Constitution has clearly stated that the boss is given the executive rights to make such decisions on his/her own, if not, even if the boss holds the majority of the shares, doesn’t mean that he is able/authorised to make decision on his own. The law will be able to differentiate if this is really to protect the business interest of the other shareholders. He also mentioned that if the minority shareholders are not agreeable with the boss/director’s decision, they need to put their stand into writing and seek legal advice soonest possible so as to protect their rights and interests.