UOB found ‘grossly negligent’ over Stamford Land rights issue advice, to pay S$1.9 million

UOB has been ordered to pay Stamford Land S$1.9 million after the High Court found that the bank was “grossly negligent” in advising the property and hotel group on the allocation of shares in a 2021 rights issue.

In a judgment issued on Tuesday (Sep 29), Justice Dedar Singh Gill found that UOB breached its contractual duty to advise Stamford Land, as well as its duty to exercise reasonable skill and care.

A UOB spokesperson said: “The bank acknowledges the court’s decision, and is currently reviewing the grounds of decision before deciding on our next appropriate course of action.”

The sum of S$1.9 million represents legal costs incurred by Stamford Land in connection with investigations and disciplinary proceedings brought by Singapore Exchange Regulation (SGX RegCo).

The dispute centred on how excess shares from Stamford Land’s rights issue were allocated.

There were about 106.1 million excess rights shares available, while shareholders who were not directors or controlling shareholders applied for about 91.4 million shares.

Despite there being enough shares to satisfy those applications in full, only about 46 million shares were allocated to these shareholders. Another 60 million shares went to directors and controlling shareholders.

SGX RegCo subsequently took the position that Stamford Land had potentially breached Mainboard Rule 877(10), which requires certain directors and substantial shareholders to rank last in priority when excess rights shares are allocated.

The judge found that UOB, which was lead manager for the rights issue, had interpreted the rule incorrectly. He noted that the bank regarded the situation as unprecedented, but did not check its own previous rights issues, look for other precedents or seek clarification from SGX.

“A creative but legally unsound interpretation of r 877(10) was advanced,” he said.

He added that UOB had given its advice with “serious disregard” for the obvious risk that the allocation would not comply with the rule, and found that its conduct amounted to gross negligence.

SGX RegCo began disciplinary proceedings against Stamford Land, executive chairman Ow Chio Kiat and CEO Ow Yew Heng in May 2023.

The proceedings were settled in December 2023 without any admission of liability. As part of the settlement, Stamford Land’s controlling shareholders donated S$2 million to the SGX Investor Education Fund.

For the case with UOB, the court also awarded costs to Stamford Land. Post-judgment interest of 5.33 per cent a year will apply to the damages, while the issue of pre-judgment interest is to be determined.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

Stamford Land Corp Ltd v United Overseas Bank Ltd [2026] SGHC 202

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