Can Minority Shareholders in a Singapore Company Demand an Audit? A Guide to Understanding!

Can Minority Shareholders in Singapore Demand an Audit? Everything You Need to Know

In Singapore, a business environment known for transparency, the rule of law, and efficiency, corporate governance remains a key concern for investors and business owners. For minority shareholders, protecting their rights and monitoring the operations of company management is both a practical and critical issue. One frequently debated topic among investors in recent years is whether minority shareholders have the right to request an audit.

1. What is a Company Audit and Why Is It Important?

An audit is a process in which an independent third-party auditing firm reviews the accuracy, fairness, and compliance of a company’s financial statements. The purpose of an audit is to ensure the reliability of financial information and to build trust among shareholders and the public in the company’s financial health.

While audits are standard practice for publicly listed companies, private limited companies Private Limited Companies are not required by law to undergo annual audits-unless certain conditions apply. For minority shareholders, audits serve not only as a key tool to understand the true financial condition of a company, but also as a way to monitor whether majority shareholders or management are abusing power or engaging in financial misconduct.

2. What Does Singaporean Law Say About Minority Shareholders’ Right to Request an Audit?

Under the Singapore Companies Act, not all companies are required to conduct audits. For example, small private companies may be exempt from audit obligations if they meet both of the following conditions

1. Annual revenue does not exceed S$10 million;

2. The company is part of a small group or does not control any other company.

However, this does not mean that minority shareholders have no say in the matter. In fact, Section 205 of the Companies Act grants shareholders certain rights. If shareholders suspect misconduct, financial fraud, or serious mismanagement, they may pass a special resolution to request an audit.

Specifically, shareholders holding at least 10% of voting rights can apply to the court for a compulsory audit. Additionally, if the company’s constitution includes specific provisions granting minority shareholders more governance rights-such as the right to request an audit under certain conditions-those provisions are legally binding.

3. Recent Case How Minority Shareholders Successfully Pushed for an Audit

In 2025, a local Singaporean tech startup, TechNova Pte Ltd, became the center of an audit rights dispute when minority shareholders questioned the authenticity of its financial reports. A group of shareholders collectively holding over 12% of shares reviewed the annual report and noticed significant discrepancies between the reported figures and the company’s actual operations. They submitted a written request for an audit to the board, which was rejected.

The shareholders then filed an application with the Singapore High Court under Section 205 of the Companies Act, seeking a court order mandating an independent audit. Ultimately, the court ruled in favor of the shareholders and appointed a well-known auditing firm to conduct the investigation.

This case attracted widespread attention in Singapore’s business community and was widely reported by media outlets such as The Straits Times. It became a landmark example of how minority shareholders can exercise their audit request rights. It also demonstrated that although not all companies are legally required to undergo audits, minority shareholders do have legal avenues to initiate the process under specific circumstances.

4. Key Considerations for Minority Shareholders Seeking an Audit

Although the law provides minority shareholders with certain audit request rights, there are several practical considerations to keep in mind

1. Minimum Shareholding Threshold Under the Companies Act, only shareholders holding at least 10% of voting rights are eligible to file for a compulsory audit. Minority shareholders seeking to act collectively must ensure their combined holdings meet this threshold.

2. Sufficient Evidence Courts will consider whether shareholders have presented enough evidence of financial irregularities or management misconduct. Before filing an application, shareholders should gather relevant documents such as financial reports, meeting minutes, or third-party whistleblower information.

3. Time and Cost Implications Pursuing an audit through legal channels can be time-consuming and costly. Shareholders should carefully weigh the potential benefits against the resources required for legal proceedings.

4. Role of the Company Constitution Some companies may include broader governance rights in their constitutions. If the constitution explicitly allows shareholders to request an audit under certain conditions, the process becomes much smoother.

5. What Else Can Minority Shareholders Do Beyond Requesting an Audit?

In addition to initiating an audit, minority shareholders can take the following steps to monitor corporate governance

Attend and Participate in General Meetings Actively exercise voting rights on major company decisions.

Review Company Books and Records Under the Companies Act, shareholders have the right to inspect company accounts and related documents.

Report Misconduct If serious financial or legal issues are uncovered, shareholders can report them to the Accounting and Corporate Regulatory Authority ACRA or law enforcement.

Seek Legal Advice Before taking any legal action, it is advisable to consult with a qualified lawyer to ensure that procedures are followed correctly.

6. Conclusion

In Singapore, while not all companies are required to undergo audits, minority shareholders are not without legal recourse. Provided certain conditions are met, they can still push for an audit through legal channels to protect their legitimate rights and interests.

As corporate governance becomes increasingly important, the voices of minority shareholders are gaining more recognition. By effectively utilizing legal tools and rights granted in the company’s constitution, minority shareholders can play a meaningful role in promoting transparency and accountability within the company.

The 2025 TechNova case clearly illustrates that, with sufficient evidence and proper legal procedures, minority shareholders can indeed be a driving force in ensuring corporate integrity and compliance.