Turn Of The Tide: 5 S’porean Founders Who Were Sued By The Very Companies They Helped Build
Many businesses start out with the best of intentions: a group of like-minded friends keen on turning an idea into a successful enterprise.
Along the way, parties may not see eye to eye and the relationship sours.
Some of these spats include disputes over differences in business direction, allegations of misappropriation of company funds and disagreements over how to resolve disputes.
Lawsuits are becoming so prevalent these days and even founders have been sued by their own companies.
Company founders can be sued individually by investors or shareholders who can prove that the founder is guilty of any personal wrongdoing.
We take a look panies that have sued their very own founders.
In March 2020, grocery delivery startup honestbee sought legal action against its former CEO Joel Sng and former director Jeffrey Wong.
Joel helmed as CEO from March 2015 to May 2019, while Jeffrey assumed the role of a director from September 2013 to August 2019.
After the two men’s departures from the company, honestbee began investigating various transactions conducted by the company while Joel was CEO and Jeffrey was Director.
Here are three transactions that caught their attention:
In 2017, the founder of Singapore’s first halal-certified skincare brand called Klarity was sued by shareholders for damages incurred from acting against the interests of the company and breaching her duties to the company.
Four minority shareholders sued Karine Estelle Cheong on behalf of the company. They engaged a forensic accountant who estimated that her breaches resulted in losses of nearly S$2.2 million.
They alleged that Karine used another company called Secretive, which she solely owns, to sell Klarity products and pocket the profits.
However, Karine, who also has an expert witness lined up, argued that no loss was caused and that she should pay only nominal damages of S$1.
In court papers she filed, she contended that her sole efforts and hard work – such as taking part in a beauty pageant to promote the brand – resulted in the growing popularity of the brand.
She was the second runner-up in Mrs Singapore World 2015/2016 pageant.
In court papers filed by the investors, they said they found out in May 2016 that the “Klarity” trademark was registered under J Consultancy (later renamed Kreate Global), which is solely owned by Karine.
They said they also found out that she operated a competing business by using Secretive to sell Klarity products and to enter into distribution agreements in overseas markets.
As a result, the investors sued Karine, J Consultancy and Secretive in 2017.
Karine alleged that she had disclosed her interest in her two companies to the minority shareholders before they invested.
She tendered her resignation as director in September 2015, after her proposal for more funding to launch new products was rejected but said that the minority shareholders failed to appoint a replacement.
The company is dormant and no longer operating.
In 2017, the co-founder and former CEO of luxury tea brand TWG Tea was sued by the company over the ownership of the domain name, twgtea.com
The lawsuit was brought by current CEO Taha Bouqdib and his wife Maranda Barnes against Manoj Murjani. They had argued that Manoj was holding the domain name on trust for the company.
In an internal e-mail in 2009, Manoj had referred to twgtea.com as “our domain” and in 2010, he signed a letter declaring that the domain name would “always remain” the property of the company.
Manoj was ordered by the High Court to hand over the Internet domain name twgtea.com to the company.
Taha, who was in the tea business, and his wife, were persuaded by Manoj in 2007 to move from France to Singapore to build the TWG Tea brand.
On 3 August 2007, Manoj had registered twgtea.com during a meeting to discuss the venture.
Murjani had alleged that he owned the domain name, which was registered before TWG Tea was set up.
He sought compensation from the company for using the domain name as well as damages for being excluded from mention as a co-founder on the company’s website and in various articles.
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