Introduction: The documents that decide your business’s fate
In February 2025, City Developments Limited (CDL), one of Singapore’s leading property developers, faced internal turmoil when Executive Chairman Kwek Leng Beng accused his son, CEO Sherman Kwek, of attempting a boardroom coup by appointing new directors without proper approval. This conflict led to a suspension of trading and a sharp drop in share prices, highlighting the critical importance of corporate governance in ensuring business stability (Reuters).
Across Asia, similar governance failures have threatened businesses. Often, the difference between stability and crisis comes down to two key documents: the company constitution and the shareholder agreement. One provides the legal foundation, while the other sets relationship terms between shareholders. Understanding how they function and their role in real businesses is vital for long-term success.
The company constitution: More than just red tape
Every business in Asia begins with a constitution. Filed with regulators like Singapore’s ACRA or Vietnam’s Department of Planning and Investment, this document is the bedrock of your legal identity. It’s not just a formality—it’s the script that dictates how your company operates under local law.
For example, when Swire Properties, a major Hong Kong-based real estate developer, entered a joint venture with Shanghai Jing’an Real Estate Group in 2021 to restore the historic Zhangyuan Shikumen compound, its company constitution played a crucial role. The document outlined governance rules, shareholder rights, and dispute resolution mechanisms, ensuring compliance with local laws and smooth collaboration (Swire Properties).
A company’s constitution must also adapt to market changes. In 2022, GoTo Group, Indonesia’s largest tech firm, adopted a dual-class share structure when it went public on the Indonesian Stock Exchange (IDX). This structure gave certain shareholders greater voting power, but new regulations from Indonesia’s Financial Services Authority (OJK) required GoTo to revise its constitution to remain compliant (BlackRock).
The shareholder agreement: Where trust meets strategy?
While the constitution handles the “what,” the shareholder agreement defines the “how.” This confidential contract is where founders preempt disputes, protect equity, and plan for the unexpected.
In Singapore, shareholder agreements often include unanimous consent clauses for significant corporate actions, such as issuing additional shares or modifying share capital structures. This prevents dilution of ownership and ensures minority shareholders have a voice. The Venture Capital Investment Model Agreements (VIMA) framework provides a model shareholder agreement outlining these protections (Singapore Law Watch).
Flexibility is a key advantage of shareholder agreements. In Vietnam and most other countries, shareholder agreements increasingly include mediation clauses to resolve disputes between foreign investors and local partners. This aligns with Vietnam’s legal framework, which promotes alternative dispute resolution methods. The EU-Vietnam Free Trade Agreement (EVFTA) also encourages mediation in investor-state disputes, reinforcing Vietnam’s commitment to corporate dispute resolution (European Commission).
How they work together: The balance of law and strategy
The company constitution and shareholder agreement complement each other:
- Legal Status: The constitution is public and filed with regulators, while the shareholder agreement is private and tailored to shareholder needs.
- Flexibility: Amending a constitution often requires a 75% shareholder vote, whereas a shareholder agreement can be changed with unanimous consent, offering more adaptability.
- Enforcement: Violating a constitution can trigger regulatory penalties, while breaking a shareholder agreement results in internal disputes, usually resolved through arbitration.
For example, in Singapore, all companies must file their constitution with ACRA, making it public and ensuring statutory compliance. However, a shareholder agreement remains confidential, allowing shareholders to customize their rights and obligations without external scrutiny.