Arielle, Bella and Cindi were three university friends who decided to set up a company called Castle Blooms Pte Ltd (“CBPL”), a flower and gift delivery service. Each of them held 50,000 shares in CBPL. They were also directors of CBPL.

As time passed, Arielle and Bella had frequent arguments with Cindi over the management and direction of CBPL. By an ordinary resolution and in accordance with the provisions of CBPL’s constitution, they removed Cindi as a director of CBPL. Subsequently, CBPL resolved to pay out huge annual bonuses as well as provide transport allowances to the directors of CBPL, namely Arielle and Bella. CBPL did not declare any dividends to its shareholders for three consecutive years even though it was consistently profitable. Cindi also found out that Arielle and Bella had incorporated another company called Aribell Pte Ltd (APL). APL also provided flower and gift delivery services. A large number of corporate clients had stopped ordering flowers and corporate gifts from CBPL and ordered from APL instead.

(a) Advise Cindi whether, as a shareholder of CBPL, she would able to maintain an action against Arielle and Bella. Please support your answer with relevant statutory provisions and case law. (18 marks)

(b) Explain the criteria to be met to start a statutory derivative action, and if Cindi could apply for it. (7 marks)