CDL executive chairman Kwek Leng Beng moves to sack son Sherman as group CEO over attempted boardroom 'coup'
The family feud escalated into a legal battle after Mr Kwek sought his son Sherman Kwek’s removal as group CEO on Feb 8, citing his role in "a long series of missteps".
A composite picture of Kwek Leng Beng and his son, Sherman Kwek. (File photos: TODAY/Hong Leong, City Developments Limited website)
This audio is generated by an AI tool.
SINGAPORE: A family feud at one of Singapore's biggest property companies has escalated into a legal battle, with City Developments Limited (CDL) executive chairman Kwek Leng Beng taking his son, group CEO Sherman Kwek, to court over alleged governance lapses and an attempted power grab at the board level.
In a statement issued on Wednesday (Feb 26), the senior Kwek accused his son and a group of directors, including Mr Philip Lee and Ms Wong Ai Ai, of bypassing CDL's nomination committee to push through board changes without proper review.
He said court papers were filed on Tuesday to address what he described as an attempted "coup" and to restore corporate integrity.
In a statement, Mr Sherman Kwek called his father's actions "extreme" and said his legal action was not authorised by the majority of the board.
The dispute centres on events that began on Jan 28, when an email was sent to the board nominating two new independent directors. The timing, on the eve of Chinese New Year, and the rush to approve the appointments raised concerns, said Mr Kwek Leng Beng.
Mr Chong Yoon Chou, the chairman of the nomination committee, was "completely unaware" of the nominations, said the older Kwek.
"On Jan 29, 2025, I questioned the urgency of appointing an additional two new directors, emphasising that such significant governance decisions should not be rushed without due diligence and proper vetting," he wrote.
Despite objections, a board meeting was convened on Feb 7. No vote was taken, but hours later, a written resolution approving the appointments was passed, said Mr Kwek Leng Beng.
The move, according to Mr Kwek Leng Beng, indicated a pre-planned effort by his son and other directors to consolidate control.
"LONG SERIES OF MISSTEPS"
Tensions escalated further when Mr Kwek Leng Beng sought his son’s removal as group CEO on Feb 8, citing his role in what he called "the latest of a long series of missteps".
The board, now led by Mr Philip Lee, opposed the move.
The elder Kwek pointed to past business decisions under Mr Sherman Kwek's leadership that have "put CDL in a precarious position", including a S$1.9 billion loss from CDL's investment in Chinese developer Sincere Property in 2020 and poor returns from UK property ventures.
CDL's share price has also underperformed since Sherman Kwek took over in 2018, he said.
At the start of the younger Kwek's tenure in January 2018, CDL's share price was around S$12.18. Shares closed at S$5.12 on Tuesday and a trading halt was called on Wednesday morning before markets opened.
A CDL spokesperson said that trading was halted due to the disagreement within the board about its composition and constitution. Business operations remain "fully functional and unaffected".
"As the matter is currently under review, the company will make further announcements should there be any material developments in this matter, in line with SGX listing rules," the spokesperson added.
City Developments Limited
City Developments Limited is one of the largest real estate companies in Singapore.
With a network spanning 163 locations in 29 countries and regions, the group has developed over 50,000 homes.
It also owns more than 150 hotels worldwide.
On Wednesday, the company reported a revenue of S$3.3 billion for 2024, down from the S$4.9 billion the previous years.
The net profit after tax and non-controlling interest came in at S$201.3 million last year, lower than the S$317.3 million in 2023.
"NOT AN EASY DECISION": KWEK LENG BENG
"As a father, firing my son was certainly not an easy decision," said Mr Kwek Leng Beng.
"I accept that business decisions are difficult and young people may make business mistakes in their careers and that is understandable, but circumventing corporate governance laws is a red line."
Mr Kwek Leng Beng vowed to take all legal steps necessary to protect the company’s governance standards and its shareholders' interests.
If the legal action by the elder Kwek is successful, Mr Kwek Eik Sheng, currently group chief operating officer, will serve as interim group CEO should Mr Sherman Kwek be removed. Mr Kwek Eik Sheng is the nephew of Mr Kwek Leng Beng.
In his statement, the senior Kwek urged shareholders to support efforts to "restore strong governance" at CDL, warning that the current dispute risks damaging the company’s reputation and long-term stability.
"EXTREME ACTIONS": SHERMAN KWEK
The CDL spokesperson said that Mr Sherman Kwek remains the group CEO until there is a board resolution to change the company leadership.
Mr Sherman Kwek said in his statement: "It is incredibly disappointing that our chairman and a minority of the CDL board have decided to take these extreme actions regarding this disagreement around the size and make-up of the CDL board.
"Our focus as CEO and directors, as a board majority and with clear guidance and support from our company and independent legal counsel, has always been to implement steps to improve governance."
The younger Kwek added that this has "never been about ousting our esteemed chairman".
"These steps to strengthen our board have purely been to ensure CDL has the highest standards of governance to which it has become known, and our collective decision-making as a board is as robust as possible," he said.
"As the matter is now before the courts for adjudication, we will not comment on the merits of the case and will make further announcements if there are any material developments."
Editor’s note: This article has been updated to remove an incorrect reference to when CDL’s share price fell below S$5.12. We apologise for the error.
