Fu Yu Corporation Limited Resolves Disputes Through Settlement Agreements: Key Points for Investors

Fu Yu Corporation Limited (“the Company”) has released a detailed response to queries from the Singapore Exchange Regulation (SGX RegCo) concerning its recent entry into settlement agreements with six former stakeholders: Mr Frank Zhang Xin Cheng, Ms Hazel Cai, Mr Wong Ka Wing, Mr Lim Wei De Victor, Ms Tan Xin Yi, and Ms Yasmin Lim. This development follows the Company’s announcement on 29 January 2026, and is of significant interest to investors, as it clarifies the Company’s exposure to potential legal liabilities and future disputes.

Key Highlights of the Settlement Agreements

• Full and Final Settlement: The agreements conclude all possible claims, counterclaims, actions, debts, rights, obligations, liabilities, costs, disputes, and causes of action between the Company and the respective parties. There will be no further claims arising from these matters.
• Confidentiality Clauses: The specific terms and settlement values are subject to confidentiality and cannot be disclosed unilaterally by the Company. However, the Board has emphasized that the settlement sums are “materially lower” than the potential damages and legal costs that could have been incurred if the disputes proceeded to litigation.
• Reduction in Legal Risk: The conclusion of these settlements is expected to significantly reduce the Company’s legal exposure and associated costs.

Background and Process Undertaken

• The disputes originated from findings of an internal audit, which led to investigations by Damodara Ong LLC. These investigations raised questions about the Company’s internal processes.
• Upon election, the current Board maintained all ongoing processes and ensured comprehensive review of findings by the Company’s legal advisers, including Rajah & Tann Singapore LLP and Damodara Ong. The Board deliberated extensively on all related issues, findings, and legal recommendations.
• The Board’s primary objective was to resolve and conclusively close all potential disputes to avoid future litigation risks, particularly as prior public references to unproven allegations could trigger new claims.

Rationale for Settlement

• After consulting with Nine Yards Chambers LLC, the Board determined that pursuing further legal action against the six parties would not be beneficial. There was no legal merit in continuing the disputes, and the costs of litigation would outweigh any potential gain.
• The Board has not received any new disputes from the six parties, but based on legal advice, it recognized a real risk of future claims if the matters were not resolved.
• The settlement provides commercial finality, avoids costly and protracted litigation, and is deemed in the best interests of the Company and its shareholders.

Scope of Legal Advice and Law Firm Involved

• The legal advice covered potential liabilities, available defenses, likelihood of success in litigation, estimated legal costs, and potential damages if the Company failed to prevail in court.
• The settlement agreements were drafted with legal consultation.
• The Board relied on advice from Oaks Legal LLC in arriving at its decision to enter into the settlement agreements.

Implications for Shareholders and Share Price Sensitivity

• Material Reduction in Legal and Financial Risk: The settlements effectively close off all pending claims, reducing the risk of costly litigation and potential liabilities that could have negatively impacted the Company’s financial standing and share value.
• No Further Claims Expected: The Board’s actions have provided legal closure, and no additional formal disputes have been received from the parties.
• Confidentiality of Settlement Sums: While specific figures remain confidential, investors should note the Board’s assurance that the amounts settled are materially less than potential litigation exposure, which is a positive outcome for the Company’s financial health.

Conclusion

The resolution of these disputes through confidential settlement agreements is likely to be viewed positively by the market, as it removes significant legal overhang and uncertainty. The Board’s prudent approach, supported by comprehensive legal advice, underscores its commitment to protecting shareholder interests and safeguarding the Company’s resources from avoidable litigation costs.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are encouraged to conduct their own research and consult professional advisors before making any investment decisions.

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