Dato Dr. LI Wei v Dfcity Group Berhad (WA-24NCC-458-08/2025)

DATO DR. LI WEI (Passport No.: EJ5183724)

ZHANG, DANDAN (Passport No.: EJ5197080) ...PLAINTIFFS

DFCITY GROUP BERHAD (Company No.: 200801038692 [840040-H])

LOW KIM KIAT (NRIC No.: 570612-14-5097) …DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 1)

There are three enclosures before this Court for determination, namely: i. Enclosure 1, which is the Plaintiffs’ Originating Summons (“the OS”); ii. Enclosure 2, which is the Plaintiffs’ application for interim and interlocutory injunctive relief; and iii. Enclosure 14, which is the Defendants’ application to set aside the ad interim injunction.

The Plaintiffs moved this Court, on a certificate of urgency dated 13 August 2025, for ad interim reliefs pending the hearing and disposal of Enclosure

I heard parties on 18 August 2025. As parties were unable to agree on a holding over, I granted ad interim injunctions sought in Enclosure 2, to wit, to preserve the status quo of parties and to prevent the 1st Defendant from acting on certain directors’ resolutions in writing, which the Plaintiffs sought to impugn vide Enclosure 1. I then fixed Enclosure 1 for hearing and made the necessary directions for the filing of affidavits and written submissions.

The Defendants then filed Enclosure 14 to set aside the ad interim orders granted by this Court in Enclosure 2.

The determination of Enclosure 1 necessarily determines the fate of Enclosures 2 and 14. I therefore proceeded to hear Enclosure 1 for the determination of all three enclosures.

The 1st Defendant is a public listed company. The Plaintiffs and the 2nd Defendant are directors in the 1st Defendant. The Plaintiffs are also substantial shareholders in the 1st Defendant.

The 1st Defendant is also a holding company of seven subsidiary companies. The Plaintiffs are directors of the subsidiary companies. They act as the corporate representatives of the 1st Defendant in the subsidiary companies.

On 12 June 2025, the 1st Defendant held its Annual General Meeting (“AGM”). The 2nd Defendant and two other individuals were elected to the board of directors of the 1st Defendant. There were no other resolutions in the said AGM to appoint new directors, re-designate the position of the 2nd Defendant, or to change the corporate representatives of the 1st Defendant.

Sometime in late June 2025, the Plaintiffs began querying the status of the 2nd Defendant’s employment in the subsidiary companies. Evidently, the 1st Defendant and one of the subsidiaries had issued appointment letters appointing the 2nd Defendant as Executive Director of the subsidiaries concerned. The Plaintiffs had no knowledge of at least one of the letters despite the Plaintiffs sitting on the board of directors of the subsidiary concerned.

The 2nd Plaintiff then caused a show cause letter to be issued to the senior manager of the subsidiary to query the issuance of the appointment letter.

The Plaintiffs aver that due to their queries, the 2nd Defendant, through the 1st Defendant, embarked on a witch-hunting exercise with the intent to wrestle control of the board in the subsidiary companies by stealth, starting from 1 August 2025. In relation thereto, the Plaintiffs say that certain directors’ resolutions in writing, the subject matter of the present dispute, were passed with the clear intention to empower the 2nd Defendant to remove the Plaintiffs as the only two directors on the board of the subsidiary companies.

There are three directors’ resolutions in writing of the 1st Defendant that the Plaintiffs seek to impugn. The resolutions are as follows: i. Directors’ Resolution in Writing (25/04) dated 1 August 2025 entitled “Appointment of Independent Non-Executive Directors of the Company” (“DRW 1”), which resolved for the appointment of two Independent Non-Executive Directors of the 1st Defendant, namely one Lina Kok, and one Fong Yik Hon; ii. Directors’ Resolution in Writing (25/07) dated 12 August 2025 entitled “Change of Corporate Representative of the Company for all Subsidiary Companies of the Company” (“DRW 2”) which resolved to revoke with immediate effect, the previous resolutions of the 1st Defendant in connection with the appointment of the corporate representative of the 1st Defendant for the subsidiary companies (collectively referred to as the “Subsidiary Companies”) and to appoint the 2nd Defendant, Low Kim Kiat (NRIC No.: 570612-14- 5097) as the Corporate Representative for the 1st Defendant for the Subsidiary Companies with immediate effect and authorised and empowered to do all acts, deeds, and things as may be necessary or expedient on behalf of the 1st Defendant in respect of the Subsidiary Companies; iii. Directors’ Resolution in Writing (25/06) dated 12 August 2025 entitled “Re-designation of Mr. Low Kim Kiat from Executive Director to Managing Director” (“DRW 3”), which resolved to re-designate the 2nd Defendant from the Executive Director to Managing Director of the 1st Defendant (All three resolutions shall collectively be referred to as “the Impugned DRW”).

As can be seen, in essence, the Impugned DRW relates to:

the appointment of additional directors;

the re-designation of the 2nd Defendant as Managing Director of the 1st Defendant; and

the appointment of the 2nd Defendant as corporate representative of the 1st Defendant in its Subsidiary Companies. THE PLAINTIFFS’ CASE

The Plaintiffs’ gravamen is that the Company had generally conducted its affairs in a manner consistent with accepted governance norms, including collective board deliberation on material matters, until the events giving rise to this dispute.

The Plaintiffs’ case, as averred in the affidavits and elaborated in the written submissions, may be succinctly condensed in the following narration.

On or about 30 July 2025, the Company Secretary circulated an email (“Email 30/7”) proposing DRW 1 to appoint two new independent non-executive directors. The board was given less than one working day to respond, with a deadline of 3:00 p.m. on 1 August 2025.

The Plaintiffs contend that the notice period was contrary to the Company’s Constitution, which requires at least seven days’ notice; the computation of time was impermissibly truncated; and the proposed appointments were inserted into a written resolution mechanism to avoid proper deliberation.

DRW 1 was nonetheless passed and publicly announced via Bursa Malaysia on 1 August 2025.

On 7 August 2025, a further email (“Email 7/8”) was circulated proposing two additional written resolutions (DRW 2 and DRW 3), again with an abbreviated response window expiring on 12 August 2025.

DRW 2 and DRW 3 purported to authorise the removal and replacement of corporate representatives in subsidiaries, confer broad powers on the 2nd Defendant as a corporate representative, and retrospectively validate prior acts affecting subsidiary governance.

Hence, the Plaintiffs assert that these resolutions effectively enabled their removal from meaningful control of the subsidiaries, notwithstanding their substantial shareholdings and without shareholder approval.

The Plaintiffs’ case is anchored on the following contentions: i. The issuance and passing of DRW 1, DRW 2, and DRW 3 breached Articles 152 and 153 of the Company’s Constitution (read with Article 169), particularly with regard to minimum notice and proper board process. It is therefore procedurally irregular. ii. The resolutions are said to contravene provisions of the Companies Act 2016 governing board composition, corporate representation, and subsidiary governance; hence, this amounts to statutory non-compliance by the 1st Defendant. iii. The Plaintiffs allege that the resolutions were orchestrated to marginalise and ultimately remove them from control, entrench the 2nd Defendant’s position, and bypass shareholder scrutiny in a listed company context. This amounts to improper purpose and bad faith on the part of the 1st Defendant. iv. The use of written resolutions for matters of such gravity is said to be inconsistent with corporate governance principles and with the 1st Defendant’s past practice of convening physical board meetings for material decisions. The core complaint here is that there is circumvention of corporate governance norms.

Substantively, the Plaintiffs seek declarations that DRW 1, DRW 2, and DRW 3 are invalid and of no legal effect, together with consequential relief restoring the pre-1 August 2025 governance status quo.

The Plaintiffs’ case is not merely that the impugned written resolutions were procedurally inconvenient or unfair; it is that they were legally incapable of producing effect. The Company’s Constitution, properly construed, does not permit the machinery of directors’ circular resolutions to be deployed so as to truncate mandatory notice, suppress deliberation, or effect a wholesale reconfiguration of corporate control.

The Plaintiffs take the position that DRW 1, DRW 2, and DRW 3 were demonstrably conceived, sequenced, and executed within a compressed period for the dominant purpose of consolidating control and removing the Plaintiffs from effective participation in the governance of the 1st Defendant and its subsidiaries.

The Plaintiffs contend that, based on authorities, even where a power is conferred by the articles, it must be exercised bona fide and for its proper purpose. Where, as here, the form of compliance masks a substantive abuse, the resolutions are void and liable to be set aside.

The Defendants’ opposition to the reliefs sought by the Plaintiffs is premised on four principal propositions: i. the Court should exercise minimal intervention in matters of internal management, particularly in relation to the appointment of directors; ii. the seven-day notice period under Article 153 does not apply to directors’ resolutions in writing; iii. Article 122 and Section 203 of the Companies Act 2016 apply only to resolutions at general meetings, not to directors’ resolutions in writing; and iv. there is no evidence of bad faith or ulterior motive in the passing of the Impugned DRW.

The Defendants’, in a nutshell, advance the position that the impugned directors’ written resolutions were neither irregular nor extraordinary. They contend that such resolutions have long been an accepted and routine mechanism within the company, including for matters of governance and board composition. The Defendants also say that the Plaintiffs themselves had previously participated in and approved such resolutions.

The Defendants also deny any improper purpose, asserting that the resolutions were driven by bona fide governance and regulatory considerations and were consistent with the shareholder confidence expressed at the AGM on 12 June 2025.

As regards the ad interim injunction, the Defendants maintain that no serious issue is disclosed, that any procedural non-compliance caused no real prejudice, and that the continuation of the injunction hampers the Company’s operations and management, thereby tipping the balance of convenience in their favour.

I take note that what is being asked of me is to more than cursorily inspect the internal management of the 1st Defendant. It is trite law that courts are slow to interfere with the internal management of companies acting within their powers.

The Federal Court in Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021] 3 MLJ 549 stated: “Traditionally, both in this jurisdiction and others, particularly the United Kingdom, there was a long-standing judicial conservatism in relation to corporate law… Jurisprudence followed the general path of non-interventionism in the internal management of company matters, given the existence of the twin corporate law principles of majority rule and the separate legal personality.”

Similarly, in Chan Tai Peng v Ning Yang Properties Sdn Bhd & Ors [2022] 11 MLJ 394, the High Court reaffirmed as follows: “It is trite law that the appointment and removal of directors belong to the internal management or affairs of the company and the court will not interfere with the internal management of acompany.”

This principle traces its lineage to Burland v Earle [1902] AC 83, where Lord Davey observed: “It is an elementary principle of the law relating to joint stock companies that the court will not interfere with the internal management of companies acting within their powers.”

I have carefully perused the affidavits and submissions of the parties. I am not satisfied that the Plaintiffs have discharged the burden of establishing bad faith or ulterior motive in the passing of the Impugned DRW.

The Plaintiffs’ reliance on events occurring after the filing of the Originating Summons, including notices of demand and alleged defamatory conduct, is sorely misplaced. These events arose ex post facto. I am unable to see how allegations of bad faith pleaded in the Originating Summons can logically be anchored to events that had not yet occurred at the time the Originating Summons was filed.

In any event, whether there is any basis for such notices of demand is a matter to be tested in the appropriate forum. The mere issuance of notices of demand, without more, cannot be elevated into proof of bad faith.

I turn now to the Plaintiffs’ submission that Articles 152, 153, and 169 must be read harmoniously so as to import a seven-day notice period into Article 169. I cannot accept that proposition.

The starting point is that articles of association must mean what they say. To read into Article 169 a notice requirement that is not there would amount to judicial rewriting of the 1st Defendant’s Constitution.

I find that there is no uniform time period practiced by the 1st Defendant in relation to circulation and approval of the 1st Defendant’s director’s resolutions in writing. It follows that there is no basis to the Plaintiffs’ complaint that there is a mandated seven-day time period for the circulation and approval of the Impugned

If a seven-day notice period were mandatory for directors’ resolutions in writing, the utility of Article 169 would be rendered nugatory. As I observed during submissions, the 1st Defendant might as well convene a directors’ meeting in every case. The very purpose of a director’s resolution in writing is to address circumstances where it may be impractical or unnecessary to convene a meeting.

This construction is fortified by the evidence that the Company has, on prior occasions, conducted business by way of directors’ resolutions in writing with less than seven days’ notice, including resolutions known to and participated in by the Plaintiffs themselves.

In Dr Mahesan & Ors v Ponnusamy & Ors [1994] 3 MLJ 312, the Court held that where the memorandum and articles expressly specify the duration of the notice of meeting of the board of directors, the board must strictly comply with that rule. Non-compliance with that rule will render the meeting ineffective and the resolutions passed at the meeting invalid. In that case, the Court held that a five-day notice was sufficient notice based on previous practice of the Company.

In the present case before me, the Defendants have exhibited various directors’ resolutions in writing that were executed by the directors of the 1st Defendant including the 1st Plaintiff. No particular time period was prescribed, and no complaint was ever raised by the Plaintiffs as to those resolutions. Even the Plaintiffs’ appointments to the board of directors of the 1st Defendant, were effected by way of the directors’ resolution in writing.

I also take note of the 1st Defendant's Directors' Resolution in Writing No. 22/01 dated 7 March 2022 on a proposed disposal of 3 pieces of land belonging to Hock Heng Realty Sdn. Bhd., a wholly owned subsidiary of the 1st Defendant. This resolution was circulated to the board of directors via e-mail dated 4 March 2022 (Friday) at 4:57 p.m. The duly approved copy of the said directors' resolution in writing (which was also signed by the 1st Plaintiff) was returned to the 1st Defendant's company secretary via e-mail on 7 March 2022 (Monday) at 12:14 p.m. The 1st Plaintiff was already a Director of the 1st Defendant then. There is nothing in evidence before me to show that he had protested to the short notice of this 1st Defendant's Directors' Resolution in Writing No. 22/01. In fact, there is nothing in evidence that the Plaintiffs have ever raised so much of a murmur of a protest to any previous Directors' Resolution in Writing of the 1st Defendant.

The Plaintiffs assert that prior discussions took place before such resolutions were passed. However, no evidence of such discussions has been adduced before me. Bare assertions do not displace the evidentiary burden of proof that must be discharged by the Plaintiffs with regard to such allegations. In any event, informal discussions cannot be used to rewrite the clear language of the Constitution.

The Plaintiffs also say that the Impugned DRW contravenes Section 203 of the Companies Act 2016 reflected in Article 122 of the 1st Defendant’s Constitution. Section 203 of the Companies Act 2016, reads as follows: “At a general meeting of a public company, a motion for the appointment of two or more persons as directors by a single resolution shall not be made unless a resolution that the motion shall be so made has first been agreed to by the meeting without any vote being given against it."

Article 122 of the Company's Constitution provides: "At any general meeting at which more than one (1) Director is to be elected, each candidate shall be the subject of a separate motion and vote unless a motion for the appointment of two (2) or more persons as Directors by a single resolution shall have first been agreed to by the meeting without any vote being given against it."

One will immediately notice the opening phrase in both the statutory provision and the constitution, which alludes to a general meeting of a company or, in this case, the general meeting of the 1st Defendant.

The language of the provision is plain and unambiguous. It applies only to resolutions tabled at a general meeting of shareholders. It does not apply to directors’ resolutions in writing. I am not prepared to read more into these provisions than what the legislature and the company have expressly provided.

I agree that it is trite a company's constitution is in fact, a statutory contract between the company and its members by virtue of Section 33(1) of the Companies Act 2016. (see: WTWT Sdn Bhd v Chew Meu Jong & 4 Ors [2018] 1 LNS 1458). Hence, it is the duty of the court in interpreting the meaning to be accorded to the relevant provisions in dispute. However, when the meaning is crystal clear from the plain words in the employ of the provision, or the contract as it is termed, the court’s solemn duty is to give effect to those plain words. I therefore decline the Plaintiffs’ invitation for me to give an interpretation that will strain the natural meaning of the provisions in contention.

In sum total, taken at their highest, the Plaintiffs’ complaints amount to dissatisfaction with the outcome of board decisions lawfully taken, which is not a recognised basis for curial intervention.

For the reasons set out above, I find that: i. the Impugned DRW were matters within the powers of the Board of Directors; ii. they were passed in accordance with the Constitution of the 1st Defendant and the Companies Act 2016; iii. no bad faith or ulterior motive has been established; and iv. this is not a case warranting judicial intervention in the internal management of the 1st Defendant.

Accordingly, I dismissed Enclosure 1 with costs.

As Enclosure 1 has been dismissed, the foundation for the interim and interlocutory injunctions falls.

The Defendants’ application in Enclosure 14 to set aside the interim and interlocutory injunctions granted earlier by this Court was therefore allowed. Dated the 26th day of December 2025 -sgd- ……………………………………………………………………… MUHAMMAD ADAM @ EDWARD BIN ABDULLAH Judicial Commissioner High Court (Commercial Division NCC 4) High Court of Kuala Lumpur In the Federal Territory, Malaysia Counsel for the Plaintiff : Ryan Chu together with Lau Zhong Yan, Evangeline Yii, and Goh Xin Wei Messrs. Lee & Poh Partnership Counsel for the Defendants : Nicholas Poon Qianfan together with Vivian Yew Zhi Xuan Messrs. Kit & Associates

Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021] 3

Chan Tai Peng v Ning Yang Properties Sdn Bhd & Ors [2022] 11

Burland v Earle [1902] AC 83 4. Dr Mahesan & Ors v Ponnusamy & Ors [1994] 3 MLJ 312 5. WTWT Sdn Bhd v Chew Meu Jong & 4 Ors [2018] 1 LNS 1458

Section 203 and Section 33(1) of the Companies Act 2016