1. ) M Telco Sdn. Bhd. v 1. ) Mrh Digital Sdn. Bhd. (WA-24NCC-22-01/2023)

M TELCO SDN. BHD. [Co. Reg. No.: 202101008997 (1409296-D)]

MALAYSIAN ALLIED HEALTH SCIENCES ACADEMY SDN. BHD. [Co. Reg. No.: 200401016011 (654514-M)] … PLAINTIFFS

MRH DIGITAL SDN. BHD. [Co. Reg. No.: 201801033411 (1295438-W)]

MOHD ROHAIZEE BIN HASHIM [NRIC No.: 680724-08-5719]

MOHAMAD EZZUL NA’IM BIN MOHD ROHAIZEE [NRIC No.: 961016-08-5911]

MRH EMPIRE SDN. BHD. [Co. Reg. No.: 201901042400 (1351730-M)] … DEFENDANTS JUDGMENT [1] This judgment turns on the interpretation of an investment agreement entered into between the Plaintiffs and the Defendants. [2] The Plaintiffs claimed that the Defendants have breached the payment obligations under the investment agreement which entitled them to terminate and demand full payment and to enforce on certain shares pledged as security for the payment obligations. Background Facts [3] The 4th Defendant, MRH Empire Sdn Bhd, is a registered company incorporated in Malaysia to provide infrastructure solutions to licensed wireless operator throughout Malaysia. The company is currently rolling out a network of unique tower solution in strategic high-demand locations. [4] The 1st Defendant, MRH Digital Sdn Bhd, is a registered company incorporated in Malaysia in 2018. [5] The 2nd and 3rd Defendants are the directors in the 1st Defendant and the 4th Defendant respectively. [6] Circa May of 2021, the Plaintiffs and the Defendants entered into a joint venture to collaborate with the objective inter alia to take advantage of and commercialize opportunities that arise from, among others, the operation of 1,342 telecommunications towers owned by the 4th Defendant with telecommunications operators in Malaysia. The terms of the joint venture between the parties are reflected in the Joint Venture Agreement dated 31.5.2021 (“JVA”) dan supplement by the Supplementary Agreement dated 27.4.2022 (“SJVA”). [7] Subsequent to the JVA and the SJVA, the Plaintiffs and the Defendants then entered into an Investment Agreement dated 13.10.2022 (“Investment Agreement”) where the Defendants are jointly and/or severally obligated to:-

procure at least three (3) more telecommunications operators as tenants for each of the four (4) towers on or before 31.12.2022;

complete the construction of the fourteen (14) towers and procure at least one (1) telecommunication operator as tenant for the fourteen (14) towers on or before 31.12.2022; and

procure at least three (3) more telecommunication operators as tenants for each of the fourteen (14) towers on or before 31.3.2023. [8]

RM 46,400.00 on or before 31.10.2022;

RM 46,400.00 on or before 30.11.2022. [10] Pursuant to Clause 4.1, the Defendants were additionally jointly and/or severally liable to repay the 1st Plaintiff and the 2nd Plaintiff an outstanding debt i.e. RM 248,400.00 that was jointly and/or severally due and owing from the Defendants to the 2nd Plaintiff over 12 monthly installments, on the last day of the month without the need for any demand which included:

RM 32,800.00 on or before 30.9.2022;

RM 49,200.00 on or before 31.10.2022;

RM32,800.00 on or before 30.11.2022. [11] Further, pursuant to Clause 5.1, as continuing security for the due and punctual performance of all obligations of the Defendants under the Agreement, the 2nd Defendant had made a share pledge by which the 2nd Defendant irrevocably and unconditionally pledged to the Plaintiffs all his title, rights, and interests in his 255,000 shares in the 1st Defendant as well as all property and rights deriving from the same (“the Pledged Shares”). [12] As part of the Pledged Shares and concurrent with the execution of the Investment Agreement, the 2nd Defendant also executed an undated Form of Transfer of Securities in respect of the Pledged Shares. [13] Separately, pursuant to Clauses 9.1 and 9.2, the Defendants are jointly and/or severally liable to bear:

the legal costs and expenses for the preparation of the Investment Agreement; and

the stamp duty payable in respect of the Investment Agreement; and where any such costs and expenses had been incurred upfront by the Plaintiffs, they shall be jointly and/or severally reimbursable immediately by the Defendants upon demand from the Plaintiffs. [14] Unfortunately, the Defendants have not even made a single payment to the Plaintiffs under the Investment Agreement to date which eventually resulted in the Plaintiffs terminating the same in December 2022. [15] On 14.1.2023, the Plaintiffs filed Enclosure 1 herein against the Defendants to seek inter alia as follows:-

an order that the 1st Defendant registers the transfer of the 2nd Defendant’s 255,000 shares in the 1st Defendant into the name of the 1st Plaintiff in accordance with the duly completed and executed Form of Transfer of Securities dated 5.12.2022, by entering or causing to be entered the name of the 1st Plaintiff in the 1st Defendant’s register of members as a shareholder in place of the 2nd Defendant, within 14 days from the date of the Order;

an order that all the Defendants jointly and/or severally pay to the 2nd Plaintiff a sum of RM4,816,985.30;

in alternative to prayers above, an order that all the Defendants jointly and/or severally pay to the 2nd Plaintiff a sum of RM5,071,985.30;

further, an order that all the Defendants jointly and/or severally pay interest to the 2nd Plaintiff at the rate of 10% per annum (calculated on daily basis) on the sum of RM4,816,985.30 or RM5,071,985.30 (as the case may be) from the date of filing of this action until the date of the Order; Defendants’ Position [16] It is the Defendants’ case that there was an understanding between the parties that the joint venture would be for a long term and the long-term relationship is reflected through the period of time that has been agreed in the JVA and the SJVA. In this regard, it is contended that the Investment Agreement should be read together with the JVA and the SJVA. It is the Defendants’ case that the respective agreements should be read as a whole in order to understand the mechanisms and purposes of this venture between the parties. [17] The fact that the Defendants had not made any payments to the 1st Plaintiff for the return of investments pursuant to Clauses 3.1.1 and 3.2 is not denied by the Defendants. [18] They are alleging that the payments were not made because there was a mutual understanding that “sebarang pembayaran pulangan pelaburan kepada [MAHSA] hanya akan dibuat selepas [the MRH Parties] memperolehi hasil (revenue) bayaran sewaan menara telekomunikasi daripada bakal operator-operator menara tersebut”. [19] In other words, notwithstanding the express terms in Clauses 3 and 4 referred to above, the terms of payment are still at large and that the Plaintiffs’ demand against the Defendants was premature given that the joint venture between the parties was on a long term basis. It is contended that the terms and conditions of the Investment Agreement are contingent on the discharge of the obligations and duties which are still ongoing and yet to be completed under the JVA and the SJVA. Court’s Deliberation [20] Regrettably, I do not find that the Defendants’ contention being borne out by the express terms of the Investment Agreement. [21] The obligations stipulated in Clause 2.3 are distinct obligations of the Defendants to procure tenants for the telecommunication towers and to construct additional telecommunication towers. [22] On the other hand, Clause 3.1 provides for the payment obligations of the Defendants. Neither Clause 2.3 nor Clause 3.1 provides for the payments to be made by the Defendants to be contingent upon anything. The payment terms in Clause 3.1 are clear and unambiguous and it is incumbent upon this Court to give effect to these clear and unambiguous terms as was done by the Court of Appeal in Perak Integrated Network Services Sdn Bhd v. Urban Domain Sdn Bhd & Anor [2021] 1 LNS 1106 (CA). [23] Accordingly, the failure by the Defendants to make the payments pursuant to Clauses 3.1.1 and 3.2 is a clear breach of the terms and conditions of the Investment Agreement. [24] The fact that the Defendants had not made any payments to 2nd Plaintiff for the settlement of the outstanding debt pursuant to Clause 4.1 is likewise not denied by the Defendants. Let there be no doubt, this payment is not for any returns of investment – but rather a settlement of an admitted debt in the sum of RM248,400.00. [25] Again, the Defendants are contending that the payments were not made because allegedly the “jadual pembayaran balik pada Klausa 4.1 [of the Agreement] tersebut juga memperuntukkan suatu jangka masa sehingga 31.8.2023 untuk [the Defendants] membuat sebarang pembayaran semula kepada [the Plaintiffs]”. [26] The aforesaid is not supported by the terms of the Investment Agreement. [27] The repayment of the outstanding debt under Clause 4.1 is clearly a monthly installment payment obligation. It is not a lump sum repayment on 31.8.2023 as suggested by the Defendants. [28] The breaches committed by the Defendants under Clause 4.1 were the non-payment of the first 3 monthly installments in the payment schedule. [29] So, when there were no payments made by the Defendants for the first 3 monthly installments pursuant to Clause 4.1, the Defendants were separately also in clear breach of the express terms and conditions of the Investment Agreement. [30] Given the clear breaches of terms and conditions of the Investment Agreement by the Defendants, the Plaintiffs had lawfully exercised their right under Clause 7.1.1. to forthwith terminate the Investment Agreement. This was done through the Plaintiffs’ solicitors’ letter of termination dated 5.12.2022 to the Defendants. [31] The consequences of the termination of the Investment Agreement by the Plaintiffs are expressly provided for in the Agreement:

Clause 7.2.1 provides that the Defendants shall jointly and/or severally be liable to immediately repay the entire Investment Sum to 2nd Plaintiff (i.e. RM4,656,260.00);

Clause 7.2.2 provides that the entire outstanding debt (or any outstanding part thereof) (i.e. RM248,400.00) shall become immediately due and payable, and the Defendants shall jointly and/or severally be liable to immediately pay the same to 2nd

Clause 7.2.3 provides that the Defendants shall jointly and/or severally be liable to immediately pay all such losses and damages suffered by the Plaintiffs arising from or in relation to the Defendants’ breaches;

Clause 7.2.4 provides that the Defendants shall jointly and/or severally indemnify and keep indemnified and hold the Plaintiffs harmless from and against, amongst others, all such losses and expenses arising from or in relation to the Defendants’ breaches. In this regard, the Plaintiffs had incurred a total stamp duty in the sum of RM23,335.00;

Clause 7.2.5 provides that 2nd Plaintiff shall be entitled to realise its security in the form of the Pledged Shares, and the Defendants shall promptly take any and all such steps as may be necessary to give full effect to such realisation of 2nd Plaintiff’s security (including but not limited to any transfer of the Pledged Shares);

Clause 8.2 provides that in the event the Defendants refuse, neglect, or fail to pay any sums payable under the Investment Agreement within the time prescribed, the Defendants shall additionally be liable to pay interest on any outstanding sums at the rate of 10% per annum (calculated on daily basis). [32] As the 2nd Plaintiff is entitled to realise its security in the Pledged Shares, they had lodged the duly completed and executed original Form of Transfer of Securities for the transfer of the Pledged Shares to the 1st Defendant and/or its Company Secretary on 5.12.2022. [33] This was done pursuant to Section 105(1) Companies Act 2016 (“CA 2016”) and the 1st Defendant and/or its Company Secretary are obliged to act on that Form of Transfer of Securities within 30 days as mandated by Section 106(1) CA 2016. [34] However:

The 1st Defendant’s Company Secretary had e-mailed the Plaintiffs’ solicitors on 12.12.2022 essentially saying that he is unable to register the transfer of the Pledged Shares on account of not having instructions or consent from the 2nd Defendant and that there were supposedly ongoing negotiations between the parties;

The 2nd Defendant had written to the Plaintiffs’ solicitors on 15.12.2022 stating that in principle, he does not have any issues with the transfer of the Pledged Shares. But he was not agreeable with the date for such transfer as this had not been discussed between the parties. [35] With respect, these are not reasons to excuse 1st Defendant and/or its Company Secretary from complying with their mandatory obligation to transfer the Pledged Shares into the name of the 1st Plaintiff in accordance with the Form of Transfer of Securities. The reasons certainly do not come within the circumstances stated in Section 106(1) CA 2016 to justify such a refusal [See: Dato’ Sng Chong Keong v. PC Manufacturing Solutions Sdn Bhd [2021] 1 LNS 1617 (HC)] [36] It is not the Defendants’ case that either CA 2016 or the 1st Defendant’s constitution permits the 1st Defendant’s directors to refuse or delay the registration for the reasons stated in either of those. [37] Accordingly, there are no reasons why this Court should not allow an order to be made pursuant to Section 107 of the CA 2016 to compel the 1st Defendant to register the transfer of the Pledged Shares into the name of the 1st Plaintiff. Conclusion [38] Learned counsel for the Plaintiffs informed this Court that the Pledged Shares are valued at RM255,000.00 by the parties. Thus, the Plaintiffs are only primarily seeking for a payment of RM4,816,985.30 plus RM 23,335.00 being the stamp fees incurred from the Defendants jointly and/or severally in addition to the transfer of the Pledged Shares in the name of the 1st Plaintiff. [39] By reason of the aforesaid, it is hereby order that the Defendants do, jointly and/or severally be liable to pay the Plaintiffs:

An order that the 1st Defendant registers the transfer of the 2nd Defendant’s 255,000 shares in the 1st Defendant into the name of the 1st Plaintiff in accordance with the duly completed and executed Form of Transfer of Securities dated 5.12.2022, by entering or causing to be entered the name of the 1st Plaintiff in the 1st Defendant’s register of members as a shareholder in place of the 2nd Defendant, within 14 days from the date of this Order;

An order that the 1st Defendant cause the Notification of Change in the Register of Members (or such other forms as may be prescribed by Companies Commission of Malaysia from time to time) to be lodged with the Companies Commission of Malaysia, within the statutorily prescribed period;

An order that all the Defendants shall promptly take any and all such steps as may be necessary to give full effect to paragraphs 39.1 and 39.2 above;

Further, an order that all the Defendants jointly and/or severally pay to the 2nd Plaintiff a sum of RM4,840,320.30;

Further, an order that all the Defendants jointly and/or severally pay interest to the 2nd Plaintiff at the rate of 10% per annum (calculated on daily basis) on the sum of RM4,840,320.30 from the date of filing of this action until the date of this Order until the full and final settlement of the same;

Further, an order that all the Defendants jointly and/or severally indemnify and keep indemnified and hold all the Plaintiffs harmless at all times from and against any claims, demands, suits, losses, damages, charges, fees, costs, and/or expenses of any kind arising from or in relation to the Defendants’ breach of the terms and conditions of the Investment Agreement dated 13.10.2022 between the Plaintiffs and Defendants (“Indemnity”), and that the Plaintiffs are at liberty to apply to the Court for the enforcement of the Indemnity by way of assessment of damages, as and when arising;

Costs fixed in the sum of RM5,000.00 (subject to payment of allocatur). Dated the 25th day of May 2023 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL:

Mr. Aravind Kumarr A/L Muniandy for Plaintiffs

Mr. Darren Malis Isik A/K Jefferson for Defendants Messrs. Samir Sumathi Fernando & Co. (Kuala Lumpur)

Perak Integrated Network Services Sdn Bhd v. Urban Domain Sdn

Dato’ Sng Chong Keong v. PC Manufacturing Solutions Sdn Bhd [2021] 1 LNS 1617 (HC)]

Sections 105, 106 and 107 of the Companies Act 2016