Nep Holdings (Malaysia) Berhad v V.S. Industry Berhad (WA-22NCC-371-08/2022)

NEP HOLDINGS (MALAYSIA) BERHAD [No. Syarikat: 199501004648 (333843-V)]

LIM CHANG HUAT (No. K/P: 691003-10-6253)

LIM CHEE KON … PLAINTIF - (No. K/P: 630528-10-8033) PLAINTIF

V.S. INDUSTRY BERHAD [No. Syarikat: 198201008437 (88160-P)]

DATUK BEH KIM LING … DEFENDAN - (No. K/P: 580819-08-6169) DEFENDAN Page 2 of 14 GROUNDS OF JUDGMENT (Post-Trial)

This is a claim brought by the 2nd and 3rd Plaintiffs against the Defendants arising from, inter alia, alleged breaches of fiduciary duties by the 2nd Defendant and alleged breaches of the Shareholders’ Agreement dated 25.7.2016 (“SHA”) by the 1st Defendant.

The 1st Plaintiff was originally a party to this action. During the course of proceedings, the 1st Plaintiff was wound up on 22.1.2025.

The liquidators confirmed that they would not be pursuing the claim on behalf of the 1st Plaintiff. Consequently, the 1st Plaintiff’s claim was struck out on 17.3.2025.

The action therefore proceeded solely on the claims advanced by the 2nd and 3rd Plaintiffs.

It is common ground that the 2nd and 3rd Plaintiffs have no pleaded cause of action against the 2nd Defendant personally and that their surviving claim is confined to the alleged breach of the SHA by the 1st Defendant. A]

This action concerns a dispute arising out of the commercial relationship between the Plaintiffs and the 1st Defendant

The 1st Plaintiff, NEP Holdings (Malaysia) Berhad (“NEP”), is a company engaged in the business of coffee machines and coffee capsules through its subsidiaries.

The 2nd and 3rd Plaintiffs are shareholders and directors associated with NEP.

The 1st Defendant, V.S. Industry Berhad (“VSIB”), is a shareholder in NEP pursuant to the SHA.

The 2nd Defendant was at all material times a director of NEP and was nominated by the 1st Defendant to sit on NEP’s Board.

The Plaintiffs’ case arises from the allegation that the 2nd Defendant, while acting as a nominee director, engaged in conduct adverse to NEP’s interests and in favour of entities associated with him, including Golden Rim Equity Sdn Bhd (“GRE”) and VS Industry (Zhuhai) Co. Ltd (“VSIZ”).

It is further alleged that such conduct involved non-disclosure of interests, conflicts of interest, and participation in competing business activities, including the alleged diversion of business opportunities and involvement in the production and sale of coffee capsules said to be in competition with NEP’s business.

The Plaintiffs contend that such conduct constitutes: i) breaches of fiduciary duties owed by the 2nd Defendant to NEP; and ii) breaches of the SHA by the 1st Defendant, on the basis that the acts of the 2nd Defendant are attributable to it.

The Defendants deny these allegations and contend, inter alia, that the matters complained of were known to the Plaintiffs and that no competing or unlawful activities, including the production or sale of counterfeit coffee capsules, have been established on the evidence. B]

The Plaintiffs’ pleaded claim is founded on the following core allegations: i) that the 2nd Defendant breached his fiduciary duties to NEP by failing to act bona fide in its interests; ii) that the 2nd Defendant failed to disclose his interests in GRE and VSIZ; iii) that the 2nd Defendant caused or facilitated business activities in competition with NEP; and Page 5 of 14 iv) that such acts should be treated as the acts of the 1st Defendant, thereby rendering the 1st Defendant liable for breach of the SHA. C]

The Defendants submit that: i) any fiduciary duties owed by the 2nd Defendant are owed exclusively to NEP and not to the 2nd and 3rd Plaintiffs; ii) following the striking out of NEP’s claim, there is no proper plaintiff to pursue such allegations; iii) the 2nd and 3rd Plaintiffs have no locus standi to pursue claims for breach of fiduciary duty; iv) Clause 7.7 of the SHA does not confer any independent cause of action on the 2nd and 3rd Plaintiffs; v) there is no basis in law or fact to attribute the acts of the 2nd Defendant to the 1st Defendant; vi) the Plaintiffs’ claim for breach of fiduciary duty is misconceived, as such duties are owed to NEP and are not enforceable by the 2nd and 3rd Plaintiffs; and Page 6 of 14 vii) in any event, the matters complained of were known to the Plaintiffs and no competing or unlawful activities, including the production or sale of counterfeit coffee capsules, have been established on the evidence. D]

The issues for determination are: i) whether the 2nd and 3rd Plaintiffs have locus standi to pursue allegations of breach of fiduciary duty against the 2nd Defendant; ii) whether the acts of the 2nd Defendant may be treated as the acts of the 1st Defendant for the purposes of establishing a breach of the SHA; and iii) whether the 2nd and 3rd Plaintiffs have established any breach of the SHA by the 1st Defendant. E]

I accept the Defendants’ submission that any fiduciary duties arising from the 2nd Defendant’s role as a director are owed to the company, namely NEP, and not to the 2nd and 3rd Plaintiffs in their personal capacities.

This is consistent with the authorities relied upon by the Defendants, including Tan Sri Dr Mohd Irwan Serigar bin Abdullah v. Datuk Kamal bin Mohd Ali & Anor and another appeal [2025] 2 MLJ 147, which affirms that fiduciary duties owed by a director are owed to the company, and that any breach thereof is enforceable by the company as the proper plaintiff, and not by individual shareholders in their personal capacities.

Following the striking out of the 1st Plaintiff’s claim, there is no proper plaintiff before the Court to pursue such a cause of action.

The 2nd and 3rd Plaintiffs therefore lack locus standi to advance claims premised on alleged breaches of fiduciary duties owed to the 1st Plaintiff.

The Plaintiffs’ attempt to rely on such alleged breaches of fiduciary duties as a foundation for their contractual claim against the 1st Defendant is legally untenable.

In any event, I note that several material allegations, including those relating to alleged pressure, coercion and improper conduct on the part of the 2nd Defendant in relation to the alleged diversion of business opportunities and competing activities, were not put to the 2nd Defendant during cross-examination.

Applying the rule in Browne v. Dunn [1893] 6 R 67 (HL), as explained in Aik Ming (M) Sdn Bhd & 8 Ors v. Chang Ching Chuen & 3 Ors & Another Case [1995] 3 CLJ 639 and Dr Shaari Isa & Anor v. Tan Sri Harris Mohd Salleh [2020] 4 CLJ 40, such allegations must be disregarded and cannot be relied upon.

I find that the 2nd and 3rd Plaintiffs’ argument that the acts of the 2nd Defendant in his capacity as a nominee director of NEP, by reason only of his status as a nominee director, are automatically attributable to the 1st Defendant is not tenable in law.

The Plaintiffs rely on Industrial Concrete Products Bhd v. Concrete Engineering Products Bhd & Other Suits (2001) 8 CLJ 262 to submit that a nominee director owes fiduciary duties to the company. While that principle is correct, it does not support the further contention that the nominating shareholder is thereby liable for the acts of its nominee director, namely the 2nd Defendant.

The Plaintiffs also rely on Jaya Sudhir Jayaram v. Dato’ Seri Timor Shah Rafiq & 3 Ors [2025] CLJU 1575. However, this case is distinguishable on its facts and does not establish any principle of automatic attribution.

A nominee director, once appointed, owes his duties to the company and not to the nominating shareholder.

A director’s conduct cannot, without more, be treated as the conduct of the shareholder, namely the 1st Defendant.

It must be shown that the director acted as the shareholder’s agent, under its direction or control, or pursuant to an express contractual provision imposing liability.

No such pleading or evidence exists in the present case.

Further, the authorities relied upon by the Defendants, namely Ng Chik Voon & Ors v. Stronghold Cycles Sdn Bhd [2025] MLJU 262, Earning Century Sdn Bhd v. Aw Khoon Hwee Dennis & Ors [2017] MLJU 39, and Ampledeal (M) Sdn Bhd & 3 Ors v. Laponie (M) Sdn Bhd & 3 Ors [2015] 1 LNS 536, confirm that shareholders do not owe fiduciary duties to the company or to other shareholders merely by virtue of their shareholding.

Accordingly, the alleged misconduct of the 2nd Defendant in his capacity as a director of NEP cannot, without more, be transmuted into a breach of the SHA by the 1st Defendant.

The 2nd and 3rd Plaintiffs contend that the 1st Defendant is liable for breaches of Clauses 7.7 and 20.1(a), (c), (d) and (g) of the

However, Clause 7.7 does not confer upon the 2nd and 3rd Plaintiffs any independent cause of action to enforce alleged breaches of fiduciary duties or to elevate them into proper plaintiffs, but is directed at regulating the conduct of directors vis-à-vis the company rather than creating personal rights of enforcement in favour of individual shareholders.

I am not persuaded that the mere nomination of a director renders the nominating shareholder liable for every act or omission of that director.

The Plaintiffs have failed to identify with precision the acts said to constitute breaches of the SHA or to demonstrate how such acts are contractually attributable to the 1st Defendant. In particular, the evidence relied upon does not establish that the impugned acts were undertaken on behalf of, or under the direction or control of, the 1st Defendant.

I accept the Defendants’ submission that the Plaintiffs’ reliance on Xin Fuyuan Ocean Sdn Bhd v. Adrian Lati [2021] 1 LNS 1448 is misplaced, as that authority concerns breaches of Page 11 of 14 fiduciary duties owed by a director to the company and does not support the Plaintiffs’ contractual claim under the SHA.

On the totality of the evidence, the 2nd and 3rd Plaintiffs have failed to discharge their burden of proof on a balance of probabilities.

Further and in any event, even if I am wrong on the issues of locus standi and attribution, I find that the Plaintiffs have failed to establish the alleged misconduct on the evidence. There is material to show that the matters complained of were known to the Plaintiffs. Further, the evidence does not establish that the Defendants, in particular the 1st Defendant, engaged in any competing or unlawful activities, including the production or sale of counterfeit coffee capsules. F]

The Plaintiffs’ claim is fundamentally premised on alleged breaches of fiduciary duties owed by the 2nd Defendant to NEP, which duties are owed to NEP as a company and are not enforceable by the 2nd and 3rd Plaintiffs in their personal capacities.

NEP is no longer a party to the action and such claims cannot be pursued by the 2nd and 3rd Plaintiffs.

The 2nd and 3rd Plaintiffs’ attempt to recast such allegations of fiduciary breach as contractual breaches of the SHA is unsupported by the pleadings, the evidence and the applicable legal principles.

No breach of the SHA has been established and the 2nd and 3rd Plaintiffs have failed to establish any basis in law or fact for holding the 1st Defendant liable.

For the reasons stated above, the 2nd and 3rd Plaintiffs’ claim against the Defendants’ is dismissed with costs. Dated this 24th day of April, 2026 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA Page 13 of 14 COUNSEL FOR THE 2ND AND 3RD PLAINTIFFS : Sng Eu Kim (Kenneth Gomes together with him) Messrs Sulaiman & Taye 11-3, Jalan 1/114, Kuchai Business Centre, Off Jalan Kuchai Lama, 58200 Kuala Lumpur Tel: 03-6201 1877 Email: sulaimantaye@gmail.com COUNSEL FOR THE DEFENDANTS : Sivaneindiren a/l P Selvanandam (Joycelyn Teoh Hooi Cheng, Bong Lep Siong, Lim Jing Rui and How Chen Hee together with him) Messrs Cheah Teh Su L-3-1, No. 2 Jalan Solaris, Solaris Mont’ Kiara, 50480 Kuala Lumpur Tel: 03-6203 6918 Email: cts@ctslawyers.com.my

Aik Ming (M) Sdn Bhd & 8 Ors v. Chang Ching Chuen & 3 Ors & Another Case [1995] 3 CLJ 639

Ampledeal (M) Sdn Bhd & 3 Ors v. Laponie (M) Sdn Bhd & 3

Browne v. Dunn [1893] 6 R 67

Dr Shaari Isa & Anor v. Tan Sri Harris Mohd Salleh [2020] 4 CLJ 40

Earning Century Sdn Bhd v. Aw Khoon Hwee Dennis & Ors [2017] MLJU 39

Industrial Concrete Products Bhd v. Concrete Engineering

Jaya Sudhir Jayaram v. Dato’ Seri Timor Shah Rafiq & 3 Ors [2025] CLJU 1575

Ng Chik Voon & Ors v. Stronghold Cycles Sdn Bhd [2025] MLJU 262

Tan Sri Dr Mohd Irwan Serigar bin Abdullah v. Datuk Kamal bin Mohd Ali & Anor and another appeal [2025] 2 MLJ 147

Xin Fuyuan Ocean Sdn Bhd v. Adrian Lati [2021] 1 LNS 1448