Tay Keng Piau v Golden Radius Sdn Bhd (MA-24NCC-14-06/2025)

TAY KENG PIAU …PLAINTIFFS (NRIC No.: 760715-01-6981)

TAY KENG AIK (NRIC No.: 720623-04-5121)

KU SUAT CHENG @ KHOO SUAT CHENG (NRIC No.: 481108-01-5272) AND GOLDEN RADIUS SDN BHD …DEFENDANT (Company No.: 199601003330) GROUNDS OF JUDGMENT

This suit concerns a dispute among family members who are shareholders of the Defendant Company. The Board of Directors, comprised of siblings, has declined to register the transfer of shares which their mother intends to convey to certain other siblings. In essence, the claim before the Court arises from this refusal.

It is a settled principle that laws exist for a purpose, and their interpretation must not be moulded to suit the factual matrix of a particular case. To do so would invite uncertainty, ambiguity, and inconsistency in both interpretation and application.

Conversely, parties must appreciate that any intended outcome or arrangement within a corporate setting must first be anchored upon the governing law. The law provides the framework within which plans are to be devised and executed, thereby ensuring that objectives rest upon firm legal foundations. The oft-cited maxim of Benjamin Franklin, that ‘failure to plan is planning to fail,’ is particularly apt in the present context.

It is undisputed that there was no shareholders’ agreement to govern the relationship of the shareholders. The parties were probably under the assumption that since the Defendant is a family-owned company with shareholders being siblings and parents, there was no real necessity to prepare on and that may only be true if all parties were on the same page, with the same intentions and same objectives.

In Dato’ S’ng Chong Keong v PC Manufacturing Solutions Sdn Bhd [2021] MLJU 1843, the very first paragraph of the said judgement clearly describes the common cause of cases of this nature: - “…the common habit of shareholders of private companies who do not take the tedious and costly step of incorporating the relevant terms of their shareholders agreement into the private companies’ M&A, would sometimes lead to lengthy and more costly litigation…”

Further, based on the cause papers filed and the submissions of both counsels, from the outset, I am unable to accept the proposition that the law should first be approached through the prism of the factual context, and only thereafter interpreted, as to what the Plaintiffs are suggesting in this case. Such an approach amounts to a Machiavellian exercise in construction, which, in my considered view, has no proper place within the administration of justice.

At the time of the filing of this action, the Defendant company consists of 3 shareholders with the following holdings: - Shareholder Shares i. Tay Keng Yaw (TKY) 30,000 ii. Tay Keng Boon (TKB) 30,000 iii. Ku Suat Cheng @ Khoo Suat Cheang (3rd Plaintiff – P3) 90,000

TKY and TKB are the current directors of the Defendant. They, together with P1 and P2 are siblings. P3 is the mother to all of them.

Prior to June 2017, 1st and 2nd Plaintiffs (P1 and P2) used to be shareholders of the Defendant, holding 12,000 shares each, amounting to 20% each of the equity of the Defendant. The total paid up capital then was RM60,000.00, divided into 60,000 shares in the following proportions: - Shareholder Shares i. Tay Keng Yaw (TKY) 12,000 ii. Tay Keng Boon (TKB) 12,000 iii. Ku Suat Cheng @ Khoo Suat Cheang 12,000 (3rd Plaintiff – P3) iv. Tay Keng Piau (P1) 12,000 v. Tay Keng Aik (P2) 12,000

Thereafter, in April 2017, the Defendant wanted to obtain financing from Maybank Berhad. The Plaintiffs alleged that it was akin to a restructuring exercise whilst the Defendant described the same as financing to acquire an immovable asset, in the form of a piece of land in Mukim Labis, Daerah Segamat, Johor. According to the Defendant, there was no such restructuring exercise.

Whatever it was, a bank loan was required and in order to facilitate that, the said bank required all shareholders and directors to provide personal guarantees. That, P1 and P2, for reasons only known to themselves, refused to do.

In June 2017, prior to the drawdown and utilisation of the financing facility, P1 and P2 then transferred all their shares to P3, their mother in order to avoid the giving of any personal guarantees to the bank.

P3 purportedly, was to hold their shares on trust, and that the said shares will be re-transferred back to P1 and P2 in the future.

Apparently, share transfer forms were already pre-signed by P3 to effect future re-transfer to P1 and P2. However, according to the Defendant, this alleged arrangement was not made known or made official with the Defendant.

The said bank acknowledged the change in the shareholding structure of the Defendant and issued a Supplementary Letter of Offer dated 13.06.2017.

TKY, TKB and P3 provided personal guarantees as collateral. A further 3rd party corporate guarantee was also given by Ban Hong Trading Sdn Bhd (“BHTSB”) a company which TKB and his wife Chan Mei Yoke jointly owned (80%:20% respectively).

It was also at this juncture or around this material time that the Defendant’s paid-up capital was increased to RM150,000.00. A further 90,000 shares were issued and allotted in the following manner: - Shareholder Shares i. Tay Keng Yaw (TKY) 18,000 ii. Tay Keng Boon (TKB) 18,000 iii. Ku Suat Cheng @ Khoo Suat Cheang (3rd Plaintiff – P3) 54,000

At around the same material time, an application for another financing facility was made and granted to the Defendant by Public Islamic Bank Berhad vide letter dated 09.06.2017, with TKY, TKB and P3 providing personal guarantees as collateral. BHTSB also provided a corporate guarantee for this financing facility.

It was on this shareholding structure involving P3, TKB and TKY and under the stewardship of the board of directors consisting of TKB and TKY that the Defendant procured the financial assistance and serviced them accordingly.

According to TKB, the aforesaid structure brought progress and success to the Defendant and that the Defendant prospered financially. The Plaintiffs did not expressly deny that the Defendant was in a better financial state then it was when P1 and P2 were shareholders.

The trouble arose when P1 and P2 wanted the re-transfer of their shares, transferred to P3 under the alleged trust as described above.

The Defendant’s company secretary, Goh Koong Yuen, asserted that instructions to affect the re-transfer were given in 2024. The Plaintiffs, however, contend that such instructions were only conveyed in March 2025.

This divergence in accounts casts further doubt on whether the transfers effected in 2017 were, in fact, matters of common knowledge among the siblings.

The Defendants, through its directors, TKB and TKY rejected the proposed re-transfer. They refused to execute a board resolution for the transfer. The Plaintiffs then commenced this action.

The Defendant, as deposed in the affidavits, advanced the broad contention that P1 and P2 had declined to assume responsibility or actively participate in the affairs of the Company for nearly eight years, thus displaying a lack of commitment, dating from the time the financing facilities were procured.

It was only in 2024 (or 2025) that they (P1 and P2) sought to involve themselves, coinciding with the Defendant Company’s apparent prosperity and increase in value. In essence, the Defendant asserts that while P1 and P2 admitted their unwillingness to bear the risks at the material time, they are now eager to reap the benefits.

At paragraph 19 of the Plaintiffs’ Affidavit (Enclosure 16), this was confirmed: - “…Selain itu, saya juga menegaskan bahawa Plaintif Pertama dan Kedua tidak pernah menolak tanggungjawab sebagai pemegang saham bagi Defendan, sebaliknya mereka hanya tidak mahu mengambil risiko kewangan yang tidak bersesuaian ketika itu….” (Emphasis added)

This was compounded by the circumstance that P1 and P2 sought to rejoin the fold of the Company/Defendant without any discussion as to whether they were prepared to assume responsibility for servicing the outstanding loans or to furnish collateral for the benefit of the Defendant.

The Plaintiffs contended that there was an existing arrangement that all parties were aware, consented or at least acquiesced to from the very beginning when P1 and P2 transferred their shares to their mother, P3. Yet, nothing was reduced to writing.

Further allegations of bad faith, ulterior motives, unreasonable grounds to reject the proposed re-transfer, which seemingly were also denial of P1 and P2’s rights to the said shares were made in the Plaintiffs’ affidavits, albeit merely cursory (at best) and devoid of any supporting particulars, details or evidence.

In reply, the Defendant, through its directors, asserted that it was within the board’s discretion to refuse the proposed re-transfer, and that there was no evidence of any trust recorded in respect of any of the company’s shares within the records.

At the hearing of the matter, a preliminary objection was raised by counsel for the Defendant in respect of certain exhibits which were disclosed in the Plaintiffs’ affidavits on the ground that the said documents were without prejudice communications between the parties.

The preliminary objection was upheld and allowed by this Court in relation to: - i. Exhibits “TKA-4” of Enclosure 16 and “TKA-5” of Enclosure 16 as they are clearly without prejudice communications and are expunged from the records; ii. Exhibit "TKB-2" of enclosure 18 together with Enclosure 26 are also expunged based on the same grounds.

The three documents referred to, were correspondences between the parties in an attempt to resolve the matter amicably. However, no settlement could be achieved.

It must also be noted that Enclosure 26 was a without prejudice letter written by the Plaintiffs’ solicitors to the Defendant’s solicitors, and copied to this Court. I cannot fathom the reason or any reason for that matter, for sending a copy of the said letter to the court.

On the issue of without prejudice communications, it bears emphasis that the Court of Appeal, as recently as October 2025, reaffirmed these principles in Uvarajen A/L Subramaniam v Syarikat Takaful Malaysia AM Bhd [2025] MLJU 3698. In so doing, the Court echoed the authoritative pronouncement of Chang Min Tat FJ in the Federal Court decision of Malayan Banking Berhad v Foo See Moi [1981] 2 MLJ 17.

At paragraph 23(2) of the Uvarajen case, the Court of Appeal cited a passage from Gary Teh Chin Yeong v Kwong Yan Loy & Ors [2019] 5 CLJ 329, which held that without prejudice communications are regarded as an extension to Section 23 of the Evidence Act 1950 (with regards to admissions in civil cases) :- “(2) in addition to s 23 EA, Malaysian case law has recognized that as a general rule “without prejudice” negotiations are privileged and cannot be admitted as evidence (General Rule). With regard to the General Rule, I cite the following judgment of Chang Min Tat FJ in the Federal Court case of Malayan Banking Bhd v Foo See Moi [1981] 2 MU 17, at 18- “It is settled law that letters written without prejudice are inadmissible in evidence of the negotiations attempted. This is in order not to fetter but to enlarge the scope of the negotiations, so that a solution acceptable to both sides can be more easily reached.” (emphasis added).

(3)The General Rule is based on public policy to encourage litigants to settle their disputes amicably and to this end, litigants should not be discouraged that anything said in the course of negotiations to settle the disputes may be used to their prejudice in court - please see the judgment of Oliver LJ (as he then was) in United Kingdom’s (UK) Court of Appeal in Cutis v Head & Anor [1984] 2 Ch 290 , at 306; “if a party has breached the General Rule by affirming an affidavit which contains inadmissible “without prejudice” negotiations, the opposing party may apply to court to expunge such evidence on the ground that such evidence is “irrelevant” (Irrelevancy Ground) as stated in O 41 r 6 of the Rules of Court 2012 (RC). O 41 r 6 RC provides as follows – “The Court may order to be struck out of any affidavit any matter which is scandalous, irrelevant or otherwise oppressive.”

Such practices are deeply troubling, as they reflect a ‘win at all costs’ mentality undertaken without due regard to the fundamental rules and tenets governing litigation.

I have considered the competing scenarios advanced by the Plaintiffs and the Defendant as to the circumstances surrounding the initial transfer of shares to the 3rd Plaintiff.

What is evidently clear was that none of the alleged arrangements or trust were reduced to writing. The refusal of the Defendant to affect a re-transfer from P3 to P1 and P2 is well within the rights of the company.

The Plaintiffs have placed their reliance on Sections 105 to 107 of the Companies Act 2016 in support of their application. I am however, unable to agree with their proposition and find the opposite to be true.

Section 107 provides: - “(1) If a company refuses to register a transfer, the transferee or the transferor may apply to the Court for an order under this section.

On an application under subsection (1), the Court may order the company to register the transfer, if the Court is satisfied that the application is well-founded.”

Upon careful consideration, this Court finds no basis to conclude that the application of the Plaintiffs is well founded.

In response to the issue the alleged existence of a trust in respect of the said shares, I find Section 110(4) of the Companies Act 2016 to be directly applicable.

For ease of reference, Section 110 provides: - “(1) Any trustee, executor or administrator of the estate of any deceased person who was registered in a register or branch register kept in Malaysia as the holder of a share in any corporation may become registered as the holder of that share as trustee, executor or administrator of that estate and shall, in respect of that share, be subject to the same liabilities and no more as he would have been subject to if the share had remained registered in the name of the deceased person.

(2)Any trustee, executor or administrator of the estate of any deceased person who was beneficially entitled to a share in any corporation, being a share registered in a register or branch register kept in Malaysia may, with the consent of the corporation and of the registered holder of that share, become registered as the holder of the share as trustee, executor or administrator of that estate and shall, in respect of the share, be subject to the same liabilities and no more as he would have been subject to if the share had been registered in the name of the deceased person.

(3)Shares in a corporation registered in a register or branch register kept in Malaysia and held by a trustee in respect of a particular trust may, with the consent of the corporation, be marked in the register or branch register in such a way as to identify the shares as being held in respect of the trust.

(4)Except as provided in this Act, no notice of any trust expressed, implied or constructive shall be entered on a register or branch register or be receivable by the Registrar and no liabilities shall be affected by anything done under subsection (1), (2) or (3) or under the law of any other place which corresponds to this section and the corporation concerned shall not be affected with notice of any trust by anything so done.”

The present case does not fall within the exceptions contemplated under Sections 110(1) and 110(2), which concern deceased persons, nor under Section 110(3). Section 110(4) expressly excludes considerations of knowledge between the parties, as alleged by the Plaintiffs.

The Federal Court decision in Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 2 MLJ 240 is instructive. At page 242: -

The Defendant’s position herein is further fortified by Article 6 of its Articles of Association, particularly the phrase “even when having notice thereof,” which directly addresses the trust scenario as alleged by the Plaintiffs.

The Plaintiffs alleged that everyone knew about the share transfer exercise executed in 2017 and that P3 was merely holding P1 and P2’s shares on trust. The Defendant denies any such arrangement or agreement.

Article 6 reads: - “No person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any other rights in respect of any share other than an absolute right to the entirely thereof in the registered holder, except only as by these Articles otherwise provided for or as by Act required or pursuant to any order of court.”

Hence, nothing hinges on the alleged knowledge of TKB, TKY, P3 or the Defendant of any arrangement between the Plaintiffs.

As for the reasons of the refusal of the Defendant to the proposed transfer, Article 23 of the Articles of Association, the very terms and conditions that bind the shareholders, affords them the ability to do so, without assigning any reason.

Article 23 reads: - “The directors, may in their discretion, and without assigning any reason therefore, refuse to register a transfer of any share to any person whom they do not approve and they may also refuse to register a transfer of any share on which the Company has a lien. If the directors refuse to register a transfer they shall within one month after the date on which the transfer was lodged with the Company send to the transferee notice of the refusal in accordance with section 105 of the Act.” (emphasis added)

The directors of the Defendant have refused to register the proposed transfer, clearly for reasons as stated earlier in these grounds, which can be summarised as a lack of commitment to the Defendant’s business activities. The Defendant, through TKB and TKY, have provided a reason, though they were not obliged to do so. This Court, having viewed all the circumstances herein, is of the considered view that it should not interfere with that decision.

In Re Smith & Fawcett Ltd [1942] 1 All E.R 542, Lord Greene M.R held that: - “..The principles to be applied in cases where the articles of association of a company confer a discretion on directors with regard to the acceptance of transfer of shares are, for the present purposes, free from doubt. They must exercise their discretion bona fide in what they consider – not what a court may consider – to be in the interests of the company, and not for any collateral purpose…”

Finally, this Court finds no evidence of mala fides on the part of the Defendant’s board in refusing to register the transfer. As established by the Supreme Court in Kuality Textiles (M) Sdn Bhd v Arunachalam & Ors [1990] 3 MLJ 361, a mere refusal to register shares, without more, is insufficient to sustain allegations of mala fides. The Plaintiffs’ assertions in paragraphs 13 and 14 of Enclosure 2 are therefore unsustainable.

Based on the above, the Originating Summons in Enclosure 1 is dismissed with costs of RM5,000.00 subject to allocatur. Dated 30th April 2026 ISA AZIZ IBRAHIM JUDICIAL COMMISIONER HIGH COURT OF MALAYA