Chong Mei Ling & 9 Lg v APFT & 4 Lg (WA-24NCC-540-10/2018)

CHONG MEI LING (NRIC No.: 530424-08-5094)

GOH BOON SOO & GOH YANG ENG (NRIC No.: 400609-04-5157)

ABDULLAH BIN SULAIMAN (NRIC No.: 541104-03-5251)

GAN CHIA WONG (NRIC No.: 761031-01-6811)

GAN CHIA SHONG (NRIC No.: 790517-01-5707)

GAN CHIA HEE (NRIC No.: 801226-01-6153)

LUWEE PEI FERN (NRIC No.: 800617-04-5002)

TAY CHEE HWA (NRIC No.: 770803-14-5707)

NG YOKE SUN (NRIC No.: 700628-10-5316)

NG CHUAN HOO (NRIC No.: 730316-06-5017) … PLAINTIFFS 2

APFT BERHAD (Company No.: 886873-T)

YM TENGKU SHAMSULBHARI BIN TENGKU AZMAN SHAH (NRIC No.: 581202-03-5235)

EDWIN SILVESTER DAS (NRIC No.: 580906-05-5133)

TAN SRI ZAINI BIN OMAR (NRIC No.: 490709-03-5417)

DATUK TAN CHOON HWA (NRIC No.: 571209-03-5845) … DEFENDANTS

This is an Originating Summons filed by 10 shareholders of a public listed company APFT Berhad (“the Company”) holding a total of 15% of the shareholding of the Company pursuant to section 314 of the Companies Act 2016 (“the Act”) for the following orders: a) An order that an Extraordinary General Meeting (“EGM”) of the Company be called by the Plaintiffs in accordance with the Orders herein; 3 b) The Plaintiffs shall cause to be issued within 14 days from the date of this Order a Notice of EGM to all members of the Company for the election of the directors of the Company; c) The Company’s Share Registrar , Shareworks Sdn Bhd and/or the Company Secretary shall within 7 days from the date of this Order supply to the Plaintiffs the Register of Depositories, and provide such assistance as may be required by the Plaintiffs including the posting of notices to the members and the convening of the EGM; d) The conduct of the EGM shall be regulated by the members present and voting at the EGM; e) The costs of calling and holding and conducting the EGM shall be borne by the Company; f) An injunction restraining the current directors of the Company, that is, the 2nd, 3rd, 4th and 5th Defendants, from any acts or commissions that would affect the status quo of 4 the Company pending the EGM as ordered by this Honourable Court; g) The costs of this proceeding to be borne by the Company; h) Such further Order or other relief that this Honourable Court deems fit to grant.

After hearing the parties, I have substantially granted orders in terms of the Originating Summons. These are the full reasons for my decision.

As stated above, the Company is a public listed company. It is listed on the main board of Bursa Malaysia Securities Berhad (“Bursa Malaysia”). The Plaintiffs hold a total of 15% of the shareholding in the Company.

On 31.5.2018, the Company issued a Notice of its 7th Annual General Meeting (“AGM”) to be held on 26.7.2018. There were altogether 9 resolutions to be put to the meeting. 5

Resolutions 1 to 5 were for the re-election of the 5 directors of the Company who retired in accordance with the Articles of Association of the Company and they were: a) Dato’ YTM Dato’ Muhammed Bin Haji Abdullah appointed on 10.4.2018; b) The 2nd Defendant appointed on 21.9.2017; c) Dato’ Sri Ahmad Said Bin Hamdan appointed on 29.12.2017; d) The 3rd Defendant appointed on 2.8.2017; and e) Chow Hung Keey appointed on 2.8.2017.

The AGM was presided by the 3rd Defendant as Chairman who announced that resolutions 1 to 8 will not be put to the vote. Apparently, out of the 5 directors, the 3 gentlemen who were not named as Defendants herein did not wish to seek re-election and the 2nd and 3rd Defendants accordingly remained as directors of the Company.

It was submitted for the Defendants that the 2nd and 3rd Defendants remained as directors of the Company because of the requirement for there being a minimum of 2 directors for a public company pursuant to: 6 a) Section 196 of the Act; b)

It was contended for the Plaintiffs that the members should be entitled to decide who they want to appoint as directors of the Company. Various shareholders including most of the Plaintiffs severally requisitioned for the directors to convene an EGM of the Company to remove the 2nd and 3rd Defendants and to appoint 2 other directors of the Company.

The total shareholding of the shareholders who requisitioned for the EGM was 12.4%.

However, the directors of the Company refused to convene an EGM of the Company to consider the removal of the directors. Instead, the 2nd and 3rd Defendants appointed additional directors of the Company being the 4th and 5th Defendants. 7

The 1st Plaintiff who was not a requisitionist asked for a copy of the record of depositors of the Company pursuant to section 34(5) of the Securities Industry (Central Depositories) Act 1991 (“SICDA”) but was not given a copy of the record of depositors. The Defendants said that this was done pursuant to legal advice due to a pending legal action involving the Company and a third party.

Without the record of depositors, the requisitionists obviously could not proceed to hold an EGM of the Company, in the absence of the directors convening such EGM.

Accordingly, the Plaintiffs filed the Originating Summons in Court pursuant to section 314 of the Act.

Section 314 of the Act provides as follows: “314. Power of Court to order meeting.

This section applies if for any reason it is impracticable – 8

to call for a meeting of members of a company in any manner in which meetings of that company may be called; or

to conduct the meeting in the manner prescribed by the constitution or this Act.

The Court may, either of its own motion or on the application –

of a director of the company;

of a member of the company who would be entitled to vote at the meeting; or

of the personal representative of any such member, Order a meeting to be called, held and conducted in any manner the Court thinks fit.

Were such an order is made, the Court may give such ancillary or consequential direction as the Court thinks expedient.

Such directions may include a direction that one member of the company present in person or by proxy at the meeting be deemed to constitute a quorum.

A meeting called, held and conducted in accordance with an order under this section shall be deemed for all purposes to be a meeting of the company duly called, held and conducted.” 9

In the case of Chong Yen Li v Tan Fee Ling & 2 Ors [2017] 1 LNS 2225 Justice Lau Bee Lan (J) made reference to the case of Low Son Siang @ Loo Soon Siong v Lee Kim Yong [1999] 1 AMR 610 where Abdul Malik Ishak J (as he then was) held: “When confronted with an application made pursuant to s 150 of the Act, the first and foremost question for the court to pose is whether the desired EGM could be conducted. The onus would then be on the plaintiff to show that it was impracticable to call for such a meeting of the company in any manner whatsoever or to conduct such a meeting in accordance with the company’s articles of association.”

The law is also clear that the Plaintiff must exhaust all other avenue before coming to court under section 314 of the Act (in pari materia with section 150 of the Companies Act 1965).

The following passage of the learned judge in Chong Yen Li (supra) is pertinent: “[23]…In fact I find the Plaintiff’s application is premature as it failed to exhaust all avenues as provided for in the EMSB’s Articles of Association ie comply with the requirements of s. 144 CA 1965 for the convening of EGM on 10 requisition by a director and after the resignation of the old company secretary, to appoint a new company secretary in accordance with Article 95 read together with s. 139(3) CA 1965 and thereafter to comply with s. 144 CA 1965 for the convening of EGM on requisition by a director…”

In the case of Chuah Sean Kin & Ors v Persatuan Kenel Anjing Malaysia & Anor [2009] 8 MLJ 453 it was held: “The law is clear that a plaintiff must exhaust all avenues before going to court. The plaintiffs here have at least three other domestic remedies before going to court as provided in the company’s articles of association…the institution of this proceedings by the plaintiffs is therefore premature.”

One issue which has arisen is whether the 2nd and 3rd Defendants validly remained as directors of the Company. It was contended for the Plaintiffs that they are not valid directors. The 2nd and 3rd Defendants say that they are valid directors.

I am of the view that the Defendants are correct on this issue. Section 196(1) of the Act provides that a company shall have a minimum of 2 directors where it is a public company and subsection (3) provides that a director of a company shall not resign or vacate his office if by his resignation or vacation from office, the number of directors of the 11 company is reduced below the minimum number required under subsection (1) and any purported resignation or vacation of office in contravention of this section shall be deemed to be ineffective unless a person is appointed in his place.

Accordingly, when 3 out of the 5 directors did not wish to seek re-election at the AGM of the Company, it is valid and proper that the 2nd and 3rd Defendants being the remaining 2 directors cannot retire or vacate their office. Whether the 2nd and 3rd Defendants still remain as valid directors after having appointed 2 other directors of the Company is another issue but I do not have to decide that issue in these proceedings as all the directors of the Company have been cited as defendants.

It is not in dispute that 14 shareholders had requisitioned vide Notices of Requisition on the same day to the Company to convene an EGM for the purposes of passing the following resolutions: a) That the 2nd Defendant be and is hereby removed as the director of the Company with immediate effect; b) That the 3rd Defendant be and is hereby removed as director of the Company with immediate effect; 12 c) That Loganathan a/l Vadivelu be and is hereby appointed as director of the Company with immediate effect; and d) That Laxmi Devi a/p Murugan be and is hereby appointed as director of the Company with immediate effect.

It is also not in dispute that no EGM was convened despite the notices of requisition and that the 1st Plaintiff was not given the record of depositors when she requested for it. In fact, the Defendants are still refusing to provide the record of depositors in these proceedings on the ground that there is a pending legal action between the Company and a third party without going into detail as to why the record of depositors could not be provided to the shareholders due to that case.

It is to be noted that pursuant to section 34 (5) of the SICDA, any member of an issuer or any other person may require the issuer to furnish him with a copy of the record of depositors, on payment in advance of one ringgit or such lesser sum as the issuer may require, in respect of every hundred words or fractional part thereof required to be copied. Subsection (6) provides that the copy of the record of depositors required under subsection (5) shall be supplied to the person who required such copy within a period of 21 days or within such longer 13 period as the Commission considers reasonable in the circumstances, commencing from the date after the date of receipt of the request by the issuer.

In this case, there is no question of the 1st Plaintiff not being willing to pay for the amount due for the copying of the record of depositors. The directors have refused to supply the Plaintiffs with a copy of the record of depositors.

Section 311(1), (2) and (3) of the Act provide as follows: “311. Power to require directors to convene meetings of members.

The members of a company may require the directors to convene a meeting of members of the company.

A requisition under subsection (1) –

shall be in hard copy or electronic form;

shall state the general nature of the business to be dealt with at the meeting;

may include the text of a resolution that may properly be moved and its intended to be moved at the meeting; and 14

shall be signed or authenticated by the person making the requisition.

The directors shall call for a meeting of members once the company has received requisition to do so from –

members representing at least ten per centum of the paid up capital of the company carrying the right of voting at meetings of members of the company, excluding any paid up capital held as treasury shares; or

in the case of a company not having a share capital, members who represent at least five per centum of the total voting rights of all members having a right of voting at meetings of members. ....”.

Section 312 (1) and (2) of the Act provide as follows: “312. Directors’ duty to call meetings required by members.

In relation to section 311, the directors shall –

call for the meeting within fourteen days from the date of the requisition; and 15

hold the meeting on a date not more than twenty-eight days after the date of the notice to convene the meeting.

If the requests received by the company identify a resolution intended to be moved at the meeting, the notice of the meeting shall include the text of the resolution. ....”.

Section 313 (1) of the Act provides as follows: “313. Power of members to convene meeting of members at comapny’s expense.

If the directors –

are required under section 311 to call a meeting of members; and

do not do so in accordance with section 312, The members who requisitioned the meeting, or any of the members representing more than one half of the total voting rights of all of the members who requisitioned the meeting, may call for a meeting of members. ...”. 16

Article 56 of the AA of the Company provides as follows: “Requisition and requirements of requisition

The Board shall as soon as practicable but in any case not less than two (2) months after receipt by the Company of the requisition call an Extraordinary General Meeting whenever a requisition in writing signed by Members of the Company holding in the aggregate not less than one –tenth (1/10) in amount of the issued capital of the Company upon which all calls or other sums then due shall have been paid and stating fully the objects of the General Meeting shall be deposited at the Office of the Company. Such requisition may consist of several documents in like form each signed by one

or more of the requisitionists.”

Article 57 of the AA of the Company provides as follows: “Notice of Meeting

If the Board does not within twenty –one (21) days from the date of the requisition being so deposited, proceed to convene a General Meeting, the requisitionists or any of them representing more than one half (1/2) of the voting rights of all of them may themselves convene the General Meeting, but 17 the General Meeting so convened shall not be held after three (3) months from the date of such deposit.”

It cannot be disputed that 14 shareholders of the Company altogether holding more than 10% of the total shareholding in the Company had requisitioned for the convening of an EGM of the Company to remove the 2nd and 3rd Defendants as directors and to appoint 2 other persons as directors and that the Defendants had not acted to convene an EGM. It was contended for the Defendants that it was not stated that the shareholders were acting together to requisition an EGM. In my view, that contention is not tenable. The notices were given on the same day and they all sought the same resolutions. The shareholders were obviously acting collectively or in concert. It is acknowledged by the Defendants that a requisition may consist of several documents each signed by one or more requisitionists.

The directors of the Company should have convened the EGM notwithstanding the shareholders were seeking to remove the 2nd and 3rd Defendants as directors. Instead, the Defendants rely on untenable contentions such as only less than 10% of the Plaintiffs had requisitioned for the EGM. It may be that out of the Plaintiffs, less than 10% of them had requisitioned for the EGM but the total shareholding of 18 the shareholders who had requisitioned for the EGM was more than 10% (it is just that not all of the shareholders who had requisitioned for the EGM were plaintiffs in this action). At that time, the directors should have convened the EGM. Instead, not only did the directors refuse to convene the EGM, they did not agree to give the record of depositors to the 1st Plaintiff thereby making it impossible for the requisitionists to convene the EGM. This is a public listed company where the shareholders can only be known from the record of depositors.

Because of the refusal of the directors in convening the EGM and the impossibility on the part of the requisitionists to obtain a copy of the record of depositors without the aid of a court order, I am of the view that it is impracticable for the Plaintiffs to convene the EGM without the assistance of the Court. Accordingly, I grant orders in terms of the prayers sought in the Originating Summons. As regards the injunction to maintain status quo, this will be without prejudice to the day to day operations of the Company and on the basis that no additional directors shall be appointed. There will be no order as to costs. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 12th December 2018 19 Solicitors for the Petitioner Won Walter A/LPP Pereira & Rameswaran A/L Ramachandran Messrs Kamarudin & Partners Advocates & Solicitors 10, 1st Floor, Jalan 30/70A Desa Sri Hartamas 50480 Kuala Lumpur Tel : 03-2300 2325 Fax: 03-2300 2327 Solicitors for the Defendants Dato’ S Arumugam & Khairun Niza Binti Husnin Messrs Aru & Co Advocates & Solicitors Business Suite 19A-13-2, Level 13 UOA Centre, No. 19, Jalan Pinang 50450 Kuala Lumpur