Chun Yoon Kong v Jin Xuan Holdings Sdn Bhd (WA-28NCC-433-04/2025)

JIN XUAN HOLDINGS SDN BHD

YAP MUN FOONG

YAP VOON KIUN (NRIC NO: 731116-10-5277) …RESPONDENTS

The Respondents are brothers, Yap Mun Foong (“Desmond”) and Yap Voon Kiun (“Jacky”). The Petitioner, Chun Yoon Kong (“Ricky”), was a longtime friend of Desmond’s. Ricky, Jacky and Desmond each hold 1/3 of the issued and paid-up share capital of Jin Xuan Holdings Sdn Bhd (“JX Holdings”). Until the events that led to this Petition, the 3 of them also constituted the Board of Directors of JX Holdings.

Ricky has petitioned to wind up JX Holdings pursuant to sections 465(1)(f), (h) and (k) of the Companies Act 2016 (“CA”). He contends that the company should be wound up because: a) Desmond and Jacky have acted in their own interests as directors rather than the interests of members as a whole; S/N ALdvJRaigkaVASpd3R/jg b) It is just and equitable to wind up JX Holdings because Desmond and Jacky have, among other complaints, excluded him from management; and c) JX Holdings is being used for unlawful purposes.

The relationship between Ricky on the one part, and Desmond and Jacky on the other, has broken down, and Desmond and Jacky have removed Ricky as a director on 25-3-2025. There is separate litigation pending in Suit No: WA-23NCVC-27-04/2025 commenced by JX Holdings against Ricky (“Suit 27”). Background facts

JX Holdings is a holding company for a chain of “Dim Sum” restaurants. It has 12 subsidiaries incorporated between 18-1- 2010 and 23-3-2021, comprising 1 central kitchen and 11 separate corporate entities operating 11 different “Dim Sum” restaurants located around the Klang Valley (“JX Group”). Jacky still holds a single share in 2 of the restaurant entities in the JX Group. The subsidiaries are otherwise wholly owned by JX Holdings.

JX Holdings was incorporated on 10-3-2008 with 4 equal shareholders who also occupied a board seat each, namely Ricky, Desmond, Jacky and Lai Pin Seong (“Lai”), an uncle of Desmond’s on his wife’s side. The first 7 or so companies in the JX Group were set up with Lai as an equal shareholder and director. On 9-10- 2012, Lai exited the business and sold his shares in equal parts to the other shareholders.

Ricky traced the origin of JX Group back to when Jacky started Kedai Kopi Kam Hin, selling Dim Sum at a rented shoplot at Kuchai Lama. Back then, Ricky was running his own unrelated business. He had invested RM14,000.00 in Jacky’s business and would help Jacky at the shop during weekends. On 6-7-2000, Kedai Kopi Kam Hin was registered as a partnership with Ricky and Jacky as partners.

Kedai Kopi Kam Hin evolved into Restoran Kam Hin. That was also registered as a partnership between Ricky and Jacky on 24-11-

On 4-5-2010, it was incorporated as Restoran Jin Xuan Hong Kong (Kuchai Lama) Sdn Bhd with a 20:80 share between Ricky and Jacky (“Restoran Kuchai Lama”). It was named like a branch of JX Holdings, but in fact, Restoran Kuchai Lama is owned only by Jacky (80%) and Ricky (20%).

Desmond and Lai were never directors or shareholders in Restoran Kuchai Lama, unlike the subsidiaries of JX Holdings in the JX Group. There are separate issues between Jacky and Ricky in Restoran Kuchai Lama that this Court did not allow to be introduced as amendments to the Petition since it is a separate entity and not a subsidiary of JX Holdings. S/N ALdvJRaigkaVASpd3R/jg Breakdown in the relationship

The strain between the parties appears to have been triggered by events during and after the Covid-19 pandemic. Ricky claims there was a quarrel because he stood up for staff welfare against Desmond, for which Desmond later apologised. The narrative put forward by Desmond and Jacky is that: a) Ricky failed in his task of enrolling the Jin Xuan restaurants onto the Grab platform, quarreled with and was slighted by Desmond, who took over the task. Then Ricky distanced himself in April 2020 and allegedly terminated the Grab enrollment on 2-6-2021 (“Grab Incident”). According to them, Jacky smoothed things over between Ricky and Desmond by acquiring a new Porsche for Ricky’s use. b) Ricky committed to establishing a new restaurant branch at Bandar Razak City Residences in mid-July 2023 and was embarrassed when Desmond messaged the developer to explain that JX Holdings would not proceed (“Bandar Razak City Incident”). Ricky then “went missing” from December 2023 and failed to turn up for weekly meetings or approve cheque payments. In another attempt to smooth things over, JX Holdings purchased a new BMW 750 E XDrive to replace the directors’ older vehicles. c) Ricky continued to stay away from December 2023 until October/November 2024 when Jacky issued a notice on 20- 9-2024 requiring the attendance of all directors, branch heads S/N ALdvJRaigkaVASpd3R/jg and head chefs (“Alleged Period of Disengagement”). Sometime during this period, Jacky took over Ricky’s role of overseeing the accounts and finance department, which had been run by a team of personnel headed by Sylvia Ng, Head of Finance.

Ricky claims that he was deliberately sidelined by Desmond and Jacky and excluded from matters like renovation of new outlets, setting up of new accounting systems, day-to-day administration, banking and general management. According to him, Sylvia Ng was instructed by Desmond and Jacky to limit his access to cheques on a “need to know and use basis.”

As pleaded, however, Ricky’s specific complaints are as follows:

Exclusion from management (I) Appointment of Messrs Keay & Co without approval by resolution; undertaking transactions that Ricky was not privy to, which included the aborted sale and purchase of 3 units of 3-storey shoplots at Taman Gohtong Jaya by Jacky for RM11.6 million in 2024;

Exclusion from management (II)

Appointing themselves respectively, as CEO and COO of JX Holdings at an EGM convened on 10-12-2024 and publishing the organization chart with Desmond and S/N ALdvJRaigkaVASpd3R/jg Jacky’s said designation, and the exclusion of Ricky, at the business premises of JX Holdings;

(ii) Calling off a directors’ meeting initially scheduled for 14- 1-2025 in which their salaries would be revised (later ascertained to be RM25,000 and RM20,000 respectively), and Ricky was to be designated as non-executive director; and

(iii) Appointing a new company secretary and convening a directors meeting on 21-2-2025 to approve the changes, and re-designate at the board level, Desmond and Jacky as CEO and COO of JX Holdings respectively, and Ricky as Non-Executive Director.

Exclusion from management (III) Removing Ricky as director at an EGM convened on 25-3- 2025 and ceasing payment of his salary of RM38,000 per month since April 2025 (but not his incentive allowance of RM13,200 per month), terminating his golf membership, and are suing him in Suit 27 for the return of the company cars.

Unauthorised non-trade and inter-co transactions Approval of the audited financial statements of JX Holdings and its subsidiaries for the financial year 2023, despite what is alleged to be unauthorised inter-company transactions recorded in the books, and denial of full access to the S/N ALdvJRaigkaVASpd3R/jg accounting records of JX Holdings after requests were made in January 2025.

Ricky has also alleged that the EGMs on 10-12-2024 and 25-3- 2025 and/or resolutions passed are invalid, inter alia, because: a) the company in general meeting has no power to appoint the CEO and COO; b) both EGMs were neither convened by a directors’ resolution nor a shareholder requisition; and c) a purported directors’ circular resolution dated 28-2-2025 (first surfacing on 4-8-2025) to approve the convening of the EGM as requisition by Jacky was fraudulently created after the fact.

Various other issues were raised in the amended Petition by Ricky relating to: a) Ricky’s claim for full payment of his directors’ advance of RM1,189,636.00, and rejecting the validity of a tri-partite agreement for a monthly repayment of RM10,000.00 due to his ouster from management; b) Ricky’s claim for RM9,203.00 as a debt owed by Restaurant Jin Xuan Hong Kong (Uptown) Sdn Bhd; and c) Ricky’s rejection of a claim of RM53,762.65 attributed to him for a payment to Affin Investment Bank Berhad.

Separately, Ricky also complained that JX Holdings had practised a deception on Bank Negara Malaysia (“BNM”) and Malayan Banking Berhad (“MBB”) and committed a fraud on the public administration of Malaysia by procuring a loan of RM914,000.00 from funds intended for small and medium enterprises (“SME Loan”), using Restoran Kuchai Lama as the loan applicant. Analysis and findings I. Unlawful purpose

It is convenient to deal first with the more contained allegation of illegality, pleaded as a basis for winding up under section 465(1)(k) of the CA, which allows the Court to order a winding up if: “(k) the company is being used for unlawful purposes or any purpose prejudicial to or incompatible with peace, welfare, security, public interest, public order, good order or morality in Malaysia”

According to Ricky, JX Holdings had practised a deception on BNM and MBB and committed a fraud on the public administration of Malaysia because: a) The SME Loan was made available under a scheme to assist SMEs and households to mitigate the effects of the Covid-19 pandemic; S/N ALdvJRaigkaVASpd3R/jg b) JX Holdings and the JX Central Kitchen did not qualify for the loan; and c) Unbeknown to Ricky, Jacky had caused Restoran Kuchai Lama to, in turn, lend part of the SME Loan to JX Holdings and the JX Central Kitchen, as recorded in the accounting records.

On this point, it is instructive to refer to the Federal Court decision in Tan Keen Keong v. Tan Eng Hong Paper & Stationery Sdn Bhd & Ors And Other Appeals [2021] 2 CLJ 318 (“Tan Keen Keong”), where the Court considered the winding up of solvent companies under the “just and equitable” ground due to the presence of illegality or contraventions of law, in circumstances where the fact and persistence of the alleged contraventions were more apparent than it is here.

In overturning the High Court and Court of Appeal decisions that ordered and affirmed the winding up, the Federal Court in Tan Keen Keong cited Lord Toulson in Patel v. Mirza [2017] 1 All ER 191, SC, who in turn had cited Lord Wright in Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277 on “the dangers of overkill” when disobedience to a statute is only a rule of public policy and Devlin J in St John Shipping Corporation v. Joseph Rank Ltd [1956] 3 All ER 683 who questioned “whether public policy is well served by driving from the seat of judgment everyone who has been guilty of a minor transgression.”

In the context of Tan Keen Keong, the Federal Court issued a reminder that in deciding private disputes including petitions to wind up a company by one of its shareholders, the court should not conflate the supposed wrong-doings of its directors with those of the company. The relevant considerations, according to the Federal Court, are: a) The nexus between the alleged illegality or contravention to the company’s business activities or the purpose for which it was incorporated (and not e.g. to the personal misconduct of its directors); b) The alleged illegality or contravention must be examined against the specific intent of the law involved, i.e. not every statutory violation automatically justifies winding up; and c) The proportionality of winding up as a remedy and whether the cessation of the illegality can only be achieved through dissolution of the company.

In the final analysis, the Federal Court held as follows in Tan Keen Keong: “[86] On the facts in these appeals, none of the companies were formed with illicit purpose or intent of circumventing any law, be it the Companies Act 1965, Income Tax Act 1967 or the Penal Code. Furthermore, it was not the suggestion of the petitioner or the families that he fronted, and it would be highly improper to attempt to change his stance midstream to claim otherwise just because the S/N ALdvJRaigkaVASpd3R/jg learned judge had found the alleged contraventions to be matters of concern that His Lordship could not ignore. The object and activities of the TEH Paper and TEH Holdings and even PCSB are not in question or under scrutiny; and this is materially different from the position in Foo Jong Wee & Ors v. Hj Afifi Hj Hassan, In re London and County Coal Company and Re Thomas Edward Brinsmead & Sons Ltd. This important point appears to have escaped the attention of the learned judge and the Court of Appeal which affirmed the decision on appeal. Where companies are fraudulently established and are themselves engines of fraud, their continued existence must be immediately apprehended. Winding-up, though draconian, is necessary in order to put an end to that unlawfulness. And, it is in that sense that the court will not hesitate to act. [87] In the context of these appeals, three statutes were identified by the learned judge, namely Companies Act 1965, Income Tax Act 1967 and the Penal Code to have been violated. Each of these must be examined against their specific intent and in the context of s. 218(1)(i); and against s. 218(1) itself. While the learned judge cited the relevant provisions, His Lordship did not ask himself the necessary question of intent and sufficiency of nexus or what we had earlier referred to as the trio considerations.” [Emphasis added]

In this case, the SME Loan was secured on 3-4-2020, and it was extended to JX Holdings as a back-to-back loan. JX Holdings has been repaying that loan to Restoran Kuchai Lama, who in turn has been using the repayments to settle the repayments due to MBB. S/N ALdvJRaigkaVASpd3R/jg These loans have been reflected in the audited financial statements since the financial year 2020 for both companies.

On the evidence, this Court considers Ricky’s participation in the securing and use of the SME Loan as a director of Restoran Kuchai Lama, the unspecified terms and conditions of the SME Loan by MBB and the intent of the parties or commercial imperatives at the material time to be pertinent questions. Setting that aside for the moment, this Court finds that the extension of the SME Loan to JX Holding is a private arrangement between the 2 companies that is not on its face illegal, nor is the procurement of the SME Loan for that purpose a clear deception of a public authority.

In any case, any impropriety in that whole affair is at most the personal misconduct of the directors. Taking the cue from Tan Keen Keong to avoid the danger of overkill, this Court had no difficulty concluding that receipt of the SME Loan by JX Holdings has no nexus whatsoever to the purpose for which JX Holdings was incorporated and no sufficient nexus to its business activities to warrant the draconian call for its winding up for that reason. It falls far short of constituting a deception or fraud on the public administration of a kind that would render it unlawful or incompatible with the public interest to allow JX Holdings to continue its existence. II. Just and equitable grounds

On the main ground for winding up JX Holdings, the Federal Court in Tan Kee Keong also usefully set out the following reminder: S/N ALdvJRaigkaVASpd3R/jg “[45] The term 'just and equitable' is thus not construed ejusdem generis; instead it should be interpreted as intended, has been and should continue to be, general. How or when it would be just and equitable to wind-up a company is necessarily a fact-sensitive exercise, its parameters and application largely dependent on perspective and context; the breadth of this statutory jurisdiction is actually illustrated through the many case scenarios or context and should never be read down or narrowly. As opined in Chow Kwok Chuen, "Ultimately, whether equity should intervene must necessarily depend on the justice of the case"

To recap, Ricky has pleaded that it is just and equitable to wind up JX Holdings because: a) he has been excluded from management by non-consultation on the appointment of Messrs Keay & Co, his relegation to non-executive status and ultimately, his removal as a director; b) the directors have been engaged in unauthorized non-trade and intercompany transactions; and c) he is owed money by JX Holdings. Quasi partnership

The “just and equitable” ground in the amended Petition was largely argued on partnership principles, relying on the leading cases of Ebrahimi v. Westbourne Galleries Ltd [1973] AC 360 (“Ebrahimi”), Tien Ik Enterprise Sdn Bhd & Ors v Woodsville S/N ALdvJRaigkaVASpd3R/jg Sdn Bhd (“Tien Ik”) [1995] 1 MLJ 769, and Tay Bok Choon v. Tahansan Sdn. Bhd. [1987] 1 MLJ 433.

In Ebrahimi, Lord Wilberforce, at p. 379, pointed out that the words "just and equitable": “... are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act 1965 and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The 'just and equitable' provision does not... entitle one party to disregard to the obligation he assumes by entering a company, nor the Court to dispense him from it. It does, as equity always does, enable the Court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way.” [Emphasis added]

To wind up JX Holdings on partnership principles, Ricky must first demonstrate that it is a quasi-partnership i.e. the shareholders behaved as fiduciaries owing duties of good faith to one another. S/N ALdvJRaigkaVASpd3R/jg As to what a quasi-partnership means in company law, this was also explained in Ebrahimi as follows: “Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be "sleeping" members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members' interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere.” [Emphasis added] See also Tien Ik which clarified that the elements of a quasi-partnership are not prescriptive.

Desmond and Jacky argued that the presence of Lai at the formation of JX Holdings dispelled the suggestion of a quasi-partnership, because Ricky was only friends with Jacky and had no personal connection to Desmond and Lai. They also downplayed S/N ALdvJRaigkaVASpd3R/jg Ricky’s role both financially and operationally in Kedai Kopi Kam Hin and Restoran Kam Hin and did not similarly trace the origin of JX Holdings from there.

As between Ricky and Jacky, they were involved in each other’s business ventures, with Jacky being similarly invested in Ricky’s mobile phone accessories business. Jacky and Ricky were named partners in Kedai Kopi Kam Hin and Restoran Kam Hin, and when Restoran Kuchai Lama was incorporated, they both held shares in a 80:20 proportion, with Jacky in the majority.

Further, it appears that the accounts and finances of Restoran Kuchai Lama were managed by finance and accounts staff at JX Holdings’ office, and that Ricky had been signing off the statutory accounts of Restoran Kuchai Lama since 2008. Based on the General Ledgers, Desmond also occasionally received a salary and bonuses from Restoran Kuchai Lama.

It is common ground that following the success of Restoran Kam Hin, Lai suggested that they set up a business together, riding on Jacky’s skill in making “Hong Kong Bao”. Restoran Kam Hin (which evolved into Restoran Kuchai Lama) was an integral part of the history of the JX Group as Ricky, Jacky and Desmond were connected there. Lai was the catalyst, and all 4 took on the role as promoters at the incorporation of JX Holdings.

Apart from the relationships that were formed, Restoran Kuchai Lama initially supplied “Dim Sum” to the JX Group restaurants before that operation (including recipe development and staff S/N ALdvJRaigkaVASpd3R/jg training) was relocated off-site, and eventually placed under Jin Xuan Food Industry Sdn Bhd (formerly known as Restaurant Jin Xuan Hong Kong (Food Industry) Sdn Bhd) (“JX Central Kitchen”).

To put the timeframe into context, JX Central Kitchen was incorporated on 18-1-2010, along with 3 other restaurant entities in the JX Group. Between 2008 and 2010, JX Holdings was a chain of 4 restaurants and Restoran Kuchai Lama was operating in parallel. In other words, the JX Group restaurant operations were separate but symbiotic with that of Restoran Kuchai Lama.

Against the aforesaid background, this Court considered whether JX Holdings was an association formed or continued on the basis of a personal relationship, involving mutual confidence between Lai, Ricky, Desmond and Jackie based on the totality of the circumstantial evidence placed before this Court for this purpose. In Re: Lim Man Kui Quarry Sdn. Bhd. [2001] MLJU 488, Richard Malanjum, J. held:- “147. As regards the absence in any written form the alleged agreement and understanding it is my view that such fact should not preclude the Court from determining if indeed there is truth in the assertion. The crucial point is the availability of convincing evidence added by the surrounding circumstances so as to justify any finding that there is truth in the assertion that an agreement and understanding existed. It is a question of fact: (see: Loch v John Blackwood Ltd (supra)).”

As explained by the Federal Court in Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corporation (M) Sdn Bhd & Anor [2010] 6 CLJ 721: “[32] And such special relationship between the petitioner and the 2nd respondent entails the application of equitable considerations or constraints as may be derived from the laws of partnership which make it unfair for the 2nd respondent when conducting the affairs of the company to rely on its strict legal powers. Unfairness in this context may be in the form of a breach of the rules or in using the rules in a manner which equity would regard as contrary to good faith as for instance, where ‘the exercise of the power in question would be contrary to what the parties, by words or conduct, have actually ‘agreed’ or ‘exchanged’ (see: O’Neil v Philips (supra)) before or after they have entered into association. [33] Further, it is not ‘necessary that such promises should be independently enforceable as a matter of contract’. (see: O’Neil v Philips (supra)).” [Emphasis added]

In Tay Bok Choon v. Tahansan Sdn. Bhd. [1987] 1 MLJ 433 Lord Templeman sitting on the Privy Council observed: "At the end of the day the judge must decide the petition on the evidence before him. If allegations are made in affidavits by the petitioner and those allegations are credibly denied by the respondent's affidavits, then in the absence of oral evidence or cross-examination, the judge must ignore the disputed allegations. The judge must then decide S/N ALdvJRaigkaVASpd3R/jg the fate of the petition by consideration of the undisputed facts.” Considering all of the above principles, the undisputed facts in this case are as follows:

First, there is no question that each shareholder, including Ricky, invested capital in JX Holdings. The initial shareholder capital of Ricky, Desmond and Jacky in JX Holdings was from the proceeds of the sale of a 3-storey shoplot in Kuchai Lama that they jointly owned. Lai put in cash in equal proportion.

When Lai exited the JX Group in 2012, he sold his shares equally to all 3 of the remaining directors and not just to Desmond, or to Desmond and Jacky. Thus, there is no question that all 3 had ventured capital in equal proportions in the JX. Profits from the business were then reinvested as shareholder capital in equal proportions into new restaurants.

Lai, Ricky, Desmond and Jacky were 4 connected individuals who ventured into business together. Ricky and Jacky were already close, and clearly, Desmond and Ricky also knew each other. As also noted, Ricky and Desmond were also both involved, peripherally or otherwise, in the startup and operations of Restoran Kuchai Lama. It is fair to say that Lai was the catalyst that brought them all together in JX Holdings.

Second, the shares in the (then) 5 revenue-generating subsidiary companies were initially held by Ricky, Desmond, Jacky and Lai S/N ALdvJRaigkaVASpd3R/jg equally. The holding company structure was established in 2010 when their individual shareholdings in the subsidiaries were transferred to JX Holdings without any consideration. As a result, they ceased to hold equity in the operating companies.

It was only in their capacities as directors that each of the 4 could influence decisions about dividends, management or strategic direction at the subsidiary level. In this regard, there is nothing written about how JX Holdings would generate revenue, how the cost of operations would be distributed and what the dividend policy of JX Holdings would be. The promoters carried on with an unwritten understanding of all such management concerns.

Third, the records show that while JX Holdings made modest revenues collecting management fees from its subsidiaries, and sometimes recorded losses, the JX Group as a whole consistently recorded substantial consolidated revenue year on year. Financial Year Revenue Profit/(Loss) 2014 24,369,435 351,053 2015 27,739,538 355,140 2016 36,046,380 803,898 2017 36,997,290 323,696 2018 44,987,190 469,838 2019 35,429,135 383,684 2020 32,994,666 608,256 2021 40,618,285 1,601,880 S/N ALdvJRaigkaVASpd3R/jg 2022 62,930,561 3,998,547 2023 66,923,005 6,683,864 2024 69,814,665 7,415,325

Consolidated retained profits was RM14,210,397.00 as at FY2023 and RM19,830,537 as at FY2024. However, no dividends were ever declared to JX Holdings or by JX Holdings to its individual shareholders. Against these consolidated financial results, it is not obvious to this Court that no dividends were distributed to the ultimate shareholders because of insufficient profits.

As observed by Hoffman LJ in Re Saul D Harrison & Sons plc [1995] 1 BCLC 14 after referring to Re Westbourne Galleries Ltd said; "Thus the personal relationship between a shareholder and those who control the company may entitle him to say that it would in certain circumstances be unfair for them to exercise a power conferred by the articles upon the board or the company in general meeting. I have in the past ventured to borrow from public law the term ‘legitimate expectation’ to describe the correlative ‘right’ in the shareholder to which such a relationship may give rise. It often arises out of a fundamental understanding between the shareholders which formed the basis of their association but was not put into contractual form, such as an assumption that each of the parties who has ventured his capital will also participate in the management of the company and receive the return on his investment in the form of salary rather than dividend. These relationships need not always take the S/N ALdvJRaigkaVASpd3R/jg form of implied agreements with the shareholder concerned; they could enure for the benefit of a third party such as a joint venturer’s widow.” [Emphasis added]

The undisputed facts show that Ricky, Desmond and Jacky were treated with scrupulous equality as working directors, including in the grant of substantial emoluments by JX Holdings, in terms of: a) directors’ salary, bonuses and incentives, each receiving a generous monthly salary and a fixed incentive from each subsidiary; a) employment of spouses, each paid an identical monthly gross salary; and b) identical golf club memberships and perks.

In particular, Ricky, Desmond and Jacky were all sold on the idea of having the JX Group acquire multiple luxury vehicles, not only for themselves as directors, but also for their spouses and adult children. Each family was given 5 equivalent luxury vehicles (top of the range Porsche, BMW/Lexus, Vellfire/Alphards for their exclusive and private use, at the expense of the JX Group.

Desmond and Jacky refuted Ricky’s contention that the profits of the business were distributed to them in the form of directors’ emoluments instead of dividends. They argued that the cars were all recorded in the books of the JX Group as company assets and therefore could not be a substitute for dividends. Be that as it may, these “perks” were unconnected to their individual performance: S/N ALdvJRaigkaVASpd3R/jg a) the directors received 5 luxury vehicles each, allocated to the 3 of them equally in terms of numbers and comparable class; b) Lai also maintained a company car, which he kept and the JX Group continue to pay for after he left; and c) Desmond and Jacky saw fit to placate Ricky’s perceived slighted feelings over the Grab Incident and Bandar Razak City Incident with new luxury cars.

Fourth, expansion of the JX Group was also supported by external financing for which all 3 directors, including Ricky, are and remain jointly and severally liable as guarantors. There is some RM30 million owed to financial institutions for the purchase of the 9 properties belonging to JX Holdings. In other words, there is shared risk.

Fifth, it is common ground that at least since 2010, Ricky, Desmond and Jacky were indeed all working directors in the JX Group, each with distinct delegated areas of responsibility in the business: a) Desmond and Jacky were engaged in kitchen and restaurant operations; and b) Ricky was tasked with overseeing the administration, accounts, and finance department.

Based on their common account, Ricky dealt with bankers and government officers, such as LHDN during audits, DBKL for business licenses and local authorities for other compliance issues, some investments and tenancy issues. Since 2010, they would all S/N ALdvJRaigkaVASpd3R/jg meet weekly to discuss business matters, after which Ricky and Jacky would return to JX Holding’s office to approve payments.

Desmond and Jacky argued that they were simply performing their duties as directors, and that was not proof of a quasi-partnership relationship between them. Jacky also alleged that the Ricky only came into the picture fully in 2010 when he ceased his other business. As noted, the records do show that Ricky (not Desmond) had been signing the Directors’ Reports and Financial Statements of JX Holdings with Jacky since its incorporation in 2008.

Even if, as contended by Jacky and Desmond, Ricky (like Lai) did not participate in management between 2008 and 2010, and that he only signed off on the audited financial statements as a formality, the law recognises that a quasi-partnership relationship may be acquired after the formation of the company. Lord Wilberforce in Ebrahimi specifically refers to an association “formed or continued” on the basis of a personal relationship.

In Strahan v Wilcock [2006] EWCA Civ 13 for example, Strahan joined the company in 1991 and was soon entrusted with day-to-day control of the company’s affairs while Wilcock stepped back into the role of chairman. He was given share options and invested his own money in reliance on the expectation that his employment and shareholding were linked. The court held that indicia of a partnership were present – personal trust, shared management, equity participation and restrictions on share transfer – illustrating that a quasi-partnership can develop even if it did not start that way.

In this case it was also admitted that Desmond and Jacky were not agreeable to Ricky selling his shares to a third party as they considered it a closed-door business. Although there are only the usual Table A restrictions on the transfer of shares in the Articles of Association of JX Holdings, they presented an effective restriction in this case.

Finally, there was no evidence that Ricky, Desmond and Jacky dealt with each other formally in the conduct of the business of the JX Group. There were no board or EGM minutes, resolutions or other written record that showed any pattern of conduct otherwise. On the contrary, the facts betrayed a striking informality in the governance. The handling of the Grab Incident and Bandar Razak City Incident demonstrated that they valued the importance of a harmonious relationship.

Based on the available undisputed evidence, this Court finds that it is sufficient to infer that JX Holdings operated as a quasi-partnership, certainly since 2010. Ricky’s allegation that there was personal trust, shared management, equity participation and restrictions on share transfer, had not been credibly denied.

In what may be a tacit recognition of the above, counsel for Desmond and Jacky argued that the law recognises that legitimate expectations (even if they once existed) can also cease. Per Young J in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd and Others

28 ACSR 688 and cited with approval in Dato' Low Mong S/N ALdvJRaigkaVASpd3R/jg Hua v. Banting Hock Hin Estate Co Sdn Bhd & 8 Ors [2003] CLJU 387.

In this case, Desmond and Jacky attributed the re-metamorphosis of JX Holdings to a company operating strictly according to the Articles of Association and CA to changes in the operations of the business post the Covid-19 pandemic namely: a) enrolment of the restaurants onto the Grab platform in 2020; b) physical improvements and establishment of new restaurant branches in 2021-2024; and c) the transition to online and new accounting and payment systems in 2024. According to Desmond and Jacky, these changes resulted in the JX Group achieving dramatic increases in post-Covid-19 revenues and profits.

The fact pattern in cases where the “re-metamorphosis” of quasi-partnerships into companies managed according to the Articles of Association and company law have been found to include the following: a) In Loh Eng Leong & Ors v Lo Mu Sen & Sons Sdn Bhd & Ors [2000] 5 MLJ 529 (“Loh Eng Leong”), the Court found that at or shortly after its incorporation, the company had re-metamorphosed based on minutes of the meetings of the Board of Director and the EGM of the company that clearly S/N ALdvJRaigkaVASpd3R/jg showed it being managed strictly in accordance with its Article and Memorandum of Association. b) In Re Lo Siong Fong [1994] 2 MLJ 72, the company was in effect a quasi-partnership of 3 families, with the head of the Lo family the only active partner, when it commenced business in

In the 1980s, there was a falling out among the members of the Lo family and while family relationship irretrievably broke down, their shareholding had diluted over time and strangers had come into the company. By 1993 when the petitioner was removed as a director, the quasi-partnership relationship had been altered beyond recognition. c) In Jumabhoy Iqbal (mendakwa sebagai wasi harta pusaka Jumabhoy Ameerali Rajabali) v Trans-Orient (M) Sdn Bhd & Ors [2023] MLJU 1091, the Court found that the changes in the shareholders and the shareholding structure of the subject companies over the years with no objections.

This Court is of the view that neither the operational changes in the business as outlined, nor the dramatically improved fortunes of the JX Group as a result, can be legitimately cited as the cause or effect of any fundamental change in the shareholding and management structure. Ricky, Desmond and Jacky continued to manage the business in the same informal way.

However, their relationship did become strained post-Covid-19, and it was evidently strained by the kind of partnership issues that typically stem from perceived or real inequality in contribution S/N ALdvJRaigkaVASpd3R/jg and/or a general disenchantment with one another over time. Desmond and Jacky clearly thought that Ricky did not deserve equal treatment as them because he was not pulling his weight.

According to the narrative that this Court has accepted in this case, the role designated to Ricky in the quasi-partnership since 2010 was to manage the accounts and finance of the JX Group and handle bankers, government authorities and ad hoc administrative issues. However, the following facts are also not disputed: a) Ricky unilaterally stopped attending regular weekly meetings with the directors, branch managers and head chefs in December 2023 and throughout 2024 until a notice was issued on 20-9-2024 requiring his attendance, after which he attended sporadically until 9-12-2024; b) He had been asked by Jacky to implement changes to the accounts department, but declined to do so, citing sufficiency of the existing Sage UBS system. In his absence, Jacky and Desmond took over, changed the accounting system and embraced online payments; c) He was not oblivious to changes implemented by Jacky in the finance department, but he did not protest, get involved in the new processes, or seek to take charge or resume any responsibilities when he returned to work, and even approved directors’ resolutions on 19-9-2024 that Desmond sign off the 2023 accounts with Jacky, despite having consistently done so in the past.

To argue a re-metamorphosis in JX Holdings, Desmond and Jacky rely on Ng Yat Chi v Max Share Ltd & Anor [2000] 4 HKC 469 (“Ng Yat Chai”), Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 (“Morgan”) and a Canadian decision in Re Jordan and McKenzie (1980) O.J. No. 3812 (“Jordan”). In doing so, they were in effect saying that Ricky had by his own conduct, abandoned or forfeited any entitlement to participate in management by destroying the quasi-partnership.

In Ng Yat Chai, the petitioner had been the managing director of Max Share Ltd, but by June 1991 he had voluntarily stepped back from management, and by early 1992 he had left Hong Kong altogether. The Court of Appeal held that because he had abandoned his role of his own accord, there was no exclusion against his will and no continuing relationship of mutual trust and confidence.

In Morgan, the company ceased to be a quasi-partnership after 1984 because the plaintiff voluntarily surrendered his right to participate in management and accepted a separate business arrangement in its place. He effectively traded away the mutual involvement and trust that had previously characterised the relationship between the shareholders.

Jordan is considered elsewhere in this Judgment. For present purposes, it suffices to say that the facts in cases where the re-metamorphosis of quasi-partnerships are found are distinguished by one important fact that the change in the relationship between the parties was profound e.g. change of shareholding structure, S/N ALdvJRaigkaVASpd3R/jg resignation or death. The word “metamorphosis” is used to connote a complete and permanent transformation.

In this case, Ricky joined Jacky on a chef’s tour in China in April 2024 and continued to execute some functions like opening bank accounts and signing loan documents for a new restaurant, and attended to the statutory audit for FY2023 as required throughout

As also noted, he was also performing miscellaneous tasks relating to tenancies. Ricky did not abandon his role altogether. This case does not fit the fact pattern of a re-metamorphosis of JX Holdings to a company governed strictly by the Articles of Association and the CA over the course of events in 2024. Grounds for winding up

As headlined, the specific complaints advanced by Ricky as just and equitable grounds for the winding up of JX Holdings, converge with no significant distinction on the facts, from those that are alleged against Desmond and Jacky for acting in the affairs of the company in their own interest or in a manner unfair or unjust to members. For this reason, where the complaints relate to sections 465(1)(f) or (h) of the CA, they are dealt with together here.

The complaints are the appointment of Keay & Co to advise the majority directors on several matters, one of which related to concerns about information received from a supplier about Ricky’s dealings with them, insinuations connected to alleged unauthorised non-trade and intercompany transactions in the S/N ALdvJRaigkaVASpd3R/jg books, and debt claims arising from historical ledgers of the directors’ accounts with JX Holdings.

In respect of the engagement of Messrs Keay & Co, Ricky first raised a query on 10-1-2025 regarding 3 invoices for their retainer for the period 23-9-2024 to 22-10-2024, 23-10-2024 to 22-11-2024 and 23-11-2024 to 22-12-2024 amounting to RM19,000.00 each. The crux of his complaint is that he was not consulted on the appointment, or given full disclosure or access to what they were engaged to assist with as the description of work done was not detailed in the invoices.

As it transpired, Desmond and Jackie had proceeded with the appointment without Ricky’s approval in circumstances where legal advice had been sought: a) in connection with Ricky’s possible misconduct and/or misfeasance affecting the company after concerns were raised about Ricky’s relationship with Optimum Distribution Sdn Bhd, a supplier of JX Holdings. As an adverse party in relation to JX Holdings in that scenario, the majority on the Board was entitled to claim privilege on behalf of JX Holdings at the time; b) on a potential purchase of the Gohtong Jaya shoplots as property investments for JX Holdings, where Desmond and Jacky do not deny that they did not consult Ricky on this potential purchase, but say that it would have been disclosed in due course if the purchase had proceeded because S/N ALdvJRaigkaVASpd3R/jg financing the purchase would involve Ricky. In fact, the purchase did not proceed and the deposit paid was refunded.

This Court did not find anything sinister or unusual about the engagement of Messrs Keay & Co. Their retainer was not concealed as Ricky had access to their invoices and approved payment. A monthly retainer typically means the lawyers are on hand to advise on legal matters as they arise from time to time. Ricky had also independently engaged solicitors for JX Holdings before.

As for the alleged unauthorized transactions in the books, there was insufficient proof that there were genuine problems with the companies’ accounts, particularly since they were not off-books transactions. The books were audited by external auditors and accounts were regularly signed off with Ricky’s approval. In fact, such accounting concerns were within the Ricky’s domain of responsibility all along.

In Re Senson Auto Supplies Sdn Bhd [1988] 1 MLJ 326 Edgar Joseph Jr (as he then was) observed: “Secondly, I noted that the major matters complained about by the petitioners appear to have been spread out over a considerable period of time. It is settled law that delay by petitioners in initiating proceedings after they have realised that they have been victims of a scheme of oppression will induce the court to refuse relief, since this indicates that they have acquiesced in the conduct complained about and their complaints are not therefore made in good faith S/N ALdvJRaigkaVASpd3R/jg (see Re Jermyn Street Turkish Baths Ltd [1971] 3 All ER 184).”

Ironically, Ricky questioned the absence of formal resolutions for the business of the companies while at the same time, arguing that JX Holdings operated on mutual trust and confidence as a quasi-partnership. Taking the Bandar Razak City Incident, Ricky similarly acted in a unilateral fashion, only for consultation to take place later and the matter resolved by consensus.

In short, the complaints highlighted above do not rise to the level of inequity required for a winding up on just and equitable grounds. They appear trivial, and the result of a concerted fault-finding exercise by Ricky. It is noted that various past events were articulated as issues for the first time in correspondences issued with the assistance of solicitors from January 2025 when these were not raised before. Unclean hands

The only grounds that have some legs for a just and equitable winding up on partnership principles are a) the creation of inequality between the 3 with Ricky’s removal from active management, redesignation as a non-executive director in December 2024 and revision of directors’ remuneration; and b) Ricky’s removal as a director 3 months later.

This Court agrees that Ricky’s effective removal from management deprived him of the benefits of his shareholding given the history. S/N ALdvJRaigkaVASpd3R/jg In addressing this however, there is one last aspect of this “just and equitable” jurisdiction that this Court must address, and that is the “clean hands doctrine.” The proposition is not controversial and is best articulated by Lord Cross in Ebrahimi: “A petitioner who relies on the 'just and equitable' clause must come to court with clean hands, and if the breakdown in confidence between him and the other parties to the dispute appears to have been due to his misconduct he cannot insist on the company being wound up if they wish it to continue.”

In considering the drastic remedy of winding up a profitable and solvent company where the underlying conflict is purely a personal spat between shareholders, as it is in this case, this Court takes guidance from the Court of Appeal in Yai Yen Hon & Ors v Lim Mong Sam @ Lim Ah Tee [1997] 2 MLJ 190 (“Yai Yen Hon”). On the facts of the case, the Court of Appeal found against the petitioner on the 2 principal issues of quasi-partnership and exclusion from management, but added: “If we are wrong in our primary opinion, we are of the view that there is ample evidence on the record for us to find that it is not just and equitable to wind-up the company for the reasons which were stated in para. 18(a) to (d) of the written submissions of Wong Kim Fatt to the learned Judge, who had not considered them adequately. In our opinion, whether to wind-up a company on the just and equitable rule is a matter of judicial discretion to be exercised on what is just and equitable, having regard to the circumstances of the case and the interest of all S/N ALdvJRaigkaVASpd3R/jg the shareholders (including the petitioner) and the company. It must be remembered that a petitioner who comes to Court to wind-up a company on the just and equitable rule must always come with clean hands.” [Emphasis added]

The Court held that it was not just and equitable to wind up the company in Yai Yen Hon considering that the other shareholders opposed the winding up, no creditors supported it and the company was profitable and successful, with no mismanagement alleged. The Court also considered the allegations against the petitioner, his suppression of material evidence about his role in management and the unsuccessful negotiations to sell his shares.

In Eng Man Hin @ Ng Mun Heng & Anor v King’s Confectionery Sdn Bhd & Ors [2006] 4 MLJ 421, the High Court also dismissed the winding-up petition on the “just and equitable” ground, after finding that the petitioners themselves were the cause of the difficulties: their complaints about staffing and bank signatories were either trivial or attributable to their own obstructive conduct. Although they alleged exclusion from management, the evidence showed they continued to participate in board meetings, receive remuneration, and be consulted on investments.

In Jordan, Boland J refused to order a winding-up because the dispute stemmed from trivial domestic matters and the applicant’s own misconduct. Jordan had overreacted to minor quarrels—most notably walking off the job over a vacuum cleaner dispute just before the busiest weekend—removed himself from the payroll, S/N ALdvJRaigkaVASpd3R/jg demanded an apology before returning, and only sought to resume work weeks later after McKenzie had taken control. The court held that Jordan’s behaviour showed he was largely responsible for the breakdown in relations and, applying the clean hands doctrine, denied him equitable relief.

In this case, the undisputed facts in this case do starkly demonstrate that it was Ricky who stopped attending weekly meetings and attending to regular accounting matters at the office, the role he cites as evidence of a consensus-based governance structure among the 3 shareholder directors. Ricky has provided no good reason to justify why he did this, and quite noticeably stepped back from his management responsibilities for almost a year since December 2023.

It was due to his own apathy that Ricky was unaware of management concerns and the evidence suggests that he did not particularly care that Desmond and Jacky had stepped up to cover his responsibilities. There were no particulars of the allegations that Desmond and Jacky had kept him out of everyday management matters ordinarily within his purview, and as pressed during the hearing of this petition, those were not the premise of his complaint of exclusion from management.

The objective facts demonstrated that Ricky did not register any complaints or objections until Desmond and Jacky decided to formalise the prevailing management structure, which also formally reflected his non-executive role.

Based on precedent founded on sound principles, this Court is of the view that refusal to wind up is justified on the basis of the ‘clean hands’ doctrine, not only in cases of misconduct involving lack of probity, but also where petitioners fail to uphold the equitable foundation that justified their place in management in the first instance.

If a shareholder director ceases to contribute to the equitable bargain by neglecting responsibilities or otherwise undermining the shared expectations of participation, the equitable considerations that protect his role will fall away. Ricky cannot rely on a prior arrangement based upon mutual confidence to found his claim if he has not himself adhered to it.

This Court also took into consideration the following actions by Ricky: a) writing to bankers to announce the shareholder dispute; b) oppressive demands for documents; and c) shifting buy-out proposal and lack of objective valuation.

Following the deterioration of relations between the parties, Ricky took steps to notify certain banks of the existence of the dispute. In particular, he issued communications to JX Holdings’ bankers asserting that there was an ongoing dispute among the shareholders and raising concerns as to the operation of the Company’s bank accounts. These notices were sent unilaterally and without the concurrence of Desmond and Jacky.

This Court finds the action as unjustified and detrimental to JX Holdings’ interests, as there was no proper basis to involve the banks in what was essentially a shareholder dispute, and that the notices were framed in a manner that was calculated to exert pressure and impede the JX Group’s restaurant business, that is by creating uncertainty and risking disruption to its day to day financial operations.

As noted, Ricky’s demand for disclosure of the accounting records of 13 companies in the JX Group was first recorded in formal notices issued in early 2025, and it requested a wide array of financial records within an impossibly short deadline of 3 days over the weekend. This Court finds that the requests were unreasonable and disingenuous considering Ricky’s professed role in overseeing the financial affairs of the JX Group.

The evidence before the Court disclosed that the parties had engaged in a series of discussions concerning a potential buy-out of Ricky’s shares. Desmond and Jacky indicated a willingness to proceed on the basis of a purchase at market value supported by proper valuation, no agreement was reached on the applicable valuation methodology.

On 19-2-2025, Ricky proposed a sale at RM40 million based on a P/E ratio derived from his own materials, without any independent valuation, which was rejected. In early March 2025, Ricky asserted the existence of third-party interest, subsequently identifying Hextar Retail Berhad as a prospective purchaser at RM33 million and offering to sell at that price. Desmond and Jacky declined, S/N ALdvJRaigkaVASpd3R/jg maintaining that they were not prepared to have outsiders in the closed company.

This Court finds that the negotiations foundered over price and credibility of Ricky’s proposals. On 28-3-2025, Ricky reversed course and offered to buy out the other shareholders for RM66 million, an offer Desmond and Jacky rejected on 4-4-2025 on the basis that it was not credible or financeable.

This Court also noted that Ricky took the draconian step of petitioning to wind up a profitable going concern when an alternative remedies like a derivative action or an oppression claim, are available as redress for all of his complaints. His scorched earth approach did not find favour with this Court.

Lastly, this Court will only say something briefly about the procedural irregularities complained of on the convening of meetings in 2025. The only meeting of consequence is the EGM on 25-3-2025 when Ricky was voted out as a director of JX Holdings. The short answer is the curative provision for any defect, irregularity, or deficiency of notice is found in s.582 of the CA. It reads as follows: “(1) No proceeding under this Act shall be invalidated by any defect, irregularity or deficiency of notice or time unless the Court is of the opinion that substantial injustice has been or may be caused which cannot be remedied by any order of the Court.

The Court may, if it thinks fit, make an order declaring that the proceeding is valid notwithstanding any such defect, irregularity or deficiency.”

As Ricky received notice of the EGM and attended to make his representations and voted on the resolutions tabled, it cannot be said that the irregularity in the manner of convening that EGM has caused any substantial injustice. It must be shown that there is a nexus between the procedural irregularity and the prejudice relied upon as constituting injustice and in this case, his removal would still have been effected if the EGM had been convened without any irregularities (Lim Swee Chai v Advancecon Holdings Bhd & Anor [2024] 6 CLJ 902).

This Court finds that Ricky’s removal as a director is valid as a matter of law. Although his expulsion from management offended the partnership principles upon which JX Holdings had been operating for over a dozen years, it did not justify winding up JX Holdings because of Ricky’s own conduct, which this Court does regard as exhibiting ‘unclean hands.’

In practical terms, Ricky remains a minority shareholder, and other more appropriate avenues remain open for Ricky to extract value from his shares if JX Holdings, for whatever reason, persists in not paying out dividends to shareholders. Whether JX Holdings remains a quasi-partnership is for another court to decide.

The petition is dismissed with global costs of RM75,000.00 for the Respondents. Bertarikh: 05 Mei 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Pempetisyen: Joslyne Delano Goonting (Lum May Lan dan Tan Yi Wen bersamanya) JD Goonting with Lum May Lan and Tan Yi Wen Tetuan Yi Wen & Co Untuk Responden: Andrew Chiew Ean Vooi (Jason Koh Wei Siong bersamanya)