Dato' Chang Jong Yu v 1. ) Kuala Ibai Development Sdn Bhd (BA-24NCvC-905-08/2021)

KUALA IBAI DEVELOPMENT SDN BHD [Company No.: 282366-H]

DATO’ SERI YONG TU SANG [NRIC No.: 461125-10-5829]

YONG EVA [NRIC No.: 790519-10-5706] … DEFENDANTS GROUNDS OF JUDGEMENT

The Plaintiff in enclosure 49, the Amended OS, sought declarations that the Notice of the Special Meeting of Shareholders of the 1st Defendant dated 30.07.2021 and the Resolution of the Shareholders of the 1st Defendant approved on 16.08.2021 (the Resolution) are invalid, null and void.

This action was based on the grounds of ultra vires of the Constitution of the 1st Defendant company and/or that it is sub judice and/or that it was an act of interference with the administration of justice or the execution of justice of the court proceedings that had not yet been decided and/or were invalid, null, and void, thus, required that all resolutions and/or decisions pursuant thereto be set aside.

On 31.07.2021, the Plaintiff received an email from the Company Secretary of the 1st Defendant, enclosing a Notice of a Special Meeting of the shareholders scheduled for 16.08.2021, at 11.00 a.m. (Special Meeting). The meeting was to take place via video conference.

Subsequently, through an email dated 05.08.2021, the Plaintiff gave a notice to the Company Secretary of the 1st Defendant to immediately withdraw the said Notice of the Special Meeting of Shareholders of the 1st Defendant together with Appendix A. The grounds for this demand were as follows: a. The said Notice and Appendix A were deemed ultra vires or flawed due to their inconsistency with both the Company's Memorandum and Articles of Association and the provisions of the Companies Act 2016; b. The failure to include the proxy form with the said Notice; c. Despite the High Court in Kuala Lumpur under Originating Summons No: WA-24NCC-488-09/2018 affirming the acknowledgment of debts owed by the 1st Defendant and its Subsidiaries to the Plaintiff and other creditors, Appendix A omitted the said debt; d. The credibility of Appendix A was undermined due to its non-certification by the Company's Auditor; e. There exist contradictions between Appendix A and the Audited Reports of Kuala Ibai Development Sdn Bhd (1st Defendant) and its Subsidiaries; f. The convened meeting appeared to be an effort to evade compliance with the Consent Order dated 14.07.2020, issued pursuant to the Kuala Lumpur High Court Suit No: WA- 24NCC-65-02/2020; g. The meeting's intent was perceived as an abuse of process, evidently designed to impede the outcomes of ongoing legal disputes involving shareholders and various corporate entities; h. In the event that the mentioned Notice of the Special Meeting was not retracted or annulled within 48 hours from the moment of the email transmission, the Plaintiff indicated his intent to pursue appropriate remedies, including the pursuit of an injunction, without any further notice; i. Meanwhile, the Plaintiff underscored the reservation of all its rights.

However, the response received via email from the Company Secretary on 06.08.2021, did not yield the desired outcome.

Subsequently, on 08.08.2021, the Plaintiff filed the Originating Summons herein. However, notwithstanding the Plaintiff’s objection, the 2nd and 3rd Defendants proceeded with the Special Meeting on 16.08.2021 and approved the Resolution.

As a result of the Defendants’ failure, refusal, and defiance to adhere and/or accord plausible explanations to the Plaintiff’s Notice given through the email dated 05.08.2021, the Plaintiff through this action sought appropriate orders and/or remedies to safeguard the interest of the Plaintiff as a minority shareholder and that of the 1st Defendant and its Subsidiaries.

The 1st Defendant is an investment company incorporated in Malaysia under the Companies Act with the following wholly-owned Subsidiaries: - a. Ibai Ria Sdn. Bhd.; b. Ibai Golf & Country Club Bhd.; c. Ibai Leisure Sdn. Bhd.; and d. Ibaimas Sdn. Bhd. (In Liquidation).

The Plaintiff was a director of the 1st Defendant until he was removed on 19.02.2019 vide a resolution passed by the shareholders of the 1st Defendant.

The current Directors and Shareholders of the 1st Defendant are as follows: - No.

Director 2nd Defendant -

Director Yong Hin Siong -

Shareholder 2nd Defendant 34.85 (1,045,000 shares)

Shareholder 3rd Defendant 16.40 (492,500 shares)

Shareholder Plaintiff 48.75 (1,462,500 shares)

Various winding-up petitions were filed by the Plaintiff and his nominee companies against the 1st Defendant and its Subsidiaries (Winding-Up Petitions) for alleged monies due and owing as follows:-

TA-28NCC-53-09/2018 Plaintiff v 1st Defendant CJY-10 of

TA-28NCC-16-03/2019 Iconic Bina Sdn. Bhd. v Ibaimas Sdn. Bhd. of

TA-28NCC-17-03/2019 Sincere Image Sdn. Bhd. v Ibai Ria Sdn. Bhd. of

TA-28NCC-18-03/2019 Laman Kejora v Ibai Golf & of Enclosure 2 Country Club Bhd.

TA-28NCC-19-03/2019 Sincere Image Sdn. Bhd. v Ibai Leisure Sdn. Bhd. of

As of the present date, the Winding-Up Petitions before the Kuala Terengganu High Court were stayed pursuant to consent orders recorded before the Court of Appeal by the relevant parties to stay the entire proceeding of the Winding-Up Petitions pending disposal of a Civil Suit brought forth by the 1st Defendant, its Subsidiaries and its Directors on 21.03.2019, against the Plaintiff and his affiliated nominee companies, inter alia, disputing the debts owed by the 1st Defendant and its Subsidiaries to the Plaintiff and the said creditors. The said suit was filed before the Kuala Lumpur High Court vide Suit No.: WA-22NCVC-166-03/2019 (Suit 166). The Suit 166 was scheduled for continued trial before the Kuala Lumpur High Court in July 2023 and August 2023.

In addition, as a result of the Plaintiff’s suit against the Defendants and Yong Hin Siong, who acted as the Director of the 1st Defendant along with its Subsidiaries before the Kuala Lumpur High Court vide Originating Summons No.: WA-24NCC-65-02/2020 in relation to a resolution passed under a General Meeting held on 03.01.2020, a consent order was recorded between the parties on 14.07.2020 (Consent Order) where, inter alia, the following were duly agreed: “No disposition of the property of the 4th Defendant, 5th Defendant, 6th Defendant, 7th Defendant, and/or 8th Defendant may be made by any of the Defendants whether acting on their own and/or through their officers, servants, employees, agents, nominees or any of them or otherwise howsoever unless such disposition is made with: a) the prior approval of the Plaintiff as a substantial shareholder of the 4th defendant; or b) if the Plaintiff withholds his consent, the prior approval of the Court under section 472 of the

Hence, the Defendants alleged that pursuant to the said Consent Order, the 1st Defendant on 31.07.2021, had issued an email to the Plaintiff enclosing the said Notice of Special Meeting of the shareholders.

The only issue for determination is whether the Notice issued by the 1st Defendant and the Special Meeting convened by the members of the 1st Defendant was valid.

Upon perusal of the cause papers and having carefully considered the written and oral submissions put forth by the Plaintiff and the Defendants, I decided that the Plaintiff’s claim vide enclosure 49, the Amended OS be dismissed. My reasons are stated below.

In a nutshell, the three main points raised by the Plaintiff are: a. that the Resolution should not be passed by the shareholders but was the responsibility of the directors, therefore the Resolution was a nullity; b. the financial statement by the 1st Defendant was unverified, unsubstantiated and therefore the Plaintiff could not make an informed decision and therefore it was tainted with unfairness and prejudicial - equity aids innocence; c. undue preference settlement under the Resolution, as such, section 528 of the Companies Act renders such settlement as void.

The Plaintiff contended that the mentioned Notice of Special Meeting was defective and/or ultra vires because it is contrary to the 1st Defendant's Constitution and/or the Companies Act 2016. The Plaintiff argued as follows.

In Agenda 1, of the Resolution "To record the debts of the Company and subsidiaries as per Appendix A" was deemed ultra vires or defective. The rights and powers to acknowledge the company's indebtedness were asserted to be vested in the company itself as a legal entity, rather than shareholders. It was argued that the company's and shareholders' rights are distinct. Hence, any privity of contract between the 1st Defendant and its creditors has no contractual relationship with the shareholders.

The decisions related to the indebtedness of the 1st Defendant, should be the purview of the Board of Directors, not the shareholders.

The passing of the Resolution by the majority shareholders, the 2nd and 3rd Defendants, during the scheduled Special Meeting on 16.08.2021, was advanced as an attempt to undermine the directors' management control and functions. This was alleged to be in contradiction to the Articles of Association and the Companies Act, an action deemed erroneous, ultra vires, or an abuse of power. In support of his argument, the Plaintiff cited the case of Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Bhd. and another appeal [2017] MLJU 1976.

The 2nd and 3rd Defendants' attempt to gain shareholders’ approval for the alleged disposal of the 1st Defendant's and its Subsidiaries' assets was depicted as a disguised manoeuver with malicious intentions. This purportedly aimed to evade any contemptuous or oppressive actions from the directors due to the Consent Order dated 14.07.2020, recorded under Suit No: WA-24NCC-65-02/2020 in the Kuala Lumpur High Court. This order prohibited asset disposal by the 1st Defendant and its Subsidiaries.

Further, it was argued that Article 44 of the 1st Defendant's Articles of Association stipulated that accounts should be presented for members’ approval only during the Annual General Meeting. Any attempt to approve accounts in other meetings was deemed ultra vires.

The alleged debt of RM8,419,796.08 in the purported Appendix A was challenged due to the absence of the latest audited accounts and the auditor. It was contended that the inability to verify the contents and authenticity of Appendix A could lead to significant harm that cannot be compensated with costs and any damages done are irreversible and would have prejudicial consequences to the Plaintiff.

Furthermore, it was asserted that the auditor of the Company was not given notice to attend the purported Special Meeting, as required by section 285(2) of the Companies Act 2016. This absence of the auditor rendered Appendix A unverifiable and detrimental to the Plaintiff if admitted.

The Plaintiff claimed that section 33(1) of the Companies Act 2016 established that the memorandum and articles bind the company and members in a manner equivalent to individual signatures and seals, obligating each member to uphold all provisions therein.

Due to the absence of Audited Financial Statements for the 1st Defendant and its Subsidiaries from 2015 to 2020, as well as the lack of current Management Accounts for 2021, the Plaintiff argued that the alleged debts in Appendix A, without the requisite financial statements, were unascertainable, unverifiable, and unsupported. It was stated that the Plaintiff's concern was not that Appendix A needed auditing, but rather that it should be substantiated by the company's financial statements for informed shareholder consideration.

As a result, Appendix A was said to be highly inappropriate, suspicious, and unverifiable, gravely prejudicing both the Plaintiff and the 1st Defendant. The 2nd and 3rd Defendants' conduct in convening the Special Meeting and passing the Resolution was asserted to be tainted with ulterior motives, aiming to deprive the Plaintiff of interests and benefits in the companies. This conduct was seen as possibly driven by an intention to dissipate assets prior to the resolution of pending suits and Winding-Up Petitions.

Further, the Plaintiff asserted that Appendix A failed to acknowledge the sum owed by the 1st Defendant and its Subsidiaries to the Plaintiff, despite those amounts being acknowledged and legitimately determined by the BDO Investigative Report dated 29.07.2019. This report, which was verified and endorsed, confirmed a debt of RM13,221,590.13 owed by the 1st Defendant and its Subsidiaries to the Plaintiff and related companies.

Additionally, the Judgment dated 01.03.2019, issued by the Honourable Justice S. Nantha Balan in connection with Originating Summons No: WA-24NCC-483-09/2018 and 14 other Originating Summons, proved that the 1st Defendant and its Subsidiaries had acknowledged their indebtedness to the Plaintiff and the associated companies.

Furthermore, the audit confirmation issued by Messrs Mohamed Asri & Co, acting as auditors for the 1st Defendant and its Subsidiaries during the relevant period, was supported by letters dated 23.08.2018. These letters corroborated the indebtedness of the 1st Defendant and its Subsidiaries to the Plaintiff and related companies.

The Defendants, on the other hand, contended that the present action by the Plaintiff constituted a backdoor attempt to circumvent the Consent Order dated 14.07.2020.

The aforementioned Consent Order had been executed by the Plaintiff, wherein the involved parties mutually agreed that no disposition of assets belonging to the 1st Defendant and its Subsidiaries would be executed without prior consent from the Plaintiff or permission from the Court, as stipulated under section 472 of the Companies Act 2016.

The Defendants asserted that the Plaintiff's deliberate absence from the Special Meeting on 16.08.2021, undeniably demonstrates before this Court that the Plaintiff intentionally withheld his consent, thus refraining the Board of Directors of the 1st Defendant from proceeding with the sale of its assets at values deemed suitable and appropriate.

As a result, in adherence to the mentioned Consent Order, the 1st Defendant had the right to:- a. conduct the said Special Meeting as scheduled as per the requirements under the Companies Act 2016; b. upon securing a simple majority from the members of the 1st Defendant, pass the Resolution; and c. seek leave from the Court for approval under section 472 of the Companies Act 2016 to give effect to the said Resolution.

The Defendants informed the Court that the 1st Defendant could not commence the leave proceeding under section 472 of the Companies Act 2016 without obtaining the relevant resolution to the same effect because:- a. the 1st Defendant was subjected to the provisions under the Companies Act 2016 at all material time; b. the Plaintiff was a member of the 1st Defendant, thus, the sole procedure available for the 1st Defendant to secure the Plaintiff’s consent was through a members meeting, as provided under section 311 of the Companies Act 2016; c. in the event the Court granted permission for the 1st Defendant’s leave application, such permission would not be enforceable against the 1st Defendant without the requisite resolution in place for the following reasons:- i. the Companies Act 2016 explicitly mandates the necessity of passing a resolution prior to the execution of the resolution by the Board of Directors; and ii. the aforementioned Consent Order did not include any provisions that exempted the requirement for a resolution from the Shareholders or Directors of the 1st Defendant.

Due to that circumstance, on 23.09.2021, the 1st Defendant initiated an Originating Summons, No.: WA-24NCC-418-09/2019, in the High Court at Kuala Lumpur to seek the Court's leave in line with the Consent Order and/or under section 472 of the Companies Act 2016 for the disposal of the 1st Defendant's assets (Leave OS).

However, on 29.12.2021, the said Leave OS was dismissed by the High Court following the objection raised by the Plaintiff, primarily based on the grounds that the Leave OS was premature, presented duplicity of action, or amounted to an abuse of the Court process, considering that the ongoing proceeding herein was yet to be determined by this Court.

The Defendants asserted that, in light of the Plaintiff's actions concerning the mentioned Special Meeting and under the said Leave OS, it is evident that: a. The Plaintiff entered into the terms stated in the Consent Order with malevolent intent, seeking to safeguard the interests of the Plaintiff and his nominee companies, consistently prioritizing these interests without duly considering the best interests of the 1st Defendant and its Subsidiaries. b. The Plaintiff conveniently abstained from participating in the aforementioned Special Meeting and subsequently initiated this legal proceeding, seemingly aimed to hinder the 1st Defendant from conducting the said Special Meeting, to give effect to Term 1 of the said Consent Order. c. If the Plaintiff contended that the said Special Meeting was not the appropriate avenue to secure his approval in relation to the proposed agenda, the Plaintiff's failure to propose an alternative course of action proved that the Plaintiff was raising an afterthought objection against the Special Meeting and was merely obstructing the 1st Defendant from resolving its financial challenges at all costs. d. The Plaintiff deliberately frustrated the 1st Defendant’s right under Term 2 of the said Consent Order even though the High Court would assess the validity of the Resolution pursuant to the justification put forth by the 1st Defendant before granting the leave under section 472 of the Companies Act 2016.

Consequently, the Defendants argued that the Plaintiff was merely employing the aforementioned Consent Order as a backdoor strategy to obstruct the 1st Defendant and its Subsidiaries from exercising the rights granted under the said Consent Order. This manoeuvre was alleged to have adverse effects on the overall well-being of the 1st Defendant and its Subsidiaries.

In light of this, it is incumbent upon this Court to dismiss the current proceeding in limine, given that it clearly embodies an abuse of the court process.

The Defendants further argued that the Plaintiff's argument regarding the alleged lack of justification for Appendix A attached to the said Notice was deemed unmerited. The Defendants stated that, according to the law, the Plaintiff, in his capacity as a member of the 1st Defendant, was not entitled to the requested documents.

As stated in Article 97 of the 1st Defendant's constitution, the directors possess the discretion to determine which accounting and other records may be accessible to the members. Members are not granted the right to inspect accounting books or operational records unless provided by statute or authorised by the directors or the company in a general meeting.

The Defendants claimed that according to the Companies Act 2016, the shareholders possess limited rights to access a company's records, in line with the principle that the company's business and affairs are managed by or under the direction of the Board. The Board holds the necessary powers for managing, directing, and supervising the company's operations. A shareholder's access to the company's documents was primarily confined to the statutory registers of the company.

Based on the aforementioned provisions, the Defendants asserted that the Plaintiff, as a shareholder, had limited access to the documents of the 1st Defendant. The Plaintiff's position as a director of the 1st Defendant was terminated only on 19.02.2019. Hence, the Plaintiff's claim that the 1st Defendant neglected to provide financial statements and reports dating back to 2015 was a biased assertion, given that the Plaintiff, who had served as a director and had carried out the role of Managing Director until 19.02.2019, failed to comply with the statutory requirement. The Plaintiff has conveniently shifted blame onto the current directors of the 1st Defendant, with the intent of depicting the Defendants negatively and suggesting a malicious motive.

The Defendants argued that the Investigative BDO report, while not a conclusive report prepared by the 1st Defendant's auditor, had been conducted by an independent auditor appointed by the Plaintiff. This report's verification is still pending before the Kuala Lumpur High Court under Suit 166.

Additionally, the Defendants emphasised that the Judgment by Honourable Justice S. Nantha Balan, pertaining to Originating Summons No.: WA-24NCC-483-09/208, solely concerned the Fortuna Injunction initiated by the 1st Defendant and its Subsidiaries against the Plaintiff and his nominee companies. This judgment was not a final determination regarding the alleged outstanding sum owed to the Plaintiff and his nominee companies, especially considering that the Winding-Up Petitions were on hold and awaiting a decision from the Kuala Terengganu High Court. Moreover, the Defendants pointed out that subsequent evidence had emerged after Justice Nantha Balan's remarks, which might have influenced a different perspective.

Furthermore, the Defendants highlighted that the letters issued by the 1st Defendant's auditors did not carry conclusive weight, particularly as the audit reports prepared by Messrs Mohamed Asri & Co were undergoing validation as part of Suit 166.

In conclusion, the Defendants contended that no definitive evidence had emerged between the parties concerning the alleged outstanding sum owed by the 1st Defendant to the Plaintiff and his nominee companies. This was due to every document presented by the Plaintiff and his nominee companies being subject to evaluation under Suit 166.

Hence, the Defendants asserted that Appendix A of the mentioned Notice did not cause any detrimental impact on the Plaintiff. Conversely, the list of liabilities of the 1st Defendant included in Appendix A was beyond dispute, and the act of asset disposition to address these liabilities was a tangible reality.

As mentioned above, the only issue this Court had to determine was whether the Notice issued by the 1st Defendant and the Special Meeting convened by the members of the 1st Defendant was valid.

Sections 310 and 311 of the Companies Act 2016, empower the members to convene meetings. The respective sections read as follows: “Section 310: Power to convene meetings of members A meeting of members may be convened by-

the Board; or

any member holding at least ten per centum of the issued share capital of a company or a lower percentage as specified in the constitution or if the company has no share capital, by at least five per centum in the number of the members. Section 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 is intended to be moved at the meeting; and

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.

Notwithstanding subsection (3), in the case of a private company, members representing at least five per centum of the paid up capital of the company carrying the right of voting at meeting of members of the company may require a meeting of members to be convened if more than twelve months has elapsed since the end of the last meeting of members convened pursuant to a requisition under this section and the proposed resolution is not defamatory, vexatious or frivolous.

A resolution may properly be moved at a meeting unless the resolution-

if passed, would be ineffective whether by reason of inconsistency with any written law or the constitution;

is defamatory of any person;

is frivolous or vexatious; or

if passed, would not be in the best interest of the company.

For the purposes of subsections (3) and (4), the right of voting shall be determined at the date the requisition is deposited with the company.”

It is noted that before the Special Meeting of the shareholders of the 1st Defendant was held on 16.08.2021 at 11.00 a.m., the 1st Defendant held the Board of Directors Meeting at 10.30 a.m. to record the debts of the 1st Defendant and its Subsidiaries as per Appendix A and further had considered and approved an Ordinary Resolution that the shareholders shall raise capital to settle the debts of the 1st Defendant and its Subsidiaries in proportion to the shareholding within 15 days from the date of the Resolution, failing which the directors are empowered to sell any or all the assets of the 1st Defendant or any of its Subsidiaries at any price acceptable to the directors, for the purpose of settling all or any of the debts of the 1st Defendant and its Subsidiaries.

Thereafter, the Special Meeting of the shareholders was held at 11.00 a.m. on the same day and the said Ordinary Resolution was approved by the majority shareholders who attended the said meeting.

I find that the Board of Directors and members were empowered to convene a meeting with due notice. In this case, the said Notice was served on the Plaintiff and it had complied with the provisions of the Companies Act. The Plaintiff was duly informed about the content of the Notice. Thus, the Special Meeting was rightfully executed in accordance with sections 310 and 311 of the Companies Act 2016, and the passed Resolution held validity. Additionally, the Plaintiff was aware of the meeting being conducted (see: Dato’ Shun Leong Kwong & Anor v Menang Corporation (M) Bhd. & Ors (2021) 7

Thus, the Plaintiff’s contention that the Resolution stating, “To record the debts of the Company and subsidiaries as per Appendix A,” was ultra vires or defective because the indebtedness of the 1st Defendant was not discussed and decided by the Board of Directors, and was only recorded and decided by the shareholders, therefore dispossessing the directors of their management control and functions under the Article of Association and the Companies Act 2016, was untenable.

Further, the members’ meeting was required for the Defendants to take any action concerning the 1st Defendant, failing which the 2nd and 3rd Defendant would be acting in violation of the provisions of the Companies Act 2016.

The Defendants took steps in relation to the Consent Order dated 14.07.2020 to convene the Special Meeting to obtain the Plaintiff’s approval for the proposed agenda, i.e. for the sale of the assets of the 1st Defendant. The Plaintiff had a choice to attend the meeting and record his objections and issues in the said meeting. However, the Plaintiff chose not to attend the said meeting, even though he was aware of the proposed agenda of the Special Meeting, and instead filed the application herein.

Therefore, since the Defendants had not obtained the Plaintiff’s approval, pursuant to the said Consent Order, the Defendants would have to obtain the leave of the court to carry out the said Resolution under section 472 of the Companies Act 2016. Hence, I find that there was no prejudice against the Plaintiff, and it did not amount to interference with the administration of justice as claimed by the Plaintiff because it is within the court’s jurisdiction to decide whether the matters passed in the said Resolution could be carried out. As such, the Plaintiff’s right was still protected, as the Defendants still have to obtain leave of the court pursuant to the Consent Order to enforce the Resolution.

Furthermore, there was no evidence indicating that the Defendants had acted in breach of the aforementioned Consent Order. In fact, the Defendants had diligently adhered to the terms stipulated in the Consent Order by convening the Special Meeting to seek the approval of the Plaintiff and other shareholders.

Therefore, I agree with the Defendants’ assertion that the Special Meeting was conducted in accordance with proper legal procedures and did not impede the administration of justice in the ongoing court actions. This is substantiated by the fact that as of the date of execution of the Consent Order on 14.07.2020, both the Winding Up Petitions and Suit 166 were still pending. The Plaintiff had explicitly consented to the terms outlined in the said Consent Order. It is evident that the intention of the parties in the Consent Order was to safeguard the interests of all parties involved without exhibiting any particular preference towards either party. Consequently, the 1st Defendant, in its efforts to address its financial challenges, undertook actions in accordance with the provisions of the Companies Act 2016. These actions included convening a meeting of the Board of Directors to document the debt and to pass a Resolution for the shareholders to raise capital for settling the 1st Defendant's debts or authorising the Directors to sell the assets of the 1st Defendant for debt settlement, culminating in the subsequent convening of a Special Meeting to obtain approval from the Plaintiff and other shareholders for the proposed Resolution, all of which align with the terms delineated in the Consent Order. In my assessment, these actions did not constitute interference with the administration of justice in the ongoing court proceedings, as they did not circumvent any of the pending lawsuits.

Taking into consideration that the Consent Order was entered into subsequent to the initiation of all pending legal suits, it becomes apparent that the parties involved had mutually agreed that any disposition of the 1st Defendant’s assets would require prior approval from the Plaintiff. In the event that the Plaintiff withholds consent, it was stipulated that the prior leave of the Court must be sought under section 472 of the Companies Act. Therefore, the question of whether the disposition of the 1st Defendant’s assets approved in the said Resolution should proceed before the conclusion of Suit 166, as well as the issues raised in relation to the purported debt owed by the Defendants to the Plaintiff, are matters to be deliberated upon and decided by the court presiding over the application under section 472 of the said Act pursuant to the justification produced by the 1st Defendant.

It is indisputable that the 1st Defendant was bound by the provisions of the Companies Act 2016. As the Plaintiff was a member of the 1st Defendant, in accordance with section 311 of the said Act, the 1st Defendant was obligated to convene a members' meeting to obtain the Plaintiff's consent prior to the disposition of the 1st Defendant's assets. Therefore, before the 1st Defendant could initiate the leave proceeding under section 472 of the Companies Act 2016, the 1st Defendant needed to secure the necessary resolution to that effect.

If the court had granted the leave application by the 1st Defendant, the same would not have been enforceable against the 1st Defendant without the relevant resolution. This is because the Consent Order did not specify any terms that would exempt the requirement of a resolution from the shareholders or directors of the 1st Defendant. Under the provisions of the Companies Act 2016, it was obligatory for the members of the 1st Defendant to pass the necessary Resolution before the Board of Directors could execute the Resolution.

Therefore, it was evident that to find a solution to its financial constraints, the 1st Defendant had to convene the Special Meeting to pass the said Resolution to comply with the provisions of the Companies Act 2016 and the Consent Order.

In conclusion, my finding was that the Notice issued for the Special Meeting, and the subsequent conduct of the Special Meeting was in compliance with the provisions of the Companies Act 2016 and the terms specified in the Consent Order. Pursuant to section 291 of the Companies Act 2016, the Plaintiff should have raised his objections during the aforementioned Special Meeting conducted on 16.08.2021, a meeting he opted not to attend. The Plaintiff had knowingly relinquished the rights conferred upon him by the Companies Act 2016. Instead, the initiation of this proceeding before this Court appeared to be a strategic move on the part of the Plaintiff to navigate around the terms stipulated in the Consent Order, which could have affected the 1st Defendant's entitlement to seek the Court's leave under section 472 of the Companies Act 2016.

The Plaintiff’s actions also appear to obstruct the 1st Defendant’s rightful ability to sell its assets and address its financial challenges, thereby causing significant harm to the 1st Defendant’s cash flow. This could be seen as an attempt to protect the Plaintiff’s own interests in the Winding Up Petitions against the 1st Defendant and its Subsidiaries, despite the Plaintiff having previously granted relevant rights to the 1st Defendant as outlined in the Consent Order.

Further, in general, the Court tends to refrain from intervening in a company’s management, particularly in cases like this one, where the parties have previously reached an agreement through the Consent Order, and the actions taken by the Defendants align with the provisions of the Consent Order. Therefore, any decision regarding the disposal of the 1st Defendant’s assets, when the Plaintiff has withheld his consent, must be made by the court in accordance with section 472 of the Companies Act 2016. It is not within the purview of this Court to interfere in such matters.

Therefore, for the reasons stated above, I ordered that the Plaintiff’s claim in enclosures 20 and 49 be dismissed with costs of RM10,000.00. Dated: 12 September 2023 -sgd-JAMHIRAH ALI JUDICIAL COMMISSIONER High Court of Malaya at Shah Alam (NCVC 1) To the parties’ solicitors: For the Plaintiff : Dato’ K Ganesan a/l Karuppannan & Luqman Zainal (Messrs Ganesan & Irmohizam) For the 1st Defendant : R. Thayalan Retanavalu (Messrs R Thayalan & Co.) For the 2nd & 3rd Defendants: R. Thayalan Retanavalu (mention on behalf of