Dato Dr Chang Seng Kooi v Dato Tan Wei Lian (WA-22NCC-11-01/2024)

This is the Defendant’s application in Enclosure 30 for the Court to determine a question of law under Order 14A and/or Order 33 rule 2 of the Rules of Court 2012, namely: Whether, assuming the agreement or undertaking as pleaded by the Plaintiff is proven, such agreement is illegal and unenforceable by reason of sections 175 and 176 of the Capital Markets and Services Act 2007 (“CMSA”).

Having considered the affidavits and submissions filed by both parties, I now set out the reasons for my decision below.

The Plaintiff’s claim is based on an alleged agreement or undertaking whereby, having acquired 50 million TWL Holdings Bhd shares at RM0.065 per share from the Defendant’s nominees at the Defendant’s request, the Defendant agreed to buy back the said shares from the Plaintiff at RM0.08 per share, amounting to RM4,000,000.00, in the event the market price of the shares fell to RM0.065 per share. The Defendant denies entering into any such agreement, denies that the Plaintiff acquired the shares through him or his nominees, and denies any contractual relationship with the Plaintiff.

For the purpose of this application, the Court proceeds on the assumption that the agreement exists as pleaded by the Plaintiff, and must determine, as a matter of law, whether such an agreement, if proven, would be illegal and therefore unenforceable.

The Defendant contends that the alleged “buy-back assurance” contravenes sections 175 and 176 of the CMSA and is further contrary to public policy and the Bursa Malaysia Listing Requirements.

However, the Defendant has not demonstrated with specificity how the elements of these provisions, namely false trading, market rigging, or price manipulation, are satisfied on the face of the pleaded agreement. No direct link has been drawn between the alleged arrangement and the statutory or regulatory criteria said to be breached.

Moreover, the Plaintiff has shown that the shares in question were acquired through private off-market transactions and not via the open market. The arrangement, as pleaded, does not disclose the hallmarks of fictitious trades, wash sales, or circular dealing.

On the terms pleaded, the alleged transaction does not reveal any intent or mechanism by which the Plaintiff could influence the market. The Plaintiff merely acquired the shares and, in the event the price fell below RM0.065, had the right to invoke the buy-back undertaking. The timing of such invocation rested with the Plaintiff, while the obligation to repurchase lay with the Defendant. Although the Defendant is or was a shareholder/director of TWL Holdings Bhd, there is no evidence that he had any control over when the buy-back would be triggered or that the arrangement was structured in a manner capable of influencing market pricing. Accordingly, there is no indication that either party had the means or intent to manipulate the share price, nor that the arrangement induced third-party participation in the market.

Furthermore, the alleged “buy-back” is discretionary and not subject to any specific timing, which is inconsistent with conduct amounting to market manipulation.

The trading data exhibited by the Plaintiff does not reveal any unusual volume spikes or price anomalies during the material time (11.4.2022 to 11.5.2022, i.e. the period surrounding the Plaintiff’s acquisition of the 50 million TWL shares, which occurred on 13.4.2022). There is also no finding or indication that the Securities Commission has concluded that the arrangement contravenes the CMSA.

Insofar as the complaint lodged by the Plaintiff with the Securities Commission against the Defendant is concerned, that is a matter within the regulatory purview of the Securities Commission or other authorities. The Court’s finding here does not impinge upon the jurisdiction of the Securities Commission to investigate or take enforcement action, if appropriate. The Court merely finds, on the assumed facts, that the pleaded underlying agreement is not illegal.

Accordingly, I answer the question in Enclosure 30 as follows: “S1: Dengan andaian Perjanjian/Akujanji seperti yang diplidkan oleh Plaintif dalam tuntutan ini adalah terbukti, adakah seksyen 175 & seksyen 176 Akta Pasaran Modal dan Perkhidmatan 2007 (Capital Markets and Services Act 2007) menjadikan Page 5 of 6 Perjanjian/Akujanji tersebut terbatal kerana menyalahi undang-undang (illegality) dan oleh itu tidak boleh dikuatkuasakan (unenforceable)?” Jawapan: Perjanjian/Akujanji tersebut tidak menyalahi undang-undang berdasarkan apa yang telah diplidkankan oleh Plaintif. Oleh yang demikian, tuntutan Plaintif diteruskan ke perbicaraan untuk membuktikan kewujudan Perjanjian/Akujanji tersebut tanpa isu menyalahi undang-undang dibangkitkan.

Costs of RM5,000/- is awarded in favour of the Plaintiff. Dated this 25th day of July, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION (NCC 3)) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA Page 6 of 6 COUNSEL FOR THE PLAINTIFF : Ong Soo Lee Messrs Ong Soo Lee & Co. No.111-1, Jalan Besar, Salak Selatan, 57100 Kuala Lumpur Tel: 03-79811882/702 Emel: o_sl@hotmail.com COUNSEL FOR THE DEFENDANT : Edwin Lewis Messrs Edwin Lewis Unit 1-032, Level 1, Dataran Millennium, Millennium Square, Jalan 14/1, Petaling Jaya, 46100 Selangor Tel: 03-79320188 / 03-27146110 Emel: edwin@edwin-lewis.com LEGISLATION / RULES CITED Rules of Court 2012 ▪ Order 14A ▪ Order 33 rule 2 Capital Markets and Services Act 2007 ▪ Section 175 ▪ Section 176