Dato' Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn. Bhd. (WA-24NCC-677-12/2023)

This Originating Summons was filed on 5-12-2023 by the Plaintiff for leave to commence a derivative action on behalf of the Defendant pursuant to sections 347 and 348 of the Companies Act 2016 (“CA”)(“Enclosure 1”).

On 25-11-2025, the Defendant applied to strike out Enclosure 1 (“Enclosure 191”). The premise of Enclosure 191 is that the Plaintiff was no longer a director of the Defendant as at 19-9- 2025 due to the vacancy of his office, and he therefore ceased to be a “complainant” as defined in section 345 of the CA. Background facts

The Defendant is a joint venture between Nautical Supreme

According to the Shareholders Agreement, the shareholding ratio in the Defendant is 80:20 in favour of AMSB as the majority. The Board of Directors has the same control structure, in that AMSB and NSSB may respectively nominate 4 and 2 directors for up to a maximum of 6 directors. The Plaintiff was one of 2 directors nominated by NSSB.

The contemplated derivative action is directed against the majority directors who are aligned to AMSB (“Majority Directors”) for breach of fiduciary duties and against Azimuth Ship Management Sdn Bhd (“ASM”) for breach of contract and/or unjust enrichment as the Defendant’s ship manager under a standard BIMCO ship management contract.

The factual premise for the intended claims is the alleged unsubstantiated increases in operating expenses (“OPEX”) that the Majority Directors have caused the Defendant to pay ASM over the years and refused to answer for, and that Suresh Emmanuel Abishegam, one of the Majority Directors, ultimately owns ASM.

To put matters in context, there have been numerous and continuous disputes between the Plaintiff and Majority Directors over a variety of issues that have escalated to active litigation and arbitration since 2016, including many ongoing actions at various stages of maturity. As early as 2017, litigation had ensued over an EGM initiated by the Defendant to remove the Plaintiff as a director.

Insofar as it is relevant to Enclosure 191, recent events began on 23-12-2024 when the Company first declared the Plaintiff’s office as director vacant (“1st Vacancy of Office”) by operation of Articles 72(g) and (h) of the Articles of Association that says:

The office of director shall become vacant if the director—

without the consent of the company in general meeting holds any other office of profit under the company except that of managing director or manager; or

is directly or indirectly interested in any contract or proposed contract with the company and fails to declare the nature of his interest in manner required by the Act. The basis for the claimed operation of the above provisions appears to be due in part to the matters raised in KLHC Civil Suit No: WA-22NCC-470-07/2025, a suit filed by the Company against the Plaintiff based on various allegations of breach of duties including breach of confidence, conflict of interest and conspiracy.

On 25-2-2025, the Plaintiff filed KLHC Originating Summons No. WA-24NCC-102-02/2025 to challenge the 1st Vacancy of Office as the issue was not on the agenda in the notice of the Board of Directors meeting. The Majority Directors had declared the vacancy only after the Plaintiff left the meeting.

An ad interim injunction was sought and obtained to suspend the effect of the 1st Vacancy of Office and on 4-9-2025, the Court allowed the challenge and declared the purported removal and/or vacancy to be unlawful, null and void. However, the Court made no findings on the application of Articles 72(g) and (h).

On 19-9-2025, the Majority Directors held a fresh Board of Directors meeting and once again declared the Plaintiff’s office to be vacant (“2nd Vacancy of Office”). The validity of the 2nd Vacancy of Office is now being challenged in KLHC Originating Summons No: WA-24NCC-559-10/2025 filed on 1-10-2025 (“OS 559”). Analysis and findings Plaintiff’s current position

The circumstances and validity or otherwise of the 2nd Vacancy of Office is not before this Court for determination. The Plaintiff argued that he remains effectively a director, as he is seeking a declaration in OS 559 that the 2nd Vacancy of Office is void. The Defendant argued that official company records already reflect that the Plaintiff is no longer a director.

On this point, this Court agreed with the Defendant that for all intents and purposes, without an Order of Court invalidating the 2nd Vacancy of Office, the Plaintiff is no longer a director as defined in the CA i.e. a person occupying the position of director in accordance with whose directions or instructions the majority of directors of a corporation are accustomed to act.

The Plaintiff’s own conduct, i.e.: a) the formal orders sought in court proceedings after the 1st and 2nd Vacancy of Office; b) the deemed necessity for an interim injunction to return to the status quo before the vacancy; and c) the willingness to hold the present proceedings in abeyance pending the above eventualities; all signify recognition of the fact that he is no longer a director until and unless the 2nd Vacancy of Office is nullified. There is no issue as to which status quo should be maintained, since no interim injunction is being sought here. The vacancy has come to pass and it is being challenged in OS 559. Locus standi as a question of law

The Plaintiff’s primary stance appears to support the suspension of these proceedings until the validity of the 2nd Vacancy of Office is determined in OS 559. For various reasons, those proceedings have been delayed and as the Plaintiff’s own litigation experience here will demonstrate, there is no quick or final answer, nor any assurance of permanence in his position.

The Defendant argued that based on the standing requirement of sections 347, 348 and 350 of the CA, read together with section 345 of the CA, Enclosure 1 had become academic and a non-starter upon the 2nd Vacancy of Office on 19-9-2025, because the Plaintiff is no longer a “complainant.” This, according to the Defendant, is a threshold issue that calls for preliminary determination.

This Court agrees with the Defendant that the Plaintiff’s locus standi to maintain Enclosure 1 is a valid threshold issue that can be decided in a striking out application. Recognizing that the change in the Plaintiff’s capacity may not be permanent, and having considered the matter, this Court regards the issue raised by Enclosure 191 as a pure question of law that did not require the determination of substantive factual disputes between the parties.

The question of law is whether a former director can maintain statutory derivative proceedings properly commenced, if he ceases to be a director before those proceedings conclude.

It is convenient at this juncture, to set out the relevant provisions of the CA on statutory derivative proceedings: Section 345 For the purposes of this Division, “complainant” means —

a member of a company, or a person who is entitled to be registered as a member of a company;

a former member of a company if the application relates to the circumstances in which the member ceased to be a member;

any director of a company; or

the Registrar, in the case of a company declared under section 590

A complainant may, with the leave of the Court initiate, intervene in or defend a proceeding on behalf of the company.

Proceedings brought under this section shall be brought in the company’s name.

The right of any person to bring, intervene in, defend or discontinue any proceedings on behalf of a company at common law is abrogated. Section 348.

An application for leave of the Court under section 347 shall be made to the Court without the need for an appearance to be entered.

The complainant shall give thirty days’ notice in writing to the directors of his intention to apply for the leave of Court under section 347.

Where leave has been granted for an application under section 347, the complainant shall initiate proceedings in Court within thirty days from the grant of leave.

In deciding whether or not the leave shall be granted, the Court shall take into account whether—

the complainant is acting in good faith; and

it appears prima facie to be in the best interest of the company that the application for leave be granted.

Any proceedings brought, intervened in or defended under this section shall not be discontinued, compromised or settled except with the leave of the Court. Section 350. In granting leave under this section and sections 347 and 348, the Court may make such other orders as the Court thinks appropriate including an order—

authorizing the complainant or any other person to control the conduct of the proceedings;

giving directions for the conduct of the proceedings;

for any person to provide assistance and information to the complainant, including to allow inspection of the company’s books;

requiring the company to pay reasonable legal fees and disbursements incurred by the complainant in connection with the application or action, or pending the grant of the leave or pending the grant of any injunction by the Court hearing the application for leave under this section; or

the costs of the complainant, the company or any other person for proceedings taken under this section, including an order as to indemnity for costs.

In support of its position, counsel for the Defendant made the following points:

principles of statutory interpretation do not allow this Court to read “former director” into section 345 of the CA;

equitable principles are irrelevant because the common law derivative action is abrogated; and

as an exception to the majority rule, the statute does not contemplate a derivative action by a former director who owes no fiduciary duty to and retains no interest in the company. Statutory interpretation

The principles of statutory interpretation are well-settled and need not be restated here. The short answer to the Defendant’s point of contention about statutory interpretation is that there is no call for this Court to read “former director” into section 345 of the CA nor has the Court done so.

Section 345 of the CA defines who a “complainant” is when referred to in sections 347 and 348 of the CA. It is clear from the plain words of section 345 of the CA that such a person does not include a former director, as it does a former member. In other words, a current director can be a “complainant” and the Plaintiff possessed the requisite standing when Enclosure 1 was filed.

The pressing inquiry is whether the Plaintiff can be dispossessed of standing before the proceedings conclude. To recap, the question determined by this Court is whether a former director can maintain derivative proceedings properly commenced, if he ceases to be a director before those proceedings conclude.

As a matter of statutory interpretation, this Court took the view that the provisions of sections 347, 348 and 350 of the CA do not say that the “complainant” must retain his initial capacity until an application for leave concludes. It is not an interpretation that the literal words of those provisions require: a) Section 348(1) of the CA on the need for leave of Court, refers to section 347(1) of the CA that says a “complainant” may, with leave, initiate, intervene in or defend a proceeding on behalf of the company. b) Section 350(a) of the CA then states that in granting leave under this section and sections 347 and 348, the Court may authorize “the complainant or any other person to control the conduct of the proceedings.”

The statutory derivative action in Singapore also provide that “the complainant or any other person to control the conduct of the proceedings” as the orders that a court can make on granting leave, and the same point was taken by the Singapore High Court in Syed Ibrahim Shaik Mohideen v Wavoo Abdusalam Shahul Hameed & 2 Ors [2022] SGHC 307 (“Syed Ibrahim”).

Syed Ibrahim concerned a director who ceased to hold office after commencing leave proceedings, inviting the challenge to his locus standi. The Court held: “…s 216A(5), which deals with the orders that a court can make if it gave leave for an action to be brought in the name of the company, empowers the court to, among others, make “an order authorising the complainant or any other person to control the conduct of the action or arbitration” [emphasis added]. This suggests that s 216A does not contemplate that the complainant remains as such at the conclusion of the hearing, since the court can appoint “any other person” to control the conduct of the action.”

This Court agrees that section 350(a) also suggests that the “complainant” need not necessarily remain in the same capacity, and that it is sufficient that the standing requirement is satisfied at the point of an application for leave.

In arguing that Syed Ibrahim is not applicable here, the Defendant highlighted that the definition of “complainant” under section 216A(1) in Singapore is wider than here. It identifies any member, the Minister and “any other person who, in the discretion of the Court, is a proper person to make an application under this section.” Thus, it was suggested that since there is no designation on who the proper person is, it may include a former director.

This Court did not agree with the distinction sought to be made by the Defendant because the definition in section 216A(1) may also be construed to refer only to the initial capacity of the person making the application and not to a continuing requirement. It was not a point in contention under section 216A(1) that a director and a former may both be proper persons at the outset.

The ratio in Syed Ibrahim is about the continuation of the proceedings by a proper person i.e. “In my view, a complainant retains the standing to bring an application under s 216A so long as he or she possessed the capacity giving rise to the requisite standing at the date of the application. This remains the case regardless of whether he or she loses that capacity after having commenced the application. In other words, I do not think that s 216A prescribes a continuing requirement that the complainant remains as a member, Minister for Finance, or a “proper person” until the application is heard and decided.” Based on this conclusion, it is irrelevant that the capacity of the “complainant” changed to one that still qualifies as a “proper person” or not.

There is no local precedent on this issue. Although Syed Ibrahim is not binding, this Court found the reasoning to be persuasive in the interpretation of the requirement for standing under our statutory regime from a practical and substantive policy standpoint: a) Retrospective Knowledge: Applications are based on knowledge accumulated while the complainant held their capacity. Because the alleged wrongs have already occurred, it makes little sense to require the capacity to continue into the future. b) Prevention of Tactical Removal: The Court observed that a "continuing requirement" would allow errant directors to stymie applications by surreptitiously removing a whistleblowing director from the board to deny them standing. c) Shareholder Fluctuations: Requiring a shareholder to maintain their status throughout the litigation would be impractical, as shares may be sold or bought out after a wrongdoing (which may have affected the share value) is discovered.

In this case, the case against tactical removals is particularly apt as this is a second attempt to strike out Enclosure 1 based on the Plaintiff’s standing in these proceedings. For good reason, the statutory derivative action regime gave standing to directors. At the leave stage, the Originating Summons procedure is meant to be expeditious so that if litigation is necessary in the interest of the company, its commencement is not unduly delayed.

Considering the above, statutes should not only be construed purposively, but also in a way that avoids absurdity. As the factual circumstances of this case illustrate, requiring a director to remain a director as a continuing condition of his standing to maintain an application under section 347 of the CA, may result in inevitable legal challenges to every instance of removal from office at the hands of the majority.

Interpreting the standing requirement to apply only at the time the application for leave is brought is also consistent with the general principle that the material time for determination of locus standi is at the time of filing of the action. If there is a change of capacity, legal mechanisms for substitution and/or joinder of parties exist to allow for the continuation of the action.

It is not suggested that the Plaintiff should be substituted if he is removed from office while Enclosure 1 is pending. The point is that the lis in Enclosure 1 does not abate, nor do the causes of action intended to be filed on behalf of the Defendant, even if the Defendant ceases to be a director. It does not result in, as the Defendant put it, Enclosure 1 becoming academic and a non-starter.

As a statutory derivative action regime intended to liberalise the common law derivative action which it abolished, the essential qualification lies not in the personal capacity of the “complainant” but in the fact that the claim is pursued on behalf of the company. The “complainant” merely serves as the procedural vehicle through which the company’s rights are asserted.

Thus, if the Plaintiff’s good faith and the best interest of the Defendant to pursue the contemplated action is proved despite his change of status, leave may be granted to the Plaintiff who will not have lost his standing as a “complainant.” Equitable considerations

The Plaintiff brought up Owen Sim Liang v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113 (“Owen Sim”) and argued that it would be inequitable to permit the Defendant to premise Enclosure 191 on the Plaintiff’s lack of standing when it is the Defendant who orchestrated the 2nd Vacancy of Office. Owen Sim famously held (in the context of an oppression petition by a former member) that: “It is the company, acting through its board, that had deprived the appellant of the status of a member. Can the company be now heard to say that the appellant is no longer a member and is therefore disentitled from moving the court under s 181 of the Act and from questioning that very deprivation in proceedings brought under the section? We think not. For it does not lie in the mouth of the alleged wrongdoers to say that the appellant has no ground to stand on after having cut the very ground from under his feet. The true principle which governs such cases as the present is housed in the doctrine of estoppel. The doctrine has reached a stage where it may be applied to prevent or preclude a litigant from raising the provisions of a statute in answer to a claim made against him in circumstances where it would be unjust or inequitable to permit him so to do.”

It will be recalled that Owen Sim was filed as an oppression petition under section 181 of the Companies Act 1965. Section 181 opened with the words: 'any member,' followed by a recital of the other persons who are declared to be entitled to move the court under the section. The result is that, as a general rule, only one who comes within the terms of s 16(6) of the Act has standing to present a petition under s 181.

The Defendant took issue with any reliance on Owen Sim or equitable principles because section 347(3) of the CA states that the common law derivative action is abrogated. Although it was not articulated in submissions, the Defendant may have been referring to the following observations of the Federal Court in Dato’ Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn Bhd and another appeal [2024] 3 MLJ 433 (“Timor”) to address the Defendant’s argument that the plaintiff may not be a proper person to bring forth the derivative action as his conduct is tainted by his personal benefit and acquiescence in the alleged wrongdoing: “[150] In this connection, we are compelled to observe that the principles in relation to ‘clean hands’ or ‘proper person’ or whether one should have control over the derivative proceedings is more associated with the common law derivative action with regard to the issue of locus standi to bring a derivative action. Looking at the present regime of the CA 2016, and as we have stated at the outset, the common law derivative action has been replaced with the statutory derivative action under ss 347 and 348 of the CA 2016, where significantly, s 347(3) of the CA 2016 has abrogated the right of a person to commence derivative action at common law. So, simply put, the principles under common law, namely, the well-entrenched exceptions to the rule in Foss v Harbottle cease to apply for leave applications under s 348 of the CA 2016. [151] In the same context, since s 345 of the CA 2016 has adequately provided the definition of complainant who may, with the leave of the court, initiate, intervene in or defend a proceeding on behalf of the company, it may be less appropriate to rely on the principles in relation to ‘clean hands’ to determine whether an applicant is a proper plaintiff as the said principle is more consonant with the common law derivative action.”

Clearly, the Federal Court in Timor held that equitable considerations ought to play no part in denying standing to a qualified “complainant” as statutorily prescribed. This Court’s reference to Owen Sim was for a different reason, namely, as an illustration of judicial reasoning supporting the purposive interpretation that this Court has given to the statutory regime to prevent the mischief of tactical removals.

The fact that estoppel was applied to prevent injustice in Owen Sim illustrated why the membership requirement was, rightly, not read as rigidly universal in that case. In other words, the mischief that equitable estoppel addressed gave practical justification for the Court’s interpretation of the statutory membership requirement. The statute was construed flexibly within the permissible scope of statutory interpretation, to avoid becoming “an engine of fraud.” Duties and interests of former directors

The Defendant also contended that a former director can never have standing to carry on a derivative action on behalf of the company in practical terms because he is, at that point, an outsider with no duties to or interests in the company. As such, he cannot be allowed access to resources and confidential information of the Defendant to pursue the contemplated derivative action on behalf of the Defendant.

The Defendant relied on the following commentary about the statutory derivative action in Singapore in Tan Chun Chuen Malcolm v Beach Hotel Pte Ltd [2022] SGHC 187: “As such, as Associate Professor Pearlie Koh has noted, the original impetus for s 216A was to strengthen the position of the minority shareholder by providing “more effective remedies to minority shareholder” (see Pearlie Koh, “For Better or For

7 SAcLJ 74 at 81–84). Further, as stated in Hans Tjio, Pearlie Koh and Lee Pey Woan, Corporate Law (Academy Publishing, 2015) (“Corporate Law”) at p 446, the “proper person” has to be in a position analogous to that of a minority shareholder” [emphasis in original]. The learned authors argue the following (at para 10.042): … These would be persons who have a financial interest in the manner in which the affairs of the company are managed and hence the outcome of any litigation affecting the company, but who, like the minority shareholder, have limited ability to influence management. …”

The Defendant also relied on the following passage in Reignwood International Investment (Group) Co Ltd v Opus Tiger Pte Ltd [2021] SGHC 133 (“Reignwood”): “110. When a s 216A application is viewed that way, as I consider it must, the only persons who have a lis as against the complainant or the company are those persons whose concern it is whether the court should sanction a deviation from the fundamental principle of majority rule. Those persons can only be insiders to the company. These insiders will, of course, include the company’s other shareholders, whether majority or minority, and the company’s directors.”

As seen in Syed Ibrahim, it is part of Singapore law that a former director may be a proper person under section 216A. Reignwood actually concerned a joinder application by the intended (third party) defendant. The Court held that there was no lis between the complainant and the intended (third party) defendant to allow its participation in a section 216A application.

In any case, there is also a short answer to the Defendant’s contention that the Plaintiff is an “outsider”, i.e. he is not an outsider. There were no credible grounds offered to challenge the averment that the Plaintiff was the appointed nominee director of NSSB, the minority shareholder in the Defendant.

Further, any concerns about the Plaintiff’s good faith should be ventilated in Enclosure 1, including the framing of the appropriate orders for the conduct of the contemplated derivative action if leave is granted. As noted, the Court may also authorize any other person to control the conduct of the proceedings.

To summarize, this Court endorses the view that a former director can maintain statutory derivative proceedings properly commenced, if he ceases to be a director before those proceedings conclude. Standing to bring an application under section 347 of the CA is retained so long as the “complainant” possessed the capacity at the date of the application.

Accordingly, Enclosure 191 was dismissed with costs of RM20,000.00. Bertarikh: 11 Mac 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Lim Chee Wee (Wee Hee, Kuljeet Kaur dan Emilia Lye bersamanya) Tetuan Jasper Hee Partnership Untuk Defendan: Rajan Navaratnam (Sheena Stephanie Sebastian, Maurice Scully dan Tunku Sulaiman bersamanya)