Ganesan A/l Ramasamy v BLUE VALLEY PLANTATION BHD. (AA-22NCvC-108-11/2019)

If a company refuses to register a transfer, the transferee or the transferor may apply to the Court for an order under this section.

On an application under subsection (1), the Court may 180 order the company to register the transfer, if the Court is satisfied that the application is well-founded.” [16]. The defendant argues that this provision only applies to the transferor or transferee in cases where a company refuses to 185 register a transfer of shares, and since the plaintiff is neither, he cannot invoke it. However, the plaintiff’s claim is grounded in common law principles of beneficial ownership and equitable relief, which override the statutory requirements for registration. The Federal Court in Chan Yock Cher @ Chan Yock Kher v Chan 190 Teong Peng [2005] 1 MLJ 101, [2004] 4 CLJ 533; [2005] 4 AMR 693 held that beneficial ownership of shares can pass upon full payment and execution of transfer documents, even if there is non-compliance with the articles of association, which primarily restrict the registration of legal ownership, not the beneficial interest. 195 These were the words of His Lordship Alauddin FCJ (as he then was) in Chan Yock Cher (supra): “56 The learned authors of Palmers Company Law (24 th Ed) at p 613, also agree that a ‘transfer is incomplete until registered. Pending registration, the transferee has only an equitable right to 200 the shares transferred to him. He does not become the legal owner until his name is entered on the register in respect of these shares’. 57 Hawks v McArthur & Ors [1951] 1 All ER 22 is further authority 205 for the proposition that a transferee having paid the full consideration for shares obtains equitable rights therein, notwithstanding the complete failure to comply with the company's articles to be followed before the shares could be transferred (see also Liu, Ren-Shuenn v Lee, Chiu-Pin [1999] 2 210 CLJ 35 : Allied Properties Sdn Bhd v Semua Holdings Sdn Bhd & Ors [1988] 3 MLJ 185 and Gan Sin Tuan v Chew Kian Hor [1958] MLJ 62). 58 Walter CM Woon in his book Company Law under the heading 215 ‘Ownership and transfer of shares’ states the position quite explicitly (at p 296): A share is movable and not immovable property. Legal title in a share is rested in the person to whom the share is 220 allotted or transferred and whose name is on the register of members in respect of that share. It is also possible for a person to have shares registered in the name of a nominee, who will hold as trustee for him. …. 225 Equitable interests in shares can arise in the same way as for any other type of property, e.g, by sale or mortgage or declaration of trust. The sale of specific shares gives to the purchaser an equitable interest in the shares … . The delivery of a share certificate with a blank transfer to a 230 purchaser gives him an equitable interest in the shares. 59 And further at p 300: A share is transferable in the manner provided by the articles. In this connexion ‘transfer’ means the transfer of 235 legal title to shares; equitable ownership may be transferred without the necessity of changing the register of members. 60 We would observe, therefore, that the law on the issue is well settled that beneficial interest passes to the purchaser of shares 240 upon his full payment and execution of the transfer documents, notwithstanding that the provisions of the articles of association restricting transfer of shares have not been complied. Those restrictions do not affect and have no application or bearing on the passing of beneficial interest and apply only to restrict the 245 registration of legal interest.” [17]. Similarly, in Allied Properties Sdn Bhd v Semua Holdings Sdn Bhd & Ors [1988] 3 MLJ 185; [1988] CLJU 68, the court recognised the rights of the beneficial owner to seek rectification of 250 the register and transfer of shares when the refusal to register the transfer is not bona fide. These two cases illustrate that a beneficial owner, such as the plaintiff, can compel the registration of shares despite procedural technicalities. Equity regards as done that which ought to be done, and thus, the plaintiff’s right to have the 255 shares registered in his name or his nominees is supported, notwithstanding the absence of certain formalities. In Allied Properties Sdn Bhd (supra), the applicant (Allied Properties Sdn Bhd) provided three loans to Malaysian Fancy Plywood and Veneer Company Ltd, secured by shares in Semua Holdings Sdn 260 Bhd. Although the pledgors consented to registering these shares in the applicant's name (beneficial owner), Semua Holdings’ directors refused, prompting the applicant to take legal action. Her Ladyship Justice Siti Norma Yaakob (as she was then) decided: “Held (1) As the applicant was the ultimate beneficial owner there 265 could be no doubt whatsoever that the applicant was the person aggrieved by the refusal of Semua Holdings to register the shares in the name of either the applicant or their nominees. The fact that the nominees were not a party to the action was quite immaterial to the real issue at hand which was whether the 270 respondents had a right to refuse registration and, if so, whether that right had been properly and legally exercised.” [18]. There is no dispute regarding the plaintiff’s full payment for the shares in question, and this is an admitted fact by both parties. The 275 payment of the full purchase price is crucial because it establishes the plaintiff’s entitlement to the shares and reinforces his claim to beneficial ownership. Under the principle of equity, once the purchaser has paid in full, the beneficial interest in the shares typically passes to the buyer, regardless of whether the formalities 280 for legal registration have been completed. This principle was affirmed in cases such as Chan Yock Cher (supra), where the court held that the beneficial interest in shares passes to the purchaser upon full payment and execution of the transfer documents, even if the articles of association or other legal 285 formalities are not fully complied with. [19]. Finally, the evidence and substantive claims presented by the plaintiff are persuasive. The plaintiff has provided substantial documentary evidence of the beneficial ownership of the 10,000 shares, including the Form 32A executed in 1993, letters 290 confirming the sale, and a power of attorney and continuous recognition of his beneficial ownership vis-a-vis the 2018 consent order, all of which support his claim. The plaintiff’s case is not limited to enforcing the consent order but is a broader claim seeking equitable recognition and registration of his beneficial 295 ownership of the shares. Therefore, this court finds that the plaintiff has established in law a case for the transfer of shares in his favour. Whether plaintiff’s evidence satisfactory and reliable to meet the burden of proof? 300 i) Evidence of nominee [20]. The transfer form is included in Part B of the common bundle of documents, the authenticity of which is undisputed, though its contents cannot be considered as undisputed. The defendant’s defence and the issues to be tried did not negate that the 305 transferees were the plaintiff’s nominees or raise it as an issue to be tried, despite the absence of a formal letter of nomination. The plaintiff’s testimony and supporting documentation in court substantiated that the transferees were indeed his nominees, providing a clear and consistent narrative unchallenged by the 310 defendant. Thus, the plaintiff has successfully proved that the transferees were his legitimate nominees. ii) Incomplete transfer form [21]. Regarding the omission of Ramasamy A/L Doraisamy’s name and signature from the Transfer Form, this court finds that the principle 315 established in Chan Yock Cher @ Chan Yock Cher (supra) is directly applicable. In that case, the Federal Court held that beneficial ownership of shares can pass upon full payment and execution of the transfer documents, even if the articles of association restrict the registration of legal ownership. The focus in 320 such situations is on the transfer of the equitable interest, which takes precedence over procedural formalities. [22]. Applying this principle to the present case, the plaintiff’s beneficial ownership of the 10,000 shares should be recognised. While the defendant contends that the omission of Ramasamy’s signature 325 renders the Transfer Form unregistrable, the plaintiff has demonstrated that Selvarajoo was the sole beneficial owner of the shares. As the beneficial owner, Selvarajoo had the legal authority to transfer the shares to the plaintiff. The plaintiff’s beneficial interest in the shares passed upon full payment and execution of 330 the transfer documents, fulfilling the essential requirement under common law. The absence of Ramasamy’s signature, therefore, does not affect the validity of the beneficial transfer already vested in the plaintiff. [23]. The defendant’s reliance on Article 21 of the defendant’s 335 Memorandum and Articles of Association, which requires signatures from both registered shareholders, is a procedural requirement for the registration of legal ownership. As the Federal Court ruled in Chan Yock Cher (supra), such formalities should not impede the transfer of beneficial ownership, which can pass 340 even without strict compliance with the company’s articles. Therefore, the defendant’s argument based on unregistrability of the Transfer Form due to Ramasamy’s missing signature is not sufficient to deny the plaintiff’s beneficial ownership or his right to the shares. 345 [24]. Furthermore, the plaintiff has invoked s. 114(g) of the Evidence Act 1950, requesting an adverse inference against the defendant for failing to produce relevant evidence regarding the ownership of the shares. This strengthens the plaintiff’s position, as the defendant has not challenged the plaintiff’s claim to beneficial 350 ownership on substantive grounds but has instead relied on technicalities. Under the equitable maxim that "equity regards as done that which ought to be done," the plaintiff’s beneficial interest in the shares is valid, and the court in the absence of evidence to the contrary, should recognise his right to the shares despite the 355 formal defect in the Transfer Form. [25]. However, since Article 21 of the defendant’s Memorandum and Articles of Association mandates that any share transfer must be accompanied by the Share Certificate, which lists both Ramasamy and Selvarajoo as registered shareholders, the signatures of both 360 parties are required for legal registration. The absence of Ramasamy’s signature renders the Transfer Form unregistrable. Therefore, while the plaintiff has established beneficial ownership, this court concludes that the transfer of the shares to the plaintiff and/or his nominees must comply with the provisions of the 365 defendant’s Memorandum and Articles of Association. Conclusion [26]. The primary facts of the case were not in dispute, and the evidence presented by the plaintiff should be accepted as true, as the defendant elected not to present any evidence to refute the 370 plaintiff’s claim. Accordingly, the plaintiff, who bears the burden of proof, has established his case on a balance of probabilities based on the available evidence. [27]. In the upshot, I allow the plaintiff’s claim in part of the prayer in the Statement of Claim, that is: 375 a) The defendant be ordered to transfer the said shares to the plaintiff and/or his nominees; b) The defendant be ordered to instruct the defendant’s company secretary to effect the transfer the said shares in the name of the plaintiff and/or his nominees; 380 c) The plaintiff be declared as the legal shareholder of the said shares; d) That the transfer be effected in accordance and due compliance with the provisions of the Memorandum and Articles of Association of the defendant; and 385 e) No order as to costs. Dated: 25 October 2024 390 Moses Susayan ( MOSES SUSAYAN ) Judicial Commissioner 395 High Court in Malaya Ipoh, Perak 400 Counsel: 405 For the plaintiff: S Raven (together with Janice Tay Shu) Advocates and Solicitors [Messrs S Ravenesan] 410 Kuala Lumpur For the defendant: Yohendra Nadarajan Advocates and Solicitors 415 [Messrs Yohendra Nadarajan] Petaling Jaya [Notice: This Grounds of Decision is subject to official editorial revision] 420 Headnotes Whether the plaintiff, as the beneficial owner with evidence of full payment and supporting documentation, is entitled to enforce the 2018 consent order for share transfer despite procedural and registration objections raised by the defendant. Whether the defendant’s “no case to answer” 425 submission is valid and sustainable in the specific circumstances of this case