Golden Plus Holding Berhad v Teo Sung Ngiap (W-02(NCC)(A)-2198-11/2019)

(a) an injunction to restrain Jason, from acting or holding himself out as the CR and LR of the appellant in the following companies (collectively referred to as “the Golden Plus Companies”):-

(i) Golden Plus (BVI) Pte Ltd (incorporated in British Virgin Islands);

(v) Yanfull Investments Ltd (incorporated in Hong Kong); and

(b) An injunction to restrain Jason from managing the affairs of the Golden Plus Companies;

(c) (i) An Order that Jason must return and deliver up to Teh Wei Kian, the new CR and LR of the appellant in the Golden Plus Companies, all the books, records, bank statements, all seals (including but not limited to common seals, official seals, finance seals and legal representative seals), and stamping tools of the Golden Plus Companies which are in his direct or indirect possession, control or custody; or alternatively 7 | P a g e

(d) An Injunction to restrain Jason whether by himself, his nominees, officers, relatives, partners, employees, servants, agents, contractors, representatives or any of them in combination or otherwise howsoever, until further order, forthwith from operating and/or carrying on any business or transaction relating to all the bank accounts of the Golden Plus Companies including issuing any cheques, effecting any transfer and/or opening any banking accounts on behalf of the Golden Plus Companies without the prior written approval of the (appellant) or Teh Weh Kian;

(e) An Injunction to restrain Jason whether by himself, his nominees, officers, relatives, partners, employees, servants, agents, contractors, representatives or any of them in combination or otherwise howsoever, until further order, forthwith from causing the Golden Plus Companies to enter into any further transactions, arrangements or agreements; 8 | P a g e

(f) An Injunction to restrain Jason whether by himself, his nominees, officers, relatives, partners, employees, servants, agents, contractors, representatives or any of them in combination or otherwise howsoever from destroying and/or tampering with his computers (including laptops, tablets, smartphones and all other electronic devices), records, and documents of the (appellant); Brief grounds for the OS [11] Briefly, the grounds for the OS are:-

(i) Jason has been removed as the appellant’s CR and LR in the Golden Plus Companies.

(v) Jason has committed fraud or caused a fraud to be perpetrated on the appellant. Chronology of events [12] The chronology of events are as follows:-

16.1.1984 The appellant was incorporated under the Companies Act 1965 as a public company.

29.11.1984 The appellant (formerly known as Dayapi Industries (Malaysia) Berhad) was listed on the Main Board of Bursa Malaysia Securities Berhad.

9.5.2012 Tan Say Han was appointed director in the appellant.

2.4.2013 Mohd Salleh bin Lamsin and Adey bin Liun were appointed director in the appellant.

14.4.2016 The appellant was delisted from Bursa Malaysia.

8.12.2017 Jason was appointed as a director of Yanfull Investments Limited, Golden Century Development Entertainment Ltd, Yanfull (Shanghai) Co. Ltd, Shanghai Golden Plus Quick Service Restaurant Co. Ltd.

23.3.2018 Teh Soon Seng (Jason’s brother) died. 10 | P a g e

7.4.2018 Yanfull Shanghai Co. Ltd and Yanfull Investments Limited appointed Jason as LR of Yanfull (Shanghai) Co. Ltd. Shanghai Roxy Leisure Co. Ltd and Golden Century Entertainment Limited appointed the Jason as LR of Shanghai Roxy Leisure Co. Ltd.

2.5.2018 The appellant appointed Jason as the CR.

28.2.2019 -

20.3.2019 The Draft Management Accounts of the Shanghai Companies and the 2 Hong Kong Companies for the period ending 2018 were submitted to the appellant.

27.5.2019 Tan Say Han and Mohd Salleh bin Lamsin signed off the appellant’s Financial Statements for the year ended 31 December 2018 28.6.2019 The appellant’s Financial Statements for the year ended 31 December 2018 was tabled and approved at the appellant’s Annual General Meeting (“AGM”).

29.6.2019 The appellant passed a Directors’ Resolution to purportedly revoke the appointment of Jason as the CR and LR of the Golden Plus Companies; and to purportedly appoint Teh Wei Kian as the CR and LR of the Golden Plus Companies.

4.7.2019 The appellant filed Originating Summons against Jason in the Kuala Lumpur High Court Originating Summons No.: WA-24NCC-354- 07/2019. 11 | P a g e The appellant applied for an interim injunction against Jason to inter alia restrain Jason from acting and holding himself out as the CR and LR of the appellant in the Golden Plus Companies.

8.7.2019 The High Court granted an ex-parte interim injunction order to the appellant pending the inter-partes hearing of the interim injunction on 18.7.2019.

18.7.2019 The High Court dismissed the appellant’s application for ad interim injunction and the inter-partes hearing for the interim injunction was fixed on 20.9.2019.

15.11.2019 The High Court dismissed the appellant’s OS and Interim Injunction application. The issue [13] The principal question in the appeal is whether the appellant as a holding company can terminate the appointment of Jason as CR and LR in indirect subsidiaries without the board of those indirect subsidiaries doing so. The appellant’s position is that this can be validly done provided they, as the holding company can show that as the ultimate shareholder of these companies its decisions would have been subsequently ratified or that it could have caused the necessary resolutions to be passed by the board of the respective indirect subsidiaries. 12 | P a g e Jason’s stand [14] Jason opposed the OS/Injunction and took the position that the only party that could lawfully terminate his position were the subsidiaries themselves and even then, he could not be removed without the PRC subsidiaries being in breach of PRC law. [15] Jason contended that he is a director of Yanfull Shanghai, Shanghai Roxy Leisure, Shanghai Golden Plus Quick Service Restaurant (collectively "the 3 Shanghai Companies"), Golden Century Entertainment and Yanfull Investments. Save for the 3 Shanghai Companies, Jason asserted that he is not the LR of the Golden Plus Companies. He was merely appointed by the appellant as CR of the Golden Plus Companies and that his appointment as LR of the 3 Shanghai Companies was pursuant to the laws of the PRC, the Articles of Association of the 3 Shanghai Companies and with the mandate and authorization of the shareholders of those companies. Jason also contended that he is neither a director nor shareholder of Golden Plus (BVI). Jason maintained that the OS is an abuse of process as the appellant has no locus standi to seek for an injunction as they are not a member nor a shareholder of the 3 Shanghai Companies. Essentially, it was submitted on behalf of Jason that through the acts of purportedly issuing non-binding resolutions in Malaysia the appellant is wrongfully interfering with the internal management of the 3 Shanghai Companies by side stepping proper corporate procedures of obtaining the necessary resolutions from the shareholders and the Board of Directors of the 3 Shanghai Companies. 13 | P a g e High Court’s decision [16] Jason’s arguments found favour with the JC. On 15 November the JC dismissed the injunction and the OS. The relevant parts of the JC’s grounds of judgment which supported the arguments that were made on behalf of Jason are: “[26] It is on this reason that this Court finds favour in the argument by the Defendant that the appointment of a LR must be made by the BOD of each of the Shanghai companies. The LR being the only recognised officer of the company to deal and run the company, must be someone that the board must approve of. The Defendant exhibited his appointment as LR by the 3 Shanghai Companies as found in his Affidavit In Reply at Exhibits 'TSN-1" and "TSN-2". These letters of appointment clearly support the contention of the Defendant that the LOA issued by the Plaintiff has no standing. As such, the revocation of the LOA on 29.6.2019 by the Plaintiff's BOD has no bearing to the Defendant's appointment as the LR of the Shanghai Companies. b) Whether the Plaintiff has the right to remove the Defendant as LR i.e. issue of locus standi [27] The six (6) Golden Plus Companies that were mentioned in the LOA are separate legal entities. They are governed by their own board of directors. It was also brought to the attention of this Court that the Plaintiff is not a member of any of the Golden Plus Companies. Accordingly, the resolution of the Plaintiff BOD cannot bind the Golden Plus Companies. [28] The Plaintiff's BOD resolution to remove the Defendant as LR has no effect in law on the Defendant or the 3 Shanghai Companies. It also inevitably means that the Plaintiff has also no right to demand that the seals, books and records of the 3 Shanghai Companies. [29] The injunction seeks to have the said seals, books and records of the 3 Shanghai Companies delivered by the Defendant to the Plaintiff. Such acts, if done by the Defendant would incapacitate the companies. It would also expose the Defendant to breaches of Chinese laws as it effectively means taking away company property and propriety information. 14 | P a g e [30] This follows that the Plaintiff has no right to refrain the Defendant from managing the affairs of the Golden Plus Companies in particular the 3 Shanghai Companies. It is only the 3 Shanghai Companies that have the right to remove the Defendant from acting as the LR and subsequently bar him from managing the affairs of the said companies. [31] In Abdul Rahman Aki v. Kerubong Industrial Park (Melaka) Sdn Bhd & Ors [1995] 4 CLJ 551; [1995] 3 MLJ 417, the Court of Appeal outlined affirmatively the proper plaintiff principle as enunciated in Foss v. Harbottle [1843] 67 ER 189. Gopal Sri Ram JCA held as follows:

"We begin with the rule in Foss v. Harbottle [1843] 67 ER The rule has two limbs. The first limb of the rule - and the present appeal has nothing to do with its application - is that a Court will not interfere with the internal workings of a corporation upon a matter which is capable of being ratified by a majority of shareholders present and voting at a general meeting of the company. The content of the first limb, although it derives its name from the case just cited, in truth finds its origins in the earlier decision in Mozley v. Alston [1847] 41 ER 833. The modern restatement of the rule is to be found in the judgment of Harman LJ in Bamford v. Bamford [1970] Ch. 212. The second limb of the rule is of much wider purport and is universal in its application. It is based upon the doctrine that only he who has been injured may sue. Translated into company law, the proposition may be stated thus. If a wrong has been done to a company, then it is the company which is the proper plaintiff in an action brought to redress the injury. An individual shareholder or even a group of shareholders forming a minority on the floor of a general meeting of the company have no locus standi to bring an action to remedy a wrong done to a company. See Prudential Assurance Co. Ltd. v. Newman Industries Ltd. (No. 2) [1982] Ch. 204. Perhaps the clearest statement of the rule is to be found in the judgment of Jenkins LJ in Edwards v. Halliwell [1950] 2 All ER 1064, 1066: The rule in Foss v. Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. 15 | P a g e Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that, if a mere majority of the members of the company or association is in favour of what has been done, then cadit quaestio." (Emphasis added) [32] Although the above case involves a derivative action, nonetheless, the principles remain relevant. [33] It is trite law that the holding company and its wholly owned subsidiary are separate legal entities. The board resolution of the holding company cannot bind the subsidiary company as each company are separate legal entities (See Tan Sri Tajuddin Ramli v. Rego Multi-Traders Sdn Bhd [2018] 7 CLJ 197). [34] From the above analysis, it is the finding of this Court that the Defendant was only appointed as a CR for the Plaintiff in the Golden Plus Companies. He was not appointed as LR to the said companies, in particular the 3 Shanghai Companies. Any resolution passed by the Plaintiff's BOD cannot bind the 3 Shanghai Companies. The Plaintiff therefore has no right to restrain the Defendant from acting as the LR as it was solely the prerogative of the 3 Shanghai Companies. More importantly, the Plaintiff has no locus standi to demand that the Defendant be restrained from functioning as LR and demand the production of the seals, books and records of the 3 Shanghai Companies.” The appellant’s arguments [17] The appellant contends that the JC erred in holding that Jason could only be removed by the indirect companies and that no injunction should lie given the potential that the PRC subsidiaries companies would be in breach of PRC law. It was contended that the JC erred in failing to appreciate that Jason was undoubtedly appointed to his various positions in the indirect subsidiaries by the appellant or with the appellant’s concurrence. As such, Jason could only remain in those position so long as the appellant desired. 16 | P a g e [18] It was also contended that the JC erred in failing to hold that whether the subsidiaries were in breach of PRC law is not an impediment and cannot prevent the removal of Jason who is an alleged defaulting director or LR. [19] Counsel for the appellant pointed to the fact that the legal position under PRC law was confirmed by expert evidence where it was opined that the 3 Shanghai Companies would not incur criminal liabilities due to the removal of a LR alone. [20] It was emphasized that the appellant’s business is conducted through the 3 Shanghai Companies. The appellant is the ultimate holding company of the 3 Shanghai Companies and that its shareholding is sufficient for it to irrefutably command the majority of the voting rights in any of the subsidiaries. It was argued that the appellant can exercise its majority control in all of these subsidiaries including the 3 Shanghai Companies, to appoint and remove directors. Counsel referred to the decision of Jonathan Parker J in Re Astec (BSR) plc [1998] 5 WLUK 106; [1999] B.C.C. 59; [1998] 2 B.C.L.C. 556 at page 586 where he said, “In the instant case the power expressly given to shareholders under the company's articles of association to appoint and remove directors and appoint others in their place has to be considered in the light of the above authorities. The exercise by a majority shareholder of his right to vote at a general meeting for the removal or appointment of directors is the exercise of his private right, which is neither conduct of the affairs of the company nor an act of the company. In my judgment it is only in exceptional cases where some special circumstances exist that the resolution which results from the exercise of such private voting rights can give rise to any complaint under s.459. In this connection I have already noted that there is no allegation in the petition that Emerson exercised its voting rights in bad faith. 17 | P a g e … So far as the appointment of directors is concerned, there is no legal impediment to a majority shareholder appointing persons connected with it to hold office as director of a subsidiary company, whether that subsidiary is wholly-owned or partly owned. Likewise there is no legal impediment to persons connected with a majority shareholder accepting office as such directors. Having accepted office they are subject to the same fiduciary duties; as the other directors.” [Emphasis added] [21] At the time the action was commenced in the High Court, Jason was a director of the following subsidiaries:- a. YIL; b. QSR; c. SRL; and d. YSL. He was the sole director of GCE. [22] It is contended that Jason was appointed to the boards of appellant’s subsidiaries with the appellant’s concurrence. This is apparent merely from the appellant’s direct and indirect shareholding in these subsidiaries. Counsel for the appellant said that no director of the subsidiaries could have been appointed without the appellant’s concurrence. Prior to 2 May 2018, Jason was a director of all of these subsidiaries, except for QSR. [23] On 2 May 2018, the appellant appointed Jason as its CR and his appointment was described as such:- “Corporate Representative of [the appellant’s] investment in the People’s Republic of China (“China”), in particular the following:- 18 | P a g e

(a) Golden Plus (BVI) Pte Ltd

(b) [GCE]

(c) [SRL]

(d) [YIL]

(e) [YSL]

(f) All other companies that will be set up in the People’s Republic of China to support the operations and businesses of the companies listed under (a) to (e) above.” [24] While the appointment was made on 2 May 2018, by the appellant’s Directors’ Resolution in writing dated 2 May 2018 that appointment was to take retrospective effect from 23 March 2018. [25] Jason’s appointment as the appellant’s CR arose because of the untimely demise of the previous CR, the late Teh Soon Seng, who was Jason’s elder brother. The late Teh Soon Seng died on 23 March 2018. The scope and responsibilities of Jason’s appointment were similar to that of the late Teh Soon Seng. The duties and the responsibilities of the CR as provided in both the letters of appointment are as follows:- “Your duties and responsibilities shall include but not limited to the following:

(a) Devote your time and attention to the business of the Group in China and shall at all time use your best endeavours to promote the interest and welfare of [the appellant’s] investments in China;

(b) Exercise and carry out all such powers and duties and shall observe all such directions and instructions as the Board of Directors may from time to time confer and impose;

(c) Oversee the overalls (sic) operations of and protect the interests of [the appellant’s] investment in China.” 19 | P a g e [26] It was submitted that the CR is the appellant’s agent to manage the appellant business in PRC. The CR reports directly to the appellant’s board and QSR, YSL and SRL being companies incorporated in PRC, require a person to be named as the LR. The late Teh Soon Seng was the LR of these companies before being replaced by Jason. While the appellant belatedly found out that Jason caused his own appointment as the LR of YSL and SRL in April 2018 i.e. before his appointment as the CR was finalised on 2 May 2018, nothing turns on this given that his appointment as the CR took retrospective effect from 23 March 2018. At the time, the appellant did not object to Jason’s appointment as the LR of these companies. [27] While the LR holds wide powers, such appointment may be terminated by the boards of these companies. In this regard, it was Jason’s contention that his appointment as these companies LR may only be terminated by the boards of these companies. [28] It was accordingly argued for the appellant that Jason’s appointment both as the CR and the LR constituted him an agent of both the appellant and its subsidiaries. (See: Meridian Global Funds Asia Ltd v Securities Commission [1995] 2 AC 500 at page 506-507) Jason’s Ouster [29] On 29 June 2019, the appellant decided to terminate Jason’s appointment as the CR and LR and director of:- a. Golden Plus (BVI) Pte Ltd; 20 | P a g e b. QSR; c. GCE; d. SRL; e. YIL; and f. YSL. [30] On the same day, Teh Wei Kian was appointed to be the new CR and LR of, inter alia, the same companies from which Jason was ousted. [31] The OS was filed on 4 July 2019 to essentially restrain Jason from acting as the appellant’s CR and LR given his ouster and for Jason to return to the appellant all the paraphernalia of the subsidiaries, including the common and official seals that he has in possession, control or custody. [32] Subsequent to the commencement of the OS, the appellant took steps to ratify its decision to terminate Jason from YSL and QSR in the following way:- a. In respect of YSL, the board of its immediate holding company, YIL, at a board meeting held on 15 July 2019, resolved to inter alia remove Jason as the LR, Chairman and director of YSL, to be replaced by Teh Wei Kian. This was ratified on 18 August 2019. b. This was followed by the Notice of Dismissal dated 16 July 2019 by YIL, dismissing Jason as the Chairman/LR of YSL. 21 | P a g e c. In respect of QSR, the board of its immediate holding company, Paradise Bazaar, passed a directors’ resolution on 26 August 2019 to remove Jason as the director, Chairman, CR and LR of QSR to be replaced by Teh Wei Kian. d. This was followed by the issuance of the Dismissal Letter dated 27 August 2019 by Paradize Bazaar, dismissing Jason as the Chairman/LR of QSR. [33] This left only one company, namely SRL that had not formally ratified the decision of the appellant. Counsel said that nothing turns on this. According to the appellant, the relevant question is whether the appellant has the right to directly terminate Jason as the CR and the LR. Insofar as it relates to his position as CR, it is clear that the appellant can do so given that he was appointed by the appellant to that position. [34] Counsel said that the answer to the question whether the appellant has the right to directly terminate Jason as the LR, is to be found in the corporate structure of the appellant’s group. In this regard, counsel for the appellant said that the only question is whether the subsidiaries could subsequently ratify the decision of the appellant. [35] He said that this is a matter of pure mathematics and that it can be shown that as a matter of mathematics the appellant controls the shareholding in each of the subsidiaries involved to the extent that it can get its decision ratified. As such, the law will not require the appellant to have to satisfy purely technical requirements before it is entitled to exercise its will. 22 | P a g e [36] Counsel said that against the backdrop of the allegations relating to Jason, the appellant needed to act quickly to remove Jason and appoint someone in his stead. It also needed to secure the assets of its subsidiaries, in particular the seals, which were in Jason’s possession. [37] It was submitted that the appellant acted out of necessity in the manner as described by VC George J (as he then was) in Avel Consultants Sdn Bhd & Anor v Mohd Zain Yusof & Ors [1984] 1 CLJ (Rep) 482 (p. 486 & p. 487); “It seems to me that the doctrine of Agency of Necessity is not without application in this case. In Halsbury's Laws of England 3rd Edn. Vol. 1 p. 157 para. 373 deals with the application of the doctrine, portions of which read as follows: Agency of necessity arises wherever a duty is imposed upon a person to act on behalf of another apart from contract, and in circumstances of emergency, in order to prevent irreparable injury. It may also arise where a person carries out the legal or moral duties of another in the absence or default of that other, or acts in his interest to preserve his property from destruction. The conditions which entitle an agent to exceed his authority under the doctrine of necessity are (1) that he could not communicate with his principal; (2) that the course he took was necessary in the sense that it was in the circumstances the only reasonable and prudent course to take; and (3) that he acted bona fide in the interest of the parties concerned. At the same time, though a strong case is required, it is not essential that any other course shall be an impossibility.” 23 | P a g e [38] This aside, the law also recognises that where “one can forecast with certainty the outcome, the court is not in the business of making people jump through unnecessary hoops and therefore you will not wait for the outcome of a preordained meeting.” Counsel referred to Breckland Group Holdings Ltd v London & Suffolk Properties Ltd [1989] BCLC 100 (“Breckland”) at page 103. [39] In the present case, counsel said that it is certain that Jason can be removed as the LR upon the appellant exercising its majority control over its subsidiaries. Thus, it was argued that the JC erred in concluding that only SRL, YSL and QSR could remove Jason as the LR. [40] In any event, both YSL and QSR (i.e. 2 of the 3 relevant subsidiaries) had removed Jason as the LR and what was left to be done was only the registration of the removal which axiomatically could not be done because Jason himself had possession of the seals. Thus, YSL and QSR had, in effect ratified the decision of the appellant to remove Jason. [41] According to counsel, doctrinally, ratification occurs where an act is carried out on behalf of a company in an irregular fashion and is subsequently accepted by the company with the act of ratification. So too here, insofar as YSL and QSR are concerned. In so far as SRL is concerned, nothing turns on the fact that the act was not ratified given the legal recognition of majority rule in Breckland. [42] Counsel referred to Bowstead and Reynolds on Agency (Article 13, p.54 (17th ed)) which reflects this principle:- 24 | P a g e “Where an act is done purportedly in the name or on behalf of another by a person who has no authority to do that act, the person in whose name or on whose behalf the act is done may, by ratifying the act, make it as valid and effectual, subject to the provisions of Articles 14 to 20, as if it had been originally done by his authority, whether the person doing the act was an agent exceeding his authority, or was a person having no authority to act for him at all.” PRC Law Issue [43] On the issue relating to PRC law and the removal of Jason as LR under that law, Jason’s position was that he could not be removed without YSL, SRL and QSR being in breach of PRC law. To counter this, it was contended that for the appellant this was not an issue that should have merited any consideration insofar as the final relief was concerned. If the subsidiaries were in breach of PRC law, the subsidiaries would have to deal with it. The appellant submitted that even if the subsidiaries would be in breach of PRC law, this cannot be an obstacle to the removal of Jason if the appellant had determined that Jason was not acting in its best interest. [44] Counsel said that in any event, a law firm in PRC, Messrs Jingtian & Gongcheng had provided an opinion dated 13 August 2019 to the effect that that neither the LR nor the companies he represents, would incur criminal liabilities due to the LR’s removal. Thus, it was contended for the appellant that the JC erred in taking this issue into consideration. 25 | P a g e Arguments for Jason [45] In opposing the OS, it was primarily argued by Jason’s counsel that the appellant lacked locus standi, and its Board of Directors’ resolution cannot bind the 6 foreign companies as they are separate legal entities. [46] It was contended for Jason that the JC had rightly found that the Letter of Appointment dated 2 May 2018 (“the LOA”) “did not intend to appoint [Jason] as a LR. The reason was obvious; Section 333 of the Companies Act 2016 only mandates for the appointment of a CR and not LR.” [47] Counsel said that the OS was predicated on s.333 CA 2016 and the concept of CR and LR are distinct. In this regard, s.333 CA 2016 limits the appellant to the right to appoint a CR only to vote at meetings of Malaysian companies of which the appellant is a member. Counsel emphasized that s.333 CA 2016 does not govern the appointment of a LR in the 3 Shanghai Companies. S.333 reads as: “333. Representation of corporations at meetings of members

Interpretation “company” means a company incorporated under this Act or under any corresponding previous written law;” [Emphasis and underlining added] [48] It was pointed out that none of the 6 foreign companies that are the subject matter of the OS and the injunction are companies incorporated under CA 2016. Further, the appellant is not a member i.e. shareholder, of the 6 foreign companies. Jason is therefore not a CR of the appellant for the 6 foreign companies for the purposes of s.333 CA 2016. [49] According to counsel, LR is a concept peculiar to PRC law. It relates to only 3 of the 6 foreign companies i.e. Yangfull Shanghai, Shanghai Roxy Leisure and Shanghai Golden Plus Quick Service Restaurant. The LR is a person who engages in civil matter such as the signing of contracts on behalf of the company, and is fully responsible for the operation and management of the company in the PRC of China. [50] Hence, s.333 CA 2016 does not authorise the appointment of a LR under PRC law. Counsel said that the LOA dated 2 May 2018 issued by the appellant is consistent with this position. It only purported to appoint him as CR over the 6 foreign companies. The appellant did not appoint Jason as LR of these companies. Jason was appointed as the LR of the 3 Shanghai Companies by the Board of Directors and shareholders of each of the 3 Shanghai Companies, and not the appellant. 27 | P a g e [51] Counsel for Jason also made the following additional points. She said that the appellant was faced with the insurmountable hurdle that they did not appoint Jason as the LR of the 3 Shanghai Companies. [52] As such, the appellant had to argue in the High Court and again asserted in its Memorandum of Appeal (per item 3) that Jason’s appointment as LR should be implied from the appellant’s LOA because Jason’s duties in the LOA extends beyond attending and voting at meetings. Counsel for Jason said that this argument is untenable because:

(i) this entire action is brought under s.333 CA 2016; and

“We begin with the rule in Foss v Harbottle (1843) 67 ER The rule has two limbs. The first limb of the rule – and the present appeal has nothing to do with its application – is that a court will not interfere with the internal workings of a corporation upon a matter which is capable of being ratified by a majority of shareholders present and voting at a general meeting of the company. The content of the first limb, although it derives its name from the case just cited, in truth finds its origins in the earlier decision in Mozley v Alston (1847) 41 ER 833. The modern restatement of the rule is to be found in the judgment of Harman LJ in Bamford v Bamford [1970] Ch 212; [1969] 1 All ER 969; [1969] 2 WLR 1107. The second limb of the rule is of much wider purport and is universal in its application. It is based upon the doctrine that only he who has been injured may sue. Translated into company law, the proposition may be stated thus. If a wrong has been done to a company, then it is the company which is the proper plaintiff in an action brought to redress the injury. An individual shareholder or even a group of shareholders forming a minority on the floor of a general meeting of the company have no locus standi to bring an action to remedy a wrong done to a company. See Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204; [1982] 1 All ER 354; [1982] 2 WLR 31. Perhaps the clearest statement of the rule is to be found in the judgment of Jenkins LJ in Edwards v Halliwell [1950] 2 All ER 1064 at p 1066: The rule in Foss v Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. 32 | P a g e Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that, if a mere majority of the members of the company or association is in favour of what has been done, then cadit quaestio.” [Emphasis and underlining added] [62] Counsel for Jason emphasized that the appellant’s allegations essentially are in respect of the 3 Shanghai Companies. Therefore, as the LR of the 3 Shanghai Companies, Jason is answerable to the Board of those companies and their shareholders and, not the appellant. The appellant is neither the Board of the 3 Shanghai Companies nor their shareholder. As such, any purported improprieties by Jason is a matter for the 3 Shanghai Companies and their Board of Directors to challenge. Lack of Jurisdiction [63] Turning next to the issue of jurisdiction, counsel for Jason argued that the lack of jurisdiction has been “disguised”. According to counsel, the true parties are the 6 foreign companies; and within these, the 3 Shanghai Companies in which Jason is the LR as a matter of PRC law. [64] However, the appellant seeks delivery of the assets of the 3 Shanghai Companies i.e. their books, assets and seals without making these 3 Shanghai Companies parties to the OS. 33 | P a g e [65] Counsel said that Jason is merely an agent of the Hong Kong companies and the 3 Shanghai Companies. And it is trite law that it is the principal who should be sued, if at all, for the appellant’s purported loss. In T & TT Enterprise Sdn Bhd v Lembaga Pembangunan dan Lindungan Tanah [2009] 2 MLJ 205; [2008] MLJU 762 CA, Low Hop Bing JCA in delivering the judgment of the Court of Appeal held that :- “[17] In law, where a party enters into a contract as an agent of the principal, s 179 of the Contracts Act 1950 would apply. Section 179 provides for the enforcement of the agent's contract against the principal in the following words: 179 Enforcement and consequences of agent's contracts. Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences as if the contracts had been entered into and the acts done by the principal in person. [18] Section 179 renders a principal liable for the act of his agent. As between the principal and third persons, the contract or act of the agent is one which is binding on the principal: see the commentary on s 226 (equipollent to our s 179) Pollock and Mulla on Indian Contracts and Specific Relief Acts, 12th Ed, at p 2290 (see also Bryant, Powis and Bryant Ltd per Lord MacNaghten at p 180). [19] In order to successfully invoke the law contained in s 226 in India and in our s 179, it is incumbent on the plaintiff to establish that the defendant is in fact the principal, failing which, the defendant cannot be made liable therefor: see Watteau v Fenwick [1893] 1 QB 346 (HC) per Wills J.” 34 | P a g e [66] Accordingly, since the proper parties are the 6 foreign companies, all of whom are not incorporated under the laws of Malaysia, the Malaysian Courts have no jurisdiction over them. The books and assets subject to the injunction which are sought, are all located outside Malaysia. All the acts complained of occurred outside Malaysia. Hence, the OS was commenced without jurisdiction [67] Counsel referred to s.23 of the Courts of Judicature Act 1964 in relation to the civil jurisdiction of the High Court. It reads:- 23(1) Subject to the limitations contained in Article 128 of the Constitution every High Court shall have jurisdiction to try all civil proceedings where —

(a) the cause of action arose, or

(b) the defendant or one of several defendants resides or has his place of business, or

(c) the facts on which the proceedings are based exist or are alleged to have occurred, or

(d) any land the ownership of which is disputed is situated, within the local jurisdiction of the Court and notwithstanding anything contained in this section in any case where all parties consent in writing within the local jurisdiction of the other High Court. 35 | P a g e [68] In Matchplan (M) Sdn Bhd & Anor v William D Sinrich & Anor [2004] 1 CLJ 810; [2004] 2 MLJ 424 CA, Gopal Sri Ram JCA (he then was) in delivering the majority judgment of the Court of Appeal, summarised the principles governing jurisdiction along the following lines :- “4 Before dealing with the merits of this appeal, it is appropriate that this opportunity be taken to re-state the principles generally governing jurisdiction in the field of private international law. They are beyond argument. 5 To begin with, as a matter of private international law, the High Court in Malaya (and this applies equally to the High Court in Sabah and Sarawak) may entertain an action in personam only if it has jurisdiction to do so. It is to be emphasized that the expression 'jurisdiction' is one that may be used in a variety of senses and therefore takes its colour from the context of its use (see Lipohar v The Queen [1999] 200 CLR 485, at pp 516-517). In the present context, it refers to the authority of the High Court in three senses, namely, jurisdiction over the parties; jurisdiction over the subject matter of the action; and jurisdiction over the cause of action. 6 First, jurisdiction over parties. The jurisdiction of the High Court is available to any plaintiff, Malaysian or foreign, save an enemy alien in time of war (see Porter v Freudenberg [1915] 1 KB 857). Next, any defendant, save those immune from suit, for example, foreign sovereigns, diplomats and other consular officers protected by written law, may be impleaded as a defendant to an action governed by principles of private international law. 7 Second, jurisdiction over the subject matter of the action. Here, it is settled by what has come to be known as the rule in the Mocambique (see British South Africa Company v Companhia de Mocambique [1893] AC 602) that the High Court has no jurisdiction to adjudicate upon rights of property in or the possession of foreign immovable property even though the parties to the dispute are domiciled or resident in Malaysia (see Potter v Broken Hill Pty Co Ltd [1906] 3 CLR 479;Hesperides Hotels Ltd v Muftizade [1979] AC 508). 36 | P a g e The rule in the Mocambique may apply to foreign movable property as well (seeTyburn Productions Ltd v Conan Doyle [1991] Ch 75; Pearce v Ove Arup Partnership [1997] Ch 293). However, in personam relief may be decreed in an action relating to foreign property if the defendant is resident within the jurisdiction of the High Court (see Penn v Lord Baltimore [1750] 27 ER 1132; Richard West & Partners (Inverness) Ltd v Dick [1969] 2 Ch 424). 8 Third, jurisdiction over the cause of action. The jurisdiction of the High Court over a cause of action rests on the twin pillars of effectiveness and submission. Effectiveness means that any judgment of the court in the given dispute can be enforced. Submission refers to a defendant submitting to the jurisdiction of the court. Absent either of these, the court cannot seise itself of the cause of action. In Malaysia, the High Court is seised of jurisdiction over a dispute in any of the following three cases:

(i) where the defendant is served with the writ or other originating process within the jurisdiction; or