Lai Chee Leong v Tif Holdings Sdn. Bhd. (BA-24NCC-69-06/2023)

TIF HOLDINGS SDN. BHD. (No. Pendaftaran: 201901010364 (1319692-U))

LIAW YEE KHAI (No. K/P: 870702-35-5041)

EDWIN LOH KHENG HUI (No. K/P: 831115-10-5599) DEFENDAN-DEFENDAN S/N QV/lBjrPkqdJlF/6gbjgQ GROUNDS OF JUDGMENT Introduction [1] The 1st Defendant, TIF Holdings Sdn Bhd ( ) was incorporated on 26-3-2019. The Plaintiff is a minority shareholder, holding 33% of the ordinary shares of TIF Holdings while the 2nd and 3rd Defendants respectively hold 34% and 33% of the remaining shares. [2] The Plaintiff filed this action for relief under Section 346 of the Companies Act 2016 ( ), claiming to be oppressed by the majority. The Plaintiff seeks an order that the 2nd and 3rd Defendants buy him out and/or pay him damages. Alternatively, he prays that TIF Holdings be wound up. Background Facts [3] As mentioned, TIF Holdings was incorporated on 26-3-2019 to carry on business as a holding company and provide business consultancy services. It holds 60% equity interest in Malt Signature ) which in turn wholly owns Malt Signature Sdn MSSB It is not disputed that MSSB operates the business of an F&B outlet called Brewtiful Café + Bar. [4] The Defendants contend that TIF Holdings had tapped on the expertise of one B Capital Holdings Sdn Bhd when it entered into the F&B business with the setting up of Brewtiful Café + Bar. Therefore, the Defendants say that TIF Holdings only provided capital as a 60% shareholder and is not involved in the operation of Brewtiful Café + Bar, although it has a nominee director on the Board of Directors of both MSH and MSSB. S/N QV/lBjrPkqdJlF/6gbjgQ [5] TIF Holdings also attempted to enter into another business venture involving stem cells. It is also not disputed that the company had signed an agreement with one Suah Wai Mung for certain exclusive rights. However, this venture failed and the company started a litigation against the said Suah Wai Mung for misrepresentation and other causes of actions ( . [6] Based on the Pl the following transpired in the year 2021: a) The relationship between the three (3) directors soured due to disagreements; b) The Plaintiff proposed to sell his shares in TIF Holdings to the 2nd Defendant so that he could exit, but this was declined; c) The Plaintiff tendered his resignation as a director of TIF Holdings on 13-10-2021; and d) The Plaintiff was slated to be a witness for TIF Holdings in the TIF Lawsuit but he decided not to testify because he was unhappy with the 2nd and 3rd Defendants. [7] On 3-11-2022, solicitors for the Plaintiff had demanded for TIF company records since March 2021 to be furnished within forty-eight (48) hours, namely: a) all minutes of all board and shareholder meetings; b) all resolutions of the board and members; c) financial statements; d) agreements entered into by the company; and S/N QV/lBjrPkqdJlF/6gbjgQ e) all records kept pursuant to Section 245 of the CA 2016 (accounting records). [8] On 24-11-2022, the Plaintiff requisitioned an EGM of TIF Holdings and requested for the following from the year 2021 to current (24-11-2022) to be presented by the Board of Directors: a) financial statements; b) bank statements; c) update on all business decisions made; d) update on performance of businesses; and e) update on existing and future strategic planning. Issues for Determination [9] The Plaintiff alleges that he could not get any information about the business and financial performance of TIF Holdings, in that the 2nd and 3rd made verbally to the 2nd Defendant on unspecified dates, in writing to the company secretary through solicitors on 3-11-2022, and in his agenda when he called for the EGM. [10] According to the Plaintiff, this amounts to actionable conduct within the meaning of Section 346 of the CA 2016, namely that the affairs of TIF Holdings were being conducted or the powers of the directors were being interests as a shareholder of the Company. S/N QV/lBjrPkqdJlF/6gbjgQ [11] In connection with the allegation that the 2nd and 3rd Defendants failed to furnish information, the Plaintiff further contended that he had a legitimate expectation to be furnished with said information for the following reasons: a) TIF Holdings was in essence formed as a partnership among the Plaintiff, the 2nd and 3rd Defendants, following an earlier venture called Trisomax Management Sdn Bhd; and b) The Plaintiff was assured by the 2nd and 3rd Defendants that they would continue to provide him with all financial information and updates concerning the affairs of TIF Holdings after he resigned as a director. [12] Based on the above, the following are the issues for determination: a) Whether TIF Holdings is a quasi-partnership such that the ; b) Whether the Plaintiff was entitled to receive the information and records he demanded access to; and c) Whether the conduct of the 2nd and 3rd Defendants in amount to interests as a shareholder. S/N QV/lBjrPkqdJlF/6gbjgQ Analysis and Findings Whether Access Rights Tied up with Shareholding [13] Generally, it is understood that the management of a company is within the domain of the Board of Directors and shareholders are not entitled to participate or interfere in management in their capacity as shareholders. As a corollary to that, shareholder access to the records and information of the company is also limited. [14] seeking continuing access to management information may be the assertion that TIF Holdings is a quasi-partnership However, there is no corroborating evidence for this assertion. The contrary appears to be true, i.e. that the Plaintiff decided to step away from management by resigning as a director. [15] The Defendants therefore denied and put the Plaintiff to strict proof that the 2nd and 3rd Defendants gave any assurances that they would continue to provide the Plaintiff with financial information and updates concerning the affairs of TIF Holdings after he resigned as a director. They took the position that the Plaintiff was not entitled to have such access as a shareholder and told him so. [16] Consistent with the Plaintiff upon his resignation, the parties had negotiated and signed a written indemnity which was given by the Defendants to the Plaintiff for the period he was a director. S/N QV/lBjrPkqdJlF/6gbjgQ [17] In the case of Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 CLJ Rep 441, the Privy Council made this point: At the end of the day the Judge must decide the petition on the evidence before him. If allegations are made in affidavits by the petitioner and those allegations are credibly denied by the respondent's affidavits, then in the absence of oral evidence or cross-examination, the Judge must ignore the disputed allegations. The Judge must then decide the fate of the petition by [18] Applying the above dicta to this case assertions why the 2nd and 3rd Defendants should continue to provide him with financial information and updates concerning the affairs of TIF Holdings after he had resigned as a director to be credibly disputed. [19] Thus, the as to the basis for his so-called legitimate expectations are disregarded and ight to information as a shareholder is assessed according to the law. Shareholder rights to company information [20] By law, the records and information of a company that a shareholder is entitled to under the CA 2016 are as follows: a) Financial statements - Section 248 of CA 2016 b) Directors report - Section 252 of CA 2016 c) Resolutions and minutes of members Section 342 of CA 2016 S/N QV/lBjrPkqdJlF/6gbjgQ [21] Where no Annual General Meetings are called, financial statements and directors' reports must be circulated to members according to the timelines in Section 258 of CA 2016 i.e. generally within six (6) months of its financial year-end. The resolutions and minutes of members are to b office for the period of mandatory document retention as stipulated. [22] In addition, Section 195 of CA 2016 allows members to review the management of a company in a meeting of members in these terms: The chairperson of a meeting of members of a company shall allow a reasonable opportunity for members at the meeting to question, discuss, comment or make recommendation on the [23] Thus, the Plaintiff was not entitled to demand access to any bank statements, management accounts and other accounting records maintained under Section 245 of CA 2016, or the minutes of meetings and resolutions of the directors. The Plaintiff was only entitled to the shareholder rights accorded in Sections 248, 252 and 342 of CA 2016. Whether the 2nd and 3rd conducts amount to oppression of minority [24] In the case of Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113 ), the Federal Court considered the guidelines on how the [then s. 181] provision is to be approached as set out by Lord Wilberforce in Re Khong Thai Sawmill and stated: S/N QV/lBjrPkqdJlF/6gbjgQ It is important to emphasize that much of what Lord Wilberforce said in his advice were mere guidelines and not inflexible propositions of law: for, the question whether there was oppression or disregard or unfair discrimination or whether the conduct eminently be determined according to the facts of each particular [25] The peculiar facts in Owen Sim led the Federal Court to highlight that [then s. 181] provision invites attention to events considered as part of a consecutive story rather than events in isolation. In the result: consequences of the wrong done in determining whether there is [26] The Plaintiffs rely on the case of Tan Tung Kwok & Ors v Lau Kah Hing & Ors [2020] 1 SSLR 135 in which the directors had failed in their statutory duty to hold annual general meetings Company from year 2010 to 2017 and the Court held this to be a disregard of the interests of the Plaintiffs as members because: [46] The failure kept the plaintiffs in the dark about the true financial position of the company and the value of their respective S/N QV/lBjrPkqdJlF/6gbjgQ [27] statements for seven (7) years in Tan Tung Kwok the unmasking of unauthorized monthly payments to the Defendants and family members; failure to submit tax returns, meeting and attempted dilution of shareholding. Thus, the facts are distinguishable. [28] The Plaintiff also relied on the case of Ho Yao Hong & Ors v Ho Yaw Ming & Another Appeal [2023] 4 MLRA 427 ). The observation of the Court of Appeal in that case is that in a typical scenario, the failure to convene AGMs and file audited accounts would oppress a shareholder who is not privy to management. However, the Court of Appeal rejected the complaint on the facts of that case: convene AGMs and file audited accounts was oppressive specifically against the Plaintiff as minority shareholder and was implicit participation, culpability, and acquiescence). [29] In distinguishing between corporate wrongs and those that amount to oppression or disregard of minority shareholder rights, the Court of Appeal in Ho Yao Hong provided the following guidance: oppression and each limb involves the interests of different personas. The first limb deals with the purpose and benefactor to the conduct or misconduct. Thus, in an oppression action, it must S/N QV/lBjrPkqdJlF/6gbjgQ be proven that the conduct or misconduct must by design specifically benefit the OPPRESSOR (the majority). It does not suffice to merely prove a conduct or misconduct. The 2nd limb deals with the consequence and the extent of the conduct or misconduct. Thus, in an oppression action, it must be proven that the conduct or misconduct must by design specifically affect and oppress the interest of the OPPRESSED (the minority). It does not suffice to merely prove that a conduct or misconduct was committed again [30] Having regard to the law on what amounts to actionable conduct under Section 346 of CA 2016, against the 2nd and 3rd Defendants falls far short of what may be considered to be oppressive to or in disregard of the interests of the minority shareholder. The reasons for this conclusion are as follows:

Members resolutions and minutes [31] On 8-11-2022, the company secretary for TIF Holdings had furnished the letter and resolution of 13-10-2021 There is no evidence that there are further documents in this category that have been withheld. [32] Further and in any event, Section 342 of CA 2016 allows the Plaintiff to attend at the office of the company secretary to inspect the records mandated by law to be maintained there.

Financial Statements [33] The EGM was called by the Board of Directors and held on 21-12-

The information presented comprised the financials of TIF Holdings as at 30-6-2020, a summary of monthly fixed expenses and the bank balance as at 30-11-2022 and the following update: [34] The Plaintiff sent a proxy who made a recording of the EGM. Based on the transcript, it was explained by the 2nd Defendant that: a) Only the financial statements as at 30-6-2020 was available as at the date of the EGM; b) The delay in settling the financial statements was due to the Covid-19 lockdowns; c) The financial statements for the year ended 30-6-2020 was finalised but the external auditor had not signed off on it; d) extension of time to March 2023 to prepare the accounts for 2021; e) The general ledger and other records of the company for 2021 would be furnished to the accountants after the 2020 accounts were settled; S/N QV/lBjrPkqdJlF/6gbjgQ f) The TIF Lawsuit against Suah Wai Ming was struck off with liberty to refile because the Plaintiff did not want to testify; g) not attend because the directors refused to provide him with h) The c TIF Holdings and the company therefore had to reserve RM80,000 to engage new solicitors; i) No business forecasts could be made because of the need to focus on recouping the RM500,000 from the claim against Suah Wai Ming in the TIF Lawsuit; j) The only business operations that TIF Holdings was involved in was that of Brewtiful Café + Bar which was operating as usual; and k) A separate meeting would have to be held to get more details about the operations of Brewtiful Café + Bar because there is another shareholder involved. [35] On 9-1-2023, the Plainti to query why no audited financial statements have been prepared from the inception of the company. On 17-1-2023, the auditor responded to say that they had not accepted the nomination to be Company auditor. [36] The Defendants say that the Plaintiff was still a director when the resolution was signed to appoint the said auditor, but were later informed that the auditor declined to accept the appointment due to the disputes between the Plaintiff and the Defendants. S/N QV/lBjrPkqdJlF/6gbjgQ [37] The delay in settling the 2020 and 2021 audited financial statements were corporate wrongs and no specific prejudice to the Plaintiff / benefit to the Defendants were shown. The Plaintiff was also implicated the Plaintiff in the delay in the 2020 accounts since he was still a director until 13-10-2021. [38] There are no specific allegations of mismanagement of the company and the precarious business and financial situation of TIF Holdings for the reasons explained (the TIF Lawsuit and the impact of Covid-19 on Brewtiful Café+ Bar) was not credibly disputed, as was the stated focus of the Board of Directors in the result. As it related to updates on Brewtiful Café+Bar, MSSB appears to have filed up to date financial statements. Conclusions [39] Based on the above, this Court is of the view that the 2nd and 3rd Defendants have furnished reasonable and adequate information to the Plaintiff comprising what would be construed as financial statements and [40] It cannot be said that the conduct of the 2nd and 3rd Defendant were specifically designed to benefit themselves or to prejudice the interests of the Plaintiff. The 2nd and 3rd Defendants were equally exposed to the fortunes and failures of TIF Holdings. S/N QV/lBjrPkqdJlF/6gbjgQ [41] Accordingly, I dismiss Enclosure 1 with costs of RM10,000.00. Bertarikh : 10 Disember 2024 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam Untuk Plaintif : Sharmaine Mok bersama Yong Won Yee (Tetuan JC Mok & Co.) Untuk Defendan-Defendan : Kelvinder Singh Sidhu (Tetuan Andy Pheh & Kel Sidhu)