Lau King Yew v Tan Yuh Pei (WA-24NCC-289-05/2025)

TAN YUH PEI (No. K/P: 761221-10-5209)

KOH KEAN MUM (No. K/P: 700924-10-5345)

ONETECH SOLUTIONS HOLDINGS BERHAD (No. Pendaftaran: 201901002105 (1311431-K)) …DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT S/N mNBoteIoEe/dwkOxvtdHA

The Plaintiff is a substantial minority shareholder of the 3rd Defendant, Onetech Solutions Holding Berhad (“Company”), a public listed entity on the LEAP market. He filed this action for remedies under section 346 of the Companies Act 2016 (“CA”) as a member of the Company. Background facts

The Plaintiff and 1st Defendant founded One ERP Solutions Sdn Bhd (“One ERP”) using their respective wives as proxies back in

One ERP provided IT consulting, training, system integration, software customization and implementation of JD Edwards ERP, an all-in-one business management software.

They operated the business on a 50-50 basis at the shareholder and board levels until 2019, when they incorporated the Company on 16-1-2019 as a holding company and listing vehicle. In a restructuring of the business, the Plaintiff and 1st Defendant relinquished direct shareholding in One ERP to the Company, and the Company was listed on the LEAP Market on 2-9-2020 (“Restructuring”).

One ERP and 2 other subsidiaries, iTech Plantation Soft Sdn Bhd and Onetech Innovations Sdn Bhd, became wholly-owned subsidiaries of the Company (“Subsidiaries”). The Plaintiff was the Managing Director and the 1st Defendant was Executive Director, S/N mNBoteIoEe/dwkOxvtdHA both identified as key management personnel of the group of companies (“Group”).

The shareholding of the Company after the Restructuring was as follows: Shareholders Percentage shareholding Plaintiff 45% 1st Defendant 35% 2nd Defendant 10% Public investors 10% It was pointed out that the LEAP (Leading Entrepreneur Accelerator Platform) market in Malaysia is a specialized equity market accessible only to “Sophisticated Investors” i.e. investors who meet criteria such as having high net assets or income, and not to the general public.

The public shareholding spread in the Company was later reduced from 10% to 3.17% as the 1st and 2nd Defendants acquired more shares from the market in 2023 and 2024. Analysis and findings

The Plaintiff complains that the 1st and 2nd Defendants have conducted the affairs of the Company, and/or exercised their powers in a manner that is oppressive and/or in disregard of and/or unfairly prejudicial to the Plaintiff’s interests as a member of the Company based on the following allegations: S/N mNBoteIoEe/dwkOxvtdHA a) his removal as a director of the Company on 23-9-2022 and as a director of the Subsidiaries on 19-11-2022; and b) the 1st and 2nd Defendant’s actions after his removal that the Plaintiff says evidence their mismanagement of the Company and personal enrichment, namely:

Deterioration of the Company’s financial performance;

(ii) Self-appointment by the 1st and 2nd Defendants as CEO and COO with RM35k and RM30k salaries; and

(iii) Purchase of luxury vehicles using the funds of One ERP for their personal use. Removal as a director

At an EGM of the Company on 23-9-2022, the 1st and 2nd Defendants tabled a resolution to remove the Plaintiff as a director of the Company and replace him with a Ms. Wong Ai Ling. Despite representations at the EGM that his proposed removal would be unfair, illogical and for no good reason, the Company voted to remove him as a director.

According to the Plaintiff in this case, he and the 1st Defendant were appointed concurrently as directors in all the companies within the Group, establishing a consistent pattern of joint leadership. He was primarily responsible for sales and the 1st Defendant was primarily responsible for post-sales delivery of projects before and after the Restructuring. S/N mNBoteIoEe/dwkOxvtdHA

In their respective capacities, the Plaintiff and the 1st Defendant were each remunerated equally through One ERP, each receiving a monthly basic salary of RM20,000 immediately before the Plaintiff’s removal as director. According to the Plaintiff also, the 2nd Defendant was a non-independent director, and was not involved in the day to day management of the Group.

Considering the origins and joint management of the Group companies since inception, the Plaintiff highlighted his significant role in the management and operations, argued that the Company is a quasi-partnership, and that consequently, he had a legitimate expectation to remain in management even after the Restructuring.

The general rule is that a company is governed by its constitution (Eng Man Hin & Anor v King’s Confectionary Sdn Bhd & Ors [2005] 8 CLJ 77 (“Eng Man Hin”)). In some circumstances, equity may intervene to make it unjust for one shareholder to insist on legal rights or to exercise them in a particular way, such as the right of the majority to remove a director according to the constitution.

As explained by Ramly Ali J in Eng Man Hin, this may arise in “Ebrahimi” type of companies, with reference to Ebrahimi v Westbourne Galleries [1972] 2 All ER 492 (“Ebrahimi”): “An "Ebrahimi" type of company is a "quasi-partnership" company having the following three elements, namely:

an association formed or continued on the basis of a personal relationship involving mutual confidence; S/N mNBoteIoEe/dwkOxvtdHA

(ii) an agreement or understanding that all or some of the shareholders shall participate in the conduct of the business; and

(iii) restriction upon transfer of the members interests so that if confidence is lost or one member is removed from management, he cannot take out his stake and go elsewhere.”

As Lord Wilberforce himself observed in Ebrahimi, one should not press the quasi-partnership analogy too far: “A company, however small, however domestic, is a company and not a partnership or even a quasi-partnership”.

This Court finds that the Plaintiff could have made a compelling case on the facts of this case before the Restructuring took place in 2019. However, it could find no evidence of any unwritten understanding between the founders that survived the Restructuring and public listing of the Company. The Plaintiff was content to hold only shares in the listed Company and no provision was included in the constitution of the Company that the Plaintiff was entitled to permanent representation on the Board.

The Plaintiff relied on CJ Polymers Sdn Bhd v Sim Chin Hu & Ors and other appeals [2025] 8 CLJ 695 (“CJ Polymers”) where a quasi-partnership and the understanding between the founders on management participation was held to have survived the change of shareholding, such that the subsequent removal of one co-founder by a vote was found to be oppressive. S/N mNBoteIoEe/dwkOxvtdHA

Authorities like CJ Polymers must be read in the context of their own facts. In all cases, the premise of any finding that the lawful removal of a director according to the written constitution of a company amounts to oppression of that director, must be proof of an understanding among the shareholders that management participation rights are and remain attached to his shareholding.

In this case, the Restructuring entailed express changes, particularly to the shareholding of One ERP and control through the Company. If a permanent seat on the Board of Directors was important, the Plaintiff should have put such matters in writing in the constitution of the Company (Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd and other Appeals [1996] 1 MLJ 661 (“Tuan Haji Ishak”)).

In this case, this Court agrees that like Dato Low Mong Hua v Banting Hock Hin Estate Co Sdn Bhd & Ors [2003] MLJU 449, any legitimate expectation that had existed did not survive the Restructuring. In particular, no such understanding could have been known to shareholders from the public who voted in favour of the resolution to remove the Plaintiff as a director on 23-9-2022.

That the Plaintiff and 1st Defendant are founders, key management personnel and substantial minority shareholders, are facts that do not by themselves establish the existence of such an understanding, enforceable in equity against the force of a majority vote. If at all, it was a private arrangement that did not bind the Company or other shareholders. S/N mNBoteIoEe/dwkOxvtdHA

As cited by the Court of Appeal in Tuan Haji Ishak, Company Law by Farrar (3rd Ed, 1991) noted as follows: “… as Lord Wilberforce stressed in Ebrahimi v Westbourne Galleries Ltd the case for giving effect to equitable considerations must be made in each instance and it is not sufficient simply to assert that the company is small or private, for in many cases the basis of the relationship will be adequately and exhaustively laid down in the articles. If it is so defined by the articles or, for example, by the articles supplemented by a shareholders’ agreement, then there is little room for finding further legitimate expectations beyond those outlined in the documents. The interests of shareholders in larger private and public companies, on the other hand, are likely to be quite different from those of shareholders in quasi-partnerships and considerably more restricted. In these larger companies there is usually no underlying personal relationship, employment is rarely an issue and the shareholders are more interested in such matters as dividend yield and capital appreciation than involvement in the day-to-day running of the company. If they become dissatisfied, especially if it is a public company, they can sell their shares and withdraw from the company. Here the members rarely have expectations beyond their strict legal rights as provided by the articles. That is not to say that s 459 does not apply to larger private companies and public companies for the section is clearly not limited to quasi-partnership. The point is that it may be harder to establish conduct which is unfairly prejudicial to the interests of the members in such companies. For S/N mNBoteIoEe/dwkOxvtdHA example, in Re Blue Arrow plc the petitioner failed to establish any expectation that the company's articles would not be altered so as to enable her to remain in office. Vinelott J pointed out that as the company was a public listed company, outside investors were entitled to assume that the whole of the company's constitution was contained in its articles and was not subject to other expectations or agreements which were not disclosed.” [Emphasis added]

In relation to his removal from the Board of Directors of the Company, the Plaintiff took particular issue with the reason cited i.e. “unsuitability to spearhead business growth strategies” and called it a pretext after demonstrating that the Group had been profitable under the Plaintiff’s management and loss making thereafter.

It is not disputed that the Plaintiff’s removal was done in accordance with the constitution of the Company. As the Plaintiff had the opportunity to make representations to the shareholders why he should not be removed, it cannot be oppression when the proposed resolution passed by majority vote.

As a LEAP market company, the investors from the public who voted for the Plaintiff’s removal are in fact sophisticated investors. There is no suggestion that they were complicit with the 1st and 2nd Defendants in voting for the Plaintiff’s ouster as a director. Shareholders can vote according to their own wishes, rationally or irrationally or for no reason at all. S/N mNBoteIoEe/dwkOxvtdHA

In any case, without establishing any right in equity to have a permanent seat on the Board, his removal affects him in his capacity as a director only, and is not a proper basis for a shareholder oppression action (Soh Jiun Jen v Advance Colour Laboratory Sdn Bhd & Ors [2010] 5 MLJ 342).

As a minority shareholder of the Company, the Plaintiff also argued that there was oppression by mismanagement of the Company’s directors, relying on Ng Chee Keong v Ng Teong Kiat Highland Plantation [1980] 1 MLJ 45. Though it is open to the court to find that serious mismanagement of a company’s business constitutes conduct that is unfairly prejudicial to the interests of the shareholders, the court will normally be very reluctant to interfere in internal managerial decisions.

Per Buckley J in Re Five Minute Car Wash Services Ltd [1966)] 1 All ER 242: “Unwise, inefficient and careless management does not constitute oppressive conduct. The mere fact that a member of a company has lost confidence in the manner in which the company's affairs are conducted does not lead to the conclusion that he is oppressed; nor can resentment at being out voted; nor mere dissatisfaction with or disapproval of the conduct of the company's affairs whether on grounds relating to policy or to efficiency however well founded amounts to oppression if there is no unfair prejudice.” S/N mNBoteIoEe/dwkOxvtdHA

There are conflicting reasons cited for the change in the fortunes of the Company as recorded in its financials after 2022. The Plaintiff blamed the 1st and 2nd Defendants, while they proffered counter-arguments about external market conditions described as changes in the ERP industry landscape and reduction of scope or termination of services by customers and/or customer migration to the Plaintiff who later set up a competing business.

These arguments serve to demonstrate why it is not generally the function of the Court to resolve disagreements on matters involving commercial judgment in the internal management of companies. This Court is ill-qualified to make a finding on the matters detailed. Fortunately, there is no need for the Court to do so as the rule on the evaluation of affidavit evidence set out in Tay Bok Chin v. Tahansan Sdn Bhd [1987] CLJ (Rep) 24 applies: “… 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 consideration of the undisputed facts”.

Apart from the financials of the Company, the Plaintiff also attribute specific actions of the 1st and 2nd Defendants in (a) circumventing his proposal to limit the remuneration of directors by resigning and appointing themselves as CEO and COO under service contracts with high monthly salaries, and (b) procuring One ERP to buy new S/N mNBoteIoEe/dwkOxvtdHA luxury vehicles for their use. Now these are matters that at first blush, appear unseemly when the Company financials were in a poor state, but are they oppressive and/or in disregard of and/or unfairly prejudicial to Plaintiff’s interests as a member?

This Court is of the view that there is nothing jarring in these actions when considered in context i.e. the new vehicles were replacement vehicles for existing ones, one of which had been approved when the Plaintiff was still a director. It is also not disputed that the top management of the Company comprising the Plaintiff and the 1st Defendant previously drew RM20k each.

Under the new management of the 1st and 2nd Defendants, the new Board of Directors drew up service contracts and paid the CEO and COO RM30k each, which was later reduced to RM22k as an austerity measure. The service contracts and payment of remuneration to the 1st and 2nd Defendants were transparent and not wholly disproportionate for their executive functions. They were also not directors’ fees requiring shareholder approval, although the Board of Directors of the Company remain accountable to shareholders at general meeting for their decisions in this regard. These are matters of internal management and cannot be said to be irregular, dishonest or surreptitious acts of misappropriation.

In fact, the Plaintiff has not been able to point to any evidence of misappropriation of Company funds by the 1st and 2nd Defendants despite his suggestive reference to the recorded reduction in the Company’s cash balances. S/N mNBoteIoEe/dwkOxvtdHA

Ultimately, the Plaintiffs’ asserted and unasserted reasons for the financial deterioration of the Group after the Plaintiff’s removal as a director must also be considered in the context of the proper plaintiff rule. In Low Cheng Teik & Ors v Low Ean Nee [2024] 5 MLJ 580 (“Low Cheng Teik”) the Federal Court recently restated the parameters of an oppression action (section 346 of the CA) and a derivative action (section 347 of the CA) to avoid any improper circumvention of the proper plaintiff rule in a shareholder action. The Federal Court held: “[95] In summary, the legal ‘test’ provides that where the nature of the act, omission or misconduct is oppressive or unfairly prejudicial to a shareholder, and the resulting injury and loss may be classified as having been suffered directly and specially or separately and distinctly by the shareholder in such capacity, as opposed to loss or injury suffered by the company or all the other shareholders, then oppression is made out and the cause of action vests in the shareholder. In such an instance, s 346 provides the remedies available. [96] If, however, the act, omission or misconduct is an injury done to the company, resulting in a loss to the company, then the cause of action vests in the company and s 347 is the proper remedy to be utilised. This situation arises commonly where the injury causes loss to all shareholders alike such that it cannot be said that the loss is suffered distinctly, separately or uniquely by any single shareholder.” S/N mNBoteIoEe/dwkOxvtdHA

The rationale for the rule against reflective loss was also clarified in Low Cheng Teik, referring to the United Kingdom Supreme Court decision in Marex Financial Ltd v Sevilleja (All Party Parliamentary Group on Fair Business Banking intervening) [2021] AC 39; [2020] UKSC 31: “[113] The judgment in Marex has the effect of reaffirming the narrow and bright-line rule of law that prevents a shareholder from claiming damages on the basis of a fall in the value of his or her shares or by reference to a reduction in dividends, where the company has a claim against the same defendant for the same wrongful action. There are, moreover, no exceptions whether or not the company pursues its own claim. Underlying this rule is the rationale that the shareholder does not suffer a loss that is distinct from that of the company. Permitting a shareholder to bring such a claim would contravene the rule in Foss v Harbottle, namely, that only the company can bring a claim which belongs to it… [125] We reiterate that an oppression action can only be properly advanced where a minority shareholder has suffered a loss which is separate and distinct from the loss to the company, that is, to all the shareholders collectively.”

Thus, a wrong that causes loss to the Company is suffered by all shareholders alike as a reflective loss, and this is not recoverable by a particular shareholder as a personal action under section 346 of the CA. Such an action is only available if it can be said that the S/N mNBoteIoEe/dwkOxvtdHA loss is suffered distinctly, separately or uniquely by that shareholder.

If, as contended by the Plaintiff, the financial deterioration of the Group after his removal as director was due to any form of mismanagement by the 1st and 2nd Defendants, the proper avenue is a derivative action on behalf of the Company for negligence and/or breach of fiduciary duties, and not an oppression action for his reflective losses.

The self-appointment of the 1st and 2nd Defendants as CEO and COO with higher salaries than what the Plaintiff and 1st Defendant were previously drawing, the purchase of company vehicles for their use, the alleged motivation to seize control of the Company’s substantial cash reserves for themselves, are such matters that can only count as losses to the Company if these were actions taken in breach of fiduciary duties.

On the totality of the evidence, the Plaintiff has not made out a case of minority oppression under section 346 of the CA. In seeking a buy-out remedy, the Plaintiff claimed to be locked in as a minority because the LEAP Market is only open to sophisticated investors and not the general market. This was not convincing in the light of credible evidence that reflected daily buy queues for share of the Company, demonstrating liquidity. S/N mNBoteIoEe/dwkOxvtdHA

For all these reasons, Enclosure 1 is dismissed with costs of RM30,000.00. Bertarikh: 23 Januari 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Stanley Phang Weng Lam (Sherlene Lai Yee Ling bersamanya) Tetuan Sherlene Lai & Co Untuk Defendan: Tan Eng Keat (Jacyn Tan Ze Xin bersamanya) Tetuan Chia & Lee S/N mNBoteIoEe/dwkOxvtdHA