Lee Bee Sun v Siew Seow Kim (WA-24NCC-249-05/2024)

SUPER RESOURCES & TRADING SDN BHD DEFENDANTS GROUNDS OF JUDGMENT (ORIGINATING SUMMONS – MINORITY OPPRESSION CLAIM)

The Plaintiff claims that the actions of the First and Second Defendants have been oppressive or have unlawfully disregarded her interests as a shareholder of the Company. She argues that there has been a visible departure from the standards of fair dealing, and that the actions of the First and Second Defendants sufficiently violate these standards, constituting a breach of fair play. Therefore, she now seeks the remedies available to her under Section 346 of the Companies Act 2016. B. Brief Facts 2. The Third Defendant, Super Resources & Trading Sdn Bhd, was incorporated by Goh Wei Lim, Yip Kien Meng, Wong Chee Wai and Sok Kok Leong on 8-10-2003. At the material time, the directors of the Company were Goh Wei Lim, Wong Chee Wai and Soh Kok Leong. Goh Wei Lim is the Plaintiff’s husband.

Thereafter, the shares were transferred to third parties. The current shareholders in the Company are (i) the Plaintiff who holds 200,000 of the shares in the Third Defendant and (ii) the First Defendant who hold 300,000 of the shares in the Company. The directors of the company are Goh Wei Lim, her husband, the Plaintiff and the Defendants.

The complaints filed by the Plaintiff are summarised in the following paragraphs.

Alleged Oppression in the decision not to purchase the Plaintiff’s shares at the price suggested by the Plaintiff – Oppressive

The Plaintiff claims that parties had agreed in principle that the shares held by her in the Company and other shares held by her and Goh Wei Lim are to be sold to the Second Defendant.

The Plaintiff contends that she had suggested the sum of RM 5,000,000.00 being a reasonable sum that should be paid by the Second Defendant. The Second Defendant disagreed and suggested that the shares in the companies are only worth RM 3,000,000.00. This was discussed at the meetings held on 4-4-2024, 22-4-2024, 3-5-2024 and 6- 5-2024. The valuation of the Third Defendant was also put forth during the meeting on 3-5-2024.

There were allegedly heated discussions between the Plaintiff and the Defendants at these meetings. At the meeting held on 6-5-2024, apparently the Plaintiff was not allowed to speak and that the First and Second Defendant had made a proposal to the Plaintiff to consider. The proposal relates to the offer to purchase her shares in toto. A solicitor was also tasked to draft the sale and purchase agreement.

(ii) Alleged Payments made by the company for the debts of third parties – Oppressive Act 2 8. As I have indicated earlier, Goh Wei Lim, the Plaintiff’s husband is a director of the Company. He is also the director responsible to approve the payments to be made by the Company through its internet banking account.

The Plaintiff alleges that Goh Wei Lim was forced to agree and approve payments made to PUM Cullet Sdn Bhd and LKF Marketing Sdn Bhd without obtaining any approval from the Plaintiff. The Plaintiff suggests that the said payments were made on behalf of MYGRIT Abrasive Sdn Bhd. The Third Defendant holds 40% of the shares in MYGRIT Abrasive Sdn Bhd.

The Plaintiff had raised her objection to the said payment and was rebuffed by the First Defendant. He stated that “I as majority shareholder of Super Resources & Trading Sdn Bhd, hereby give you instruction to approve the below mentioned transactions: … I shall be responsible for the above mentioned transactions.”

The above circumstances led to the exchange of letters of demand between the respective solicitors. The Defendants denied any form of wrongdoing and claims that the said payments were made in the best interest of the Company.

The Plaintiff claims that there is a lack of check and balance in the Company. The affairs of the Company are being undertaken at the instructions of the Defendants including all the business, financial affairs and decisions relating to dividends.

The Plaintiff further suggests that the relationship of trust and confidence between the parties has no longer exists.

(iii) Attempt to stop the Plaintiff from participating in the business and management of the company – Oppressive Act 3 14. The Plaintiff also suggests that she was stopped from actively participating in the business and management of the Company. She alleges that: -

The Defendants had told her and her husband that they should not come to the office as of 5-6-2024 and that they are barred from entering the premises of the Company.

(ii) The Defendants had stopped her access to the internal control systems and the accounts of the Company.

(iii) All the cheque books of the Company and its subsidiaries such as Barisan Performa Sdn Bhd, GSS Engineering Sdn Bhd and Wibadi Engineering Sdn Bhd were taken away from her by the First Defendant.

(iv) The email postmaster of the First Defendant was changed by the First Defendant and her wife, Alice Siew Seow Kim.

The Plaintiff believes that the funds of the Company would be wrongly utilized by the Defendants.

(vi) The Defendants had wrongly made payment of the sum RM 122,

036.00 to a third party for a commission of a project obtained by Barisan Performa Sdn Bhd, a subsidiary of the Company. The said payment was made from the accounts of both Barisan Performa Sdn Bhd and Wibawa Engineering Sdn Bhd.

The Plaintiff also relies on what was told to her by employees of the Company such as Cheryl Chai Mee Ling and Kong Wai Hon. Denial by the Defendants – No Alleged Wrong 16. The Defendants deny the claims by the Plaintiff. Their position is summarized in the following paragraphs.

All banking facilities held by the Plaintiff and the accounts are undertaken with the express approval of the directors of the Company. Any transaction must be approved by Goh Wei Lim and the Plaintiff (Group A) and the Defendants as well as Muck Wai Chong (Group B). Plaintiff still holds the secure pass token for all such transactions.

The actions by the Plaintiff, in filing this suit and in their attempt to stop all such payments to be made to the creditors and in the business of the Company, is to ensure that the Defendants have no other option but to purchase their shares at the price suggested by the Plaintiff and on the terms dictated by her.

It is the Plaintiff who has refused to come to our office to attend to her duties and the Defendants had consistently urged her to be present to ensure that all necessary approvals for payments were duly undertaken.

The intention of the Plaintiff in filing this suit is not only to force the Defendants to purchase their shares in the Third Defendant but also in Barisan Performa Sdn Bhd, Wibadi Engineering Sdn Bhd and GSS Engineering Sdn Bhd.

The payments made to the third party was made as part of the company’s investment in the PUM Cullet Sdn Bhd and LKF Marketing Sdn Bhd. To ensure that the Plaintiff is reassured that the payments were correct, the First Defendant agreed to be responsible for the said payments. The Defendants have also produced documents and invoices to show that the payments made were part and parcel of the business of the Company.

The Plaintiff’s access to the account had to be restricted to enable the Company to be run effectively. The Plaintiff had been difficult and had been attempting to stop the operations of the Company. C. Applicable Law – Minority Oppression 23. I reproduce Section 346 of the Companies Act 2016 for ease of reference: - “S. 346. Remedy in cases of an oppression.

Any member or debenture holder of a company may apply to the Court for an order under this section on the ground -

that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders including himself or in disregard of his or their interests as members, shareholders or debenture holders of the company; or

that some act of the company has been done or is threatened or that some resolution of the members, debenture holders or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or debenture holders, including himself.

If on such application the Court is of the opinion that either of those grounds is established, the Court may make such order as the Court thinks fit with the view to bringing to an end or remedying the matters complained of, and without prejudice to the generality of subsection (1), the order may—

direct or prohibit any act or cancel or vary any transaction or resolution;

regulate the conduct of the affairs of the company in the future;

provide for the purchase of the shares or debentures of the company by other members or debenture holders of the company or by the company itself;

in the case of a purchase of shares by the company, provide for a reduction accordingly of capital of the company; or

provide that the company be wound up. ….”

I must first refer to the leading case on this area, Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd v. Ling Beng Sung [1978] 2 MLJ 227. In that case the Privy Council explained: - “……… for the case to be brought within section 181(1)(a) at all, the complaint must identify and prove ‘oppression’ or ‘disregard’. The mere fact that one or more of those managing the company possess a majority of the voting power and, in reliance upon that power, make policy or executive decisions, with which the complainant does not agree, is not enough. Those who take interests in companies limited by shares have to accept majority rule. It is only when majority rule passes over into rule oppressive of the minority, or in disregard of their interests, that the section can be invoked, As was said in a decision upon the United Kingdom section there must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect before a case of oppression can be made (Elder v. Elder & Watson Ltd): Their Lordships would place the emphasis on ‘visible’. And similarly, ‘disregard’ involves something more than a failure to take account of the minority’s interest: there must be awareness of that interest and an evident decision to override it or brush it aside or to set at naught the proper company procedure (per Lord Clyde in Thompson v. Drysdale). Neither ‘oppression’ nor ‘disregard’ need be shown by use of the majority’s voting power to vote down the minority: either may be demonstrated by a course of conduct which in some identifiable respect, or at an identifiable point in time, can be held to have crossed the line. …….. in a number of United Kingdom decisions it has been held that for s. 210 to apply the complainant must show oppression continuing up to the date of proceedings (eg, In Re Jermyn Street Turkish Baths Ltd); where there has been oppression in the past the section does not bite. Their Lordships agree that the wording of the section (and the same is true of s. 181(1)(a)) relates to a present state of affairs: ‘are being conducted’, powers ‘are being exercised’ are grammatically clear: the language may be contrasted with that of s. 181(1)(b) which refers to an act of the company which has been done or threatened. But this argument must not be taken too far. What is attacked by sub-s. (1)(a)) is not particular acts but the manner in which the affairs of the company are being conducted or the powers of the directors exercised. And these may be held to be ‘oppressive’ or ‘in disregard’ even though a particular objectionable act may have been remedied. A last-minute correction by the majority may well leave open a finding that as shown by its conduct over a period, a firm tendency or propensity still exists at the time of the proceedings to oppress the minority or to disregard its interests so calling for a remedy under the section. This point is well brought out in Re Bright Pine Mills Pty Ltd 1969 VR 1002 1011–2”

I also refer to the decision of the Federal Court in Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corp (M) Bhd & Anor [2010] 6 CLJ 721 where Richard Malanjum CJ (Sabah and Sarawak) held: - “[25] Therefore, in order to succeed in its Petition pursuant to section 181 the Petitioner has to establish and ‘must eminently be determined according to the facts’ of this case that the affairs of the Company are being conducted or that the powers of the directors are being exercised in an oppressive manner or in disregard of its interests, or to its prejudice some unfairly discriminatory or prejudicial act of the Company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed. [26] In other words section 181 permits judicial remedy on four categories of conduct, namely, oppressive conduct, conduct in disregard of interests, unfairly discriminatory conduct or prejudicial conduct. [27] It may also be noted that from the wordings of section 181 its basic theme is ‘unfairness’. However, unfairness ‘does not mean that the court can do whatever the individual judge happens to think fair. The concept of fairness must be applied judicially and the content which it is given by the courts must be based upon rational principles. “The court. has a very wide discretion, but it does no sit under a palm tree”‘. (See: O’Neil v.Philips [1999] 2 All E R 961). [28] In Re Saul D Harrison & Sons plc [1995] 1 BCLC it was explained (Hoffmann LJ [as he then was]) that in ‘deciding what is fair or unfair for the purposes of s. 459, it is important to have in mind that fairness is being used in the context of a commercial relationship. The articles of association are just what their name implies: the contractual terms which govern the relationships of the shareholders with the company and each other. They determine the powers of the board and the company in general meeting and everyone who becomes a member of a company is taken to have agreed to them. Since keeping promises and honouring agreements is probably the most important element of commercial fairness, the starting point in the starting point in any case under s. 459 will be to ask whether the conduct of which the shareholder complains was in accordance with the articles of association…The answer to this question often turns on the fact that the powers which the shareholders have entrusted to the board are fiduciary powers, which must be exercised for the benefit of the company as a whole… But the fact that the board are protected by the principle of majority rule does not necessarily prevent their conduct from being unfair within the meaning of s. 459’. [29] Thus, in Re Kong Thai Sawmill (Miri) Sdn Bhd [1978] 2 MLJ 227 the term ‘disregard of interests’ is to be understood to mean ‘unfair disregard’ while ‘oppression’ denotes an ‘unfairly prejudicial conduct’ which means a conduct ‘departing from standards of fair dealing and a violation of conditions of fair play’. But ‘a member of a company will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on which he agreed that the affairs of the company should be conducted’. And ‘trivial or technical infringements of the articles were not intended to give rise to petitions under s. 459’. (See: Re Saul D Harrison & Sons Plc). [30} The principles of law are therefore quite settled in a non - quasi-partnership company. However, where it is (in the nature of quasi-partnership) as in this case there is an added factor which members are obliged in law to observe, namely, to act in good faith to one another.”

Whether an act or inaction complained of could tantamount an act that falls within the scope of a minority oppression action, will depend on the facts of each case. The act complained of, is also not limited to the affairs of the company per se but may, in appropriate circumstances, extend to the decisions, actions or inaction of the affairs of a subsidiary company.

I refer to Tuan Haji Ishak Ismail v Leong Hup Holdings Berhad & other appeals [1996] 1 CLJ 393 where Mahadev Shankar JCA held: - “Two or more shareholders may come to an agreement that in exercising any voting rights the shares held by them shall only be voted as agreed. Such an agreement has been referred to as a pooling agreement. Greenwell v. Porter [1902] 1 Ch. 530 was such a case. Greenwell bought some shares in a company on the express condition that the vendors would support the election of two directors nominated by him and upon their retirement vote for their re-election. The Court granted an injunction to stop the vendors voting against their re-election. In Puddephatt v. Leith [1916] 1 Ch. 200 the Court granted a mandatory injunction to enforce an agreement by the mortgagee of shares in a limited company to vote in accordance with the wishes of the mortgagor where the agreement to do so was clearly spelt out in a letter collateral to the mortgage deed. Yet again In re A and B.C. Chewing Gum Ltd.[1975] 1 WLR 579 there was an express contract between Topps Chewing Gum Incoporated, an American company which bought a third of the shares from two brothers who owned the remaining two thirds in A and B.C. Chewing Gum Ltd. (the English Company). The purchase was on the basis that Topps though holding only one-third of the English Company would be entitled to equal control and representation on the Board of the English Company. Reference may also be made to Greenhalgh v. Arderne Cinemas Ltd. [1951] Ch. 286 where the Mallard family who wholly owned Arderne Cinemas Ltd. agreed to accept a loan from Greenhalgh on terms that in addition to the debenture he should become a director, have the unissued shares allotted to him and have a collateral voting agreement whereby the Mallard family should vote with him. (There is a useful summary of this case in Gower's Principles of Company Law 3rd edition at page 571. See also Article Pooling Agreements, Under English Company Law by Stephen Kruger in 94 LQR page 557). This material was not cited to us but is nevertheless quite useful in so far as it is illustrative of the kind of evidence which is required to satisfy a Court that there is an agreement in fact between shareholders to vote in a particular way on matters which concern them. … Ebrahimi v. Westbourne Galleries [1973] AC 360 proceeded on a consideration of s. 222(f) of the English Companies Act 1948 which is in pari materia with our s. 218(f). A quasi-partnership in a small company can exist between a small group of individuals as also between two companies (see in re A & B. C. Chewing Gum Ltd. - [1975] 1 WLR 579]. In Ebrahimi there was no express agreement about participation; the legitimate expectation to participate arose because in the circumstances of that case the relationship was deemed to be a quasi-partnership with a fundamental understanding as to participation in the conduct of the business, an understanding, I should add, to which ALL the shareholders were privy. In re A & B.C. Chewing Gum Ltd. the right to participate was not a legitimate expectation, but arose out of an express agreement between ALL the shareholders. It is rooted in our legal philosophy that the Courts will not compel specific performance of agreements which involve continuous supervision. When mututal confidence breaks down between partners the remedy under s. 222(f) is to wind-up because it is just, equitable so to do.” The general rule is that a party is not entitled to disregard the obligation he assumes upon entering a company and the Court is not entitled to dispense him from it. The superimpostion of equitable considerations which entitles a shareholder to participation by way of an assured directorship requires the three elements of that "something more" which Lord Wilberforce spelt out at page 389 all of which are plainly missing. ….. The last element was the one which Mr. Abraham took such pains to emphasise. There is no reported decision where in the absence of either a fundamental understanding or an express contract to that effect embodied in the Articles or otherwise, a Court has upheld a claim to a legitimate expectation to participation in the management of a public company by way of a permanent seat on the Board of Directors, and the critical reason for its absence is that the aggrieved shareholder can sell his shares, so take out his stake and go elsewhere. In quasi-partnership cases where such a right of participation has been recognised as a legitimate expectation, the remedy for its breach was not specific performance by compelling the hostile factions to continue in double-harness but to wind-up. The reason for this was spelt out by Lord Wilberforce at page 380 of the report where he said: My Lords, this is an expulsion case, and I must briefly justify the application in such cases of the just and equitable clause. The question is, as always, whether it is equitable to allow one (or two) to make use of his legal rights to the prejudice of his associate(s). The law of companies recognises the right, in many ways, to remove a director from the board. Section 184 of the Companies Act 1948 confers this right upon the company in general meeting whatever the articles may say. Some articles may prescribe other methods: for example, a governing director may have the power to remove (compare In re Wondoflex Pty. Ltd. [1951] VLR 458). And quite apart from removal powers, there are normally provisions for retirement of directors by rotation so that their re-election can be opposed and defeated by a majority, or even by a casting vote. In all these ways a particular director-member may find himself no longer a director, through removal, or on re-election: this situation he must normally accept, unless he undertakes the burden of proving fraud or mala fides. The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member(s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that, if broken, the conclusion must be that the association must be dissolved. Words to the same effect can be found in Re Saul D. Harrison & Sons plc [1994] BCC 475 at page 490 where Vinelott J described how a legitimate expectation could arise out of a fundamental understanding between all the shareholders which formed the basis of their association, quoted Lord Wilberforce, and then said: Thus in the absence of "something more" there is no basis for a legitimate expectation that the board and the Company in general meeting will not exercise whatever powers they are given by the articles of association. It is worth underscoring that this case was brought under s. 459 of the Companies Act 1985 and the Wilberforce approach in the Ebrahimi case was now being used to determine not just whether there were grounds for winding-up but whether the conduct complained of was unfairly prejudicial. Two further passages from the judgment now follow: at page 488: In deciding what is fair or unfair for the purposes of s. 459, it is important to have in mind that fairness is being used in the context of a commercial relationship. The articles of association are just what their name implies: the contractual terms which govern the relationship of the shareholders with the company and each other. They determine the powers of the board and the company in general meeting and everyone who becomes a member of a company is taken to have agreed to them. Since keeping promises and honouring agreements is probably the most important element of commercial fairness, the starting point in any case under s. 459 will be to ask whether the conduct of which the shareholder complains was in accordance with the articles of association. The answer to this question often turns on the fact that the powers which the shareholders have entrusted to the board are fiduciary powers, which must be exercised for the benefit of the company as a whole. If the board act for some ulterior purpose, they step outside the terms of the bargain between the shareholders and the company. As a matter of ordinary company law, this may or may not entitle the individual shareholder to a remedy. at page 489: Although one begins with the articles and the powers of the board, a finding that conduct was not in accordance with the articles does not necessarily mean that it was unfair, still less that the court will exercise its discretion to grant relief. There is often sound sense in the rule in Foss v. Harbottle. In choosing the terms 'unfairly prejudicial', the Jenkins Committee (at para. 204) equated it with Lord Cooper's understanding of 'oppression' in Elder v. Elder & Watson [1952] SC 49 at p. 55: 'a visible departure from the standards of fair dealing, and a violation of the conditions of fair play on which every shareholder who entrusts his money to a company is entitled to rely.'

Based on the above cases, I find that this Court may superimpose such equitable conduct if it is shown that (i) the Company was formed or continued on the basis of a personal relationship, involving mutual confidence, (ii) the company was formed out of a previous partnership, (iii) an agreement or understanding that the members of the Company shall participate in the conduct of the business, (iv) there are restrictions on the transfer of shares in the entity that does not allow members to exit despite being unhappy with the management decisions and (v) family relationships or family companies. Refer to Embrahimi v Westbourne Galleries Ltd [1973] AC 360.

The above are mere examples of what could be characteristics of what is commonly described as a quasi-partnership entity. However, this Court must caution itself that the above must still be looked at objectively with a commercial lens based on the established background facts. I refer to the decision of Powell J in Re Dernacourt Investments Pty Ltd ; Baker Davis Supply Co Pty Ltd & Ors v Dernacourt Investments Pty Ltd & Ors 2 [1990] ACSR 553:- “1. Oppression involves unfairness, the test of which is an objective one, namely, whether or not reasonable directors, possessing any special skill or acumen possessed by the directors of the defendant company, and having in mind, on the one hand, the furtherance of the corporate object sought to be achieved by the decision which is question, and, on the other, any disadvantage which would be suffered by any relevant member if theta decision were taken, would, or would not, have decided that it was unfair to make the decision in question.”

I must remind myself of what was held by the Federal Court in Low Cheng Teik & Ors v. Low Ean Nee [2024] 9 CLJ 171 where Nallini Pathmananthan FCJ held: - “[92] As stated earlier, the most compelling reason for formulating a legal "test" or guidelines in this context is that the governing legislation in this area contains two different statutory provisions, namely, ss. and 347 of the Act. The nature of the wrong resulting in damage either to the shareholder or the company is dealt with by the Legislature vide different statutory provisions and accordingly gives rise to different and distinct remedies. [93] Based on the matters considered above, the following criteria are proposed as the basis for the formulation of a legal test to ascertain whether a shareholder's complaint is actionable under s. 346 of the Act or more properly on behalf of the company under s. 347 of the Act:

what is the act or omission that one or more of the shareholders complain of? In short, identify the act, series of acts or omissions;

(ii) can the act(s) or omission(s) be characterised as being:

oppressive to;

in disregard of the interests of;

unfairly discriminatory against; or

otherwise prejudicial to one or more of the shareholders;

(iii) does the cause of action vest in the shareholder or in the company;

(iv) who has suffered loss or damage from the wrong done - the shareholder in his capacity as a shareholder, or the company;

is the loss suffered by the shareholder as plaintiff separate and distinct to the plaintiff in his capacity as a shareholder, or is it a loss suffered by all the shareholders. … [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. [97] Flowing from the above, a minority shareholder who seeks to bring an oppression action must first identify the conduct complained of on the part of the majority and establish that such conduct is unfairly prejudicial to their interests as a minority shareholder. It must then be shown that the majority's conduct has caused harm to the minority shareholder personally. Finally, the minority shareholder is required to demonstrate that they have been affected in a distinctive and individual manner which is distinct from the other shareholders by reason of the wrongful conduct, usually by the majority or those in control of the company. [98] Where all the shareholders are affected equally by the wrongful conduct, it follows that the shareholder has not suffered distinct or special harm by reason of the wrongful conduct. In such an instance, the derivative action is most likely the proper cause of action.” D. Decision on the merits

Failed to show that these rights were derived as a member of the company – Section 346(1) (a) of the Companies Act 2016 31. Firstly, when I consider the Petition and affidavits filed by the Plaintiff, she did not allege that the Company is a quasi-partnership type entity. There is no evidence or assertion that the Company is either: -

formed or continued on the basis of a personal relationship, involving mutual confidence.

(ii) the Company is formed out of a previous partnership; and

(iii) formed as a result of a family relationship or is created as a vehicle for business run by family members.

The Plaintiff has also failed to prove the existence of any (i) an agreement or understanding that the members of the Company shall participate in the conduct of the business or (ii) there are restrictions on the transfer of shares in the entity that does not allow members to exit despite being unhappy with the management decisions. No such averments were made specifically in any of the affidavits of the Plaintiff. To propound for such a case, she should have made specific averments that she had a right to participate in management due to her continued holding of shares in the Company. This would have then enabled the Defendants to reply and put forth their version of the said issue. In the circumstances, this Court cannot entertain such arguments from the Bar without any supporting facts put forth in the Plaintiff’s affidavit.

I also note that the shareholders of the company had changed from the time the said Company was incorporated to the time when the shares are now held by the Plaintiff and the First and Second Defendants. As stated earlier, the original shareholders were Goh Wei Lim, Yip Kien Meng, Wong Chee Wai and Sok Kok Leong on 8-10-2003. The shares have since changed hands. The shares are now held by the Plaintiff and the First Defendant. The directors of the Company have also changed to Goh Wei Lim, Wong Chee Wai and Soh Kok Leong. Goh Wei Lim is the Plaintiff’s husband.

The fact that the shares have changed hands shows that there are no limitation or restriction on the right to transfer shares.

The Plaintiff has also not explained how she derived her alleged legitimate expectation to be involved in the management and decisions of the Company. What I can see in her affidavit in support is that her rights to be involved in the management of the Company did not derive from her position as a shareholder but more due to her position as a director of the Company. The same can be seen in the right of her husband, Goh Wei Lim, to approve the payment process for any internet banking undertaken by the Company. Notably, Goh Wei Lim is not a shareholder of the company but only a director. He would therefore have a right to control the accounts of the Company and approve payments pursuant to his position as a director.

What is crucially lacking in the affidavits filed by the Plaintiff is the laying down of facts how the Plaintiff derived this right. She has not shown any form of agreement or understanding between parties that she had the right to (i) enter the Company, (ii) participate in the daily business, (iii) control payments and (iv) control the accounts by virtue of her being a member of the Company or that there was such an understanding or agreement between shareholders that all of them were involved.

Instead of laying down the existence of the said right and how it was derived by the Plaintiff due to her being a member, the Plaintiff simply levelled attacks against the Defendants and made allegations that could also be based on her right to participate in management and accounts by virtue of her position as a director of the company. The same can be said to her husband’s right to approve payments and participate in the management of the Company.

As a general rule, a shareholder or member of the Company do not have such rights. A shareholder has limited rights of access to the records of the Company. See Satischandre Pravinchandre Keval Chand Doshi v. Rainbow Paradise Beach Resort [2022] 1 LNS 1290 where the Court held: - “[21] Under the Companies Act 2016 (“CA 2016”), a shareholder has very limited rights of access to the records of the company. To my mind, this is in line with the principle that the business and affairs of the company shall be managed by, or under the direction of the [directors]. The [directors have] all the powers necessary for managing and for directing and supervising the management of the business and affairs of the company. (See section 211 of CA 2016). [22] Generally, neither a shareholder nor the Court ought to interfere in the management of the company…”

Therefore, the Plaintiff should have laid down the foundation to show that as a result of the relationship between parties or the agreement entered between shareholders that as a member, she had the legitimate right to (i) participate in management, (ii) access the accounts, (iii) access to the office and (iv) run the Company as well as the bank accounts. This was not done by the Plaintiff in any of the affidavits or petition filed by her.

Therefore, I find that her rights were derived as a result of her position as a director of the Company. The same applies to her husband’s rights. He only had the right to oversee and approve payments due to his position as a director and not as a member of the Company. If she had wanted to put this forth, she should have made specific averments in her affidavits. This Court cannot make such assumptions or make the link merely because that was sought by Counsel for the Plaintiff. That should have been specifically stated in the affidavits filed by the Plaintiff.

On the powers of directors, I refer to Section 245(4) of the Companies Act 2016 and the following cases: -

Dato’ Tan Kim Hor & Ors v. Tan Chong Consolidated Sdn Bhd [2009] 2 MLJ 527.

(ii) Wuu Khek Chiang George v ECRC Land Pte Ltd [1999] 3 SLR 65

(iii) Loh Teck Wah v. Lim Pang Kiam & Ors [2022] 12 MLJ 342; and

(iv) Dato’ Seri Timor Shah Rafiq v. Nautilus Tug & Towage Sdn Bhd [2018] 8 MLJ 394.

(ii) No sufficient Evidence to show that they were oppressed as members of the company by any action of the company or action of the directors – Section 346(1)(b) of the Companies Act 2016 42. I will deal with each of the alleged acts of oppression raised by the Plaintiff.

Alleged Oppressive Act 1 – Proposed Purchase of Shares and Dispute 43. I find that the issues raised in relation to the alleged proposal to purchase the Plaintiff’s shares, the failure to agree on a purchase price, and the purportedly unfair conduct during the meetings to discuss the sale and purchase of the said shares do not constitute an oppressive conduct on the part of the Defendants that justifies the exercise of the powers laid down under Section 346 (2) of the Companies Act 2016.

I find that the dispute as to the price that should be paid for the shares and, even if it is true, the conduct of the Defendants at the said meetings to discuss the purchase price of the shares, do not fall within any of the limbs laid down in Section 346(1) (a) or (b) of the Companies Act 2016.

I do not find that the disagreement as to the purchase price payable could be seen as to be an act that constitutes oppressive conduct that is defined under the Companies Act. This is simply a dispute as to the purchase price payable and cannot be used as justification for the invocation of Section 346(2) of the Companies Act 2016.

Alleged Oppressive Act 2 – Payment by company to third parties for the debts of another company 46. On this issue, I find that, even taking the Plaintiff’s case at its highest and assuming that her allegations are correct, the wrongs complained shows a wrong that is committed against the Company. The payments made, if they were wrongly undertaken, shows that the First and Second Defendants, had breached their fiduciary duty to the Company and must be made accountable for the losses suffered by the Company.

The wrongs were committed against the Company and the Plaintiff is entitled to institute an application under Section 347 of the Companies Act 2016 to seek leave to file a derivative action against the said Defendants on behalf of the Company. The Plaintiff’s claim does not fall within the scope of Section 346 of the Companies Act 2016.

In addition to the above, I find that the Defendants have shown that the payments were made for commercial purposes. The invoices and documents produced by the Defendants in Exhibit C in Enclosure 11 shows that the Defendants believe that the said payments were made in the best interest of the Company. The First Defendant had also assured the Plaintiff that he will be made responsible for the said payments. Therefore, if the said payments are wrongful, then the Plaintiff only need to pursue a derivative action for the said wrongs done against the Company.

I therefore do not find that the above allegations constitute oppressive conduct as alleged by the Plaintiff.

Alleged Oppressive Act 3 – Alleged Removal from the management of the company and alleged restriction of physical access 50. I repeat that the Plaintiff has not shown she has a legitimate expectation to be involved in the management of the Company due to her shareholding in the said entity.

Therefore, even if I find that the Plaintiff has shown that the said Defendants have acted unfairly in (i) attempting to shut her out by removing her right of access to the premises of the Company and (ii) by restricting her right to the accounting system of the Company. These are her rights as one of the directors of the Company and not in her capacity as a shareholder or member of the Company.

The same can be said concerning her husband’s right to access the accounts. The said rights were given to him by virtue of him being a director of the company.

I refer to Ho Sue San @ David Ho Sue San v. Hovid Bhd & Ors [2024] MLJU 1358: - “Equitable considerations [33] If an applicant wishes the court to consider equitable considerations, then the burden lies with the applicant to show there existed a relationship in the nature of a quasi-partnership beyond an association which is purely a commercial one. [34] In order to determine whether there is a relationship in the nature of a quasi partnership, the court should consider the circumstances of the commercial relationship between the shareholders, including but not limited to whether there exist one or more of the three elements as propounded in Ebrahimi (supra), at p. 379E-G, namely:

an association formed or continued on the basis of a personal relationship, involving mutual confidence – this element will often be found where a pre-existing partnership has been converted into a limited company;

(ii) an agreement, or understanding, that all, or some (for there may be “sleeping” members), of the shareholders shall participate in the conduct of the business;

(iii) restriction upon the transfer of the members’ interest in the company – so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere.” … [57] It must be noted that legitimate expectation is not a cause for an application under s. 346 of the CA 2016, but rather it is a consequence of an equitable restraint in a case where equitable consideration apply. This was made clear in the judgment of Lord Hoffmann in O’Neill v. Phillips (supra), wherein his Lordship stated, at p. 970g, as follows: “It was probably a mistake to use this term, as it usually is when one introduces a new label to describe a concept which is already sufficiently defined in other terms. In saying that it was ‘correlative’ to the equitable restraint, I meant that it could exist only when equitable principles of the kind I have been describing would make it unfair for a party to exercise rights under the articles. It is a consequence, not a cause, of the equitable restraint. The concept of a legitimate expectation should not be allowed to lead a life of its own, capable of giving rise to equitable restraints in circumstances to which the traditional equitable principles have no application. That is what seems to have happened in this case.” …….. Summary [63] The majority of this Court finds the appellant could not establish the association was in a nature of quasi-partnership. The appellant did not fulfill any one of the three Ebrahimi elements. Therefore, there is no basis for this Court to take into account equitable considerations and to impose equitable restrain on the 3rd respondent.” [64] The majority of this Court also finds the bargain, i.e., the VGOs, is purely a commercial bargain. There was purely a commercial agreement entered into between the appellant and TAEL or the 3rd respondent; there was no equitable bargain as claimed by the appellant. The breach of the VGO-2, if any, is purely a contractual one. This is not enough to constitute a cause of complaint under s. 346 of the CA 2016.”

I also accept the Defendants position that they have not restricted the Plaintiff the right to access the Company premises at any material time. I find that the Defendant has shown that they had asked the Plaintiff to appear at the Company’s premises to execute the required online transactions and execution of cheques. The evidence produced by the Plaintiff only shows that the Defendants were contemplating whether they could remove the Plaintiff’s access card, but no further steps were taken. As such, I do not believe that the Plaintiff has proven her claims on this ground.

I note that the Defendants have indeed decided to restrict the right of access to the accounts of the Company. The justification to this argument is that the said Defendants believe that the Plaintiff may manipulate the accounts of the Company due to her various claims that she has against the Defendants. I find that this is a wrong done against the Plaintiff as a director. The Plaintiff has not, in any of her affidavits, drawn a connection between this alleged right of access and her status as a shareholder. Again, this Court cannot make the said assumption on behalf of the Plaintiff. She should have stated this specifically in her affidavits and establish how her right to be involved in the management of the company was by virtue of her being a member in the Company. This was not established by the Plaintiff or her by counsel.

Furthermore, the right of access to the accounts of the Company is conferred only upon directors. This is provided for in Article 97 of the said Company’s Constitution. I reproduce the said Article: - “97. The directors shall cause proper accounting and other records to be kept and shall distribute copies of the balance sheets and other documents as required by the Act and shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounting and other records of the company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any account or book or paper of the company except as conferred by statute or authorized by the directors or by the company in general meeting.”

This Article was not shown to have been displaced by any understanding or agreement between the shareholders. Accordingly, the right of access to the accounts of the Company remains confined to directors of the Third Defendant. As such, even if she is correct in her assertion, the said wrong did not affect in her capacity as a member of the Company but only affected her as a director of the Company. Any such wrong should be addressed appropriately but not through a minority oppression claim.

As I have said earlier, the Plaintiff should have first established a correlation between her right as a member of the Company and her alleged rights to the accounts and to be involved in the management of the Company. This was not done. Therefore, the prerequisite for a claim under Section 346 of the Companies Act 2016 has not been fulfilled and the Plaintiff’s claim falters in the circumstances of this case.

Concerning her complaints as to the change of the email password for Barisan Performa Sdn Bhd, I find that this again does not relate to her right as a shareholder of the Company. This is an email of another entity, and she has not shown how the said access to the said email relate to her position as a shareholder of the Third Defendant.

I find that the claim against the Defendants is actually premeditated as a result of the Plaintiff’s dissatisfaction with the decision not to purchase her shares at the price she wants. The Plaintiff has an ulterior motive in pursuing this claim against the Defendants. She is not really concerned with the issues raised here. In fact, when I consider the initial affidavit in support filed by the Plaintiff to the Originating Summons, the allegations only concern with the (i) disagreement over the share price to be agreed upon and (ii) the alleged wrongs done to the company. These other complaints were only raised in subsequent affidavits and even then, the Plaintiff failed to relate these alleged wrong to her standing as a member of the Company.

I have also considered the issue of the alleged breakdown in mutual trust and confidence. I find that, as the Plaintiff has not pleaded the particulars to justify the existence of a relationship of trust and confidence, this claim does not arise. The Plaintiff must first prove the existence of such relationship as I have identified earlier before this issue could be even entertained by this Court. The Plaintiff should have made these averments in her affidavits. At the end of the day, the Plaintiff remains a director of the Company and have all the rights that arises as a result of holding the said office.

It is wrong for the Plaintiff and her solicitors to simply throw to this Court the alleged wrongs claimed against the Defendant without laying down the foundation for such claims. The basis of the rights purportedly arising from the Plaintiff’s status as a shareholder should have been clearly pleaded in the Originating Summons and supported by the affidavits filed in this matter.

There should have been averments, that she had those rights as a result of her being a shareholder or, an agreement between shareholders that she should remain a director and have such rights as a result of being a member. This Court cannot make the said assumption and make the said link without any averments by the Plaintiff. Failure to do so is fatal to the Plaintiff’s claim and she cannot rely on such averments in the circumstances of this case.

I reiterate that it is unfair and wrong for the Court to make the said link on behalf of the Plaintiff. More so when these rights do not apply only to her but also to her husband who is not a member of the Company. I note that Goh Wei Lim is only a director of the Company. Therefore, as far as the Plaintiffs claim’ show, these rights arise as a result of her being a director of the Company. If this is specific to her being a shareholder of the Company, then it will not apply to Goh Wei Lim. I find that the Plaintiff’s claim, as framed in the affidavits and the Originating Summons, does not meet the threshold required under Section 346 of the Companies Act 2016 for a minority oppression action. E. Orders of this Court 65. For the above reasons, I dismiss the Plaintiff’s claim with costs of RM 15,000.00 subject to allocator. The costs include the costs of the interlocutory applications filed in this proceeding. Dated 12 March 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 Counsel: Raspreet Kaur Sidhu together with Nurul Farhana for the Plaintiff Ras & Co. Advocates & Solicitors Darren Lai together with J S Lai and Nurul Athirah for the Defendants