Lee Leng Chan v Addekoh Sdn Bhd (WA-28NCC-94-01/2023)

ADDEKOH SDN BHD (Company No.: 911964-H)

KOH SIONG CHOON (NRIC No.: 600701-01-5299

WONG SOH LING (NRIC No.: 680817-10-6654) … RESPONDENTS S/N 6x5jy8fpaU6E7PFJacmmdA JUDGMENT INTRODUCTION [1] Enclosure 1 is the Petition to wind-up the 1st Respondent (“the Company”) based on the just and equitable principles provided by section 465(1)(b) of the Companies Act 2016 (“CA 2016”). [2] The Petitioner is a minority shareholder holding 38% shares, while Kong Siong Chen (R2) holds 62%. However, when the Company was first incorporated the shares were held 50-50 between the parties. [3] The Company was set-up between the Petitioner and R2. When it was set-up the Petitioner’s shares was held by his nominee one Madam Ong because the Petitioner was still employed in a different company. [4] Although the Company was set-up like a partnership, nevertheless R2 held the majority shares. S/N 6x5jy8fpaU6E7PFJacmmdA [5] The grounds by the Petitioner to wind-up the Company are as follows:

The whole substratum and objective of setting up the Company has vanished (loss of substratum).

Loss of mutual trust and confidence between the 2 shareholders. [6] On the issue of loss of substratum it is undisputed that the company’s only business was the distribution of plastic additives produced by AVI Malaysia (“AVI”) and throughout its existence the Company did not at any time attempt to get any new business or distribution rights from any other company. [7] When AVI terminated the sole distributorship on 11.11.2022, the Company did not conduct any other business and it stopped generating any income. Since March 2022 the Company had zero sales. [8] Although R2 claims that as founder of the Company he can rebuilt the Company’s business, there was still zero sales even from March 2022, till the date of hearing. And it is clear that throughout the Company’s existence it never attempted to obtain distributorship rights from other manufacturer of plastic additives. Therefore, I accept the Petitioner’s submission and I find that on a balance of probabilities the whole S/N 6x5jy8fpaU6E7PFJacmmdA substratum of the Company has been lost which in itself would justify a winding-up of the Company. [9] Thus, I am persuaded by the decision of Justice Collin Sequerah in Tan Khai Ling v Travelers Tours Malaysia (2017) MLJU that once the substratum of the company has failed, that alone satisfies the just and equitable ground to wind-up the Company. BREAKDOWN IN MUTUAL TRUST [10] On the second issue, even though R2 holds majority shares in the Company, he admitted under cross-examination that the profits were distributed 50:50, and the Petitioner was paid more salary than R2. This is clear evidence that the company was run as a quasi partnership despite R2 holding a larger percentage of shares in the Company. [11] R2 has caused the company to file Civil Suit 378 against the Petitioner, his son and a company owed by the Petitioner’s son called DLee. [12] In that suit 378, R2 alleged that the Petitioner had breach statutory and fiduciary duties as a director of the Company. Through DLee, the Petitioner was alleged to be in competition with the business of the S/N 6x5jy8fpaU6E7PFJacmmdA Company and had misused confidential information belonging to the Company. [13] R2 and the Company attempted to get an injunction against the Petitioner in Suit 378 but failed. [14] Based on the litigation (Suit 378) commenced by D2 against the Petitioner, and my observation of D2 and his occasional outburst of temper and irritability during cross, I am convinced that there is acrimony between the 2 shareholders. I am convinced there is a breakdown of mutual trust and confidence between the parties. [15] In the case of Yap Lai Seng v Hing-On Industries (2015) MLJU, the learned Judge held as follows: “that the shareholders are no longer on talking terms they will ordinarily be unable to work or see eye to eye for the best interest of the company therefore the making of winding-up order is just and equitable. Based on my findings on the above two issues, there is no necessity for me to make any findings on the other issues raised by the Petitioner including the alleged existence of an earlier oral agreement between the parties to wind-up the Company. S/N 6x5jy8fpaU6E7PFJacmmdA [16] For the reasons aforesaid, I find that the Petitioner has proven that it is just and equitable for the Company to be wound-up. Therefore, I order that the Company be wound-up and the Official Receiver be appointed as liquidator, and cost of RM20,000.00 be paid to the Petitioner from the assets of the Company. Dated 28 March 2025 …………t.t...…………………. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PETITIONER: PUNG KIAN BANG WITH CHAN KHENG HOE SOLICITORS FOR THE PETITIONER: TETUAN KHENG HOE & LEE YUEN COUNSEL FOR THE RESPONDENT: NG CHIA HOW NEO CHI CHYN SOLICITORS FOR THE RESPONDENT: TETUAN FIROZ JULIAN S/N 6x5jy8fpaU6E7PFJacmmdA Cases Referred to: ➢ Tan Khai Ling v Travelers Tours Malaysia (2017) MLJU ➢ Yap Lai Seng v Hing-On Industries (2015) MLJU Legislation Referred to: ➢ Companies Act 2016 Decision date: 5 March 2025 S/N 6x5jy8fpaU6E7PFJacmmdA