Loi Yap Loong v Harald Richard Hemming (WA-22NCC-530-08/2024)

P 5 % shareholding in the 4th Defendant company , and the subsequent dilution of that shareholding to 3.75 %. P avers that the transfer of 10,000 shares from the 1st Defendant to him in the year 2018 was an outright and unconditional gift conferring full legal and beneficial ownership, which extends to the subsequent 27,500 shares allotted to him in the year 2020.

The Defendants, on the other hand, contend that all of the 37,500 shares in the company shares were held by P as security or collateral, and on trust. They filed a counterclaim seeking a declaration that P holds all the 37,500 shares (registered in his name) on trust for the 2nd Defendant D2 .

After a full trial, I allowed s claim only insofar as ownership of the 37,500 shares is concerned. Correspondingly, I dismissed the counterclaim. Here are my reasons.

P aver share transfer has been inconsistent, and has shifted over time. Initially, the shares were described as security or collateral. Only later, after disputes arose and following the show cause letter in the year 2024, did D1 and D2 assert the existence of a trust. P submits that these are legally distinct concepts with different consequences, and cannot coexist on the same factual foundation. The absence of any contemporaneous documentation or communication evincing a security or trust arrangement leads to the conclusion that the share transfer was an absolute gift.

P points out that the 37,500 shares are registered in his name, which constitutes evidence of legal title and, absent contrary evidence, beneficial ownership. There are no pre - signed share transfer forms, no redemption terms, and no written security arrangements. At the material time, the company was in financial difficulty. The shares had minimal value, making it implausible that they were intended as meaningful security. P asserts that, as a practising solicitor who had assisted D1 and D2 and extended financial help, the share transfer was a gesture of appreciation.

The dispute intensified when in December 2021, D1 and D2 first requested the return of the shares, purportedly to facilitate bank financing and avoid scrutiny in due diligence. P refused, maintaining that he was the beneficial owner of the shares. P submits that if the shares were truly securities, there would have been no reason to seek their return before settling the purported indebtedness. The timing of the request and the , rather than a genuine prior arrangement.

Beyond ownership, P alleges breaches of fiduciary and statutory duties by the 1st to 3rd Defendants as directors of the company. A series of corporate acts between 2022 and 2023, i.e. (i) the introduction of a new member, (ii) the appointment of a new director, and (iii) a further share These acts were carried out without proper disclosure to P.

P argues that these actions contravened sections 75 and 85 of the Companies Act 2016 CA 2016 , which protect shareholders through approval requirements and pre - emptive rights. P was not offered the new shares proportionately, nor given adequate notice to preserve his equity. is said to reflect improper purposes and disregard for minority rights. Additionally, P was excluded from general meetings for several years, further marginalising his participation. When viewed cumulatively, P submits that the conduct of the 1st to 3rd Defendants amounts to minority oppression under section 346 (1) of the CA 2016.

Accordingly, P seeks declarations confirming his beneficial ownership, findings of breach of duty, restoration of his 5 % shareholding or alternatively a court - ordered buy - out at fair value, damages, and Paragraph 50 of the statement of claim prayed for the following reliefs : i) A declaration that the 37,500 ordinary shares in the 4th Defendant, registered in the Plaintiff s name, are legally owned by the Plaintiff and were not held in trust for the 1st or 2nd Defendants; ii) A declaration that the directors of the 4th Defendant have breached their fiduciary duties to the Plaintiff as a shareholder; iii) An order directing the 1st to the 3rd Defendants to take all necessary steps to restore the Plaintiff 4th Defendant to its original percentage of 5 % by issuing the equivalent allotment of shares; iv) An order directing the cancellation of any share transfer forms or documents executed under the demands or instructions from the 1st and / or 2nd Defendants for the return of the shares registered in the Plaintiff name; v) Alternatively to prayers (iii) and (iv) above, an order requiring the 1st and / or 2nd Defendants, or alternatively the 4th Defendant, to buy out the Plaintiff % shareholding at a fair market value as valued by an independent valuer appointed by this Honourable Court; and vi) General damages for the distress and inconvenience caused by the including legal costs incurred in addressing these claims to be assessed by this Honourable Court.

The Defendants aver that P held the shares as a collateral or security and in trust for D1 and D2, pending the payment of monies and legal fees to be paid. D1 did not and never intended to transfer the 10,000 shares to P as a gift. D1 had repaid all monies borrowed from P. The Defendants had paid all invoices for legal services rendered by P.

The Defendants counterclaim against P for the following reliefs : a) A declaration that the Plaintiff holds all the shares (registered in his name) in the 4th Defendant in absolute trust for the 2nd Defendant; b) A declaration that the Plaintiff is not a shareholder of the 4th Defendant and all shares registered in the name of the Plaintiff are held in trust for the benefit of the 2nd Defendant; c) An order directing that the Plaintiff take all necessary steps to sign and / or execute all share transfer forms or documents necessary for the transfer and return of the shares registered in the Plaintiff the 2nd Defendant; d) Alternatively, an order directing the Senior Assistant Registrar of the High Court be authorised to sign and / or execute all transfer forms or documents necessary for the transfer and return of shares registered in the Pl name to the 2nd Defendant; and e) Damages to be assessed. Background facts The parties

P is a practising lawyer. He is a minority shareholder of the company, holding 37,500 shares representing 3.75 % of the issued share capital of the company. Prior to the dilution arising from a share capital increase exercise in the year % of the issued share capital of the company. P has not held any executive, managerial, or operational position in the company. He has not been involved in the day - to - day operations, management decisions, or control of the affairs of the company, which were at all material times exercised by its directors.

D1 has been a director of the company since its incorporation. He founded the company and was formerly a shareholder. In the year 2018, D1 transferred his entire shareholding. Currently, he does not hold any shares in the company.

D2 has served as a director of the company since 6.5.2014. She is the majority shareholder of the company, presently holding 962,498 shares representing approximately 96.25 % of the issued share capital of the company. D1 and D2 are husband and wife.

The 3rd Defendant was appointed as a director of the company on 16.8.2022. P alleges that the appointment of the 3rd Defendant as a director of the company was made without notice to him.

The principal activities of the company include engineering and procurement contracting, experimental development and commercial activities relating to solar energy. The current issued share capital of the company is RM 1 million, comprising 1 million shares. Shareholding composition of the company

On 16.7.2018, D1 transferred:- (a) 10,000 shares to P, representing 5 % of the issued share capital of the company at that time 2018 share transfer ; and (b) 8,666 shares to D2. Following this share transfer, the shareholding of the company was as follows:- (i) D2 - 142,000 shares (71 %); (ii) Mr. Tey Chin - 48,000 shares (24 %); and (iii) P - 10,000 shares (5 %). On 18.6.2019, Mr. Tey Chin transferred his 48,000 shares to D2.

On 28.7.2020, the issued share capital of the company was increased from RM 200,000 to RM 750,000, with the allotment of 550,000 new shares first 2020 share capital increase D1 and D2 procured this share capital increase through advances from P. The 550,000 new shares of the company were allotted in the following manner:- (i) 522,500 shares to D2, increasing her shareholding to 712,500 shares (95 %); and (ii) 27,500 shares to P, increasing his shareholding to 37,500 shares (5 %). On 9.6.2022, D2 transferred two shares to one Mr. Tey Tong.

After the first 2020 share capital increase, the company in the year 2023 undertook a further increase of RM 250,000, consisting of 250,000 new shares, all of which were allotted to D2 second 2023 share capital increase P alleges that this share capital increase was effected without notice to him. Show cause letter

Prior to March 2024, P conducted a company search on the company and discovered changes in the company. Namely:- (i) the appointment of the 3rd Defendant as a new director; (ii) the introduction of an additional minority shareholder; and (iii) the second 2023 share capital increase. The 2023 second share capital increase increased the total issued shares from 750,000 to 1 million, 5 % to 3.75 %.

On 19.3.2024, P, through his solicitors, issued a letter to the company requiring it to show cause and to provide clarification regarding the then current shareholding structure and directorship composition of the company, including changes made between 2022 and 2023. The letter further sought an explanation for the company show cause letter

By way of a letter dated 23.4.2024, a firm of solicitors then acting for D1, D2 and the company, replied to the show cause letter. In that reply, were held by P on trust for D1 and D2. The said reply also alleged that the relevant changes had been communicated to P, but that he did not respond. It further asserted that all statutory filings and corporate changes were made in compliance with the applicable provisions of company law 23.4.2024 reply to the show cause letter Issues to be tried

The dispute herein concerns The crux of the dispute is whether the 37,500 shares belong to P. Or are held by him as security or collateral and on trust for D1 and D2. The Defendants say that P is not the true beneficial owner of the 10,000 shares transferred by D1 to him pursuant to the 2018 share transfer. Nor of the additional 27,500 shares subsequently issued to him pursuant to the first 2020 share capital increase. I disagree.

I agree with P that D1 and D2 have adopted inconsistent and shifting positions regarding the nature and purpose of the 2018 share transfer. Their characterisation of the share transfer has changed over time, depending on whether the position was advanced by D1 and D2 themselves or conveyed through their solicitors.

Prior to the issuance of the show cause letter, and during discussions and D2 maintained that the 2018 share transfer served only as a collateral or security holding purposes only, and not as a transfer conferring legal and beneficial ownership on P.

holding was made by D2 around December 2021, when she requested that P execute a share transfer form her. This request is inconsistent with the factual chronology, as the shares in question had already been transferred by D1 to P. The request to transfer those same shares to D2 is inconsistent with any genuine intention that P was merely a nominee or holder of security.

After the issuance of the show cause letter, D1 and D2 advanced a different position. In the 23.4.2024 reply to the show cause letter, they asserted that the same shares were held by P on trust for D1 and D2. This position sought to recast P as a bare trustee, rather than a shareholder beneficially and absolutely entitled to the shares.

Upon the commencement of this action in August 2024, the and legally distinct characterisations, namely that the shares were given as security, held as collateral, and held on trust. Such positions are legally distinct and carry different legal consequences. The Defendants concurrent reliance on all three characterisations manifests the absence of a clear and consistent factual foundation. It amounts to an attempt to assertions.

Consequent upon these alleged security, collateral, and trust arrangements, the Defendants now pursue a counterclaim alleging that company are held by P on trust for D2. I consider that this counterclaim represents a continuation of the . It is unsupported by contemporaneous evidence or any agreement creating such security or trust. Here is my explanation. The nature of the transfer of the shares to the Plaintiff by the 1st Defendant was an absolute gift

The various positions advanced by the Defendants regarding the nature of the 2018 share transfer, namely that the shares were held as or not mere refinements of a single defence. They are inconsistent and legally irreconcilable. These positions reflect fundamentally different legal characterisations of the same transaction. Each carries distinct legal consequences in relation to ownership and beneficial entitlement. The reliability of their narrative.

A transfer by way of security or collateral presupposes the existence of an underlying secured obligation. Such arrangements ordinarily require cogent terms identifying:- (a) the obligation said to be secured; (b) the circumstances under which the security may be enforced; and (c) the In commercial practice, arrangements of this nature are typically reduced into writing and properly documented. Even where parties initially act informally, some contemporaneous record would be expected. This is particularly so where P, D1 and D2 regularly communicated through WhatsApp and email prior to the dispute. Yet no communication or document exists referencing any security or collateral arrangement.

discussions and throughout the dispute between December 2021 and May 2022, P maintained that the 2018 share transfer was intended as an absolute gift. In December 2021, when D2 requested that P transfer his shareholding in the company to her, P reiterated that he is the beneficial and registered owner of the shares by virtue of an outright gift from D1.

Prior to the 2018 share transfer, P had, since 2016, in his capacity as an advocate and solicitor, provided legal services to D1 and D2 in separate matters. His firm, Messrs T.Y. Teh & Partners, was on record in certain matters. P also assisted D1 and D2 in matters relating to the company and other corporate issues. On several occasions, he provided assistance without charging a professional fee. He also extended personal loans to D1. Against this background, and as a gesture of appreciation, D1 transferred the 10,000 shares to P.

The 2018 share transfer was effected as an outright gift. D1 imposed no conditions or limitations. There was no agreement or understanding that the shares were to be held as security or collateral, on a nominee basis, or in trust. D1 did not, at the material time, link the share transfer to any loan or outstanding legal fees. The transfer was unconditional and intended to pass full legal and beneficial ownership to P.

When D1 first 2020 share capital increase, he did not state that P s shares would serve as collateral. At no material time did D1 P advanced RM 550,000 by direct transfer from his personal account to the company ount. The RM 550,000 advance was subsequently repaid to him.

P testified that D1 verbally expressed his intention to gift the shares to him. This intention was given effect through the execution of the prescribed share transfer instrument share transfer was carried out as a completed disposition, and not as a conditional or temporary arrangement. Although the executed share transfer instrument itself was not produced at the trial, the absence of the physical share transfer evidence.

It is undisputed that the sha Such registration could not have occurred without the requisite instrument of transfer having been executed and lodged. The objective documentary narrative that a formal transfer was effected. Further, D1 agreed under cross - examination that there was no pre - signed share transfer form or any other instrument prepared in advance to facilitate a re - transfer of the shares to D1 or D2 at the time of the 2018 share transfer.

constitutes evidence of legal title and, in the absence of contrary evidence, beneficial ownership. Here, t consistent with D1 himself of ownership and to vest both legal and beneficial title of the shares in P.

If the shares had truly been intended as security or collateral, one would expect a clear mechanism for re - transfer or enforcement. In commercial practice, this commonly includes a pre - signed share transfer form, written security terms, or an agreement specifying the circumstances for redemption and return of the shares. No such pre - signed share transfer form, written terms, or documented conditions exist in this case. The absence of these features is inconsistent with any genuine security or collateral arrangement.

The conspicuous absence of documentary evidence is critical. Where parties genuinely intend to create a security or collateral arrangement over shares in a commercial context, such arrangements are ordinarily reduced mechanisms. The absence of any contemporaneous record, communication, or cor se that no security or collateral arrangement was ever intended. And that the share transfer was a genuine and outright gift.

The alleged security or collateral arrangement is implausible when viewed against the financial position of the company at the material time. The company was in a weak financial position, and the shares had little value. In such circumstances, it would be unrealistic to rely on shares of negligible value as meaningful security or collateral for any obligation.

D1 agreed under cross - examination that in the year 2018, the company was facing financial difficulties. Its projects had not materialised, as anticipated. The value of its shares was minimal. D further agreed that the position did not materially improve in 2019 and 2020, and that the value of the shares remained modest. These admissions security or collateral.

In those circumstances, it is improbable that shares of little value would be relied upon as meaningful security or collateral for any alleged obligation, whether in respect of personal loans from P or outstanding legal fees said to be payable to P and his firm. A reasonable person would not regard such shares as providing real security or collateral, nor as adequate protection pending repayment of sums that exceeded the value characterisation of the shares as security or collateral.

Furthermore, the allegation that the shares were intended as security contemporaneous understanding at the time of the 2018 share transfer. The contemporaneous evidence instead shows that any claim of security or collateral first surfaced only in December 2021, three years later.

Toward the end of 2021, the company was pursuing bank facilities in order to secure investment capital in anticipation of solar projects. In that context, D1 and D2 stated that supposedly to spare P from scrutiny during the due diligence process. During re - examination, D1 confirmed that the objective was to comply with investor requirements, which meant that P was not intended to be part of the shareholding structure for those purposes. At no material time was any alleged security or collateral arrangement mentioned.

Consistent with that context, D1 and D2 informed P via WhatsApp on 27.12.2021 that they did not wish to implicate P. They suggested that the shareholding di request for P to transfer his shares in the company to D2 therefore arose in that context and for that purpose. Such a request is inconsistent with the suggestion that the shares had been provided as security or collateral for earlier obligations. If the shares were held as security, there would have been no need to request a share transfer on this basis.

P did not agree to that request as he was neither a nominee nor a proxy for D1 or D2. He maintained that the shares were legally and beneficially owned by him. His refusal is consistent with his stance that the shares were transferred to him as an outright gift, thereby conferring full legal and beneficial ownership. At all material times, P acted on the basis that the shares were his property and were not subject to any security, collateral or trust arrangement.

Following a face - to - face meeting on 27.12.2021 at a hotel, D1 raised, for the first time, a desire to reclaim the shareholding held by P in the company position that, since the 2018 share transfer, the shares had always been subject to qualification. Thereafter, D2 pressed P to execute a share transfer form to transfer his 37,500 shares. Notably, this insistence was not accompanied by any contemporaneous reference to any prior security, collateral or trust arrangement. No document evincing such an arrangement, or any prior message to that effect, was produced at the time.

D1 accepted under cross - examination that the 27.12.2021 meeting discussion. This admission confirms that no prior arrangement or understanding regarding the alleged security or collateral existed before that date. If such an arrangement had really been in place since 2018, it would reasonably have surfaced earlier. D1 further admitted during cross - examination that the first request for the return of the shares was made via WhatsApp on 27.12.2021. D1 also accepted that, at that time, any alleged outst been fully settled.

These admissions are important. If the shares had been intended as security or collateral, one would expect the alleged security to remain in place pending full settlement of the underlying obligations, rather than for a request to be made for their return before payment was complete. The fact that such a request was made despite the alleged sums remaining security or collateral.

between January 2022 and May 2022 between D1 and P. It was only during this period, and after P declined to transfer his shares, that the notion of holding the shares as security or collateral was first introduced as a purported justification for demanding their return. The timing of this assertion is significant. It arose only after P maintained his refusal and was not raised at the time of the 2018 share transfer or at any earlier stage. This sequence indicates that the allegation of security or collateral was a reactive position, intention at the time of the transfer.

Thereafter, by his email dated 13.5.2022, P informed D1 that he did not wish to engage in further protracted email exchanges on the same issue. He therefore ceased responding to D1 Notwithstanding this, D1 sent a further email dated 16.5.2022 reiterating the same demand and position regarding the shares. Following May 2022, there were no further requests by D1 and D2 for the return or transfer of show cause letter to the company.

In addition, there was no corporate action by the company to procure the return or transfer of the shares after May 2022. No board resolution or members resolution was passed requiring or authorising P to transfer his shares. In a corporate context, any genuine attempt to recover shares said to be held as security or on trust would ordinarily be accompanied by formal corporate steps. The absence of any such action is telling.

In the absence of any documentary evidence of any security, collateral or trust arrangement, and having regard to the manner in which ons amount to bare unsubstantiated allegations. actual conduct, such allegations carry little weight.

The burden lies on the party who asserts a fact to prove it. The Defendants, having alleged that the shares were held as security or collateral, bear the legal burden of establishing those assertions on evidence. On the totality of the evidence, the more sensible inference is that the 2018 share transfer was an outright and unconditional transfer of both legal and beneficial ownership of the shares to P by way of a gift. That inference is consistent with the documentary record and conduct.

The attempts to characterise the transfer as security or collateral arose only after disputes had emerged between the parties. The timing and circumstances of those assertions indicate that they were advanced to challenge P rights, intention at the time of the 2018 share transfer.

The Defendants assert that P did not pay for the shares and rely on section 26 of the Contracts Act 1950, which provides that an agreement without consideration is void. However, they have failed to consider the provision in its entirety. In particular, Explanation 1 in section 26 of the Contracts Act 1950 states that -

A gift, by definition, does not require consideration. The absence of payment is the hallmark of a gift, not a legal defect. (See the Court of Appeal case of Sabah Berjaya Sdn Bhd v Ketua Pengarah Jabatan Hasil Dalam Negeri [1999] 3 MLJ 145). The alleged trust is an afterthought and legally inconsistent

characterisations of the same share transfer, namely that the shares were given as security, held as collateral, and held on trust, is untenable. Even if pleaded in the alternative, these positions remain irreconcilable both on the facts and in law. Alternative pleading does not permit a party to advance mutually destructive factual foundations, where the underlying facts required to sustain each legal characterisation are fundamentally inconsistent.

As discussed earlier share transfer as security or collateral fail when tested against the totality of the evidence. In those circumstances, the Defendants cannot then recharacterise the very same shares as trust property. Such a shift exposes a fundamental inconsistency in their case. These legal concepts are not interchangeable. Each arises from a distinct juridical basis and c on all three demonstrates the absence of a coherent and credible factual substratum.

In particular, a trust is conceptually and legally distinct from a security or collateral arrangement. A security or collateral arrangement presupposes an underlying obligation, a debtor - creditor relationship and a clear right of enforcement or redemption. A trust, by contrast, concerns the separation between legal and beneficial ownership and imposes fiduciary obligations on the trustee in favour of identified beneficiaries. The underscores the inconsistency in their own case theory.

It is settled law that the creation of a valid trust requires the presence of the three certainties. Namely certainty of intention, certainty of subject matter, and certainty of objects. These requirements are cumulative, and the absence of any one is fatal to the existence of a trust.

The court does not lightly infer a trust, particularly where proprietary rights in shares are concerned, unless the evidence shows a genuine intention to create a trust. A trust ordinarily manifests through contemporaneous documentation, an express declaration, or conduct unequivocally referable to a trust relationship and not reasonably explicable on some other basis. Mere assertions made after a dispute has arisen cannot retrospectively supply the requisite certainty of intention. (See the Court of Appeal case of Tan Keng Yong @ Tan Keng Hong & Anor v Tan Hwa Ling @ Tan Siew Leng & Ors [2022] 3 MLRA 414).

None of these indicia is present in the present case. There was no declaration of trust, no trust deed, no written acknowledgement of trustee status, no segregation of beneficial interests and no instructions consistent with trustee obligations. P never received any request to act as a trustee, to hold the shares for any defined beneficiary or to treat the shares as trust property. P treated the shares, and was at all material times treated by D1 and D2, as the legal and beneficial owner of the shares prior to the request in December 2021. These objective facts negate the existence of a trust.

The legal burden of proving the existence of a trust lies on the party asserting it. The Defendants therefore bear the burden of establishing the existence of the three certainties and the factual substratum supporting them. A trust cannot arise by speculation or shifting explanations. (See the Court of Appeal case of Thavamany P Vengadasalam & Ors v Jaya In Gopal [2025] MLRAU 254).

The Defendants have failed to discharge that burden. Their own evidence reveals uncertainty as to the identity of the alleged beneficiary. Although the shares originated from D1 e Defendants variously suggested that the shares were held for the benefit of D1, D2 or both. Such fluctuating positions directly undermine the certainty of objects. A valid trust requires identifiable beneficiaries at the time of its creation, not a range of possibilities advanced after the fact. This uncertainty is fatal to the alleged trust.

D2 admitted under cross - examination that D1 was the person who transferred the shares to P. However, when explaining why the request for the shares to be transferred back was directed to her, D2 said that a transfer to either D1 or D2 would have been regarded as effectively the same, on the basis that they are husband and wife and jointly manage the company.

Such reasoning is legally untenable. The company is a separate legal entity. Its shareholding structure and proprietary interests cannot be treated interchangeably based on personal relationships between shareholders or directors. The identity of a shareholder is a matter of legal significance, not convenience. The suggestion that a transfer to either company law and further undermines the credibility of the alleged trust arrangement.

D2 further said that, due to tender requirements applicable to the company, the company was required to have a Malaysian shareholder. Consequently, the shares could not be requested to be transferred to D1, as he is a German national, and such a transfer would render him a foreign shareholder in the company.

These admissions further highlight the absence of certainty of objects and the lack of any clearly identified beneficiary at the material time. If the alleged beneficiary could alternately be D1 or D2, depending on convenience or regulatory considerations, this demonstrates that no fixed or certain object of the trust existed at the time of the alleged creation. Such fluidity is fundamentally inconsistent with the legal requirements of a valid trust and reinforces the conclusion that no trust was ever intended or created.

Importantly, the allegation that the shares were held on trust only surfaced at a much later stage, namely in the 23.4.2024 reply to the show cause letter. Prior to that, D1 and D2 consistently described the shares as contemporaneous correspondence at the time of the share transfer or when the dispute first arose. The absence of any reference to a trust during the material period indicates that no trust was intended at the time of the share transfer, and that the trust allegation is a subsequent reconstruction.

D1 conceded under cross - examination that the appeared in writing only in the 23.4.2024 reply to the show cause letter. This was the first occasion on which a trust was expressly asserted in any contemporaneous correspondence or document. D1 further conceded under cross - examination that in the earlier email correspondence from those contemporaneous communications. D2 also conceded under cross - examination that, in a WhatsApp message sent by D2 to request that P s shares be transferred to her, there was no mention of a trust.

T change in the Def evolving litigation position, rather than any genuine reflection of the share transfer. This evolution of terminology points to the reconstruction of a defence to meet litigation exigencies, rather than the recollection of a true and contemporaneous arrangement.

These admissions are significant in assessing both credibility and intention. They demonstrate that the allegation of a trust is a late development, raised only after the issuance of the show cause letter and immediate proprietary and fiduciary consequences. Parties who genuinely intend to create such a relationship would ordinarily articulate it clearly at the time of the transaction, not introduce it retrospectively once a dispute arises. The belated invocation of a trust is therefore inconsistent with the existence of a genuine trust arrangement.

A genuine trust arrangement, given its serious fiduciary implications and proprietary consequences, would ordinarily be recorded in some form, whether by written declaration, correspondence, or at the very least consistent oral instructions and subsequent conduct. One would expect, at a minimum, evidence of acknowledgement of trustee status, identification of beneficiaries, or directions on how the shares were to be dealt with as trust property. The absence of any such articulation or documentary trace indicates that no trust was contemplated at the material time. Instead, it supports the inference that the trust allegation is an afterthought devised to bolster a defensive narrative in response to the present dispute.

In the premises, the alleged trust finds no support in any contemporaneous evidence, is inconsistent with D1 and D s earlier characterisations, and fails to satisfy the legal requirements for the creation of a trust. When the chronology, the documentary record, and the considered, they point away from any trust arrangement. The evidence admits of only one reasonable inference, namely that no trust was ever intended or created. I therefore reject the allegation of trust.

Consequent upon the foregoing, I granted the declaratory relief sought by P regarding the shares. Namely that the 37,500 shares registered in his name are legally and beneficially owned by him, and are not held on trust for D1 or D2. Correspondingly, the declaratory reliefs existence of a trust, must necessarily fail and are dismissed. No breach of duty by the 1st to 3rd Defendants as directors of the company, and no oppression of the Plaintiff as a shareholder of the company

In addition, P complains about the propriety of the 1st to 3rd company shareholding in the company and the manner in which the company affairs were managed. P contends that the 1st to 3rd Defendants, in their company, acted in breach of their statutory and fiduciary duties under the CA 2016, resulting in the % to 3.75 % Further, that the conduct of the 1st to 3rd Defendants amounts to oppression against P as a member of the company within the ambit of section 346 (1) of the CA 2016. Premised thereon, P claims that he is entitled to relief, including the restoration of his shareholding rights, damages, and a buy - out of his shareholding in the company.

It is my finding that there is no breach of fiduciary or statutory duties by the 1st to 3rd Defendants as directors of the company. Further, that there is no oppression of P as a shareholder of the company. The evidence demonstrates that :

P, by his own choice, was not interested or involved in the affairs of the company. In any event, he was not a director of the company and had no management rights. By his conduct, P had never shown any interest in the affairs of the company. He had never enquired about the annual general meeting of the company, despite knowing of the resolutions relating to the audited accounts tabled at the annual general meeting. Actually, P had refused and delayed signing various members resolutions of the company.

The first 2020 share capital increase was carried out in order for the company to qualify for and obtain a CIDB (Construction Industry Development Board) licence. The second 2023 share capital increase was carried out in order for the company to qualify for and bid for a solar project.

P admitted that he did not wish to subscribe to the additional shares, when the issued share capital of the company was increased. He was aware that the issued share capital of the company had to be increased due to the tender requirements in bidding for a solar project, but chose not to take up any further shares.

P alleges oppressive conduct arising from:- (i) the appointment of a new director; (ii) the introduction of a new shareholder; and

(iii) the second 2023 share capital increase. However, P had no right to contest the appointment of a new director. That is an internal management matter of the company. P complains that he was not accorded pre - emption rights to the new 250,000 shares allotted under the second 2023 share capital increase. However, by his own admission, P was not interested in taking up additional shares in the company.

Prior to the year 2024, P had never protested that the affairs of the company were being conducted in an oppressive manner or in disregard of his interests as a member of the company, or that he was unfairly discriminated against as a member of the company. P had kept silent from the time he was gifted with the shares in the year 2018. What triggered his present allegations wrest the shares away from him. Up until then, P was content with his modest shareholding and passive role in the company.

At paragraph 42 of the statement of claim, P alleges that the 1st to 3rd Defendants are in breach of their duties as directors of the company, citing the following particulars : At all material times, the reduction in the shares held by the 2nd Defendant and the introduction of a new shareholder were not communicated to the Plaintiff. This lack of disclosure constitutes a breach of the directors duty to keep shareholders informed about significant changes affecting their shareholding and company management. The failure to disclose this significant change in the management of the 4th Defendant constitutes a breach of the fiduciary duty owed by the directors to keep the Plaintiff informed of developments that could affect the Plaintiff s interest; ii) th Defendant was conducted in contravention of Section 75 of the Companies Act 2016 and is, therefore, void. Specifically, the allotment was carried out without obtaining the necessary approval from the Plaintiff, which is a requirement under the Companies Act 2016. This failure to obtain the requisite approval renders the allotment invalid and unenforceable. The actions were intended within the 4th Defendant; iii) The 1st to 3rd Defendants, by their conduct, deliberately refused to take all reasonable steps to prevent the contravention of Section 75 of the Companies Act 2016. This deliberate inaction was intended to urgently and undermine the fiduciary duty and statutory obligations, aimed at unfairly disadvantaging the Plaintiff and failing to act in the best interests of the Plaintiff as one of the shareholders; iv) The Plaintiff was never issued with any notice for the AGM or any EGM of the 4th Defendant for the years 2022, 2023 and 2024. This lack of communication, which is a breach of the fiduciary duty owed by the directors, effectively excluded the Plaintiff from participating in key decisions affecting the 4th Defendant. The Plaintiff was thus prevented from exercising his rights and participating fully in the governance of the 4th Defendant; v) The affairs of the 4th Defendant are being conducted by the 1st to 3rd Defendants and / or the powers of the 1st to 3rd Defendants are being exercised in a manner oppressive to the Plaintiff, in disregard of the in contravention of Section 346 (1) (a) of the Companies Act 2016, which prohibits oppressive conduct and requires that the management of the 4th Defendant be fair and equitable to all shareholders; and vi) The appointment of a new director and the introduction of a new shareholder, as well as the passing of resolutions related thereto, which have not been issued to the Plaintiff, have been executed by the 1st to 3rd Defendants in a manner that unfairly discriminates against or prejudices the Plaintiff. This conduct amounts to unfair treatment and discrimination, interests as a shareholder of the 4th Defendant, and is in contravention of Section 346 (1) (b) of the Companies Act 2016.

Those allegations do not withstand scrutiny. Allegation (i)

assertion that the second 2023 share capital increase was communicated to P. As regards the introduction of a new shareholder in the year 2020, there was no legal obligation to notify P regarding the transfer of the two shares by D2 to Mr. Tey Tong.

Even if true that the second 2023 share capital increase was not communicated to P, it duty lack of disclosure cannot constitute a breach to keep shareholders informed about significant changes affecting their shareholding and company management . The directors of the company do to keep P informed of developments that could Allegation (ii)

Allegation (ii) above is baseless. T powers to allot shares pursuant to the second 2023 share capital increase was not carried out in contravention of section 75 of the CA 2016. it is not a requirement that the approval of P specifically must be obtained. What is required under section 75 of the CA 2016 prior approval by way of resolution by the company e company, to authorise the allotment of new shares, may be passed by a simple majority of votes. With his 5 % shareholding, P could not have blocked the resolution. As such, the specific approval of P for the second 2023 share capital increase was not required nor needed.

As mentioned earlier, the second 2023 share capital increase was carried out in order for the company to satisfy the tender requirements to bid for a solar project shareholding rights within the . shareholding reduced from 5 % to 3.75 % because he was not interested in subscribing for additional shares of the company.

Moreover, I do not see that it would make a difference whether one holds a 5 % or 3.75 % shareholding, in terms of management of the company or even having influence over the company. I do not see how having a reduced 3.75 % shareholding, as opposed to a 5 % shareholding, can or exclude him from . Bearing in mind that the shares were gifted to him and P did not pay any consideration for the same. Allegation (iii)

Allegation (iii) above is likewise baseless. There is no contravention of section 75 of the CA 2016. The 1st to 3rd Defendants breach of fiduciary duty and statutory obligations, aimed at unfairly disadvantaging P and failing to act in the best interests of P as one of the shareholders

At law, directors owe fiduciary duties to the company, rather than directly to shareholders. In general, directors do not have a contractual or fiduciary relationship with individual shareholders. Here, the 1st to 3rd Defendants owe a duty to act in the best to act in the best interests of P as one of the shareholders Allegation (iv)

Allegation (iv) above is devoid of merit. P was prevented from exercising his rights and participating fully in the governance of the excluded from participating in key decisions affecting the . Under section 211 of the CA 2016, the business and affairs of a company shall be managed by, or under the direction of the board.

Thus, the management of a company is vested in its board of directors. P, by virtue of shareholding alone, does not have a right to participate in the management or operation of the company. (See the Federal Court case of Petra bin Tengku Indra Petra v Petra Perdana Bhd and another appeal [2018] 1 MLRA 263; [2018] 2 MLJ 177 at paragraph 108).

The reality is that P was merely a passive shareholder, having been gifted with a nominal 5 % shareholding. He had never shown any interest in the affairs of the company. He had never enquired about the annual general meeting of the company, despite knowing of the resolutions relating to the audited accounts tabled at the annual general meeting. Allegation (v)

Allegation (v) above is unfounded. The 1st to 3rd Defendants did in a manner oppressive to P or in disregard of his interests as a shareholder allegations were only raised by P when D1 and D2 disputed his shareholding in the company. I consider such allegations to be an afterthought and a reactionary step to the dispute. Allegation (vi)

Allegation (vi) above is untenable. The appointment of a new director, the introduction of a new shareholder and the second 2023 share capital increase cannot, by any stretch of imagination, amount to oppression, unfair treatment or discrimination in contravention of section 346 (1) of the CA 2016. In making these allegations, P has overreached his position as a passive minority shareholder of the company.

As discussed earlier, there is no breach of fiduciary or statutory duties by the 1st to 3rd Defendants in connection with the appointment of a new director, the introduction of a new shareholder and the second 2023 share capital increase. Even if there were, it is not enough for P to merely raise that there was any such breach. P must also establish that any such breach constitutes conduct which is oppressive, in disregard of interests, unfairly discriminatory or prejudicial within the scope of section 346 (1) of the CA 2016. (See the Federal Court case of Pan - Pacific Construction Holdings Sdn Bhd v Ngiu - Kee Corporation

(M) Bhd & Anor [2010] 6 CLJ 721 at paragraph 42). P has not succeeded in doing so.

Since oppression is not made out, the relief sought by P for the buy - out of his shares under section 346 (2) of the CA 2016 does not come into play. Nevertheless for completeness, I will address the valuation report produced by the Defendants. In anticipation of a possible buy - out order, the Defendants attempted to introduce valuation evidence through DW3 (a chartered accountant). valuation report is contained in the Common Bundle of Documents in Enclosure 31 and is categorised as a Part B document valuation report .

I disregarded the valuation report because the Defendants failed to comply with the mandatory procedural requirements governing expert evidence under Order 40A of the Rules of Court 2012 Order 40A . The mandatory nature of Order 40A was emphasised by the Court of Appeal in [2021] 5 CLJ 149 at paragraph 46, where the court underscored that compliance with Order 40A is necessary to ensure the proper reception and evaluation of expert evidence.

Here, the Defendants did not file an affidavit affirmed by DW3 that exhibits the valuation report, in compliance with Order 40A. This requirement is fundamental. The safeguards under Order 40A are substantive in nature and are intended to ensure transparency and court impartially. testified. I directed parties to address compliance with Order 40A by way of submissions. Subject to that, DW3 was permitted to testify in court.

Although DW3 was permitted to testify and to be cross - examined due to his presence in court, such procedural accommodation does not - compliance with Order 40A. Nor does it operate to retrospectively regularise the manner in which the expert evidence ought to have been introduced. Compliance with Order 40A is a precondition to the proper adduction of expert evidence. A departure from those requirements cannot be remedied merely by allowing oral testimony.

E e regarded, at most, as opinion evidence of limited evidential weight. The procedural safeguards under Order 40A are designed to ensure court. Where those safeguards are not complied with, the court is entitled to accord little or no

Further, the valuation carried out by DW3 is self - serving, as it was prepared at the instance of D1 and D2 for the purposes of this litigation, rather than as a neutral or corporate exercise undertaken on behalf of the company. A valuation procured in such circumstances must be and proprietary rights. During cross - examination, DW3 accepted that the valuation report was commissioned personally by D1 and D2, and not by the company. The valuation report itself contains no statement that it was commissioned by the company, nor does it state that D1 or D2 commissioned it in their capacity as directors of the company.

This distinction is material. A valuation commissioned by interested shareholders in their personal capacity is quite different from one commissioned by the company through proper corporate authority. The former carries a risk of partiality, whereas the latter is at least ostensibly indication that the valuation was undertaken as a corporate exercise raises legitimate concerns as to independence and objectivity. In these circumstances, the court should scrutinise both the independence of the valuer and the reliability of his conclusions.

Here, the valuation report was commissioned and procured by D1 and D2, who have a direct financial and strategic interest in its outcome. Where a valuation is prepared at the instance of interested parties and relies predominantly on information supplied by those same parties, there exists a risk that the exercise becomes self - serving rather than objective. The court must therefore treat such evidence with caution.

The conclusion of DW3 that the equity value of the company was merely RM 1 on the basis of negative cash flow, notwithstanding that the company has an issued and fully paid - up share capital of RM 1,000,000, warrants particular scrutiny. While issued and fully paid - up share capital does not by itself determine equity value, such an extreme valuation outcome calls for a well - substantiated explanation. Such a conclusion requires the court to examine the assumptions adopted, the data relied upon, and the methodology applied.

must be assessed in light of how the valuation of the company was undertaken, including the following matters :

DW3 admitted during cross - examination that, since obtaining his licence as a valuer, he had conducted only one prior valuation, which concerned a prawn farming business and not a company operating in the solar energy sector. This demonstrates limited and non - comparable sectoral experience;

DW3 admitted that he relied solely on information provided by D1 and D2, without any independent verification or corroboration from third - party or objective sources. This includes the absence of verification against audited accounts, independent financial records, or market comparables; and

Although DW3 testified that he referred to various documents in preparing the valuation, those documents were neither exhibited nor appended to the valuation report. DW 3 admitted that some were not even identified as source materials. This omission prevents meaningful scrutiny of the valuation's factual foundation and accuracy.

In light of the foregoing, I consider that the valuation report is not supported by sufficiently reliable or independently verified material. The necessarily limited. The valuation falls short of the level of independence and methodological rigour expected of expert evidence placed before the court.

Before leaving this point, I would mention the justification proffered by for not filing an affidavit in compliance with Order 40A. His justification is that no direction was issued by me regarding the filing of such an affidavit. That is a poor excuse.

Order 40A rule 3 of the Rules of Court 2012 reads :

Unless the Court otherwise directs, expert evidence to be given at the trial of any action, is to be given in a written report signed by the expert and exhibited in an affidavit sworn to or affirmed by him testifying that the report exhibited is his and that he accepts full responsibility for the report.

The requirement is that an affidavit in compliance with Order 40A must be filed, unless the court directs otherwise. Here, no contrary should know better that an affidavit in compliance with Order 40A has to be filed.

Incidentally, paragraph 50 (v) of the statement of claim contained an alternative prayer for the company to buy - that is not legally permissible. This is because section 123 (1) of the CA 2016 prohibits a company from purchasing its own shares. The exception in section 127 of the CA 2016 does not apply in this case, as the company is not listed on a stock exchange.

Further, paragraph 50 (iii) of the statement of claim prayed for an order that the 1st to 3rd company to its original percentage of 5 % by issuing the equivalent allotment of shares. There is no basis for such prayer. Even if P had succeeded in proving oppression and breach of duty by the 1st to 3rd Defendants, it would not justify such a relief. P was gifted with 37,500 shares, period. He was not gifted with a perpetual 5 % shareholding in the company.

For the reasons above, I allowed only prayer (i) of paragraph 50 of the statement of claim. I granted a declaration that the 37,500 shares of and beneficially owned by him, and were not held in trust for D1 or D2. I did not allow the other Correspondingly, I dismissed the Defendants counterclaim. After hearing the parties on costs, I awarded costs of RM 20,000 to P as proposed by him. Dated 11 March 2026 Quay Chew Soon Judge High Court of Kuala Lumpur (Commercial Division NCC 2) Counsels Ravenesan Sivanesan, Siti Nur Amirah Aqilah binti Adzman, Athena Don and Sashvinna Anne (Messrs. S Ravenesan) for the Plaintiff Sivasankar and Arjun Mohanakrishnan (Messrs. Ganendrah & Associates) for the Defendants Case reference 1. Sabah Berjaya Sdn Bhd v Ketua Pengarah Jabatan Hasil Dalam Negeri [1999] 3 MLJ 145 2. Tan Keng Yong @ Tan Keng Hong & Anor v Tan Hwa Ling @ Tan Siew Leng & Ors [2022] 3 MLRA 414 3. Thavamany P Vengadasalam & Ors v Jaya In Gopal [2025] MLRAU 254 4. another appeal [2018] 1 MLRA 263; [2018] 2 MLJ 177 5. Pan - Pacific Construction Holdings Sdn Bhd v Ngiu - Kee Corporation (M) Bhd & Anor [2010] 6 CLJ 721 6. [2021] 5 CLJ 149 Legislation reference 1. Sections 75 and 85 of the Companies Act 2016 2. Section 26 of the Contracts Act 1950 3. Order 40A rule 3 of the Rules of Court 2012