The Directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the transferee named in as ordinary transfer presented for registration. [See pages 139-141 of the Record of Appeal Jil. 2/2]” [19] It would appear from the terms of Article 49 that the respondent was prepared to treat a person such as the appellant who is entitled to shares “in consequence of the death of a member” as a “transmission”. The respondent has recognised this as a “transmission clause”. [20] Be that as it may, under the terms of Article 50, the respondent always retained the right to refuse registration, even of a person entitled by transmission. This is consistent with the view of learned authors in their field of law. We add that the respondent’s subsequent amendment and deletion of the abovementioned articles in its Articles of Association have no effect on the above reading as the amendments were made after the decision 33 rejecting the request for registration. With the amendments the respondent’s Articles of Association are more in line with those found in Table A. [21] Whether transmission or transfer, the Articles of Association may place some restrictions to get a transmission or transfer done as of right. Learned author Walter Woon on Company Law, 2nd ed. at page 473 on restriction of transfer of shares as well as Directors’ Discretion to refuse registration of a transfer, says: “Restriction on Transfer of Shares Shares are freely transferable unless restrictions are imposed by the memorandum or articles. [Re Smith, Knight & Co, Weston's Case (1868) 4 Ch App 20 (Court of Appeal in Chancery, England); Re Bede Steam Shipping Co Ltd [1917] 1 Ch 123, 132 per Lord Cozens-Hardy MR (Court of Appeal, England); Lim Ow Goik v Sungei Merah Bus Co Ltd [1969] 2 MLJ 101, 104 per BTH Lee J (High Court, Malaysia)]. The right to transfer shares may also be restricted by agreement. [Ontario Jockey Club Ltd v McBride [1927] AC 916]. In the case of a private company, the transfer of shares must be restricted in some way. [Section 18(1) (Malaysia: s 15(1)(a))]. This is commonly done by giving a discretion to the directors to refuse to register a transfer, or by stipulating to whom shares may be transferred, or by giving to the existing members a right to have any shares offered to them first before they can be transferred ('pre-emptive rights'). A public company may have share transfer restrictions in its memorandum and articles, but this is not compulsory. In the case of public companies that have securities quoted on the stock exchange, there will usually be no restriction on the transfer of shares, since the whole point of a listing is to create a vibrant secondary market. [Some strategic companies have restrictions on transfer of shares to foreigners, eg. banks and some privatized government companies]. 34 Directors' Discretion to Refuse Registration of a Transfer Directors have no discretion to refuse to register a transfer of shares unless the articles so provide. [Re Smith, Knight & Co, Westons Case (1868) LR 4 Ch App 20 (Court of Appeal in Chancery, England)]. Where a discretion is given to the board of directors to refuse to register a transfer, this power must be exercised bona fide in what they consider is in the interests of the company and not for any collateral purpose. [Re Smith & Fawcett Ltd [ 1942] Ch 304 (Court of Appeal, England); Kesar Singh v Sepang Omnibus Co Ltd [1964] MLJ 122 (High Court, Malaysia); Lim Our Goik v Sungei Merah Bus Co Ltd [1969] 2 MLJ 101 (High Court, Malaysia)]. A transferor does not warrant that the consent of the directors will be given when he sells shares to a purchaser. [London Founders Association Ltd v Clarke (1888) 20 QBD 576]. If a company refuses to register a transfer by reason of a discretion conferred upon the directors, a notice stating the facts which are considered to justify refusal must be served on the applicant for transfer within one month of the date the application is made. [Section 128(2) (no Malaysian equivalent). In Xiamen International Bank v Sing Eng (Pte) Ltd [1993] 3 SLR 228 (High Court, Singapore) Judith Prakash J treated this as requiring the company to state its reasons for refusing to register the transfer]. Where the directors have given reasons for the refusal to register a transfer, the court may evaluate the sufficiency of those reasons. [Xiamen International Bank v Sing Eng (Pte) Ltd (1993J J SLR 228 (High Court, Singapore); Lim Ow Goik Sungei Merah Bus Co Ltd (1969) 2 MLJ 101 (High Court, Malaysia)]. The court may interfere if the directors have acted from some improper motive or arbitrarily and capriciously. [Re Gresham Life Assurance Society (1872) LR 8 Ch App 446, 447, 452 (Court of Appeal in Chancer England); Allied Properties Sdn Bhd v Semua Holdings Sdn Bhd (1988] 3 MLJ 185 (High Court, Malaysia)]. In Kwality Textiles (Malaysia) Sdn Bhd v Arunchalam [1990] 3 MLJ 360, the Malaysian Supreme Court held that: The court should not interfere with the proper exercise of discretion of the board of directors conferred by the articles to refuse registration for the well 35 being of the company. Indeed the court should be slow to question the exercise of the discretion in the absence of evidence that the board of directors had acted mala fide.” [22] In this case, the respondent had given their reasons for their decision. Not only is the decision one that the respondent is entitled to take, the reasons given (as set out in the letter earlier) do not amount to bad faith. [23] We have read the appeal records and able submissions of the learned counsel. After giving much consideration to the submissions of the learned counsel for the appellant in detail, we take the view that the appeal has no merit. Our reasons inter alia are as follows: