Ng Choong Wei v Kck Dafu Congee Sdn. Bhd. (BA-24NCC-125-11/2025)

KCK DAFU CONGEE SDN. BHD.

LEE CHEE KHEONG (NO. K/P: 821009-08-5345) … DEFENDAN-DEFENDAN

Enclosure 11 was the Plaintiff's application for the appointment of a receiver and manager.

On 15 May 2026, this Court heard and determined Enclosures 22, 11, 1 and 13. Following the filing of notices of appeal in respect of Enclosures 22 and 1, this Court prepared and issued a ground of judgment dated 8 June 2026 addressing only those two applications.

Subsequently, a notice of appeal was also filed in respect of Enclosure 11, namely the Plaintiff's application for the appointment of a receiver and manager over KCK Dafu Congee Sdn Bhd (KCK Dafu).

These grounds are therefore confined to Enclosure 11. Brief factual background to Enclosure 11

The Plaintiff's main application was Enclosure 1, by which he sought leave to commence a derivative action on behalf of KCK Dafu Congee Sdn Bhd. The proposed derivative action was premised on alleged breach of fiduciary duties, misuse of company funds, unexplained payments, accounting irregularities, and related party transactions involving entities said to be connected to the 2nd Defendant.

The Plaintiff relied substantially on the Axcelasia report, which he described as an independent assessment report prepared after a review of the financial and accounting records of KCK Dafu. The report raised concerns on revenue, payments, accounting entries and related party transactions.

Enclosure 11 was filed in that context. By Enclosure 11, the Plaintiff sought the appointment of a receiver and manager over KCK Dafu. The Plaintiff's position was that an independent person should be appointed to take control of the company's affairs, preserve the company's assets and ascertain what had happened to the company's funds.

The Defendants opposed Enclosure 11. They denied that the threshold for the appointment of a receiver and manager had been met. They also challenged the reliance placed on the Axcelasia report and submitted that the application was, in substance, an attempt to use a receiver and manager as an investigative tool.

This was the context in which I considered Enclosure 11. Although I allowed Enclosure 1 because the Plaintiff had shown arguable issues warranting further inquiry, I had to consider Enclosure 11 separately because the appointment of a receiver and manager involves a different and higher threshold.

The appointment of a receiver and manager is a discretionary and drastic remedy. It is not granted merely because allegations of mismanagement or wrongdoing have been made. The Court must be satisfied that the remedy is necessary to preserve the subject matter of the dispute.

In Matang Holdings Bhd & Ors v Dato' Lee San Choon & Ors [1985] 2 MLRH 362, the Court stated the three broad requirements for the appointment of a receiver. The applicant must show a good prima facie claim that the property is in jeopardy and that the applicant would be in a worse position if the appointment is delayed. This approach was also referred to in Lim Poh Choo v Absolute Ascend Sdn Bhd [2007] 4

The authorities also make clear that risk to property must be supported by credible evidence. In Ng Yong Long v Qua Hock Leong & Ors [2006] 4 MLRH 729, the Court emphasised that mere assertion of risk is insufficient. There must be material showing that the property or assets are at risk of dissipation, siphoning, mismanagement, loss or removal.

In company disputes, the existence of a shareholder dispute or allegations of wrongdoing does not by itself justify the appointment of a receiver and manager. In Lee Quan Yoong v Koh Heng Jin Holdings Sdn Bhd & Ors [2022] MLRHU 734, the Court recognised the distinction between a shareholder's title to shares and the company's assets. A shareholder does not, merely by reason of shareholding, have a direct proprietary claim to the company's underlying assets.

There are cases where the Court has intervened because the evidence showed real jeopardy to the company's assets or serious dysfunction in the company's affairs. Examples include Wong Fook Thian v Lau See Mang & Ors [2016] MLRHU 808 and Oon Ah Baa @ Boon Pak Leong & Ors v Eagle & Pagoda Brand Teck Aun Medical Factory Sdn Bhd & Ors (No 2) [2003] 6 MLRH 479. However, the common thread is that the Court must be satisfied that the circumstances go beyond suspicion or dispute and justify the displacement of management.

The remedy is therefore protective. It is not ordinarily used as a tool to investigate allegations or to search for evidence. The Court must therefore distinguish between an arguable claim which may justify leave to sue, and a real risk to assets which may justify the appointment of a receiver and manager. The first does not automatically establish the second.

The Plaintiff relied substantially on the Axcelasia report and the accompanying financial records. The Plaintiff submitted that the report raised serious concerns regarding revenue, payments, accounting entries and related party transactions. The Plaintiff also submitted that an independent person should be appointed to take control of the company's affairs and ascertain what had occurred in relation to the transactions complained of.

The Defendants opposed the application. They relied on section 376 of the Companies Act 2016 and the decision in Dato' Sri Andrew Kam Tai Yeow v Tan Sri Dato' Kam Woon Wah & Ors [2018] CLJU 1600 to submit that the Court must be satisfied that there is a real risk to company assets and that the appointment is necessary. The Defendants also submitted that a receiver and manager should not be appointed merely to investigate allegations or to conduct a fishing expedition.

I accepted that section 376 is not confined only to applications by debenture holders. The section also refers to "any other interested person". However, that does not mean that an interested person is entitled to the appointment of a receiver and manager as of right. The requirement of necessity and real risk remains.

I accepted that the Axcelasia report raised concerns sufficient to support my finding under Enclosure 1 that there were arguable issues warranting further inquiry.

However, the issue before the Court in Enclosure 11 was different. The question was not whether there were arguable complaints. The question was whether the Court should appoint a receiver and manager to assume control over the affairs of the company.

I was unable to accept that the material before me justified that step. The appointment of a receiver and manager is protective in nature. It is not intended to function as an investigative mechanism or as a means of obtaining evidence which a party believes may exist.

I also considered the Axcelasia report carefully. I accepted the Defendants' submission that the report was subject to the limitations stated within it. The report was prepared from materials made available to its author, and the information had not been independently verified.

I did not reject the report outright, nor did I treat it as inadmissible. However, even giving the report due weight, it raised questions but did not establish imminent dissipation, concealment, loss or removal of company assets.

This distinction is important. My decision to allow leave under Enclosure 1 shows that I accepted there were matters deserving further inquiry. However, the existence of an arguable case does not automatically justify the appointment of a receiver and manager. The threshold for Enclosure 11 is materially higher.

I also considered whether there was evidence that the company's assets were at real risk. On the material before me, no such evidence was established.

The Plaintiff's concerns centred on historical transactions, accounting entries, related-party dealings, and alleged mismanagement. Those matters may form the subject matter of the proposed derivative action. They did not, however, demonstrate that the company's assets were presently in danger of being dissipated, concealed, lost or removed.

Accordingly, I was not satisfied that the Plaintiff had established a real risk to the company's assets or the level of necessity required to justify the appointment of a receiver and manager.

For the reasons stated above, I found that the materials disclosed issues warranting further inquiry, but they did not demonstrate immediate jeopardy to company assets.

Accordingly, Enclosure 11 was dismissed with costs of RM5,000 to the Defendants, subject to allocator. Dated this: 16 June 2026 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR Representative: For the Plaintiff : J Shamesh together with Raymond Tan Zhe Yoong Messrs Jeeva Partnership For the Defendants : Eugene Khoo Yean Shern together with Kum Hui Min