POLARIS MARITIME TRAINING ACADEMY SDN. BHD. v Pendaftar Syarikat Suruhanjaya Syarikat Malaysia (KA-24NCvC-90-03/2025)

PENDAFTAR SYARIKAT

KETUA PENGARAH INSOLVENSI JABATAN INSOLVENSI MALAYSIA …RESPONDENTS GROUND OF JUDGMENT (Enc. 1)

The Applicant through this Originating Summons dated 10.03.2025 [Enclosure 1] prayed for the following:

That the Applicant be granted leave to file this application under Section 103 and/or Section 602 of the Companies Act 2016;

An Order that the First Respondent shall give effect to the Sealed Order dated 23.01.2024 issued by the Sessions Court of Alor Setar, Kedah Darul Aman in [Civil Suit No.: KA-A54-8-12/2022];

A Declaration that the Second Respondent is granted leave to transfer shares of POLARIS MARITIME TRAINING ACADEMY SDN BHD [Company No.: 904666-V] in the Share Register of the First Respondent as follows: a. Transfer of 961 shares from Syed Mahzan bin Syed Mohamad [NRIC No.: 721001-07-5427] to Mohamad Amir bin Abdullah [NRIC No.: 740807-07-5649]; b. Transfer of 641 shares from Syed Sallehuddin bin Syed Mohamad [NRIC No.: 780331-02-5123] to Noormazlini binti Madzlan [NRIC No.: 830525-07-5658];

An Order that the First Respondent be granted leave to rectify and remove the names of Syed Mahzan bin Syed Mohamad [NRIC No.: 721001-07-5427] and Syed Sallehuddin bin Syed Mohamad [NRIC No.: 780331-02-5123] from the list of shareholders in the Share Register of the First Respondent under Section 103 of the Companies Act 2016;

An Order that the Applicant be granted leave to cancel the Annual Return dated 16.06.2024, which was filed on 18.07.2024, from the records of the First Respondent under Section 602 of the Companies Act 2016;

An Order that the Applicant shall re-file the Amended Annual Return dated 16.06.2024 with the First Respondent within thirty [30] days from the date of this Order;

An Order that the Applicant shall lodge the Sealed Order dated 23.01.2024 issued by the Sessions Court of Alor Setar, Kedah Darul Aman in [Civil Suit No.: KA-A54-8-12/2022] with the First Respondent within thirty [30] days from the date of this Honourable Court’s Order;

An Order that the Applicant shall pay administrative costs amounting to RM1,000.00 to the First Respondent within thirty [30] days from the date of this Order;

An Order that the Applicant shall lodge the Sealed Order issued by this Honourable Court with the First Respondent within thirty [30] days from the date of this Order;

That the costs incurred and arising from this application be paid by the Respondents to the Applicant;

Such further or other Orders as this Honourable Court deems fit and proper.

The application is supported by the Affidavit in Support in Encl. 2. The First Respondent (R1) in opposition filed an Affidavit in Reply in Encl.6 which the Applicant responded in Encl. 8 through a further affidavit. The Second Respondent (R2) in opposition filed an Affidavit in Reply in Encl. 16 which the Applicant responded in Encl. 19 through a further affidavit.

Written submissions were subsequently filed by parties which are Encl. 12 [Applicant’s Written Submission] and Encl. 13 [Applicant’s Bundle of Authorities], Applicant’s additional written submission Encl. 20, R1 written submission Encl 9 together with Bundle of authorities Encl. 10 and R2 written submission Encl 18.

Having heard the parties and carefully considered all the evidence before me, I dismissed the Applicant’s application.

Dissatisfied with my decision, the Applicant has filed a notice of appeal dated 12 January 2026.

The following are my grounds in arriving at my decision.

The Applicant is a private limited company. At the material time it has four directors. Two of its directors, Syed Mahzan bin Syed Mohamad and Syed Sallehuddin bin Syed Mohamad subsequently became bankrupts. The two directors are also the shareholders of the Applicant. The Applicant commenced an action in the Sessions Court vide Civil Suit No.: KA-A54-8-12/2022 seeking for among others a declaration that the two shareholders have lost their rights to the shares. On 23 January 2024 in the absent of the two directors, the Session Court made the declaration.

The applicant then served upon the Companies Commission of Malaysia (R1 in this matter) the Session Court Order to give effect to the order to transfer the ownership of shares belonging to Syed Sallehuddin (641 share units) and Syed Mahzan (961 share units) to the other shareholders, Mohamad Amir bin Abdullah and Noormazlini binti Madzlan.

By a letter dated 24 December 2024, R1 stated that the Applicant’s application was irregular and must be filed in the High Court together with the necessary amendments to be included, including naming the Director General of Insolvency, Department of Insolvency Malaysia, as a party to the proceedings.

The Applicant, in response to R1’s letter, has caused the filling of the present application.

Subsequently, R1 after having reconsidered the application, determined that the central issue herein pertains to the transfer of shares belonging to Syed Sallehuddin bin Syed Mohamed and Syed Mahzan, both adjudged bankrupts.

At the outset, R1, through a letter dated 24 March 2025, indicated no objection to the Applicant’s application. Nevertheless, by a further letter dated 25 April 2025, R1 retracted its consent, citing that Syed Mahzan and Syed Sallehuddin being a bankrupt then the matter falls under the jurisdiction of the Director General of Insolvency (R2 in this matter).

It is an undisputed fact that Syed Mahzan was adjudged bankrupt on 2 August 2018, whilst Syed Sallehuddin was made a bankrupt on 27 September 2017 and again on 8 November 2017. By virtue of section 8(1)(b) of Act 360, the Director General of Insolvency is vested with authority to administer the property and liabilities of the Judgment Debtor.

From the factual matrix outlined above, the issues requiring determination are, in essence, whether the Applicant is entitled to invite this Court to issue:

A declaration that the R2 is granted leave to transfer the shares of Syed Mahzan and Syed Sallehuddin in the Share Register of R1 to other shareholders of the Applicant:

(ii) An Order that the R1 shall give effect to the Sealed Order dated 23.01.2024 and rectify the register of members of the Applicant. The case for the Applicant

The Applicant submits that:

This Originating Summons is filed in the High Court under the direction of R1 pursuant to section 2 of the Companies Act 2016.

(ii) The intitulement in this action refers pertinently to section 103 (rectification) and section 602 (rectification of registers) of the Companies Act 2016.

(iii) R1 was wrong in issuing the Notice dated 25 April 2025 withdrawing the notice of no objection dated 24 March 2025.

(iv) This Originating Summons is founded upon the Order of the Sessions Court dated 23 January 2024, pertaining to the transmission of Share Units by operation of law.

This Originating Summons is not based on bankruptcy proceedings, as the Applicant is not a creditor but rather a third party asserting his rights pursuant to the Sessions Court order dated 23 January 2024.

(vi) The Applicant has no connection whatsoever with the bankruptcy proceedings initiated against Syed Mahzan and Syed Sallehuddin.

(vii) The Court may proceed to hear this Originating Summons without the need to obtain leave under section 8(1)(a) of the Insolvency Act 1967.

(viii) Section 58 of the Insolvency Act 1967 empowers R2, who is named as a party in this action, to transfer the shares vested under R2 to the existing shareholders of the Applicant Company.

(ix) There is no contravention of any provision of the Insolvency Act 1967 by the Applicant, as Syed Mahzan and Syed Sallehuddin have lost their rights over the said Share Units pursuant to the order dated 23 January 2024. The case for the First Respondent (R1) The First Respondent submits that:

The Applicant’s application must refer to the Insolvency Act 1967 as the primary cause of action, and not the Companies Act 2016.

(ii) The shareholdings of Syed Mahzan (961 units) and Syed Sallehuddin (641 units), who are bankrupts, are under the control and administration of R2.

(iii) R2 ought to be afforded the opportunity to file their response in this action. The case for the Second Respondent (R2) The Second Respondent submits that:

R2 has rights over the bankrupts’ shares in the Applicant Company pursuant to section 8(1)(b) of the Insolvency Act 1967.

(ii) Under section 55(4) of the Insolvency Act 1967, any property of a bankrupt shall be deemed to have been vested in the Director General of Insolvency.

(iii)

(iv) The Order dated 23 January 2024 was obtained by the Applicant without the presence of the bankrupts and R2.

The terms of the Order dated 23 January 2024 are inconsistent with section 8(1)(b), section 55(4), and section 58 of the Insolvency Act 1967.

(vi) This application is wrongly filed and is misconceived.

The factual matrix clearly established that the relevant shareholders are undischarged bankrupts. It is trite that upon a person being adjudged a bankrupt, all his affairs become vested in the Official Assignee (see Re Low Kok Tuan, exp Arab-Malaysian Merchant Bank Bhd [1997] 4 CLJ 185). Section 24(4) of the Bankruptcy Act 1967 clearly provides that upon making the bankruptcy order the property of the bankrupt shall become divisible among his creditors and shall vest in the Director General of Insolvency (see Re Badan Pengurusan Bersama Kondominium Lagenda, [2017] 1 LNS 1796).

Given the state of the law as stated above the question that has to be answered is whether a company may make any application which pertain to the shares in that company which are held by a bankrupt. The Applicant emphatically canvassed before me that it could do so. It referred to and relied on sections 103 and 602 of the Companies Act 2016.

It must be immediately stated that reliance on these sections is wholly misconceived and untenable. The provisions in question pertain solely to rectification of a company’s records. These provisions concern rectification in the records of a company. This necessarily implies that the company’s records contain an error which, once discovered, must be duly corrected. It is patently clear that these sections have nothing to do with the transfer or the transmission of shares. The case before this Court is not about the error on the share register. As the Applicant was at pains to admit the simple fact is that the so called “error” is that the shareholders have since became bankrupts. To my mind this is not an ‘error’ for which the provisions of section 103 and 602 can be called into aid. Accordingly, there is no basis upon which the Applicant may rely, let alone direct R1 to undertake the rectification sought.

Put it another way this case does not involve any error in the entries of the Applicant’s records. What occurred is that the Applicant acted against its bankrupt shareholders by obtaining a declaration that Syed Mahzan and Syed Sallehuddin were declared to have lost their rights over the shares registered under their names.

I find the Sessions’ Court Order of 23 January 2024 to be one issued without full appreciation of the law under the guise of operation of law. It seems to me that the effect of the order was to divest the bankrupts’ rights over the shares and to invests that proprietary rights to other shareholders. I am unaware of any legal provisions which provides that a bankruptcy will have the automatic effect of rendering the shares of a bankrupt in a company liable to be transmitted to other shareholders in the same company. The only vesting by operation of law, to my mind, is that from the bankrupt to the DGI.

I therefore sustain the submissions of R1 and R2 and agree that the application herein is without merit. The Applicant had relied upon the cases cited in its submissions and with respect to counsel these authorities do not assist the Applicant. I further find that the Order of the Sessions Court which was obtained by way of a of judgment in default (without the present of the two shareholders), is illegal and hence is incapable of being enforced – see Badiaddin Mohd Mahidin & Anor v. Arab Malaysian Finance Bhd [1998] 2 CLJ 75

I find and hold that when the bankrupts’ assets have been vested in or transferred to the Director General of Insolvency, any declaratory order stating that the bankrupts “lost their rights over the Share Units” becomes nonstarter and illegal, because at the time the declaration was obtained, the assets were no longer in the possession of the bankrupts.

The Applicant’s application to transfer the shares of Syed Mahzan and Syed Sallehuddin pursuant to the Sessions Court order dated 23 January 2024 is contrary to section 8(1) of the Insolvency Act 1967, whereby the bankrupts’ assets are under the control of R2, and only R2 is entitled to act as receiver, manager, administrator, and trustee over all the bankrupts’ assets.

In the case of Danny Tan Yew Chong v. Skyboard Media Sdn Bhd & Ors [2019] 9 MLJ 802, it was held that the transfer of shares was carried out to avoid the application of section 52 of the Insolvency Act 1967, because if the shareholder had already been declared bankrupt, the shares could not be transferred to the Director General of Insolvency, who is empowered to receive, manage, and administer such assets for the benefit of creditors under the Insolvency Act. The Court had occasion to state as follows: - [48] Based on the case of Silver Corridor, whether the transfer of the one TCK’s share in the first defendant to Mohd Sunawan was made in good faith or for valuable consideration would necessarily depend on the facts and circumstances. To my mind, based on the affidavits evidence adduced, it can be reasonably inferred that the transfer was not done in good faith. It was done to circumvent s 52 of the IA 1967 so that in the event TCK is adjudged bankrupt TCK’s shares would not be passed to the DGI who is empowered to receive, manage and realise TCK’s assets for the benefit of TCK’s creditors. As the transfer is void against the DGI, it follows the agreement between TCK and Mohd Sunawan for Mohd Sunawan to hold the one shares in trust for the benefit of TCK is void. Therefore, like night follows day, Mohd Sunawan does not possess the legal capacity and good title to deal with the one share.

Similarly, in the present case as the shares was vested to R2, any application to transfer the shares to the remaining members of the Company cannot be done without the consent of the Director General of insolvency.

In the upshot the Applicant’s application is dismissed.

Costs of RM5,000.00 each to be paid by the Applicant to R1 and R2 subject to allocator. Dated: 14 December 2025 (Mohd Aimi Zaini Bin Mohd Azhar) Judicial Commissioner High Court Malaya Alor Setar Kedah Darul Aman Solicitors for the Applicant: Encik Irwansyah bin Asri Messrs. Aswandi Hashim & Co Solicitors for the First Respondent: Encik Rashdi bin Shamuddin Suruhanjaya Syarikat Malaysia Solicitors for the Second Respondent: Encik Suhaimi bin Remly Jabatan Insolvensi Kedah