Sage 3 Sdn Bhd v Andrew Hoh Tjun Mee (WA-24NCC-681-12/2025)

The Plaintiff’s central contention is that a payment of RM100,000.00 made in April 2019 to Eric Chan was, in truth, an unlawful self-acquisition of the company’s own shares contrary to section 123 of the Companies Act 2016, with the consequence that Eric Chan had no valid title to pass to the Defendant under the nemo dat quod non habet rule.

The Defendant, who has been recognised on the Plaintiff’s own register of members and in twenty-six successive statutory filings as a 20% shareholder for nearly five years, resists the application on three principal grounds: that the Originating Summons procedure is inappropriate; that the application is a bad-faith afterthought brought only after a buyout negotiation collapsed; and that, on any view, the threshold for stripping a registered shareholder of his property is not met.

Having heard learned counsel and considered the affidavit evidence, this Court dismisses the Originating Summons with liberty to the Plaintiff to commence a fresh action by way of writ within fourteen (14) days, without prejudice to the operation of the Limitation Act 1953. There is no order as to costs. The reasons follow. B. BACKGROUND FACTS [5] On 3 January 2019, Eric Chan was allotted 100,000 ordinary shares of RM1.00 each in the Plaintiff company. On 24 April 2019, the Plaintiff paid Eric Chan RM50,000.00 and set off a further RM50,000.00. The payment voucher describes the transaction as “refund of shareholders paid-up capital” and the contemporaneous equity ledger records it as a “REFUND OF SHARE CAPITAL BUT PENDING SSM CHANGES.”

By a Letter of Offer dated 18 September 2019, the Plaintiff offered the Defendant 50,000 shares, described therein as “treasury shares.” The Defendant paid RM50,000.00 directly to the Plaintiff and, on 20 January 2020, a transfer of 50,000 shares from Eric Chan to the Defendant was executed. A second tranche of 50,000 shares was transferred in like manner on 19 June 2023, for which the Defendant paid RM125,000.00 directly to the Plaintiff.

Between 2020 and 2025, the Plaintiff filed twenty-six statutory documents with the Companies Commission of Malaysia — Annual Returns, audited accounts and board resolutions — each recognising the Defendant as the holder of 100,000 shares. Between August and October 2024, following the Defendant’s announced resignation, parties entered into negotiations for the Plaintiff to buy out the Defendant’s shares. On 23 October 2024, the majority directors offered a discounted price which the Defendant rejected.

On 6 January 2025, the Plaintiff’s finance manager wrote to the Defendant disputing the validity of his shareholding for the first time. Notwithstanding that dispute, on 15 November 2025 the Plaintiff lodged an Annual Return with the Companies Commission still reflecting the Defendant as the holder of 100,000 shares. The present Originating Summons was filed on 1 December 2025. C. PARTIES’ SUBMISSIONS [9] Learned counsel for the Plaintiff submitted that the April 2019 transaction was a prohibited self-acquisition under section 123 of the Companies Act 2016; that the “treasury shares” concept under section 127 is confined to public listed companies; that any return of capital required a formal reduction under sections 116 or 117; that the resulting nullity cannot be cured by estoppel; and that the Plaintiff is duty-bound to correct an irregularity upon discovery.

Learned counsel for the Defendant submitted that the 2019 arrangement was a “warehousing” of title pending the entry of a 6 new shareholder, agreed amongst the directors; that the dispute throws up substantial disputes of fact unsuitable for an Originating Summons; that the non-joinder of Eric Chan and the Companies Commission is fatal; that the suit is an opportunistic afterthought brought only after the buyout collapsed; and that no fraud or forgery is alleged or made out. D. ISSUES FOR DETERMINATION [11] Three issues fall for determination: (i) whether the Originating Summons procedure is appropriate having regard to the matters in dispute; (ii) whether, on the affidavit material presently before the Court, the Plaintiff has established cogent reasons sufficient to displace the Defendant’s registered title to the 100,000 shares; and (iii) the consequential question of disposal, including any jurisdictional bar arising from the relief sought against the Companies Commission of Malaysia. E. PRINCIPLES OF LAW [12] The starting point is the constitutional protection of property. Article 13(1) of the Federal Constitution provides: “No person shall be deprived of property save in accordance with law.”

Shares in a company are a species of property within the meaning of Article 13. It follows that a registered shareholder may not be divested of his shareholding save upon reasons that are cogent and legally sufficient. By cogent reasons, this Court means reasons of substance such as fraud, forgery, or a clear statutory nullity apparent on the face of the documents — not bare assertions or arguable contentions requiring resolution at trial.

Section 50 of the Companies Act 2016 provides that: “The register of members shall be prima facie evidence of any matters which are by this Act directed or authorised to be inserted in it.”

The register is therefore presumptive proof of title. The burden of displacing that presumption lies upon the party impeaching the register, and that burden is to be discharged on the balance of probabilities as expressed by Denning J in Miller v Minister of Pensions [1947] 2 All ER 372 — evidence that is more probably true than not. Where, however, the impeaching party proceeds by Originating Summons, the affidavit material must be such as can safely sustain the finding sought without recourse to oral testimony.

Section 123 of the Companies Act 2016, relied on by the Plaintiff, provides: “(1) Except as is otherwise expressly provided by this Act, a company shall not — (a) acquire its own shares; or (b) purport to acquire the shares of its holding company.”

That provision codifies the rule in Trevor v Whitworth (1887) 12 App Cas 409, namely that a company may not purchase its own shares so as to return capital otherwise than through the statutory mechanisms of capital reduction. The principle was applied in Mookapillai v Liquidator, Sri Saringgit Sdn Bhd, where the Court held that a private company’s informal self-acquisition, bypassing the formal capital reduction procedure, is impermissible. Where such illegality is established on the facts, estoppel will not validate a nullity: Kelapa Sawit (Teluk Anson) Sdn Bhd v Dr Yeoh Kim Leng.

On procedure, Order 5 rule 2 of the Rules of Court 2012 provides: “Proceedings in which a substantial dispute of fact is likely to arise shall be begun by writ.” [19] An Originating Summons is, by its nature, a procedure for the resolution of questions of construction or of law upon facts that are either undisputed or capable of safe determination on affidavit. Where the resolution of the dispute turns on contested questions of intention, credibility or surrounding circumstance, the proper course is for the proceedings to be tried on pleadings, either by continuation as if begun by writ under Order 28 rule 8 or by a fresh writ. Contemporaneous documents may, in a proper case, prove decisive: Detik Ria Sdn Bhd v Prudential Corp Holdings Ltd; WTWT Sdn Bhd v Chew Meu Jong. But documents are decisive only where they speak with one voice. Where they are equivocal, oral evidence is required. F. ANALYSIS AND FINDINGS

Whether the Originating Summons procedure is appropriate [20] The Plaintiff’s case rests upon the proposition that the April 2019 payment to Eric Chan was, in legal character, a refund of capital amounting to a self-acquisition by the company. The Defendant’s answer is that it was a warehousing arrangement amongst directors, in which Eric Chan retained legal title pending the entry of a new shareholder. [21] Each version finds some support in the documents. The payment voucher, the equity ledger and the Letter of Offer (referring to “treasury shares”) lend colour to the Plaintiff’s reading. The twenty-six successive statutory filings recognising the Defendant’s shareholding, the audited accounts, the buyout negotiations of October 2024, and the Plaintiff’s own post-dispute Annual Return of 15 November 2025, lend colour to the Defendant’s reading. The documents do not speak with one voice. [22] The true character of the 2019 arrangement turns upon the intention of the directors at the material time, the surrounding commercial context, and what was understood and communicated amongst the principals. These are quintessentially matters for oral evidence and cross-examination. The Defendant himself, candidly, admits no personal knowledge of the 2019 arrangement. The person who would know — Eric Chan — is not before this Court. To resolve such a question upon competing affidavits, in the absence of the principal witness, would be unsafe. [23] This Court therefore finds that the Originating Summons is not the appropriate procedural vehicle. The matter requires pleadings and a trial: Order 5 rule 2 of the Rules of Court 2012.

(ii) Whether cogent reasons have been shown to displace the Defendant’s registered title [24] Even taking the Plaintiff’s affidavit case at its highest, this Court is not satisfied that the threshold for displacing the Defendant’s registered title is met on summary process. The Defendant has been the registered holder of the 100,000 shares for nearly five years. He paid consideration of RM175,000.00. Twenty-six statutory filings, lodged by the Plaintiff itself, affirm his title. His shareholding is property within the meaning of Article 13 of the Federal Constitution. [25] No allegation of fraud is advanced against the Defendant. No allegation of forgery is made. There is no suggestion that the Defendant was party to, or knew of, any irregularity in the 2019 arrangement. On the contrary, the Plaintiff’s own pleaded case acknowledges that the Defendant paid full consideration directly to the company. The matter is, at its highest, an alleged statutory irregularity between the company and Eric Chan, the consequences of which as against the Defendant are contested and require trial. [26] Learned counsel for the Plaintiff submitted that the Plaintiff is duty-bound to correct an irregularity upon its discovery. This Court accepts the principle but observes that it cuts both ways. If the Plaintiff discovered the irregularity in 2019, it has slept on its rights for five years while issuing successive statutory affirmations of the Defendant’s title. If discovery came only after the buyout broke down in late 2024, that timing is itself a matter requiring scrutiny at trial. Five years is, in this Court’s view, a long time to discover an irregularity said to lie on the face of one’s own books. [27] This Court is conscious of the rule in Trevor v Whitworth and the principle in Mookapillai and Kelapa Sawit (Teluk Anson) that estoppel cannot validate a statutory nullity. Those principles are not in doubt. But they assume that the underlying nullity has been clearly established. On the material presently before this Court, it has not. Where the very character of the impugned transaction is genuinely contested, and where the only person with direct knowledge of it is not before the Court, the nullity is not made out to the standard required to override a registered shareholder’s constitutional property interest on summary process. [28] This Court accordingly finds, on this second and reinforcing ground, that the Plaintiff has not shown cogent reasons to displace the Defendant’s registered title in these summary proceedings. Nothing in this finding precludes the Plaintiff from establishing its case on a fuller record at trial.

(iii) Disposal and ancillary matters [29] Three further submissions require to be addressed. First, learned counsel for the Defendant submitted that the non-joinder of Eric Chan and the Companies Commission is fatal, relying on Tenaga Nasional Bhd v Majlis Daerah Segamat. The point has force. Eric Chan is the alleged transferor whose title is impugned; the Court ought not, ordinarily, make declarations affecting his interest in his absence. This consideration reinforces, rather than displaces, the disposal above. It also supplies the reason why this Court considers a fresh, properly constituted writ preferable to mere conversion: a writ permits the proper joinder of the transferor. [30] Secondly, learned counsel for the Defendant submitted, relying on Aw Eng Sun and Norakhmar, that this Court has no jurisdiction to order the Companies Commission of Malaysia, a non-party, to expunge its records. By way of observation only and not forming part of this Court’s ratio, there is force in the submission as regards orders directed at the Commission itself, though it does not necessarily exclude orders directed at the company to lodge corrective filings. The point need not be decided. It is a matter for the writ action, if any, where it can be properly ventilated with the Commission, if appropriate, joined or heard. [31] Thirdly, both sides invoked authorities going to the merits — Central Securities (Holdings) Bhd v Haron bin Mohamed Zaid, Tan Chee Hoe & Sons Sdn Bhd v Code Focus Sdn Bhd on the Plaintiff’s side, and Detik Ria, WTWT and the line of authority on contemporaneous documents on the Defendant’s. Each of these authorities will, in its place, be relevant at trial. None, in this Court’s view, is sufficient to convert this contested matter into one fit for summary disposal on affidavit. G. CONCLUSION AND ORDERS [32] For the reasons set out above, this Court makes the following orders:

The Originating Summons is dismissed;

The Plaintiff is granted liberty to commence a fresh action by way of writ within fourteen (14) days from the date hereof, without prejudice to the operation of the Limitation

There is no order as to costs, the dismissal being on the ground of choice of procedure and the substantive merits remaining for determination in any fresh action. [33] Nothing in this judgment shall be read as a determination on the merits of the underlying dispute, which remain at large. H. APPRECIATION [34] This Court records its appreciation to learned counsel on both sides for the industry and clarity with which the submissions were prepared and presented. Dated 22hb June 2026 (MOHAMAD REDZUAN BIN IDRUS) JUDICIAL COMMISSIONER KUALA LUMPUR HIGH COURT NCC 5 WILAYAH PERSEKUTUAN KUALA LUMPUR APPEARANCES For the Plaintiff: Dharmesh Singh Penesar, Mahesh Kalai Selvan & Sherry Lyz Alicia (PDK) (Teja Singh Penesar & CO. (Kuala Lumpur)) For the Defendant: Lee Shih, Lim Zhi Ying & Cherry Huang You You (Lim Chee Wee Partnership (Kuala Lumpur)) CASES REFERRED TO

Aw Eng Sun & Anor v. Lau Kooi Cheun & Ors [2013] 10 MLJ 553 2. Central Securities (Holdings) Bhd v Haron bin Mohamed Zaid [1979] 2 MLJ 244 3. Detik Ria Sdn Bhd v Prudential Corp Holdings Ltd & Anor [2025] 3 MLJ 22 4. Kelapa Sawit (Teluk Anson) Sdn Bhd v Dr Yeoh Kim Leng & Ors [1991] 1 MLJ 301 5. Miller v Minister of Pensions [1947] 2 All ER 372 6. Mookapillai & Anor v Liquidator, Sri Saringgit Sdn Bhd & Ors [1981] 1 MLRA 612 7. Norakhmar bt Baharon & Anor v Lee Ming Leong & Ors [2007] 8 MLJ 50 8. Tan Chee Hoe & Sons Sdn Bhd v Code Focus Sdn Bhd [2014] 4 MLRA 11 9. Tenaga Nasional Bhd v Majlis Daerah Segamat [2022] 2 MLJ 119

Trevor v Whitworth (1887) 12 App Cas 409

WTWT Sdn Bhd v Chew Meu Jong and Ors [2018] 1 LNS 1458

Federal Constitution — Article 13 2. Companies Act 2016 — sections 50, 116, 117, 123, 127 3. Contracts Act 1950 — section 66 4. Limitation Act 1953 5. Rules of Court 2012 — Order 5 rule 2; Order 28 rule 8; Order 92 rule 4