Shahida Nabila Binti Serat v Wan Suraya Binti Wan Abdul Nasir (BA-24NCC-122-10/2024)

The originating summons for remedies under Section 346 of the Companies Act 2016 was dismissed with costs of RM12,000.00.

The plaintiff, dissatisfied with the court's decision here, filed an appeal. Salient Facts of the Case 3. The plaintiff and the defendant are equal shareholders of a company known as Srikandi Ayla Sdn Bhd, which was incorporated on 18 August 2022. The company's primary objective is to provide dental healthcare services.

Both the plaintiff and the defendant are qualified dental practitioners. They each hold 150,000.00 ordinary shares, totalling 300,000.00 issued ordinary shares. They have each contributed RM150,000.00 in paid-up capital.

The plaintiff and the defendant had a series of disagreements over the company’s operational procedures and decision-making processes, which subsequently impacted its management and overall functioning. The defendant ceased work on 26 July 2024.

The defendant proposed to sell her shares to the plaintiff for a sum of RM300,000.00, payable in three monthly instalments beginning in September 2024.

However, the plaintiff argues that the offered price of RM300,000.00 was excessively high. The plaintiff also claims that the defendant failed to justify how the offered price was determined.

The defendant’s act of filing a Winding-Up Petition against the company in the Shah Alam High Court on 26 November 2024 was regarded by the plaintiff as an act of bad faith by the defendant.

The plaintiff’s main grievances focused on the defendant's lack of commitment to the company's operations and their status as a director and shareholder, which has caused the plaintiff significant stress.

Therefore, the plaintiff considers this to be an appropriate case under Section 346 of the Companies Act 2016. The plaintiff believes that the defendant’s initial offer to sell her shares further reinforces the plaintiff’s position.

The defendant alleges that disputes between the plaintiff and the defendant arose in the year 2023, leading to a deadlock in the company’s management.

On 4 September 2024, the defendant issued a letter proposing to sell her 150,000.00 shares in the company to the plaintiff for RM300,000.00. Her alternative proposal was that the company be wound up.

On 9 September 2024, the plaintiff declined the initial offer and presented a counterproposal to purchase the shares for RM150,000.00. Additionally, the plaintiff dismissed the defendant’s demand for the company's winding-up.

On 11 September 2024, the defendant rejected the counter proposal, reserving her right to sell the shares to a third party. She further emphasised that the company should be wound up if the shares are not sold.

The plaintiff responded on 13 September 2024 that no sale of shares to a third party had been agreed upon. On 18 October 2024, the current originating summons was filed under Section 346 of the Companies Act 2016.

The defendant has submitted a winding-up petition under Section 465(1)(f) and (h) of the Companies Act 2016 at the Shah Alam High Court. Issue to be Tried 17. Whether the disagreement in the company's operations, which has led to the defendant filing a winding-up petition, is oppressive under Section 346 of the Companies Act 2016. Decision of this Court 18. The Federal Court decision in the case of Low Cheng Teik & Ors v Low Ean Nee [2024] 5 MLJ 580 has set out the legal test to decide whether a shareholder’s complaint is actionable under Section 346 of the Companies Act 2016. “[93] Based on the matters considered above, the following criteria are proposed as the basis for the formulation of a legal test to ascertain whether a shareholder’s complaint is actionable under s 346 of the Act or more properly on behalf of the company under s 347 of the Act:

What is the act or omission that one or more of the shareholders complain of? In short, identity the act, series of acts or omissions;

Can the act (s) or omission (s) be characterised as being:

oppressive to;

(ii) in disregard of the interest of;

(iii) unfairly discriminatory against; or

(iv) otherwise prejudicial to one or more of the shareholders?

Does the cause of action vest in the shareholder or in the company?

Who has suffered loss or damage from the wrong done – the shareholder in his capacity as a shareholder, or the company?

Is the loss suffered by the shareholders as plaintiff separate and distinct to the plaintiff in his capacity as a shareholder, or is it a loss suffered by all the shareholders? [94] It should be said that the formulation of the legal test provides criteria that may be applied to a given fact situation to determine the best cause of action to pursue under the Act, more particularly in relation to shareholder disputes. It does not comprise a blueprint that is set in stone, providing the complete and immutable touchstone for the cause of action an aggrieved party is bound to undertake. Instead, it provides relevant guidance to the court and litigants alike to consider the most appropriate form of action to take in a given situation. [95] In summary, the legal ‘test’ provides that where the nature of the act, omission or misconduct is oppressive or unfairly prejudicial to a shareholder, and the resulting injury and loss may be classified as having been suffered directly and specially or separately and distinctly by the shareholder in such capacity, as opposed to loss or injury suffered by the company or all the other shareholders, then oppression is made out and the cause of action vests in the shareholder. In such an instance,

346 provides the remedies available.”

In the present case before this Honourable Court, the plaintiff has submitted numerous acts of the defendant perceived as oppressive conduct. These are enumerated as follows:

19.1 The defendant’s offer to sell her shares for RM300,000.00;

19.2 The defendant’s act of submitting a winding-up petition;

19.3 A deadlock has occurred that can only be resolved if the plaintiff acquires the defendant’s shares, allowing the company to continue operating as a sole proprietorship.

19.4 The plaintiff further claims that, although the defendant has ceased her practice as a dental surgeon, she remains a director of the company. This has complicated the management of the company’s affairs, especially regarding financial matters overseen by the defendant, including irregularities related to employees' salaries, cash deposits, and the approval of the company's expenditures. However, no evidence has been presented before this court concerning her grievances. Findings of the Court 20. After examining the affidavit evidence submitted by the parties, considering the submissions of the learned counsel, and applying the legal test outlined in the Federal Court decision in Low Cheng Teik and Ors v Low Ean Nee, supra, I dismiss the grounds raised by the plaintiff and find that there was no oppression by the defendant against the plaintiff for the following reasons.

20.1 The facts presented in the affidavit, as evidenced by the plaintiff, merely serve to demonstrate the plaintiff's strong desire to continue operating the dental healthcare clinic.

20.2 There is not an iota of evidence that proves the plaintiff suffered any loss in her personal capacity as the director of the company. No such proof has been presented in this court.

20.3 The plaintiff’s claim that the defendant’s proposal to sell her shares at an excessive valuation is baseless, as it is not supported by any compelling evidence showing that the offer was made at an inflated price. This clearly does not constitute oppression.

20.4 The defendant’s conduct was directly attributable to the plaintiff's unprofessional management of the dental clinic, wherein she temporarily accommodated her family members in the doctor’s restroom. Furthermore, the plaintiff’s husband admonished her children within the clinic premises. It is an uncontested fact that the plaintiff’s husband is also employed as a dental assistant at the same clinic.

20.5 The plaintiff’s claim that her exclusive dependence on the company for income does not amount to oppressive conduct by the defendant. Her aim to sustain the company does not constitute oppression by the defendant.

20.6 The facts clearly show that the breakdown in communication between the plaintiff and the defendant was caused by how the plaintiff managed the company, which ultimately led to a deadlock. The plaintiff did not provide any evidence of personal loss. In fact, her eagerness to retain and control the company suggests the opposite. Conclusion 21. The unfortunate circumstances between the plaintiff and the defendant revolve around their divergent approaches to managing the company, and the behaviour of the defendant does not constitute oppression pursuant to Section 346 of the Companies Act 2016.

The extent of the plaintiff's insistence on establishing herself as the sole proprietor of the company further confirms that she did not suffer any damage or harm caused by the alleged oppressive actions of the defendant. At no significant point did the plaintiff show any loss in her personal capacity or any detriment or injury resulting from the claimed oppressive conduct.

Furthermore, the court is not obliged to issue an order in cases of oppression, as this is a discretionary remedy, a principle explicitly established in the High Court case of Nilai Lanjut Sdn Bhd v Yeng Chong Realty Bhd & Ors [2018] MLJU 2053 as follows: “[87] It was submitted for the defendants that even assuming oppression can be made out the Court is not bound to make an order under Section 346 of the Companies Act 2016. The Court has discretion by virtue of the word ‘may’ in section 346(2). The remedy is discretionary and there were many reasons set out as to why a Court should decline to make any orders under section 346(2). The categories are not closed. [88] In Campbell v Backoffice Investments Pty Ltd [2008] 66 ASCR 359, Young CJ in EQ, after an extensive review of authorities, said: “[452] It is clear from the authorities that a court is not bound to make an order under the section even if the plaintiff demonstrates that there has been oppression. [453] In particular, the Court may, in its discretion, decline to make an order under the section. Without wishing to limit the ambit of the section, it seems that it may properly refuse to make an order, if it finds that oppression has ceased …”

In conclusion, this is a fit and proper case to be dismissed with costs of RM12,000.00. Dated: 29th September 2025 (INDRA NEHRU SAVANDIAH) Judge High Court of Malaya Shah Alam Selangor Date of Decision: 18th August 2025 Counsels: For the Plaintiff : Muhd Zamir Aflah bin Mohd Amin Messrs Saidina & Co.