Tan Liong Huat @ Tan Swee Huat v Tan Huat Hoe (WA-24NCC-268-05/2025)

TAN HUAT HOE

TAN ZU YAN

ONG SEE HONG

NINAMAJU SDN BHD (NO. SYARIKAT: 198101003186 (69300-V)) …DEFENDAN-DEFENDAN

The Plaintiff claims that the 1st Defendant (“D1”) has conducted the affairs of the 4th Defendant (“Ninamaju”) and/or used his powers as a director of Ninamaju oppressively within the meaning of section 346 of the Companies Act 2016 (“CA”). He also claims that D1 has breached his duties as a director under sections 213, 218, and/or 251 of the CA. D1 has counterclaimed against the Plaintiff with cross allegations of oppression. Background facts

The Plaintiff (Tan Liong Huat) is a director and minority shareholder of Ninamaju, holding 18.33% of the issued share capital. Together with his wife and sister-in-law, they hold 50% of the issued share capital of Ninamaju. D1 (Tan Huat Hoe) is the other director of Ninamaju and a cousin of the Plaintiff. D1, his son D2, and his wife D3, collectively hold the other 50% of the issued share capital of Ninamaju.

According to the narrative, P and D1 are the respective patriarchs of the Plaintiff’s family (“Liong Huat Family”) and the Defendant’s family (“Huat Hoe Family”). The families are aligned along these lines, and as such, the company is deadlocked at both shareholder and board levels.

Ninamaju has been carrying on business as wholesalers and distributors of rice under the “Cap Udang” brand. It is based in Kedah and has been in operation since 1981.

In 2012, the Plaintiff acquired PM Mahsuri Sdn Bhd, an existing rice wholesaler and turned it into a related business based in Selangor. PM Mahsuri engages in packaging rice and retail trading in packaged rice, including Ninamaju’s Cap Udang brand.

PM Mahsuri is controlled by the Plaintiff’s son (Tan Chor Eeow), who has the single largest shareholding block. Both the Plaintiff and his son (Tan Chor Eeow) are also directors of PM Mahsuri. The other director and minority shareholder of PM Mahsuri is D2 (Tan Zu Yan), the son of D1.

Although D1 himself is not a shareholder of PM Mahsuri, the Huat Hoe Family (through the son, Tan Zu Yan) has a related oppression action against members of the Liong Huat Family (i.e. the Plaintiff, his son Tan Chor Eeow and 2 others) in KL High Court Originating Summons No: WA-24NCC-409-08/2024 (“PM Mahsuri OS”).

The PM Mahsuri OS was heard together as the allegations there overlap substantially with the subject matter of the counterclaim in this action. The PM Mahsuri OS is the subject of a separate Judgment.

As noted, Ninamaju is in a complete deadlock. The Plaintiff’s complaints all stem from D1’s alleged desire for the Huat Hoe Family to exit the business, and a disagreement between the Plaintiff and D1 concerning the valuation of shares in Ninamaju and PM Mahsui (“Share Valuation Dispute”).

Before even addressing the issue of liability, the parties had recorded Consent Orders here on 13-3-2025, and in the PM Mahsuri OS on 19-3-2025, with terms for the valuation of the shares of Ninamaju and PM Mahsuri.

However, the implementation of those Orders promptly fell into dispute and interlocutory applications were filed by both parties, respectively, to vary and enforce the Consent Orders to force one view over the other. These interlocutory applications were determined by Justice Shoba Dorai Rajah on 30-10-2025 and are now pending appeals by the dissatisfied parties.

The Share Valuation Dispute is, with the greatest of respect, wholly premature in the context of the originating summonses filed. It is at best part of an entirely private endeavour between the parties to reach an out-of-court resolution of their disputes. The Courts should not have been troubled to determine a resolution for the Share Valuation Dispute in the litigation, even before the underlying question of liability has been established.

On 1-12-2025, this Court allowed a stay of the valuation procedures pending the appeals, but ordered that both oppression actions concerning Ninamaju and PM Mahsuri be heard immediately. Counsel were forewarned that they could, in the alternative, record the buy-out on the terms determined by the Court of Appeal on the Share Valuation Dispute as a final settlement of the underlying Originating Summons. The parties declined. Analysis and findings

It is trite that the Court will not generally interfere in the internal management of companies. To invoke remedies under section 346 of the CA, that member must demonstrate the existence of one or both of 2 limbs of that provision: Limb (a) refers to the “conduct of the affairs of the company” or the exercise of the “powers of the directors” in a manner that is either oppressive “to one or more of the members” or in disregard of “his or their interests as members” Limb (b) refers to “an act of the company” or a “resolution of the members” which either unfairly discriminates against or is otherwise prejudicial “to one or more of the members”.

The express words of section 346 of the CA make it clear that relief under this provision is only available: a) to a member to protect his interests in his capacity as a member, against conduct that is singularly prejudicial to that member. This is distinguished from wrongs suffered by a complainant in any other capacity (e.g. as a director or employee) and wrongs suffered by the company itself which affects all the shareholders equally (Low Cheng Teik & Ors v Low Ean Nee [2024] 9 CLJ 171); and b) in relation to conduct, whether by the directors in exercise of their powers or by the members in general meeting, it must be an act of the company or concerns the affairs of the company and not e.g. a private arrangement between the shareholders (Jet Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors & Anor appeal [2013] 2 CLJ 277) These are prerequisites before any proof of the conduct complained of needs to be considered.

It should be highlighted that the Originating Summons here was originally filed at the High Court in Alor Setar in June 2024 (registered as KA-24NCC-5-06/2024). The action was transferred to the KL HC by consent on 13-3-2025 along with the terms for valuation of Ninamaju’s shares.

Based on the supporting affidavit filed with the Originating Summons, the Plaintiff’s entire case is that because of a breakdown in the relationship caused by the aforesaid Share Valuation Dispute, D1 resorted to the following acts of oppression: a) D1 refused to sign and approve Ninamaju’s draft audited financial statements for the year ended 31-5-2023, exposing Ninamaju to risk of penalty; b) D1 distributed a memorandum dated 21-2-2024 to Ninamaju’s bankers, alleging mismanagement of Ninamaju’s finances; and c) D1 caused a notice of show cause to be issued to the General Manager of Ninamaju, the Plaintiff’s son (Tan Chor Eeow), to allege poor company performance, demanding a performance improvement plan and threatening termination of employment. This notice was also copied to Ninamaju’s bankers. The Plaintiff therefore, claims to be entitled to remedies under section 346 of the CA for a buy-out of the Huat Hoe Family’s shareholding in Ninamaju on his terms.

In subsequent affidavits, other complaints emerged, some after the filing of the Originating Summons. Counsel for the Plaintiff relied upon the following in written submissions filed to ground the application for relief. They are as follows:

Oppression actions in Malaysia were originally commenced by way of petition, but following changes to the Rules of Court 2012, they are now prosecuted through the originating summons procedure. This change streamlined shareholder remedies and aligned oppression claims with the broader civil procedure framework.

In Re Tecnion Investments Ltd [1985] BCLC 434, the Court of Appeal (UK) per Dillon LJ (Sir John Megaw concurring) made the following observations in overturning a lower court decision allowing discovery in an oppression petition: “It is very important that the allegations which are being relied on in a petition of this nature should be properly set out in the petition itself and not merely collected from various places in voluminous affidavit evidence. For my part, I would emphatically endorse the comments and citations of Megarry J in Re Fildes Bros Ltd [1970] 1 All ER 923 at 927, [1970] 1 WLR 592 at 597–598. He there referred to statements by Plowman J in Re Lundie Bros Ltd [1965] 2 All ER 692 at 699, [1965] 1 WLR 1051 at 1058: 'It was suggested in the course of argument that it was really the evidence and not the allegations in the petition which was of importance in this matter. I entirely dissent from that proposition. It seems to me that it would be wrong for the court to travel outside the allegations in the petition, particularly in a case of this sort where the petition is based on the proposition that the respondents to it have been guilty of some oppression or some lack of probity.'”

This Court adopts the above views and finds support in the context of the Originating Summons, in Trudy Ranjini Ganendra v Dato’ Dennis Ganendra & Anor [2022] MLJU 3677 where the Court held that:- “[25] The Plaintiff is bound by her pleadings and as the Originating Summons is an oppression action the Plaintiff is bound by her pleaded case as set out in the Originating Summons and the Plaintiff’s Affidavit In Support in Enclosure 2 (Re Tecnion Investments Ltd [1985] BCLC 434; Re G&G Properties Ltd [2019] EWCA Civ 204613).”

In this case, other than the allegation that D1 refused to sign and approve Ninamaju’s draft audited financial statements for the year ended 31-5-2023, exposing Ninamaju to risk of penalty, counsel for the Plaintiff did not deal with the original allegations found in the Plaintiff’s supporting affidavit for the Originating Summons.

On a pleading point therefore, this Court was disinclined to consider the new grounds of oppression premised on failure or negligence to perform other management functions, damaging notices about D1 and the company to other third parties and the presentation of a petition to wind up Ninamaju.

As the pleading point was not raised by D1 however, this Court did consider the same and found that the new grounds of oppression, like the original grounds, are all fundamentally about D1’s alleged non-cooperation in a dead-locked board of directors on operational matters.

This Court finds that the complaints, if they are true, are quintessentially about D1’s alleged breaches of his statutory and fiduciary duties to Ninamaju as a serving director and are corporate wrongs affecting Ninamaju as a separate legal entity, not conduct that has caused any personal wrong or injury to the Plaintiff in his capacity as a member.

For example, D1 refused to sign off on the AFS causing the non-filing to date of accounts for FYE 2023-2025 due to transactions in the books allegedly carried out by Ninamaju at the behest of the Plaintiff in breach of laws and regulations on the control of sales of padi and rice. Both actions risk action and penalties against the Company. In fact, the Plaintiff identifies D1’s actions as breaches of his directors’ duties.

The sheer detail devoted to arguments about the Share Valuation Dispute also reveals where the true point of contention lies between the parties. However, the Share Valuation Dispute concerns the private disagreements in negotiations between shareholders about the sale and purchase of shares between them. It had nothing to do with the affairs of the company.

In the counterclaim, D1 also complains of the impasse in the Share Valuation Dispute and then sets out his complaints that the Plaintiff is responsible for the following cross allegations of oppression:

that the Plaintiff and his son (Tan Chor Eeow): a) caused Ninamaju to supply rice to PM Mahsuri and TBR Beras Enterprise at subsidized and discounted prices; b) used the assets of Ninamaju such as funds, lorries and workers to support the operations of PM Mahsuri; c) used the funds of Ninamaju to support the operations of an advertising company, AK Media Networks Sdn Bhd, which supplies services to Ninamaju at full price; and d) tampered with the SQL accounting system of Ninamaju to reduce the interest rate on debts due and owed by PM Mahsuri to Ninamaju, unjustly enriching PM Mahsuri.

that the Plaintiff and his son (Tan Chor Eeow) gradually excluded D1 from the management of Ninamaju by: a) assuming unilateral decision-making authority in the company and notifying staff of this change; b) excluding D1 from access to Ninamaju’s email system and WhasApp chat groups with staff.

that Tan Chor Eeow was rude to an important customer (Tesco) causing loss to Ninamaju, was disrespectful to D1, and failed to carry on his duties professionally, affecting the overall operations and financial performance of Ninamaju.

that the Plaintiff accused D1 of lacking in empathy for seeking to reduce CNY “ang pow” paid to employees in 2023.

that the Plaintiff carried out unauthorized financial transactions in 2011 and 2013;

that the Plaintiff in 2024, approved bonuses and increments for employees and at a board of directors meeting on 18-12- 2023, asked D1 to sign off on Ninamaju’s bank transactions, raising suspicion of irregular transactions.

Now, what immediately stands out is the fact that the Plaintiff’s son, Tan Chor Eeow, is not a director and has not been joined as a party in these proceedings, yet the principal complaints are directed at the Plaintiff and his son without distinction as to who the acts complained of are actually attributed to.

Further, this Court is of the view that complaints (2) and (4) above have to do with internal management issues of Ninamaju, and does not affect D1’s rights as a shareholder but as a working director. No case was pleaded in the Defendants’ counterclaim that D1’s shareholder rights include the management and operational control that D1 claims to be deprived of as a director of Ninamaju.

The other complaints similarly fail to satisfy the requirements of section 346 of the CA for the same reason that the Plaintiff’s complaints have failed i.e. they are also descriptions of corporate wrongs whose proper plaintiff is Ninamaju. Similarly, D1 acknowledges this fact by also pleading a breach of directors’ duties by the Plaintiff.

Regardless of the motivation, where the Board of Directors are deadlocked on management and operational issues, and the shareholders are unable to break the deadlock because neither carries a majority to reconstitute the Board of Directors, there are alternative remedies such as derivative actions against errant directors and their removal by the Court, or winding up on just and equitable grounds.

As noted, there is already a pending petition to wind up Ninamaju in Alor Setar High Court Companies (Winding Up) Petition NO: KA- 28NCC-37-11/2025 filed by the Huat Hoe Family premised on just and equitable grounds, and on the grounds that the company is being used for unlawful purposes.

In conclusion, this Court finds that both parties have failed to prove their pleaded case of oppression against the other. The claim and counterclaim are both dismissed with no order as to costs.

As it relates to the Share Valuation Dispute pending before the Court of Appeal, this Court is respectfully of the view that it has become academic with the dismissal of the oppressions claims, since no remedy calling for the valuation of shares has been ordered. If, as can be discerned, the Consent Order recorded is of an interim nature, it ought to be discharged. Bertarikh: 24 April 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Manpal Singh Sacdev a/l Manjit Singh (Tan Weng Hung Eywin bersamanya) Tetuan Manjit Singh Sachdev Mohammad Radzi & Partners Untuk Defendan: Kelvin Ng Chun Yee (Gary Wong bersamanya)