Teh Chee Hoe v South Malaysia Industries Berhad (WA-24NCC-327-06/2025)

03.

6.2025 Defendant issued a Notice of Meeting for the 53rd AGM to be held on 25.6.2025 to its shareholders. S/N rj8eiWazTEy8OChnsVtpig

12.06.2025 Defendant received the Plaintiff’s Notice of Intention dated 11.6.2025, expressing an intention to move resolutions to appoint Ng Fun Kim, Ling Chi Hoong, Amy Tan Li Peng and himself as directors at the Defendant’s 53rd AGM to be held on 25.6.2025.

13.06.2025 Promptly, the Defendant made a public announcement stating that the Board of Directors will be convening an emergency Board of Directors’ meeting on 18.6.2025 to seek legal advice and deliberate on the Plaintiff’s Notice of Intention dated 11.6.2025.

16.06.2025 Before the Board of Directors emergency meeting conveyed, the Plaintiff already commenced the present action via Originating Summons WA-24NCC-327- 06/2025 on 16.6.2025.

17.06.2025 Subsequently the Defendant vide its public announcement stated that upon seeking legal advice and Defendant’s investigation, they disclosed the following: a. That the Plaintiff did not satisfy the requirements set out in Section 323 of Companies Act 2016; b. That the Plaintiff is connected to Target 1 Sdn Bhd (wholly and solely owned by Leong Seng Wui) which has issued a Notice of Unconditional Mandatory Take-Over Offer dated 20.8.2024 on the Defendant Company. S/N rj8eiWazTEy8OChnsVtpig

Pending the full and final disposal of this Originating Summons, that the Chairman of the 53rd AGM of the Defendant (whosoever he shall be) be empowered to and shall, notwithstanding anything contained in the Defendant’s Constitution, and notwithstanding that the meeting shall not have consented to or directed such adjournment, declare the AGM to be adjourned to such time and place and such date as shall be determined by this Court after the tabling and voting of ordinary business under items 1 to 4 and special business under item 5 in the agenda of the Notice of 53rd Annual General Meeting dated 03.06.2025; and

That in the event that the adjourned AGM shall be held at a date after a period of greater that 30 days from the date of the AGM, an order that notice of the adjourned AGM shall be S/N rj8eiWazTEy8OChnsVtpig deemed to have bene duly given if advertised once in the English and Chinese newspapers not less than fourteen (14) days before the adjourned AGM and that other than notice in the manner aforesaid, no other notice be given; THE RELEVANT LAW. [5] In my opinion, the relevant issues to be addressed by this court, are as follows: -:

Defendant’s preliminary objections that this suit was premature and disclosed no cause of action on the date of filing;

That the Plaintiff did not satisfy the requirements set out in

The Plaintiff’s notice was in breach of the takeover rules restricting appointment and exercise of voting rights by persons acting in concert during an ongoing takeover process. S/N rj8eiWazTEy8OChnsVtpig

Defendants’ preliminary objections that this suit was premature and disclosed no cause of action on the date of filing. [6] The court considered whether, on the date the Originating Summons was filed (16.06.2025), was there an existing and enforceable right to a relief for the Plaintiff? The Defendant’s public announcements and the defendant’s subsequent board resolution demonstrate that the company had not conclusively refused to circulate the Plaintiff’s notice until the board’s consideration was completed. [7] The Defendant stated that the Board of Directors had only resolved not to circulate the notice of candidature on 17.06.2025, therefore, the cause of action alleged, has not yet arisen and/or not accrued as at 16.06.2025. Due to this, the Plaintiff purportedly lacks the locus standi to commence this Originating Summons. However, the Plaintiff in reply, submits that the Defendant’s contention is misconceived. The Plaintiff’s cause of action accrued when the Defendant failed to provide the written undertaking sought by the Plaintiff on or by 14.06.2025. [8] Consequently, the question before this court is whether there was a clear and unequivocal threat to the Plaintiff's right, when the Defendant refused to provide a written undertaking as requested by the Plaintiff. S/N rj8eiWazTEy8OChnsVtpig [9] In Credit Corporation (M) Bhd v Fong Tak Sin [1991] 1 MLJ 4094, the Supreme Court discussed “cause of action” in the context of limitation and held at pgs. 411 to 413 as follows: “…In Cook v Gill Brett J defined ‘a cause of action’ to mean ‘every fact which is material to be proved to entitle the plaintiff to succeed’. This definition was subsequently approved by the Court of Appeal in Read v Brown (1888) 22 QB 128. After reviewing the authorities Yong J in Lim Kean v Choo Koon [1970] 1 MLJ 158 came to the conclusion that the period of limitation does not begin to run ‘until there is a complete cause of action’. In that case he held that the plaintiff's cause of action was not complete until an order is obtained from the Rent Assessment Board fixing the amount of the rent legally recoverable under the Control of Rent Ordinance. He accordingly held that the period of limitation commenced to run only from the date of the order of the Board. From established authorities we can now accept that the cause of action normally accrues when there is in existence a person who can sue and another who can be sued, and when all the facts have happened which are material to be proved to entitle the plaintiff to succeed. S/N rj8eiWazTEy8OChnsVtpig [10] In the court’s view, the relief claimed by the Plaintiff, must be confined to matters existing at the date when the suit was instituted. Even though it’s more discretionary in substance, but this court, takes into consideration whether the premature filing may manifest advantage or disadvantage to one party. The Written Undertaking [11] Moving further, the court would like to shift its attention to the 48- hour written undertaking requested by the Plaintiff. Generally, a written undertaking, may be requested in commercial transactions to secure an obligation, but they are not universally mandatory unless specified by the relevant provisions of law or contract. In my opinion, the burden of proof is on the Plaintiff to point out to this court, the relevant mandatory provisions of law or contract that requires the undertaking to be given within 48 hours by the Defendant. The Plaintiff has failed to do so and this is so crucial for this court to determine the Plaintiffs action to sue and the premature action filed. [12] The Court may accept that a claimant might seek declaratory protection where there is a real and immediate threat or where a tangible threat to a legal interest exists. However, the Defendant is still duty bound in his capacity as a public listed company, especially to the stakeholders, informing them regarding the Plaintiff’s intended resolution dated 11.06.2025. S/N rj8eiWazTEy8OChnsVtpig [13] Most importantly the Defendant had taken active steps in making the public announcement of board consideration and subsequent board decision, as well as to investigate and determine its legal position. The present originating summons is, in fact, advance of an actual appropriate refusal or final board determination, that will render this claim unsustainable at the date of filing. Therefore, the cause of action has not accrued and the claim is premature. [14] Even though the Plaintiff’s claim might have been well-merited at the time this Court had jurisdiction to grant an interim injunction but after full consideration of the Plaintiff’s claim, it remains that the plaintiff should have waited a little longer before entering the portals of the Court.

(b)That the Plaintiff did not satisfy the requirements set out in Section 323 of Companies Act 2016; [15] This court disagrees with the Plaintiffs, that clause 88 in the Defendant’s Constitution does not in any way contravene nor inconsistent with section 323 of Companies Act 2016 as the issues are of two separate and distinct provisions. [16] Clause 88 of the Defendants Constitution reads as follows: - S/N rj8eiWazTEy8OChnsVtpig “No person, not being a retiring director, shall be eligible for election to the office of Director at any general meeting unless a member intending to propose him for election has, at least eleven (11) clear days before the meeting , left at the registered office of the company, a notice in writing duly signed by the nominee, giving his consent to the nomination and signifying his candidature for the office, or the intention of such Member to propose him for election, PROVIDED THAT in the case of a person recommended by the Directors for election, nine (9) clear days’ notice only shall be necessary, and notice of each and every candidature to the Board of Directors shall be served on the registered holders of shares at least seven (7) days prior to the meeting at which the election is to take place”. [17] The Defendant argues that the notice of candidature issued by the Plaintiff failed to comply with the statutory threshold pursuant to section 323(2) of CA 2016 based on the following grounds:

Failure to meet the statutory threshold, is a fundamental breach of the statutory provisions; and

The non-compliance with the statutory timing requirement. S/N rj8eiWazTEy8OChnsVtpig SECTION 323 OF THE COMPANIES ACT 2016 [18] 323. (1) The members of a public company may require the company to—

circulate a statement of not more than one thousand words with respect to —

a matter referred to in a proposed resolution to be dealt with at that meeting; or

(ii) other business to be dealt with at that meeting; or

give notice of a resolution which may be properly moved and is intended to move at that meeting, to members of the company entitled to receive notice of a meeting of members.

The directors shall be required to circulate the statement referred to in paragraph (1)(a) or give notice of a resolution referred to in paragraph (1)(b), as the case may be, once the company has received the requisition from—

members representing at least two and a half per centum of the paid-up capital of the company carrying the right of voting excluding any paid-up capital held as treasury shares;

at least fifty members who have a relevant right to vote and hold shares in the company on which there has S/N rj8eiWazTEy8OChnsVtpig been paid up an average sum, per member, of at least five hundred ringgits; or

in the case of a company not having a share capital, members who represent at least two and a half per centum of the total voting rights of all members having a right of voting.

A request made under subsection (1) shall be—

in hard copy or electronic form;

accompanied with the statement to be circulated;

signed or authenticated by the person making it; and

received by the company—

in the case of requisition requiring notice of resolution, at least twenty-eight days before the meeting; or

(ii) in the case of any other statement, at least seven days before the meeting.

Unless the company resolves otherwise— a) the expenses of the company in complying with subsection (2) shall be paid by the members who requested the circulation of the statement; and

it shall not be bound to comply with subsection (2) unless there is deposited with or tendered to the company, not later than one week before the meeting, a S/N rj8eiWazTEy8OChnsVtpig sum reasonably sufficient to meet its expenses in doing so.

For the purposes of subsection (2), the right of voting shall be determined at the date the requisition is deposited with the company.

The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding twenty thousand ringgits [19] In my opinion, a company’s constitution cannot contain terms that contravene, contradict or which are inconsistent with the provisions of the Companies Act 2016 as provided under Section 32(2) of Companies Act 2016 as follows: - “32. (1) A company may adopt a constitution for the company and the adoption shall be by way of special resolution.

The constitution of a company has no effect to the extent that it contravenes or is inconsistent with the provisions of this Act. S/N rj8eiWazTEy8OChnsVtpig

Subject to the provisions of this Act, the constitution adopted under subsection (1) shall be binding on the company, its directors and its members.” [20] Firstly, the Plaintiff by issuing the Notice of Intention only holds less than 2.5% shareholding in the Defendant. Consequently, the Plaintiff failed to meet the statutory requirement, of a 2.5% shareholding threshold as provided under Section 323(2) of Companies Act 2016. Automatically the Plaintiff here does not possess the required shareholding threshold at the material date the resolution was filed. [21] Secondly the statute requires that requisitions requiring notice of a resolution be received by the company at least the 28 days prior to the meeting as in to Sub-Paragraph 323(3)(d)(i) of the Companies Act 2016. The Plaintiff’s notice was received by the company within a shorter period and did not satisfy the advance-notice requirement for the meeting of 25 June 2025. Notice of Intention dated 11.06.2025 [22] The Plaintiff had put forward lengthy arguments in their submissions, with supporting case laws, to what constitutes a “resolution” within the meaning of the Plaintiff’s Notice of Intention. S/N rj8eiWazTEy8OChnsVtpig [23] The Notice of Intention reads as follows: - S/N rj8eiWazTEy8OChnsVtpig [24] However, in my view, paragraph 2, does indeed make reference to the Plaintiff’s intention to pass a resolution, with the words clearly demonstrating “and cause the following resolutions for consideration and voting in the AGM” [25] At first instance, Plaintiff has failed to comply with the mandatory threshold, set out in the requirements of Section 323 of Companies Act 2016, governing the power of members, requiring to circulate statements or give notice of a resolution which may be properly moved at a general meeting. [26] The statutory threshold is not optional BUT a pre-condition to any obligation under Companies Act 2016, to circulate a requisitioned resolution. A member who does not satisfy the threshold therefore has no legal right to compel the company to circulate a notice under that statutory mechanism. The absence of that threshold, is fatal to the Plaintiff’s application for the statutory relief sought in the originating process.

Plaintiff’s Breach of Rule 15 on Rules on Take-Overs [27] On this issue (c) with regards to public interest and takeover-rule considerations, this court will give brief reasoning, since part (a) and (b), discussed above, sets out the very foundation on the Plaintiff’s claim. In general, the Defendant submitted, that the Plaintiff is purportedly connected with Persons Acting in Concert S/N rj8eiWazTEy8OChnsVtpig (PACs), who had commenced a mandatory general offer over the Defendant and is in breach of the Take-Overs Rules. In the Defendant’s written submission’s as well as the affidavits filed, the court observes patterns of some contentious behavior by certain groups. [28] In response to the PACs, the Defendant publicly made an announcement that there is some co-existent evidence that a mandatory take-over process was in the background and that certain persons and entities were acting or were alleged to be acting in concert. The Defendant had relied on the take-over rules which permits the regulator to control management changes during a take-over process. [29] The statutory and regulatory regime governing take-overs exists to protect the market and to ensure shareholders are not misled. In such circumstances credible and documented evidence of a take-over schemes and where the company has stated its concern about the effect of any appointment during that process, this court will take in to account the regulatory context in assessing whether relief should be granted via an urgent originating process. [30] On the present record the Defendant has shown to a certain extent, the appointment and voting positions sought by the Plaintiff, if acceded, risked undermining the statutory protections that the take-over rules are intended to achieve at first instance. S/N rj8eiWazTEy8OChnsVtpig Conclusion [31] The Court finds that the rush to court, coupled with failure to satisfy the statutory thresholds, demonstrates an opportunistic use of the courts process, paired with inconsistency in the orderly operation of corporate decision-making and regulatory protections. The use of the court process in such circumstances constitutes an abuse and, in my opinion, the Plaintiff was seeking to short-circuit processes that the statute and the company’s governance permit the company to employ prior to the availability of judicial relief, in this instance filing an Originating Summons. [32] This court concludes that the Plaintiff did not possess the statutory right to compel the Defendant to circulate the notice of intention under the Companies Act 2016 at the time the Plaintiff instituted the present proceedings. Moreover, it lacked the statutory shareholding threshold and did not comply with the statutory timing requirements. [33] Likewise, the proceedings were premature because the Defendant had yet reached a final position and had taken steps to consider the notice of intention and obtain legal advice. Magnified together, all those factors demonstrate an attempt to abuse the court’s process that warrants a dismissal of the Originating Summons and striking out of the Plaintiff’s claim. S/N rj8eiWazTEy8OChnsVtpig [34] Therefore enclosure 10 is allowed with costs of RM10,000 and enclosures 1 and 6 struck off. 29 December 2025 SHOBA DORAI RAJAH Judicial Commissioner Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Cecil Abraham with Sunil Abraham, Alex Tan Che Sian with Lee Sin Yee (Messrs Wong Kian Kheong) For the Defendants: Gideon Tan with Yip Man Fei (Messrs Gideon Tan Razali Zaini (Petaling Jaya) S/N rj8eiWazTEy8OChnsVtpig