Venkateswara Rao A/L Krishnan v Selgate Healthcare Sdn Bhd (WA-24NCC-570-11/2024)

1 IN THE HIGH COURT OF MALAYA IN THE FEDERAL TERRITORY OF KUALA LUMPUR, MALAYSIA (COMMERCIAL DIVISION) ORIGINATING SUMMONS NO.: (WA-24NCC-570-11/2024) In the matter of Sections 346(1) and (2)(a),

1. SELGATE HEALTHCARE SDN BHD (Company No.: 1197365-K)

2. NOOR HISHAM BIN MOHD GHOUTH (NRIC No.: 690118-10-5395)

3. NURUL MU’AZ BIN OMAR (NRIC No.: 750123-07-5487)

4. SULAIMAN BIN ABDULLAH (NRIC No.: 550829-11-5309)

5. MOHD SIRAZ BIN RAMELI (NRIC No.: 781203-03-5321)

6. SELCARE CLINIC SDN BHD [Company No.: 201001001191 (885764-D)] …DEFENDANTS **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 GROUNDS OF JUDGMENT (Enclosure 1) INTRODUCTION

1. The Plaintiff’s Originating Summons, brought pursuant to Section 346 of the Companies Act 2016 (“the Act”), alleges that the affairs of the 6th Defendant (“D6”) have been conducted in a manner oppressive, prejudicial and in disregard of his interests as a member.

2. The Plaintiff seeks declaratory and consequential reliefs to bring an end to the alleged oppressive conduct, including orders to enforce a Shareholders’ Agreement dated 17 October 2017, to impugn certain corporate decisions and financial reporting of D6, and to obtain access to and scrutiny of D6’s financial affairs.

3. The gravamen of the Plaintiff’s claim is that, by reason of the Defendants’ conduct, particularly in relation to corporate governance, financial transparency, and the management of D6’s affairs, the Plaintiff has been unfairly treated and his rights as a minority shareholder have been undermined, thereby justifying the intervention of this Court under the statutory oppression remedy. BACKGROUND FACTS

4. The Plaintiff is an individual shareholder. He holds a minority interest of 10% in D6. Selgate Healthcare Sdn Bhd, the 1st Defendant (“D1”) holds the remaining 90% shareholding. **Note : Serial number will be used to verify the originality of this document via eFILING portal 4 5. D6 is a private limited company involved in the provision of healthcare and medical-related services, including the operation of clinics and related consultancy services. The 2nd to 5th Defendants held positions in D6 and/or related Selgate entities during the material period. D1, as 90% shareholder, exercised majority control over D6.

6. The relationship between the Plaintiff and D1 is governed, inter alia, by a Share Sale Agreement cum Shareholders’ Agreement dated 17 October 2017. Pursuant to these agreements, the Plaintiff disposed of a substantial portion of his shares in the underlying business in D6 to D1. He retained a minority stake in D6 together with certain contractual and participatory rights in the management and financial oversight of D6.

7. It is the Plaintiff’s case that the Defendants, who control both D1 and D6, conducted the affairs of D6 without due regard to the Plaintiff’s rights as a minority shareholder. In particular, the Plaintiff alleges that there were failures in corporate governance and transparency, including the non-circulation or delayed circulation of financial statements, issues concerning the company’s auditors, and decisions taken without proper regard to the Plaintiff’s interests.

8. The Plaintiff further complains that matters relating to the financial performance and transactions of D6, particularly in connection with certain business operations and programmes undertaken by the company, were not adequately disclosed, thereby preventing him from properly assessing the true financial position of the company. **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 9. These events ultimately culminated in the present Originating Summons, wherein the Plaintiff seeks relief on the basis that the conduct of the Defendants amounts to minority oppression within the meaning of Section 346 of the Act.

10. The Plaintiff alleges that the Defendants persistently disregarded his rights as a minority shareholder under the Shareholders’ Agreement and the Companies Act 2016 by failing to provide timely financial information, concealing material matters relating to the company and its auditors, inadequately explaining the company’s financial affairs and transactions, disregarding minority concerns in the conduct of meetings, and acting under conflicts of interest arising from overlapping directorships.

11. The Plaintiff contends that the cumulative effect of that conduct constitutes minority oppression within the meaning of Section 346 of the Act and warrants the reliefs sought in the Originating Summons. THE DEFENDANTS’ CASE

12. The Defendants’ primary position is that the Plaintiff’s complaints are either misconceived, exaggerated, or relate to matters that have been adequately explained and/or remedied in the ordinary course of corporate administration.

13. In relation to the alleged failure to circulate financial statements, the Defendants contend that any delay in the circulation of the financial reports and statements of D6 was not deliberate or oppressive, and **Note : Serial number will be used to verify the originality of this document via eFILING portal 6 was subsequently rectified. They maintain that such delay, in and of itself, does not constitute oppressive conduct within the meaning of Section 346 of the Act.

14. The Defendants further assert that explanations have been provided in respect of D6’s financial position, including the revenue and costs associated with D6’s operations. They deny any lack of disclosure or misconduct and contend that the Plaintiff’s complaints are misconceived and unsupported.

15. As regards the allegation concerning the auditors, the Defendants maintain that there was no concealment of material facts and that any issues relating to the auditors do not give rise to oppression. They further contend that the Plaintiff has failed to demonstrate how such matters have caused him any distinct prejudice as a minority shareholder.

16. The Defendants also deny any conflict of interest affecting the management of D6. They assert that the directors acted bona fide in the best interests of D6. They also contend that the mere fact that certain directors hold positions in related entities does not, without more, establish oppressive conduct.

17. In respect of the Plaintiff’s complaints regarding lack of transparency and alleged impropriety in financial matters, the Defendants contend that the Plaintiff has been provided with sufficient information and that his allegations are unsupported by credible evidence. They characterise the Plaintiff’s claims as speculative and premised on suspicion rather than proof. **Note : Serial number will be used to verify the originality of this document via eFILING portal 7 18. The Defendants further contend that the Plaintiff’s application is, in substance, an attempt to re-litigate or advance collateral issues arising from prior disputes between the parties, rather than a genuine oppression claim.

19. In the premises, the Defendants maintain that the Plaintiff has failed to establish any conduct that is oppressive, unfairly prejudicial, or in disregard of his interests as a minority shareholder, and they accordingly contend that the Originating Summons ought to be dismissed. ISSUES FOR DETERMINATION

20. Having considered the pleadings, affidavits and submissions of the parties, the central issue that arises for determination is whether the Plaintiff has established acts of oppression within the meaning of Section 346 of the Act.

21. In this regard, the Court must examine the alleged failures relating to corporate governance and financial transparency, the alleged non-disclosure and matters relating to D6’s auditors, and whether the management of D6 was conducted in a manner that unfairly disregarded the Plaintiff’s interests.

22. If the Plaintiff succeeds in demonstrating distinct prejudice as a minority shareholder, the Court must then proceed to consider the appropriate relief to be granted. **Note : Serial number will be used to verify the originality of this document via eFILING portal 8 LAW ON MINORITY OPPRESSION

23. Section 346 of the Act confers on the Court a wide jurisdiction to grant relief where the affairs of a company are conducted in a manner oppressive, or in disregard of the interests of a member.

24. The governing principles are well-settled. The Federal Court in Pan-Pacific Construction Holdings Sdn Bhd v Ngiu Kee Corp (M) Bhd & Anor [2010] 6 CLJ 721 emphasised that the statutory remedy is fact-sensitive and directed at unfairness in substance rather than form: “Therefore, in order to succeed in its petition pursuant to s. the petitioner has to establish and 'must eminently be determined according to the facts' of this case that the affairs of the company are being conducted or that the powers of the directors are being exercised in an oppressive manner or in disregard of its interests, or to its prejudice some unfairly discriminatory or prejudicial act of the company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed. In other words s. 181 permits judicial remedy on four categories of conduct, namely, oppressive conduct, conduct in disregard of interests, unfairly discriminatory conduct or prejudicial conduct.”

25. The focus of the inquiry is therefore not merely whether there has been a breach of legal rights, but whether the conduct complained of, viewed in context, is commercially unfair to the minority shareholder. **Note : Serial number will be used to verify the originality of this document via eFILING portal 9 26. In Low Cheng Teik & Ors v Low Ean Nee [2024] 9 CLJ 171, the Federal Court proposed the following criteria as the basis for the formulation of a legal test to ascertain whether a shareholder's complaint is actionable under Section 346 of the Act or more properly on behalf of the company under Section 347 of the Act:

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

(iii) does the cause of action vest in the shareholder or in the company;

(iv) who has suffered loss or damage from the wrong done - the shareholder in his capacity as a shareholder, or the company;

27. The Federal Court further held that: “a minority shareholder who seeks to bring an oppression action must first identify the conduct complained of on the part of the majority and establish that such conduct is unfairly prejudicial to their interests as a minority shareholder. It must then be shown that the majority's conduct has caused harm to the **Note : Serial number will be used to verify the originality of this document via eFILING portal 10 minority shareholder personally. Finally, the minority shareholder is required to demonstrate that they have been affected in a distinctive and individual manner which is distinct from the other shareholders by reason of the wrongful conduct, usually by the majority or those in control of the company. Where all the shareholders are affected equally by the wrongful conduct, it follows that the shareholder has not suffered distinct or special harm by reason of the wrongful conduct. In such an instance, the derivative action is most likely the proper cause of action.”

28. It follows that the Court must assess whether the impugned conduct has resulted in unfair prejudice to the Plaintiff in his capacity as a member, and not merely whether there has been dissatisfaction with management decisions.

29. In sum, the following principles may be distilled:

30. It is against these principles that the Plaintiff’s complaints must be evaluated. ANALYSIS AND DECISION

31. The starting point is that Section 346 of the Act is not a general jurisdiction to correct every perceived corporate irregularity. The Plaintiff must show that the conduct complained of is commercially unfair to him in his capacity as a member. Mere dissatisfaction with management, a disagreement over commercial judgment, or a technical breach, without more, does not suffice. WHETHER THE PLAINTIFF HAS ESTABLISHED OPPRESSION

32. I am not satisfied that the Plaintiff has crossed the threshold required to establish oppression. His complaints, when analysed separately and cumulatively, do not show conduct having an oppressive or unfairly prejudicial effect on him as a minority shareholder. They show, at their highest, dissatisfaction with the manner in which D6’s affairs were managed, particularly in relation to financial reporting, the auditor, the SELVAX programme, meetings, and alleged conflicts of interest.

33. The difficulty with the Plaintiff’s case is that it proceeds substantially from suspicion. He invites the Court to infer oppression from the fact that D6 generated substantial revenue but recorded comparatively **Note : Serial number will be used to verify the originality of this document via eFILING portal 12 low profit, and from the fact that the entities involved in SELVAX were related companies. Suspicion is no substitute for proof. A minority oppression claim must be founded on cogent evidence of unfair prejudice, not merely on the Plaintiff’s perception that the commercial outcome ought to have been more favourable to him.

34. I will address the Plaintiff’s substantial complaints in the following part of my judgment. FINANCIAL STATEMENTS FOR 2020 AND 2021

35. The Plaintiff’s first main complaint concerns the alleged failure or delay in circulating D6’s financial statements for 2020 and 2021. He says this deprived him of information necessary to understand D6’s true financial position. The Plaintiff relies on the alleged non-circulation of the reports, the later service of the documents, and the fact that there were no records showing that the financial reports and statements for 2020 and 2021 had earlier been circulated to him.

36. I accept that timely circulation of financial statements is an important corporate governance obligation. However, the question is not simply whether there was delay or irregularity. The question is whether that delay, in a given context, amounted to oppression. On the material before me, I am not satisfied that it did.

37. The Defendants’ position is that the financial reports had been provided earlier and that the later forwarding of the same was a re-service rather than first disclosure. The Defendants also contend **Note : Serial number will be used to verify the originality of this document via eFILING portal 13 that the Plaintiff was not denied access to the documents and did not suffer harm, prejudice, or damage from the alleged failure.

38. On the Defendants’ case, the documents had already been delivered to the Plaintiff’s solicitors, as stated in the letter dated 19 August 2022. The Plaintiff’s complaint on this aspect is therefore principally one of delay in the receipt of those financial statements.

39. As for the delay, I find that the Plaintiff has not shown how the alleged delay translated into unfair prejudice to him as a shareholder. This is not a case where a dividend was declared and withheld from him. His voting rights were not nullified by reason of the delay. There is no evidence that he was deprived of a specific corporate right in a manner that cannot be remedied otherwise due to the delay.

40. If the delay in the circulation of the financial statements amounts to a breach of statutory or contractual obligations, that would not, without more, automatically amount to oppression unless it relates or leads to commercial unfairness. On the present facts, the Plaintiff has not established that the delay has any nexus to any unfair prejudice to him as a member. Minor or remediable irregularities do not, without proof of breach of fair dealing or fair play, give rise to a claim of minority oppression (see: Re Saul D Harrison & Sons PLC [1995] 1 BCLC 14).

41. The Plaintiff also complains that the failure or delay in furnishing the financial statements amounts to a material breach of the Share Sale Agreement cum Shareholders’ Agreement dated 17 October 2017. **Note : Serial number will be used to verify the originality of this document via eFILING portal 14 Even assuming there was such delay or breach, it does not, without more, amount to oppression. At best, such delay or failure is a private matter enforceable between the parties to the agreement. The breach, if any, does not, on the facts of this case, translate into oppressive conduct in the affairs of D6 (see: Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors and Another Appeal [2013] 2 CLJ 277). AFTAAS AND THE AUDITOR COMPLAINT

42. AFTAAS is the auditor of D6. The Plaintiff says that AFTAAS had been sanctioned by the Audit Oversight Board for non-compliance with auditing standards. The Defendants allegedly failed to inform the Plaintiff of that fact. The Plaintiff also objected to receiving the audited accounts on the basis that AFTAAS had been sanctioned.

43. Again, I accept that the appointment of an auditor is a matter of corporate importance. However, the Plaintiff must show more than the existence of a sanction against the auditor. He must show how that sanction rendered D6’s affairs oppressive to him as a member.

44. The Defendants’ evidence is that the sanction was not related to any audit report prepared by AFTAAS for D6. The Defendants further state that the sanction did not apply to private companies like D1 and D6, and did not impact their operations or financial standing.

45. On the evidence, the Plaintiff has not demonstrated that AFTAAS’ appointment caused him actual prejudice as a shareholder. Nor has he shown that the financial statements were in fact false, fraudulent **Note : Serial number will be used to verify the originality of this document via eFILING portal 15 or materially unreliable by reason only of AFTAAS’ position. The complaint remains at the level of concern and suspicion. That is insufficient to justify relief under Section 346 of the Act. MEETINGS, AGENDAS AND ALLEGED EXCLUSION

46. The Plaintiff also complains of the Defendants’ failure to include minority agendas and/or properly convene meetings. In particular, he objected to the 2023 members’ meeting and raised objections relating to the validity of the meeting, the receipt of audited accounts, the re-election of directors, directors’ remuneration and the reappointment of auditors.

47. The evidence does not establish that the Plaintiff was excluded from participation as a shareholder. The dispute concerns the validity and propriety of the meetings, agendas and decisions taken, rather than proof of exclusion from the shareholder process itself.

48. It is apparent to me that the Plaintiff’s complaints disclose disagreement over the manner in which meetings were convened and conducted. While such matters may in an appropriate case amount to evidence of oppression, here the Plaintiff has not shown a deliberate pattern of exclusion or denial of shareholder rights.

49. Even if I am wrong and there were procedural imperfections in the meetings, the evidence does not show that those imperfections were used as a mechanism to oppress the Plaintiff. The Court is slow to convert every complaint about corporate procedure into an **Note : Serial number will be used to verify the originality of this document via eFILING portal 16 oppression remedy, particularly where the alleged prejudice is not clearly established. SELVAX, LOW PROFIT AND ALLEGED OPACITY

50. The Plaintiff’s most serious allegation concerns SELVAX. He says that D6 generated very substantial revenue but only a modest profit. Evidently, D6 generated revenue of RM100,652,029 but only RM287,176 in profit. That low profit, coupled with non-circulation of financial statements and inter-company dealings, prejudiced him because he could not question the SELVAX mechanism.

51. I have considered this complaint carefully. A large revenue figure with a small profit figure may justify questions. But it does not, by itself, prove oppression. Revenue does not equal profit. A business may have high turnover and low margin for legitimate commercial reasons. The Plaintiff must show that the low profit was the result of oppressive diversion, concealment or unfair dealing.

52. The Defendants have provided an explanation. They say that SELVAX was a large-scale vaccination programme involving multiple related entities. D6 was one of several operational entities. The Defendants say that vaccine procurement was undertaken through Selcare Pharmacy as part of the SELVAX structure.

53. The Defendants also explain that the programme involved substantial costs, including vaccine costs, labour, personal protective equipment, sanitisation, and related expenses. The cost of services and vaccination amounted to RM94,520,200. They **Note : Serial number will be used to verify the originality of this document via eFILING portal 17 further state that although D6’s vaccination revenue was RM78,924,222.00, vaccine costs alone amounted to RM74,069,047.00.

54. These explanations may not have satisfied the Plaintiff commercially. But the issue before this Court is not whether the Plaintiff would have preferred a more commercially profitable arrangement. The issue is whether the arrangement was shown to be oppressive. On the evidence, I am not satisfied that the Plaintiff has established that SELVAX profits were diverted from D6 or that the Defendants concealed profits belonging to D6.

55. Further, the Plaintiff is not a shareholder of D1 or Selcare Pharmacy. The Defendants’ evidence is that the SELVAX funds from PKNS and the Selangor State Government were channelled to D1, later transferred to Selcare Pharmacy, and that the vaccine purchase was between Pharmaniaga and Selcare Pharmacy. The Plaintiff’s right is as a 10% shareholder of D6. His oppression claim must therefore be anchored to prejudice suffered in that capacity.

56. Even if the Plaintiff was entitled to ask searching questions about SELVAX, that in itself does not mean that oppression has been made out. At most, the Plaintiff has raised matters requiring explanation. The Defendants have given an explanation. The Plaintiff has not displaced it with cogent evidence of fraud, diversion, or concealment. **Note : Serial number will be used to verify the originality of this document via eFILING portal 18 CONFLICT OF INTEREST

57. The Plaintiff also relies on alleged conflicts of interest arising from overlapping directorships and related-company dealings. While overlapping roles may require careful scrutiny, overlapping directorships within a corporate group are not inherently oppressive. Mere overlap of directorships, without proof of abuse or unfair prejudice, does not by itself establish oppression.

58. The Plaintiff must show that the alleged conflict resulted in conduct unfairly prejudicial to him as a member. He has not done so. There is insufficient evidence that D2 to D5 used their positions to divert value from D6 or to deny the Plaintiff his rights as shareholder. The allegation remains general. It is not tied to a proven transaction, a proven loss, or a proven abuse of corporate power. WHETHER DISTINCT SHAREHOLDER PREJUDICE HAS BEEN SHOWN

59. The decisive weakness in the Plaintiff’s case is the absence of demonstrated prejudice in his capacity as a shareholder. The Plaintiff has not shown that his 10% shareholding was diluted or that he otherwise suffered unfair prejudice to the exclusion of others.

60. In the round, I find that the Plaintiff’s case fails for four principal reasons.

61. First, the Plaintiff has not converted suspicion into proof. The allegations of opacity, fraud, and concealment are serious. They **Note : Serial number will be used to verify the originality of this document via eFILING portal 19 require cogent evidence. The evidence before me does not reach that level.

62. Secondly, the complaints concerning financial statements and auditor issues, even if accepted in part, do not by themselves establish commercial unfairness or oppression.

63. Thirdly, the SELVAX complaint rests heavily on the assumption that high revenue should have produced high profit. That assumption is unsafe, particularly where the Defendants have explained the vaccine costs, operational costs and related-company structure.

64. Fourthly, the Plaintiff has not established distinct prejudice in his capacity as a shareholder of D6. CONCLUSION

65. Having given serious consideration to the Plaintiff’s complaints, I find that the cumulative picture does not show a pattern of oppressive conduct. It shows a commercial dispute between a minority shareholder and the majority, overlaid with suspicion concerning financial performance and related-party transactions.

66. Even if there was delay in financial reporting, even if the Plaintiff was entitled to more detailed explanations, and even if the SELVAX structure invited legitimate questions, those matters do not cumulatively establish that the affairs of D6 were conducted in a manner oppressive to the Plaintiff. The missing element remains unfair prejudice in his capacity as a member. **Note : Serial number will be used to verify the originality of this document via eFILING portal 20 67. For these reasons, I am not satisfied that the Plaintiff has established oppression under Section 346 of the Companies Act 2016.

68. The Plaintiff’s Originating Summons was therefore dismissed with costs. Dated the 10th day of June 2026 -sgd- ……………………………………………………………………… MUHAMMAD ADAM BIN ABDULLAH Judicial Commissioner (Commercial Division NCC 4) High Court of Malaya In the Federal Territory of Kuala Lumpur, Malaysia **Note : Serial number will be used to verify the originality of this document via eFILING portal 21 Counsel for the Plaintiff : Syamsul Azhar Abdul Aziz together with Azizudin Adam Mudin, and Izzatul Abdah binti Mohd Azuddin Messrs. Azhar Aziz & Associates Counsel for the Defendants : Fahda Nur Ahmad Kamar together with Amanina Yusrina Ahmad Kamal, and Siti Sarah Jamil Messrs. Fahda Nur & Yusmadi CASE REFERENCE:

1. Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors and Another Appeal [2013] 2 CLJ 277 2. Low Cheng Teik & Ors v Low Ean Nee [2024] 9 CLJ 171 3. Pan-Pacific Construction Holdings Sdn Bhd v Ngiu Kee Corp (M) Bhd & Anor [2010] 6 CLJ 721 4. Re Saul D Harrison & Sons PLC [1995] 1 BCLC 14 LEGISLATION REFERENCE:

1. Section 346 and Section 347 of the Companies Act 2016 **Note : Serial number will be used to verify the originality of this document via eFILING portal