Wilbur Tock Bing Heng v 1. ) Tock Khee Song (WA-28NCC-949-09/2023)

The Petitioner filed this Petition in Enclosure 2 to wind-up the Second Respondent pursuant to section 465(1)(f) and (h) of the Companies Act 2016 (“CA 2016”). The grounds given by the Petitioner to wind-up the Second Respondent (“R2”) are: a) There is a breakdown of mutual trust and confidence between the Petitioner and the First Respondent (“R1”) who happens to be his uncle. b) There exists a deadlock at the shareholder’s level c) R2 has lost its substratum and is presently dormant and no longer in operation d) R1 has acted in the affairs of R2 in his own interests instead of the interests of the members as a whole.

R2 was engaged in the business of cleaning and coating services before it stopped providing the services after the demise of the founder 3 shareholder Tong Kai Chok (TKC) who the grandfather of the Petitioner.

The late TKC was the majority shareholder holding 75% of the issued shares and R1 held 25%. Upon the death of TKC, R1 who is TKC’s younger son inherited the other 25% making him a 50% shareholder. The Petitioner was given the other 50% from the Last Will of TKC. Thus, at the time of filing this Petition both the Petitioner and R1 hold 50% each making them equal shareholders.

The late TKC allowed R1 to run the business of R2 because he was old and unwell. Sometime in August 2022, about one month before TKC died, R1 unilaterally change the constitution of R2 and made himself the only director of R2 thereby assuming total control of the management of R2.

R1 one was appointed co-executor of the will of TKC, together with two

others, i.e. the Petitioner’s father “TKL” and one Teoh Geok May (“Miss Teoh”). 50% of TKC’s shares was eventually transmitted to the Petitioner on 10.03.2023 making him a 50% shareholder of R2. PETITIONER’S SUBMISSIONS [6] To establish a breakdown of relationship between the two (2) equal shareholders the Petitioner submits that it is clear from the Affidavit in Support (“AIS”) that R1 had consistently denied the Petitioner’s rights as a 50% shareholder of the Company as follows: a) R1 threatened to report the Petitioner for criminal breach of trust although none has been committed; [See Tab 2 of Petitioner’s Core Bundle of Documents (PCBOD) at page 18-20] b) R1 denied the Petitioner’s right to make any decision in the Company; [See Tab 3 of PCBOD at pages 21-22] c) R1 denies the Petitioner’s right to inquire into the affairs of the R2; [See Tab 4 of PCBOD at pages 23-24] d) TKS informed the Petitioner that he is not a director of R1 therefore he has no right to enquire into the accounts of R1 or to have access to the details monthly transactions in R1; [See Tab 4 of PCBOD at pages 25-35] e) R1 rejected the Petitioner’s request to be appointed as a director; [See Tab 6 of PCBOD at pages 36-46] f) R1 informed the Petitioner that he cannot enquire into the Company’s transactions including the RM63,000.00 unaccounted for rentals. [See Tab 7 of PCBOD at pages 47-49] g) R1 denied the Petitioner’s right to have access to R2’s documents without his approval; [See Tab 8 of PCBOD at pages 50-51] h) R1 threatened the Petitioner to not mess up his account, which strongly suggest to the Petitioner that R2’s accounts is being manipulated. [See Tab 9 of PCBOD at pages 52-53] i) R1 informed the Petitioner that he will not agree to the Petitioner checking the bank accounts and invited the Petitioner to sue him if he wants to inspect R1’s accounts. [See Tab 10 of PCBOD at page 54] [7] In reply to the Petitioner’s averments R1 submits as follows: a) The admissibility of the impugned voice recording of Exhibit “P- 14” of Enclosure 19 and the undated Certificate under Section 90A was heavily disputed by the Respondent through Enclosure

The audio recording in Exhibit “P-14” (with its transcribe) and “P-13” in Enclosure 19 has been recorded unlawfully and without authority/consent of R1 hence shall be inadmissible. b) After all, it is in accordance with the law that the Petitioner as a shareholder indeed has no rights to access to the ‘documents of the R2, including financial statements and bank documents of R2. c) The allegation that R1 challenged the Petitioner to sue the R1 is mala fide as the R1 is merely following the law in not providing the bank accounts for the Petitioner and the Petitioner is always at liberty to file any suits if the Petitioner feels that he as a shareholder should be entitled to access the bank accounts. d) All accusations are unsubstantiated and an afterthought to justify the ulterior move of the Petitioner. [8] In respect to the Petitioner’s averment that the substratum of the Company is lost, R2 submits that: a) On 16..08.2022, the Respondent has passed a special Resolution to abolish the Articles of Association of R1 to change the objects clause of the Company to include “investment in properties”. THIS COURT’S FINDINGS [9] With respect to the loss of the substratum, it is clear that the main business of R2 has always been cleaning and coating services and it was never founded as an “investment holding company as averred by R1. [10] The objects of R2 was changed only after R2 has unilaterally and without valid resolutions amended R2’s constitution by changing the objects of R2 to include investment holdings. The two (2) pieces of land belonging to R2 had been part of the R2’s assets even back when the founder, TKC was still alive. I agree with the Petitioner’s submission that the change in the Company’s constitution by R1 who only hold’s 25% of the issued shares at the relevant time, is irregular and invalid. It is clear that the Company’s Constitution can only be changed via a special resolution of the shareholders with 75% of votes (See section 292 of the CA 2026). [11] R1 had admitted that the principle business of R2 has ceased operations as can be seen in the following averments in his affidavit. a) In paragraph 16 of Enclosure 27

“paragraph 21 is denied and I verily state that since the 2nd Respondent Company is closing down, the only activity is to receive rents while disposing of the properties in accordance with my late father’s will” b) In paragraph 13.3 of Enclosure 23 13.3 “it was also his last wish to close down the Company once all debts due and owing to the Bank have been fully discharged”. [12] R1’s main argument in opposition to this Petition is that as executor of the estate of the late TKC he cannot agree to wind-up R2 until he has paid off the bank loans and sold off the two pieces of land. [13] I find this contention to be misconceived. It is clear that once the shares in R2 has been transferred from the estate of TKC, to the Petitioner, there are only 2 shareholders in R2. The estate of TKC no longer has an legal or beneficial interests in the assets of the Company and R1 as executor of the estate of TKC was no locus to dispose of the assets in R1. This issue has been more extensively addressed by in my earlier grounds dated 16.04.2024 appointing Interim Liquidator over the assets of R1. [14] Therefore I agree with the Petitioner’s submission that the whole substratum of R2 has been totally lost since R2 has been dormant since the demise of TKC. LOSS OF TRUST AND CONFIDENCE AND DEADLOCK AT THE SHAREHOLDER’S LEVEL [15] R1 himself had admitted in his affidavits that the is only collecting rentals on the land pending the eventual sale of the land. This shows that the alleged investment in properties as the new business undertaking of R1 is only temporary. He intends to distribute the proceeds after a successful sale. This is implied admission that the intention of R2 has always been to close the operation of R2 after sale of the lands. [16] The fact that R2 has only 2 squabbling shareholders holding equal shares is a clear case of deadlock. This needs no elaboration. The fact that R1 has refused to allow the Petitioner to even have his nominee on the board or even to allow access to the accounts and books of R1 shows that R1 intends to shut out the Petitioner from any involvement in R2 and to retain absolute control over the management of R2. This in itself justifies the Petitioner’s lack of confidence and trust in R1 as the sole Director of R2. [17] Therefore I find that the conduct of R1 since death of TKC, has caused the Petitioner to lose trust and confidence in R1 managing the affairs of R2. [18] In Tai Hean Leong @ Tek Hean Leng (2018) 1 LNS 1647, the Court held.

The Court does not have to analyse the reason why the relationship between the parties have broken down….

When relationship between family members has broken down, the court would be ready to wind-up the Company fairly and equitably. [19] The Petitioner has made other allegations against R1 concerning in the manner R1 attempted to dispose of the lands without carry out a proper valuation and his refusal to account for the rentals collected. However, I don’t see the need to make any findings on these other issues. I find on a balance of probabilities that: a) The substratum of the Company has been lost, and b) The relationship between the only two (2) shareholders have irretrivally broken down as evidenced by R1’s challenge to the Petitioner to sue him and the fact that the parties are merely communicating through solicitors. [20] For the reasons aforesaid I find it is just and equitable that R2 be wound up. Therefore I allow the Petition and make the orders prayed for in the Petition with costs of RM20,000.00 to be paid by R1 to the Petitioner. Dated 08 April 2025 …………t.t….……………. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PETITIONER: GOIK KENWAYNE WITH FOONG KAR YEE SOLICITORS FOR THE PETITIONER: TETUAN DENNIS NIK & WONG COUNSEL FOR THE RESPONDENT: PHAN YIT LENG SOLICITORS FOR THE RESPONDENT: TETUAN LEAW & PHAN Cases Referred to: - Legislation Referred to: ➢ Companies Act 2016 ➢ Companies (Winding-Up) Rules 1972 Decision date: 01 July 2024