Zakaria Bin Saad v Aiman Bin Azli (WA-24NCC-853-08/2022)

AIMAN BIN AZLI [No. K/P: 891202-14-6449]

ALIAH BINTI AZLI [No. K/P: 871227-14-5268]

DEMI IDAMAN SDN BHD … DEFENDAN - [No. Syarikat: 892801-P] DEFENDAN JUDGMENT [1] This was an application by the Plaintiff under section 348 of the Companies Act 2016 (“CA 2016”) for leave to initiate proceedings on behalf of the 3rd Defendant-company against the 1st and 2nd Defendants pursuant to Section 347 CA 2016 (“this Application”). Page 2 of 20 A] SALIENT BACKGROUND FACTS [2] The Plaintiff is a shareholder of the 3rd Defendant holding 368,480 shares (36.48%) in the 3rd Defendant. The Plaintiff was previously a director of the 3rd Defendant. [3] The 1st and 2nd Defendants are directors of the 3rd Defendant. The 1st Defendant is also a shareholder of the 3rd Defendant holding 631,520 shares (63.61%) in the 3rd Defendant. [4] The Plaintiff entered into a business dealing with the one Dato Azli Bin Abdul Rahman (“Dato Azli”) involving gold processing. This dealing culminated in, inter alia: i) the 1st Defendant holding 51% of the 3rd Defendant’s shares as the proxy of Dato Azli (at that material time); and ii) the sharing of the 3rd Defendant’s profits between Dato Azli and the Plaintiff on a 50:50 profit sharing ratio. [5] The 1st and 2nd Defendants are the children of Dato Azli. B] THE PLAINTIFF’S COMPLAINT [6] The Plaintiff’s complaint is summarised below. [7] On 25.5.2018, the 3rd Defendant issued a letter of intent dated 25.5.2018 (“Letter of Intent”) to Blue Ocean International Bank (“Blue Ocean”) stating that the 3rd Defendant is ready and willing to purchase gold bullion, Aurum Utalium (AU), subject to the terms and conditions set out in the Letter of Intent. [8] On the same day, 25.5.2018, the 3rd Defendant also entered into a Sale and Purchase Agreement with Blue Ocean whereby Blue Ocean was represented by one Ewan Sherriff (“Ewan”) for a commodity known as “AU Metal Gold in 1 kilogram bar form, GLD specification” (“AU Metal”) for a contract period of 12 months (“SPA 1”). Page 3 of 20 [9] Subsequently, also on 25.5.2018, the 3rd Defendant entered into a Sale and Purchase Agreement with one Parwiz Kausar Bin Ghulam Nabi Kausar (“Parwiz”) from Prana Resources Pte Ltd (“Prana Resources”) for the commodity AU Metal for a contract period of 12 months (“SPA 2”). [10] At that material time, Prana Resources is a company providing corporate finance advisory services and Parwiz at that material time was one of the directors in Prana Resources. [11] On 1.10.2018, the 3rd Defendant entered into an agreement with Prana Resources whereby Prana Resources is enabled to supply gold bars (“Raw Materials”) in various sizes and purities to the 3rd Defendant and the 3rd Defendant is to fulfil its commitment to melt, refine, cast and manufacture the Raw Materials into gold bars of various sizes that carries purity of 999.9 and hallmarked as “Idaman Gold” complying with the international standard. [12] All dealings with Blue Ocean and Prana Resources are handled and managed by Dato Azli himself without involving the Plaintiff. This is evident from the exchange of emails between Dato Azli and Blue Ocean and Prana Resource where the Plaintiff was not included in the said email communications. [13] Following the agreements referred to above, the 3rd Defendant issued several purchase orders to Blue Ocean and the 3rd Defendant and/or the Plaintiff had made several payments to Blue Ocean and Prana Resources and/or Parwiz (as instructed by Dato Azli). The particulars of these payments are as follows:

Amount (USD)

6.2018 The Plaintiff paid to Blue Ocean 1,959,545.16 15.10.2018 The Plaintiff paid to Parwiz 2,300,000.00 24.10.2018 The Plaintiff paid to Parwiz 780,000.00 24.10.2018 The Plaintiff paid to Parwiz 950,000.00 29.10.2018 The Plaintiff paid to Prana Resources 965,000.00 Total amount paid (USD) 6,954,545.16 Page 4 of 20 [14] At that material time, the arrangement between Dato Azli and Parwiz was that the payments will be made to the Plaintiff's account in Singapore (representing the 3rd Defendant) to show “proof of fund” and the Plaintiff will then subsequently make payments to Prana Resources / Parwiz. [15] Despite several delays, Blue Ocean and Prana Resources delivered 75kg of gold material to the 3rd Defendant via two tranches, one on 18.10.2018 (50kg) and the other on 25.10.2018 (25kg). The total value of these deliveries are USD2,827,270.00. [16] However, despite the above 2 successful deliveries, there is still outstanding AU Metal with the value of USD4,082,275.00 that are yet to be delivered to the 3rd Defendant. Due to the delays and failure of Blue Ocean and Prana Resources and/or Parwiz to deliver the remaining gold bullion, the 3rd Defendant together with its other borrowers had suffered losses. [17] The Plaintiff together with a few other borrowers of the 3rd Defendant questioned Dato Azli and Aiman on the dealings with Blue Ocean and Prana Resources as there were no further deliveries since 25.10.2018. However, the only response from Dato Azli and the 1st Defendant was that they will handle it accordingly. [18] Dato Azli and Aiman failed to solve the issue with Blue Ocean and Prana Resource. [19] Subsequently, Dato Azli offered to purchase the Plaintiff’s shares in the 3rd Defendant for RM2,600,000.00 and to reimburse the Plaintiff for the capital that the Plaintiff had invested in the 3rd Defendant i.e. RM2,400,000.00. Hence, an agreement was executed on 6.3.2019 setting out the terms of the sale and purchase of the shares (“Share Sale Agreement”). [20] Following the Share Sale Agreement, the Plaintiff resigned as a director of the 3rd Defendant on 21.3.2019 but remained as a shareholder until Dato Azli makes full payment in accordance with the Share Sale Agreement. [21] Despite the above events, Blue Ocean and Prana Resources / Parwiz still failed and/or neglected to supply and deliver the Page 5 of 20 outstanding AU Metal to the 3rd Defendant when the 3rd Defendant had made the relevant payments. [22] As of to-date, the 1st Defendant and/or Dato Azli had not taken any steps to recover and/or to demand for the refund of the sums USD4,082,275.00 from Blue Ocean and Prana Resources and/or Parwiz being the payments made by the 3rd Defendant for the supply and delivery of the gold bullion / AU Metal but Blue Ocean and Prana Resources and/or Parwiz failed to supply and deliver the same. [23] Arising from the above, the Plaintiff makes the following allegations: i) There is a conspiracy between Dato Azli, Blue Ocean and Prana Resources. The 3rd Defendant’s dealings with Blue Ocean, Prana Resources and Parwiz are managed and handled by Dato Azli and the 1st Defendant. The Plaintiff was excluded in any discussion, negotiations or communication and this can be seen from the exchange of emails between them. Additionally, there were words like “trade secret” or “plan” used. Ewan from Blue Ocean had also requested in their exchange of emails to be silent about the progress of their dealings from any third parties. ii) The 1st and 2nd Defendants have breached their fiduciary duty to the 3rd Defendant and had failed to secure the best interest of the 3rd Defendant as follows: a) Failed to recover and/or claim for the refund of the monies paid to Blue Ocean, Prana Resources and Parwiz when there was no further delivery of the AU Metal since 25.10.2018. b) Failed to terminate the dealings and/or business with Blue Ocean, Prana Resources and Parwiz to cut and/or reduce the losses incurred by the 3rd Defendant at the material time. c) Failed to take legal action against Blue Ocean, Prana Resources and/or Parwiz for their failure to comply with the terms of the agreements and for any misrepresentation and/or negligence of any party. Page 6 of 20 d) The 1st and 2nd Defendants attempted to set up a new company in the similar industry for their own interest and to compete against the 3rd Defendant. The new company is known as Naga Precious Metal Sdn Bhd (previously known as Demi Ventures Sdn Bhd) and was established in May 2019. iii) The 1st and 2nd Defendants had misappropriated and/or mismanaged the 3rd Defendant’s funds as follows: a) Based on the 3rd Defendant’s Trial Balance (December 2018), General Journal (1.1.2018 to 31.12.20218) and Annual Report and Financial Statement for the year ended 31.12.2018 (collectively referred to as “3rd Defendant’s Financial Statements”), it is discovered that in December 2018 the 3rd Defendant had approved and made payment of RM880,000.00 as bonus without any approval and/or confirmation from any general meeting. b) Based on the 3rd Defendant’s Financial Statements, it is discovered that in December 2018, the 3rd Defendant had approved and made payment of RM580,000.00 to Dato Azli without any explanation and/or approval from any general meeting. c) In the Annual Report ending the year 2018, regarding the financial position of the 3rd Defendant as at 31.12.2018, the sums owing to director as at 2018 was RM1,220,439.00 while for the year 2017 is RM3,397,269.00. However, the Defendant had in 2019 issued a letter dated 31.7.2019 that the sum owing is RM2,100,000.00. Hence, there is a major discrepancy in these sums stated as owing to the director. d) The 1st and 2nd Defendants and Dato Azli had enjoyed benefits from the 3rd Defendant where they had bought a house (now currently under the name of Dato Azli’s wife) and cars (currently still being used by the 1st Defendant and Parwiz) with the 3rd Defendant’s funds without any board of directors resolution regarding the purchases and/or benefits. Page 7 of 20 C] THE DEFENDANTS’ RESPONSE TO THE PLAINTIFF’S COMPLAINT AND ALLEGATIONS [24] The Defendants’ response to the Plaintiff’s complaint and allegations are summarised as follows: i) Dato Azli holds no executive power in the 3rd Defendant and any actions that were taken (with or without Dato Azli’s involvement) were made by the 3rd Defendant’s board of directors (“Board”) while the Plaintiff was the managing director of the 3rd Defendant. ii) The Plaintiff had conveniently left the 3rd Defendant on 21.3.2019 at times of turmoil with the 3rd Defendant’s creditors. iii) The Plaintiff failed/neglected or/and refused to disclose the 3rd Defendant’s funds at the time he left the 3rd Defendant. iv) The emails from Blue Ocean and Prana Resources were all after the Plaintiff left the 3rd Defendant. v) The Plaintiff unilaterally transferred the 3rd Defendant’s funds to his account in Singapore which were ultimately used to pay Blue Ocean, Prana Resources and Parwiz, without the 3rd Defendant’s Board of Directors’ resolution. vi) Regarding the Plaintiff’s allegation of misappropriation and mismanagement, the transactions that occurred in 2018 are known to the Plaintiff and that he was a managing director of the 3rd Defendant at the time. vii) The Defendants had done all they could to recover the outstanding sum from Blue Ocean and/or Prana Resources and/or Parwiz. D] REQUIREMENTS FOR LEAVE UNDER SECTION 348 CA 2016 AND WHETHER THEY HAVE BEEN SATISFIED [25] Section 347 of CA 2016 states as follows: Page 8 of 20 “347. Derivative proceedings

A complainant may, with leave of the Court initiate, intervene in or defend a proceeding on behalf of a company.

Proceedings brought under this section shall be brought in the company’s name.

The right of any person to bring, intervene in, defend or discontinue any proceedings on behalf of a company at common law is abrogated.” (own emphasis added) [26] Section 348 of CA 2016 states as follows: “348. Leave of Court

An application for leave of the Court under section 347 shall be made to the court without the need for an appearance to be entered.

The complainant shall give thirty days’ notice in writing to the directors of his intention to apply for the leave of Court under section 347.

Where leave has been granted for an application under section 347, the complainant shall initiate proceedings in Court within thirty days from the grant of leave.

In deciding whether or not leave shall be granted, the Court shall take into account whether –

the complainant is acting in good faith; and

it appears prima facie to be in the best interest of the company that the application for leave be granted.

Any proceedings brought, intervened in or defended under this section shall not be discontinued, compromised or settled except with the leave of the Court.” (own emphasis added) [27] The definition of a “complainant” is defined under Section 345 CA 2016 as follows: Page 9 of 20 “For the purposes of this Division, "complainant" means-

a member of a company, or a person who is entitled to be registered as a member of a company;

a former member of a company if the application relates to the circumstances in which the member ceased to be a member;

any director of a company; or

the Registrar, in the case of a company declared under section 590.” (own emphasis added) i) Locus Standi [28] As a shareholder of the 3rd Defendant the Plaintiff qualifies as a “complainant” under Section 347 of CA 2016 read together with its definition under Section 345(a) CA 2016. Hence, the Plaintiff has locus standi to apply for leave under Section 348 CA 2016. [29] Based on Section 348 CA 2016, the Court is to take the following into consideration before the Court can exercise its discretion whether to grant leave to commence a derivative action: i) whether a 30-days’ notice was given to the 3rd Defendant’s directors of the Plaintiff’s intention to apply for leave to initiate the derivative action (Section 348(2) CA 2016); ii) whether the complainant (Plaintiff) is acting in good faith (Section 348(4)(a) CA 2016); and iii) whether it appears prima facie to be in the best interest of the company that leave be granted (Section 348(4)(b) CA 2016). (see Lembaga Tabung Angkatan Tentera v Prime Utilities Bhd [2013] 7 MLJ 831; Abdul Rahim bin Suleiman (suing as director and minority shareholder of Semangat Motor Sdn Bhd and in the interest of Semangat Motor Sdn Bhd) & Anor v. Faridah bt Md Lazim & Ors [2016] 6 MLJ 449) ii) Notice [30] In so far as the notice requirement under Section 348(2) CA 2016 is concerned, on 8.6.2022 the Plaintiff had issued a notice of his Page 10 of 20 intention to apply for leave to commence derivative proceedings to the Defendants and also to the 3rd Defendant’s company secretary. (Salina bt Mohamad Sukor v. MVD International Sdn Bhd & An or [2019] 9 MLJ 762; Independent Oil Tools Limited v. Ramil Bin Md Nor & Ors [2018] MLJU 133). Therefore, the notice requirement has been fulfilled. [31] Further and in any event, the Defendants did not raise any dispute on the Plaintiff’s abovesaid notice issued pursuant to Section 348(2) CA 2016. iii) Acting in Good Faith [32] The interpretation and application of the term “acting in good faith” in Section 348(4)(a) has been interpreted in several cases, some of which are stated below. i) In Celcom (M) Bhd v. Mohd Shuaib Ishak [2011] 3 MLJ 636 the Court of Appeal held as follows: “[15] The second crucial requirement for the determination of the court in granting leave is the need for the respondent to show that he was acting in good faith in making this application ( s 181 B(4)(a)). The onus of proof here is on the respondent on a balance of probabilities. The test of good faith is two-fold. One is an honest belief on the part of the respondent, and two, that this application is not brought up for a collateral purpose. …….” ……… “[16] This second requirement will depend on the factual circumstance which comes before the court. This was stated by Palmer J in Swansson with these words: Nevertheless, in my opinion, there are at least two interrelated factors to which the courts will always have regard in determining whether the good faith requirement of s 237(2)(b) is satisfied. The first is whether the applicant honestly believes that a good cause of action exists and has a reasonable prospect of success. Clearly, whether the applicant honestly holds this belief would not simply be a matter of bald assertion: the applicant may be disbelieved if no reasonable person in the circumstances could hold that Page 11 of 20 belief. The second factor is whether the applicant is seeking to bring the derivative suit for such a collateral purpose as would amount to an abuse of process.” (own emphasis added) ii) In Salina (supra) where the Court held as follows: “[20] Further in Mohd Shuaib Ishak v Celcom (M) Bhd [2008] 5 MLJ 857; [2008] 1 LNS 314, Ramly Ali J (as he then was) in considering the issue of good faith adopted and applied the following principle: The test for good faith was dealt with by the Supreme Court of British Columbia in Primex Investments Ltd v Northwest Sports Enterprise [1995] CanLI1717 (BCSC), where the court considered the requirement under section 225 of the BC Company Act in an action where die petitioner applies for leave to bring a derivative action in the name ofNorthwest Sports Enterprise Ltd against several of its current directors, together with companies in which some of them have an interest. Mr Justice Tysoe in finding the applicant acted in good faith appears to tie the requirement of good faith’ to die test of the ‘interest of the company’. He stated that were there is an arguable case, the applicant cannot be said to be acting in bad faith because he wants the company to pursue what be genuinely considers to be a valid claim. In that case, there was no evidence the applicant was using the prospect of a derivative action as a threat in order to extract some advantage from the company. Tysoe J also indicates that an applicant advancing self-interest is not necessarily acting in bad faith. Hence, where there is an arguable case, it cannot be gainsaid that the plaintiff is acting in bad faith, even if the applicant is advancing self interest, if the applicant’s greater objective is to further the interest of the company as a whole. The presence of a private interest does not necessarily negate good faith if the same coincides with that of the company (see Ong Keng Huat v Fortune Frontier (M) Sdn Bhd & Anor [2015] 11 MLJ 604). The plaintiff has shown genuine and honest concerns about the wrong doings of Paramjeet, which would have dire consequences for the company if left unchecked. The plaintiff has clearly set out Paramjeet’s wrong doings and breaches of fiduciary duty and have produced documentary evidence in support of her allegations. Despite the other directors being notified of Paramjeet’s alleged breaches of fiduciary duty, the other directors have not taken any Page 12 of 20 action to enquire into the complaint or take any action to safeguard the company’s interest. Instead, the other directors have sought to appoint Paramjeet to the board of directors. Thus, I find that the plaintiff has shown an arguable case against the putative defendants, which is prima facie in the interest of the company." iii) In the case of Lembaga Tabung Angkatan Tentera (supra) the High Court referred to Celcom (supra) and held as follows: “[13] In an application for leave under pursuant to s 181A of the CA a complainant must show that it is acting in good faith, and that it is prima facie in the interests of the company that the action be brought. The complainant must demonstrate that there is a reasonable basis for the complaint and that the proposed action is legitimate and arguable. ………. “[22] The main reason the plaintiff commenced this action is because the defendant had not proceeded diligently to recover the investment sums nor given any reasonable explanation why it had not pursue the recovery of the investment sum. The plaintiff had written to the defendant requesting for an explanation for the failure to pursue the recovery of the investment but the directors of the defendant have failed to respond or reply to that letter. No explanation has been given by the defendant for the reluctance to file the proof of debt against Boston. [23] The duties and obligations of the directors are: a) To exercise skill, care and diligence in performance and discharge of their duties; b) To act honestly and use reasonable diligence in performance and discharge of their duties; c) To perform and discharge their duties in the best interest of the defendant; d) To perform and discharge their duties for proper purpose; e) Fiduciary duties to the defendant.” ……….. “[25] The directors of the defendant must exercise skill, care and diligence in performance and discharge. As the custodian of the defendant the directors are duty bound to explain their actions to the plaintiff. The Page 13 of 20 plaintiff have shown through its affidavits that it is acting in good faith and in the best interest of the company in bringing this action against the defendant. There is no evidence that this application is made in had faith or for collateral purposes.” (own emphasis added) [33] In alleging that the Plaintiff is not acting in good faith the Defendants have essentially raised the Plaintiff’s history with the 3rd Defendant and that he left the 3rd Defendant during turmoil. The Plaintiff had responded to this allegation and stated that he resigned following the Share Sale Agreement until Dato Azli made full payment as per the Share Sale Agreement. [34] Regardless of what reason the Plaintiff has for resigning the fact remains that: i) there is a substantial sum owed by Blue Ocean, Prana Resources and/or Parwiz to the 3rd Defendant, that is about USD4,082,275.00; ii) the legitimacy of the transactions between the 3rd Defendant and by Blue Ocean, Prana Resources and/or Parwiz and specifically SPA 1 and SPA 2 are not in dispute; iii) it is not in dispute that at least the 1st Defendant was involved in the abovesaid transactions; iv) it is not in dispute and the Defendants have further acknowledged the debt owed by Blue Ocean, Prana Resources and/or Parwiz to the 3rd Defendant; v) there is no legal action commenced by the 3rd Defendant against Blue Ocean, Prana Resources and/or Parwiz to recover sum of USD4,082,275.00 from them for failure to deliver the balance of the gold bullions / AU Metal. In this regard there are no evidence or documents provided by the Defendants to show of any legal action commenced by the 3rd Defendant against Blue Ocean, Prana Resources and/or Parwiz; and Page 14 of 20 vi) it was only the Plaintiff who had made police reports against Blue Ocean, Prana Resources and Parwiz instead of the Defendants, who did not take such (or any) action. [35] The above undisputed facts in themselves would undermine the responses given by the Defendants (paragraph 24 above) to the Plaintiff’s complaint and allegations. [36] Further, the above undisputed facts give credence to the Plaintiff’s allegation of a conspiracy between Dato Azli, Blue Ocean and Prana Resources given that no action was taken by 3rd Defendant (whose directors are the 1st and 2nd Defendants) against Blue Ocean, Prana Resources and/or Parwiz to recover such a substantial sum owed to the 3rd Defendant, i.e. the USD4,082,275.00. [37] Even if the Plaintiff has personal interest or motive for the recovery of the USD4,082,275.00, it does not mean that he is not acting in good faith in particular where the “greater objective is to further the interest of the company as a whole” (Salina (supra); Ong Keng Huat v. Fortune Frontier (M) Sdn Bhd & Anor [2015] 11 MLJ 604). [38] It is clear that it is in the best interest of the 3rd Defendant to recover the USD4,082,275.00 owed to it by Blue Ocean, Prana Resources and/or Parwiz. [39] In so far as the Defendants’ allegation that the Plaintiff did not disclose the 3rd Defendant’s funds at the time he left the 3rd Defendant is concerned, it is of no consequence as the Defendants and more specifically the 1st and 2nd Defendants are currently the directors of the 3rd Defendant and would have access to the 3rd Defendant’s financial records. [40] Therefore, I find that this Application was brought by the Plaintiff in good faith and not for any collateral purpose. iv) Prima facie in the best interest of the company [41] The test of whether an action is prima facie in the interest of the company was laid out the Canadian Supreme Court of British Page 15 of 20 Columbia case of Discovery Enterprise Inc v. Ebco Industries Ltd [1997] BCTC LEXIS 5338 where it was held as follows: “[16] Mr. Justice Cashman articulated the test of whether an action is prima facie in the interests of the company in Re NorthwestForest Products Ltd., [1975] 4 W.W.R. 724 (B.C.S.C.). He stated at p.735: The real question here is whether in the circumstances of this case, 'it is prima facie in the interests of the company that the action be brought1 (s. 222(3) (c) ) . It will be noted that the Legislature has said that it is sufficient to show that the action sought is prima facie in the interests of the company and does not appear to require that the applicants prove a prima facie case. Presumably the authors of that legislation had in mind that a minority shareholder being in a real sense on the outside is often not in a position to obtain evidence such as that the Crown could be expected to put forward to found a prima facie case in a criminal matter. [17] He continued at p. 736: This application decides nothing more than whether the applicant has adduced sufficient evidence which on the face of that evidence discloses that it is, so far as can be judged from the first disclosure, in the interests of the company to pursue the action. Adopting that definition one must then consider what disclosures are contained in the evidence which might warrant a Court exercising its discretion to allow the minority shareholders here to commence an action against the directors. . . [18] In Bellman v. Western Approaches Limited (1981), 33 B.C.L.R. 45 (C.A.), Nemetz C.J.B.C. considered a similarly worded provision in the Canada Business Corporations Act s, 239(2)(c): "it appears to be in the interests of the corporation". He stated at pp.53-4: . . . The section does not say that the court must be satisfied that it is in the interests of the corporation. It says that no action may be brought unless the court is satisfied that it appears to be in the best interests of the corporation to bring the suit. I take that to mean that what is sufficient at this stage is that an arguable case be shown to subsist. This is quite different from the rules established at common law. Page 16 of 20 [19] In Primex Investments Ltd. v. Northwest Sports Enterprises Ltd. (1995), 13 B.C.L.R. (3d) 300, (S.C.) appeal dismissed (1996), 26 B.C.L.R. (3d) 357 (C.A.), leave to appeal to S.C.C. dismissed April 24, 1997, Tysoe J. considered the leading cases dealing with "the interest of the company” test under both the B.C. Company Act and the Canadian Business Corporation Act, and concluded at pp. 315-6: The authorities are clear that the Court should not attempt to try the case when deciding whether the requirement in s. 225 (3) (c) has been satisfied. The Court should determine whether the proposed action has a reasonable prospect of success or is bound to fail. If / it is asserted that the proposed defendants in the derivative action have a defence to the claim, the Court must decide whether such a defence is bound to be accepted by a trial judge following the completion of the trial of the derivative action. It is not necessary for the applicant to show that the action will be more likely to succeed than not. As noted in the Dickerson Report, the Court should also be satisfied that the potential relief in the proposed action is sufficient to justify the inconvenience to the company of being involved in the action. [20] In summary, the test amounts to whether the petitioner has proven that the action is prima facie in the interests of the company rather than having proven a prima facie case. In other words, whether the petitioner's case has a reasonable prospect of success or is bound to fail; whether the defence raised is bound to be accepted; and whether the potential relief from the action will justify the cost and inconvenience to the company.” (own emphasis added) [42] The Court of Appeal in Tang Kwor Ham & Ors v Pengurusan Danaharta Nasional Bhd & Ors [2006] 5 MLJ 60 dealt with what needs to be considered by the High Court in a leave application and held as follows: “[10] To paraphrase in less elegant language what has been said in these cases, the High Court should not go into the merits of the case at the leave stage. Its role is only to see if the application for leave is frivolous. If, for example, the applicant is a busybody, or the application is made out of time or against a person or body that is immunised from being impleaded in legal proceedings then the High Court would be justified in refusing leave in limine. So too will the court be entitled to refuse leave if it is a case where the subject matter of the review is one which by settled law (either written law or the Page 17 of 20 common law) is non-justiciable, eg, proceedings in Parliament (see art 63 of the Federal Constitution) ...” (own emphasis added) [43] In the present case the Defendants were not able to provide any cogent reason why legal action could not be commenced against Blue Ocean, Prana Resources and/or Parwiz. They essentially only raised the following: i) The Plaintiff failed or did not disclose the 3rd Defendant’s funds at the time he left the 3rd Defendant. ii) The 3rd Defendant has been suffering financially and is therefore unable to commence any legal action against Blue Ocean and/or Prana Resources. [44] Despite the above reasons given by the Defendants, they have not produced any evidence in terms of, for example, the 3rd Defendant’s financial statements or audit reports to show the 3rd Defendant’s financial position. [45] Further, based on the 3rd Defendant’s Financial Statements, as at the year 2018, the 3rd Defendant had a profit after tax of RM1,121,562.00. [46] In considering whether leave should be granted I also took into account, inter alia, the following: i) The 1st and 2nd Defendants are shareholders and the 1st Defendant is a director of the company Naga Precious Metal Sdn Bhd (previously Demi Ventures Sdn Bhd) (“Naga”) which was incorporated on 23.5.2019 and the company, Naga, appear to be in the similar industry/ business as the 3rd Defendant. Therefore, there appears to be a conflict of interest for the 1st and 2nd Defendants to be involved in Naga. ii) The Defendants have not provided cogent or satisfactory reason(s) regarding the allegations raised by the Plaintiff pertaining to the expenditure and payments made as stated in the 3rd Defendant’s Financial Statements. Page 18 of 20 iii) The 1st and 2nd Defendants, as the directors of the 3rd Defendant, had not initiated any legal action by the 3rd Defendant against Blue Ocean, Prana Resources and/or Parwiz to recover the USD4,082,275.00. iv) The 1st and 2nd Defendants’ failure to disclose the financial position of the 3rd Defendant and the costs or anticipated costs if legal action was taken against Blue Ocean, Prana Resources and/or Parwiz. [47] These are matters which give rise the Plaintiff’s complaint regarding, inter alia, the breach of 1st and 2nd Defendants’ fiduciary duty towards the 3rd Defendant. An action against the 1st and 2nd Defendants in respect of the above matters are therefore justified to protect the interest of the 3rd Defendant. [48] Therefore, I find that the Plaintiff has a reasonable prospect of success if a derivative action is initiated and that he is acting in the best interest of the 3rd Defendant. E] CONCLUSION [49] For the reasons stated above, I am satisfied that the Plaintiff has fulfilled the requirements for leave to initiate a derivative action on behalf of the 3rd Defendant against the 1st and 2nd Defendants and accordingly allowed this Application with costs in the cause. Dated this 21th day of March, 2024 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judge High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) Page 19 of 20 COUNSEL FOR THE PLAINTIFF Dato Rajan Navaratnam (Toh Xin Yi, together with him) Messrs Shahrizat Rashid & Lee Ground Floor & First Floor, Wisma Prima, 17, Jalan Sri Semantan Satu, Bukit Damansara, 50490 Kuala Lumpur Tel: 03-27105555 Emel: srl@srl-law.com.my COUNSEL FOR THE DEFENDANTS Jagesh Mehalingam Messrs Ami Rozaidi, Edynoor & Mu’az E-2-14, Plaza Damas, Jalan Sri Hartamas 1, 50480 Kuala Lumpur Tel: 03-61438832 Emel: partners.arem@gmail.com LEGISLATION CITED Companies Act 2016  Section 345(a)  Section 347  Section 348(2), (4)(a) and (4)(b) CASES CITED

Abdul Rahim bin Suleiman (suing as director and minority shareholder of Semangat Motor Sdn Bhd and in the interest of Semangat Motor Sdn Bhd) & Anor v. Faridah bt Md Lazim & Ors [2016] 6 MLJ 449 Page 20 of 20 2. Celcom (M) Bhd v. Mohd Shuaib Ishak [2011] 3 MLJ 636 3. Discovery Enterprise Inc v. Ebco Industries Ltd [1997] BCTC LEXIS 5338 4. Independent Oil Tools Limited v. Ramil Bin Md Nor & Ors [2018] MLJU 133 5. Lembaga Tabung Angkatan Tentera v Prime Utilities Bhd [2013] 7 MLJ 831 6. Ong Keng Huat v. Fortune Frontier (M) Sdn Bhd & Anor [2015] 11

Salina bt Mohamad Sukor v. MVD International Sdn Bhd & An or [2019] 9 MLJ 762 8. Tang Kwor Ham & Ors v Pengurusan Danaharta Nasional Bhd & Ors [2006] 5 MLJ 60