A party cannot rely on wrongful acts as grounds for winding-up a solvent company, especially when the petitioner is a majority shareholder with control over the board.

JUDGMENT

Ahmad Murad Abdul Aziz J:

Introduction

[1] The Petitioner filed this Petition to wind-up the 6th Respondent ("the Company") pursuant to s 465(1)(c) and (h) of the Companies Act 2016 (" CA 2016").

[2] The main grounds relied upon by the Petitioner to wind-up the Company are:

a) the Company has ceased all business operations for more than one year

b) It is just and equitable to wind-up the company because

(i) there is unpaid capital of RM497,000.00 wrongly credited as paid-up in the records of the Suruhanjaya Syarikat Malaysia ("SSM")

(ii) total loss of substratum of the Company due to closure of business since 28 February 2022, and

(iii) the parties cannot agree on a buy out of each other's shares in the Company.

Background Facts

[3] The Company was founded by Kamarul Anuar, the former husband of the Petitioner. As at 20 August 2019, the shareholding of the Company was as follows:

[4] (i) The Founder transferred 40,000 of his shares in the Company to the 1st and 2nd Respondents in consideration of the 1st and 2nd Respondents' contributions to the Company. On 5 April 2021, the Founder transferred his remaining 250,000 shares in the Company to the Petitioner. Subsequently, on 26 April 2021, he resigned as a director of the Company. This transfer of shares to the Petitioner was essentially part of the divorce settlement between the Founder and the Petitioner. As a result, the Petitioner acquired a majority stake in the Company, with the following shareholding structure:

As at 5 April 2021

(ii) Subsequently the Petitioner transferred some of her shares to her family members, namely the 3rd, 4th and 5th Respondents. The total shares transferred to the 3rd, 4th and 5th Defendant are miniscule, amounting to less than 1% of the issued shares.

[5] As from 5 April 2021, the Petitioner became the majority shareholder of the Company holding 66% of the issued shares and the Second Respondent ("R2") and Third Respondent ("R3") holds 25% and 9% respectively.

Respondent's Averments

[6] (i) On the issue of cessation of business operations of the Company and loss of substratum, R2 and R3 (collectively referred to as the Respondents) alleged that this cessation was caused by the Petitioner herself when she transferred the 'tadikas' (pre-school or kindergartens) belonging to the Company to another company owned by her sister, the 6th Respondent, without knowledge or a consent of the Respondents who are shareholders of the Company. This is in breach of s 223 of the CA 2016 which requires a shareholders' resolution to effect the transfer.

(ii) Section 223 (i) provides:

(I) Notwithstanding anything in the constitution the directors shall not enter into or carry into effect any arrangement or transaction for:

(a)....

(b) the disposal of a substantial portion of the company's property unless;

(II) the carrying into effect of the arrangement or transaction has been approved by the Company by way of a resolution.

[7] With respect the alleged unpaid capital of RM447,000.00 the Respondents avers that those shares were issued to them "otherwise than in cash" by the Founder. The shares were issued in consideration of the Respondents settling debts incurred by the Company (see paras 9,10 and 11, encl 11 and exhibit (NMW-3) enclosing the agreement between the Founder and the Respondents).

[8] The Respondents further contend that the Petitioner herself has approved the issuance of these shares to the Respondent when the Petitioner herself had signed the resolution approving the issuance of the said shares tothe Respondent on 26 June 2019 and the audit report for the year 2020. Thus, the Petitioner cannot now claim ignorance of the consideration behind the issuance of shares.

[9] On the final issue of the parties failing to reach an agreement regarding the buyout of each other's shares in the Company, the Respondents contend that this failure is not a recognized ground for winding up under the "just and equitable" provision of the CA 2016. There is no deadlock at the sha