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HIGH COURT MALAYA SHAH ALAM
NG KA GIAP – Appellant
Versus
LIM POH CHAI & ORS – Respondent
[Originating Summons No: BA-24NCC-87-09-2021]
Key Points: - The court found the plaintiff failed to prove oppression under s 346 of the CA, after examining six alleged oppressive acts (e.g., dilution, RM2,000,000 payment, removal as director, etc.) (!) (!) (!) (!) (!) (!) - Oppression requires a course of conduct that affects the plaintiff qua member and goes beyond mere disagreements with majority decisions (!) (!) (!) - The doctrine of separate legal entity and lack of injury to the plaintiff as shareholder unless independently caused is central to the decision, with oppression not shown to affect him personally in a manner meeting s 346 requirements (!) (!) - The court emphasized that mismanagement or internal power disputes alone do not constitute oppression under s 346; the acts must cross into oppression affecting the member’s rights (!) (!) - The court noted that internal director removal decisions are generally not reviewable under s 346 unless there is proven oppression; the plaintiff’s removal did not amount to oppression given evidence of compliance with legal processes (!) (!) - The judgment relies on authorities and principles that mismanagement or disagreement with majority decisions do not automatically constitute oppression; legitimate expectation and understandings must be evidenced and supported by constitutional documents (!) (!) (!) (!) - The plaintiff’s claims regarding share buyout offers and asset disposal were not established as oppressive acts constituting relief under s 346; the court found resolutions were not proven as oppressive or were decisions made with plaintiff’s acquiescence (!) (!) (!) (!) - The court reserved that oppression under s 346 must affect the complainant qua member, not merely as a shareholder in theory; private agreements or shareholder disputes are not within s 346’s remit (!) (!) (!)
| Table of Content |
|---|
| 1. minority oppression claims are initiated under statutory provisions. (Para 1 , 2 , 8) |
| 2. court must ascertain acts of oppression and define suitable remedies. (Para 9 , 10) |
| 3. removals of directors require statutory compliance to avoid claims of oppression. (Para 34 , 39) |
| 4. allegations of oppression should stem from actionable misconduct, not personal dissatisfaction. (Para 58 , 59) |
Introduction
[1] The Plaintiff, a member of the 5th Defendant, commenced an action for minority oppression pursuant to s 346 of the Companies Act 2016 ( CA ) for an order that the 1st, 2nd, 3rd and 4th Defendants purchase all the Plaintiffs shares in the 5th Defendant or that the 5th Defendant be wound up.
[2] The issue before this Court is whether there was oppression of minority shareholders as complained of by the Plaintiff and if the answer to this issue is in the affirmative, then this Court is to decide what are the suitable remedies.
Brief Facts
[3] Sometime in 1984, the 1st and 2nd Defendants incorporated the 5th Defendant, a private limited company. Pursuant to the Share Sale Agreement (SSA) dated 15 August 2018, the Plaintiff agreed to buy the 1st Defendant's shares in the 5th Defendant, which represented 14.28%, and subsequently, the Plaintiff acquired another 10.72% shares in the 5th Defendant and increased his shareholding to a total of 25%.
[4] As such, the Plaintiff is a minority shareholder of the 5th Defendant holding 500,000 shares representing 25% of the total issued and paid-up share capital of RM2,000,000.00. While the 1st, 2nd and 4th Defendants are the majority shareholders holding 1,500,000 shares representing 75% of the total issued and paid-up share capital of the 5th Defendant.
[5] The 1st to the 4th Defendants are also the Directors of the 5th Defendant. The Plaintiff was also appointed as the Director of the 5th Defendant on 3 October 2018 and subsequently on 1 March 2019 he was appointed as the Managing Director on a fixed-term basis.
[6] The Plaintiff was removed as the Managing Director and Director of the 5th Defendant on 10 May 2021 and 25 May 2021 respectively. His removal as Director triggered the commencement of this action under s 346 of the CA alleging that he, being a minority shareholder, has been oppressed by the Defendants.
[7] The Plaintiff has raised six (6) oppressive acts in his application, which are as follows:
a. the issuance and allotment of share capital resulting in dilution of the Plaintiff's shares in the 5th Defendant;
b. the 5th Defendant's resolution to pay the 1st Defendant the sum of RM2,000,000.00;
c the appointment of the 4th Defendant as a Managing Director of the 5th Defendant and the forgery and/or the wrongful alterations of invoices by the 4th Defendant;
d. the removal of the Plaintiff as a Director of the 5th Defendant;
e. failure to acquire the Plaintiff's shares by the majority shareholders; and
f. continued disposal of the 102 vehicles/departure from the New Business Model.
[8] In light of the abovementioned complaints, the Plaintiff is claiming, inter alia, for the 1st to the 4th Defendants to purchase the Plaintiffs shares in the 5th Defendant based on the conditions as set out by the Plaintiff in prayer 2 of the Originating Summons. The Plaintiff also claimed for general and exemplary damages to be awarded to him against the 1st to the 4th Defendants.
Issues For Determination
[9] The main issue for this Court to decide is whether the acts of oppression complained of by the Plaintiff entitle him to relief under s 346 of the CA , and if he is, then what are the suitable remedies for the Plaintiff?
The Law
[10] Section 346 of the CA explains the shareholder's oppression and the remedies available to an oppressed party. Further, the position of law in respect of minority oppression is outlined in the Privy Council case of Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd & Ors v. Ling Beng Sung, [1978] 2 MLJ 227 , Lord Wilberforce
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