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2024 MarsdenLR 728
HIGH COURT MALAYA KUALA LUMPUR
POP INVESTMENTS LIMITED – Appellant
Versus
ICAPITAL.BIZ BERHAD – Respondent
[Originating Summons No: WA-24NCC-581-10/2023]
A beneficial shareholder has standing under Section 351 of the Companies Act 2016 to challenge a company's actions, and existing constitutional provisions can impose foreign shareholding limits without explicit amendments.
Headnote:(A) Companies Act 2016 - Section 351 - Corporate governance - Injunctive relief sought against imposition of a 20% limit on foreign shareholding by ICAP - Court held that beneficial shareholder has locus standi to challenge company's actions under s 351 - ICAP's Constitution does not require explicit amendment to impose foreign shareholding limits as existing provisions suffice - Court dismissed Pop's Originating Summons for declaratory and injunctive reliefs. (Paras 86, 128)
(B) Interpretation of 'member' - Court interpreted 'member' in ICAP's Constitution broadly to include both local and foreign shareholders, aligning with regulatory provisions - 20% limit on shareholding deemed compliant with SC CEF Guidelines and MMLR. (Paras 90, 100)
Facts of the case:
Pop Investments Limited filed an Originating Summons against ICAP, claiming unlawful imposition of a 20% foreign shareholding limit without amending its Constitution, thus violating the Companies Act 2016. (Paras 1, 18).
Findings of Court:
Pop was found to have standing under s 351 of the Companies Act 2016, and ICAP's actions were lawful under the existing constitutional provisions. (Paras 86, 128).
Issues: Whether ICAP was required to amend its Constitution to impose a 20% limit on foreign shareholding and whether Pop had legal standing. (Paras 87, 128).
Ratio Decidendi: The court concluded that the existing provisions of ICAP's Constitution sufficiently supported the imposition of the foreign shareholding limit, and Pop's beneficial ownership granted it standing to seek relief. (Paras 86, 128).
Result: Originating Summons dismissed with costs. (Para 128)
JUDGMENT
[1] This judgment concerns an application by a beneficial shareholder of a public listed company for declaratory and injunctive relief against the company's imposition of a 20% limit on foreign shareholding. The applicant, a foreign entity, held shares in the company through a nominee arrangement at the time of filing the application. The company had made a series of announcements regarding the implementation of the 20% foreign shareholding limit, citing various regulations and guidelines as the basis for its actions. The applicant contended that the company's imposition of this limit without amending its Constitution was unlawful and in breach of the Companies Act 2016 . Central to the dispute were questions of the applicant's legal standing to bring the action, the interpretation of relevant securities regulations, and the interplay between the company's Constitution and the regulatory framework governing closed-end funds in Malaysia. The case also raised important issues regarding the rights of beneficial shareholders and the scope of s 351 of the . Additionally, the court was tasked with determining whether the company was required to expressly amend its Constitution to incorporate a prescribed limit on foreign shareholding before imposing such a restriction. This judgment addresses these complex issues within the broader context of corporate governance, securities regulation, and shareholder rights in Malaysia.
Background Facts
[2] Pop Investments Limited ("Pop"), a company incorporated in the Isle of Man, filed an Originating Summons against iCapital.Biz Berhad ("ICAP'), a public listed company in Malaysia, on 24 October 2023.
[3] At the time of filing, Pop was the beneficial shareholder of ICAP, with its shareholding held under nominee companies Kenanga Nominees (Asing) Sdn Bhd ("KNASB") and Canaccord Genuity Wealth (International) Ltd Specifically, 1,279,600 shares in ICAP were held by KNASB as a nominee for Pop under a Global Custodian Agreement dated 26 January 2023.
[4] ICAP made a series of announcements and statements regarding a 20% prescribed limit on foreign shareholding over the course of September 2023. These communications were made through various channels, including official announcements to Bursa Malaysia, the company's Notice of Annual General Meeting and its 2023 Annual Report.
[5] On 8 September 2023, ICAP made its first announcement to Bursa Malaysia titled "Lodgement to Bursa Malaysia Depository on Foreign Ownership Limit Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 and Rules of Bursa Malaysia Depository". In this announcement, ICAP stated that it is subject to the "prescribed limit" as defined under Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996 ("SICDA FOR') and Rules of Bursa Malaysia Depository ("BMD Rules"), and that the fund is classified by Bursa Malaysia or Bursa Malaysia Depository Sdn Bhd as being imposed with a "prescribed limit". Importantly, ICAP declared that the "prescribed limit" of the fund is 20% on foreign shareholding in ICAP.
[6] A week later, on 15 September 2023, ICAP made a second announcement to Bursa Malaysia, referencing the first announcement. This communication provided further context, stating that the purpose of the first announcement was to notify existing foreign shareholders of ICAP's compliance with SICDA FOR and BMD Rules. It also specified that the percentage threshold of the prescribed limit is as per para 7.40 of the Main Market Listing Requirements ("MMLR') and para 3.7.1(iii) of the Securities Commission's Guidelines for Public Offerings of Securities of Closed-end Funds ("SC CEF Guidelines"). ICAP asserted that it had taken necessary actions to comply with regs 5 and 6 of SICDA FOR, read together with r 24 A 05(1) of the BMD Rules.
[7] ICAP's third announcement to Bursa Malaysia came on 29 September 2023. This announcement focused on the righ
