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2021 MarsdenLR 2036
HIGH COURT MALAYA SHAH ALAM
SC ESTATE BUILDER BERHAD – Appellant
Versus
TERENCE CHEAH EU LEE & ORS (ENCLS 1 3 & 9) – Respondent
[Civil No: BA-22NCvC-236-06/2021]
Shareholders with over 10% ownership have the right under the Companies Act 2016 to requisition a general meeting, and directors cannot refuse this request.
Headnote:(A) Companies Act 2016 – Sections 310, 311, 206, 202, 207 – Dispute among shareholders regarding convening of general meeting – Court determines shareholders holding more than 10% have the right to requisition a general meeting, and directors must convene it accordingly – Existing directors sought injunction to prevent shareholder meeting – Court dismissed the injunction, reinforcing statutory shareholder rights and stating that the court cannot interfere with the internal decisions made by shareholders at their general meetings. (Paras 10, 14, 21, 36)
Findings of Court: The court upheld shareholders' rights to remove directors and convene general meetings as enshrined in the Companies Act 2016.
Issues: Rights of shareholders versus powers of the Board concerning general meetings;
Ratio Decidendi: Shareholders possessing over 10% shareholding have an unequivocal right to convene meetings, and the directors have no discretion in this regard per the Companies Act 2016;
Result: Plaintiff's injunction applications dismissed.
JUDGMENT
(Enclosures 1, 3 and 9)
Introduction
[1] The present case relates to disputes between a group of shareholders of a public-listed company and the existing directors of the company.
[2] In essence, a group of shareholders in the company want to convene a general meeting of shareholders to remove the existing directors and to appoint new directors, while the existing directors have filed this court suit in the name of the company to try to stop the shareholders from convening any general meeting with the proposed resolution to remove the existing directors.
The Main Suit And The Interlocutory Applications
[3] In the main suit filed on 3 June 2021, the existing directors of the company suing in the name of the Plaintiff-company claim against the Defendants (the shareholders who requisitioned for a general meeting) for the following reliefs:
(i) An injunction be granted restraining the Defendants (by themselves, agents, servants, nominees or otherwise) fromconvening and/or proceeding and/or taking any further steps to convene the Proposed EGM of the Plaintiff pursuant to the Defendants' requisition notice dated 21 May 2021 or any adjournment thereof, until the disposal of the suit;
(ii) An injunction be granted restraining the Defendants (by themselves, agents, servants, nominees or otherwise) from interfering with the affairs and/or the management of the Plaintiff;
(iii) An injunction be granted restraining the 2nd and 4th Defendants (by themselves, agents, servants, nominees or otherwise) from exercising the shareholders' right to vote in any meeting(s) of the shareholders of the Plaintiff pertaining to their shares of 80,000,000.00 arising from the private placement;
(iv) An injunction be granted restraining the Defendants (by themselves, agents, servants, nominees or otherwise) from convening and/or proceeding an/or taking any further steps or allowing to hold any EGM of the Plaintiff as proposed on any date whatsoever or voting or passing and/or implementing any resolution thereto that purports to or have the effect of: -
(a) removing Loh Boon Ginn, Loh Shy Ming, Loh Boon Zheng, Loh Shy Tyug and Ooi Bee Chin [collectively known as the current Board of Directors] as the directors of the Plaintiff;
(b) appointing the Defendants' nominees, agents, servants or otherwise including but not limited to Terrence Cheah Eu Lee, Liau Chee Kiong, Alwin Wong Khai Xiang and/or Saiful Nizam Mohd Yusoff, in substitution of or in addition to the current Board of Directors of the Plaintiff; until the disposal of the suit;
(v) Plaintiff's damages, loss of opportunities and/or profits to be assessed before this Honourable court;
(vi) General damages to be assessed before this Honourable court;
(vii) Costs;
(viii) Further and/or such other relief as this Honourable court deems fit and just.
[4] In Enclosure 3 application filed by the Plaintiff-company on 3 June 2021 the Plaintiff seeks the following interlocutory injunctive reliefs against the Defendant-shareholders:
(1) Upon the Plaintiff's undertaking to abide by any order that this Honourable court may make as to damages in case this Honourable court or Judge should hereafter be of the opinion that the Defendant may suffer any loss or damage by reason of the order to be made herein, that: -
(i) An interlocutory injunction be granted restraining the Defendants (by themselves, agents, servants, nominees or otherwise) from convening and/or proceeding and/or taking any further steps to convene the Proposed EGM of the Plaintiff pursuant to the Defendants' requisition notice dated 21 May 2021 or any adjournment thereof, until the disposal of the suit;
(ii) An interlocutory injunction be granted restraining the Defendants (by themselves, agents, servants, nominees or otherwise) from interfering with the affairs and/or the management of the Plaintiff, until the disposal of the suit;
(iii) An interlocutory injunction be granted restraining the 2nd and 4th Defendants (by themselves, agents, servants,
