Quorum must be present for resolutions to be valid; breaches of statutory provisions cannot be condoned without valid proof.

JUDGMENT

Evrol Mariette Peters J

Introduction

[1] This was the Plaintiffs' application ("this Application) for, inter alia, for the following:

a) A declaration that the appointment of the following directors of the Second Plaintiff on 30 October 2017 in accordance with the terms of the agreement dated 27 August 2015 was valid, effective and enforceable:

i. Sawilah binti Masrom @ Haji Nasir; and

ii. Mohamad Shah Jihan bin Ahmad Yusuf:

b) A declaration that the Extraordinary General Meeting ("EGM") held on 30 October 2017 was valid and in order; and

c) A declaration that the parties present at the EGM held on 30 October 2017 was a sufficient quorum under s 328 of the Companies Act 2016 ("Companies Act") for the First and the Second Plaintiffs to proceed with the meeting.

The Factual Background

[2] The First Plaintiff and First Defendant are the directors and shareholders of the Second Plaintiff ("the Company"), with the shareholding of 80% and 20% respectively.

[3] Pursuant to an EGM held on 30 October 2017 that was convened by the First Plaintiff, certain resolutions were passed, which included appointment of new directors and the removal of the First Defendant as director of the Company. Although notices were sent to both the First Plaintiff and the First Defendant, the First Defendant was absent. The First Plaintiff, therefore, exercised his power as a majority shareholder to hold the meeting and to decide the agenda in the absence of the First Defendant.

[4] In April 2018, the First Defendant lodged a complaint against the First Plaintiff to the Second Defendant, the Companies Commission of Malaysia or Suruhanjaya Syarikat Malaysia ("SSM") alleging that the First Plaintiff had held the EGM without a quorum, and as a result thereof, the resolutions passed were void and invalid.

[5] Pursuant to the complaint, SSM conducted investigations, and discovered that the First Plaintiff had in fact directed the company secretary to call for an EGM on 30 October 2017. As a result thereof, in early 2019, SSM had charged the First Plaintiff at the Johor Bahru Sessions Court, for contravention of s 328(4) and (5) of the Companies Act, which amounts to an offence under s 588 of the Companies Act, both of which read:

Section 328 - Quorum at meetings

...

(4) No business shall be transacted at any meeting of members unless a quorum is present at the time when the meeting proceeds to business.

(5) Unless otherwise provided in the constitution, if within half an hour from the time appointed for the meeting, a quorum is not present, the meeting-

(a) if convened upon the requisition of members, shall be dissolved; or

(b) in any other case, shall stand adjourned to the same day in the next week at the same time and place, or to such other day and at such other time and place as the directors may determine.

Section 588 - General penalty

(1) A person commits an offence under this Act if he-

(a) does that which by or under this Act he is prohibited to do;

(b) does not do that which by or under this Act he is required or directed to do; or

(c) otherwise contravenes or fails to comply with any provision of this Act.

(2) A person who is guilty of an offence under this Act shall, on conviction, be liable to a penalty or punishment not exceeding the penalty or punishment expressly mentioned as the penalty or punishment for the offence, or if a penalty or punishment is not mentioned-

(a) in the case of a person who is an individual, to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both;

(b) in the case of a person other than an individual, to a fine not exceeding fifty thousand ringgit.

[Emphasis Added]

[6] Subsequent to the charge in the Sessions Court, the Plaintiffs filed this Application in April 2019, which was dismissed for the following reasons.

Contentions, Evaluation, And Findings

[7] It was undisputed that the First Plaintiff held the EGM without a quorum, and therefore was clearly in breach of the s 328 of the Com