A beneficiary under a trust lacks locus standi to sue a company limited by guarantee if not a registered member of that company.

[1] Two appeals were heard together viz 02(i)-54-07-2012(P) and 02(i)-55-07- 2012(P).

[2] This court had granted leave to the appellants to appeal against the decision of the court of Appeal which had affirmed the decision of the High court allowing the respondent's application to strike out the appellants' claim under O 18 r 19, Rules of the High 1980 ("RHC"). The appellants' successful leave application before us was over the following question:

"Whether a beneficiary under a trust has locus standi to bring an action in breach of trust against a company limited by guarantee incorporated under the Companies Act 1965 pursuant to the objective of the trust?"

Background Facts

[3] The appellants claim to represent Malays in Pulau Pinang.

[4] The 1st respondent is a Foundation incorporated on 8 July 1980 under the Companies Act 1965 and is a company limited by guarantee. Article 1 of the Memorandum of Association states that the Foundation is established in accordance with the New Economic Policy to selectively acquire the reserved shares in enterprises on trust for Pulau Pinang Malays.

[5] The articles of association (AA) of the 1st respondent proposes to register 100 members and the first two members shall be subscribers to the memorandum of the association (MOA) and any person desiring to be a member must apply in writing to the Foundation and upon admission the secretary shall cause his name to be recorded in the register of members.

[6] Article 5 of the AA provides that "that subscribers to the memorandum of association and such other persons as shall be admitted to membership in accordance with these regulations and no others shall be members of the foundation and shall be entered in the register of members accordingly."

[7] The Board of Trustees (BOT) is responsible for the management of the affairs of the Foundation and the powers of the Board are set out in art 25 which includes the power to expand the funds of the Foundation, the power to acquire in the name of the Foundation, the power to delegate any powers to any committee, to enter into contracts on behalf of the Foundation, to borrow money, to make and from time to time to repeal or alter regulations and by laws etc.

[8] Two sale and purchase agreements (SPA) dated 22 August, 2000 were entered into between the 3rd respondent and the 8th respondent, and between the 9th respondent and the 8th respondent for the sale and joint venture of three pieces of properties situated in Seberang Prai Utama Penang ("the said properties"). The said properties were acquired by the 3rd and 9th respondents which were fully owned companies of the 1st respondent. The said properties were then transferred to the 8th respondent for the purpose of the joint venture. The appellants' alleged that the value of the properties transferred to the 8th respondent was at an undervalue resulting in a loss of RM115,474,303.30 to the Penang Malays.

[9] The appellants then filed a suit against the respondents for breach of trust and/or breach of fiduciary duties and unjust enrichment in the High court, seeking a declaration that the transfer of the said properties