Abdul Malik Ishak J:

This is an interesting case as it involves the interpretation of s. 226(3) of the Companies Act 1965. The applicant, Bruno Phillipe Fehrenbach - a Frenchman, is a minority shareholder in a company known as Han Pacific Sdn Bhd. On 15 July 1998, the applicant filed a writ summons in the form of a derivative action suing as a minority shareholder of Han Pacific Sdn Bhd. That writ summons bears the Civil Suit No: 22-388-1998 and the parties thereto were as follows:

BETWEEN

Bruno Phillipe Fehrenbach (seorang pemegang saham minoriti bagi pihak Han Pacific Sdn Bhd No: Syarikat 362403-K) ........ Plaintiff

AND

(1) James Hamilton McPhail

(2) Viva Capital Sdn Bhd (No: Syarikat 419885-M)

(3) Ang Swee Hau @ Jeffrey Ang

(4) Complete Command Sdn Bhd (No: Syarikat 447504-D)

(5) Han Pacific Sdn Bhd (No: Syarikat 362403-K). ....... Defendants

In a derivative action, the name of the company itself must be named as a defendant so that the order of the court will bind the company. Thus, Han Pacific Sdn Bhd was named as one of the defendants in Civil Suit No: 22- 388-1998. In a derivative action, the plaintiff usually seeks to enforce a cause of action which belongs to the company and not to him personally and the court can, in its discretion, at any time after the commencement of the action order the company to indemnify him for his costs on a common fund basis (in addition to the party and party costs recoverable by the plaintiff from the substantive defendants), and such discretion is exercisable in the plaintiff's favour whether the derivative action is eventually successful or not (Wallersteiner v. Moir (No: 2) [1975] QB 373, 508n, [1975] 1 All ER 849). Derivative actions have been entertained in many kindred situations. A person who is entitled to shares or an interest but is not registered as the holder of them in the company's register of members is entitled to institute a derivative action (Bagshaw v. Eastern Union Railway Co. [1849] 7 Hare 114; Binney v. Ince Hall Coal and Channel Co [1866] 35 LJ Ch 363; and Mills v. Northern Railway of Buenos Ayres Co [1870] 5 Ch App 621). The court will definitely allow a derivative action to proceed if it is brought for the benefit of the company and this seems to be the sole purpose of the present applicant - a point advanced with enthusiasm by Mr. Gan Techiong, of counsel for the applicant. Derivative actions too have been allowed against directors who were in control of the company by misappropriating the company's assets (Spokes v. Grosvenor Hotel Co [1897] 2 QB 124), or against the directors who have misapplied the company's assets in breach of the Companies Act (Wallersteiner v. Moir [1974] 3 All ER 217; [1974] 1 WLR 991), or to compel the directors to account to the company for profits made by them and depriving the company of those profits (Cook v. Deeks [1916] 1 AC 554). In short, derivative actions remain a force to reckon with as it opens the door for the minority shareholders to advance their cause for the company.

But the derivative action of the applicant here moves into unchartered water. On 16 July 1998, a day after the applicant filed his writ of summons, a windingup order was made against Han Pacific Sdn Bhd by this court as a windingup court. The applicant is in a dilemma as he is confronted by s. 226(3) of the Companies Act 1965 which reads as follows:

226 (3) When a winding up order has been made or a provisional liquidator has been appointed no action or proceeding shall be proceeded with or commenced against the company except -

(a) by leave of the Court; and

(b) in accordance with such terms as the Court imposes.

and in that state of bewilderment, his solicitors, Messrs Gan & Lim, rightly advised him to file an originating summons seeking a declaration in regard to the correct interpretation of that section. It is for this reason that the applicant files an originating summons in encl. 4 which is supported by an affidavit in support o