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2020 MarsdenLR 848
COURT OF APPEAL PUTRAJAYA
SUKI MEE – Appellant
Versus
FAR ORIGIN SDN BHD – Respondent
[Civil Appeal No: A-02(NCC)(A)-963-05-2019]
The conduct of directors prioritizing personal interests over those of members justifies the winding up of a company under Section 465(1)(f) of the Companies Act 2016.
Headnote:(A) Companies Act 2016 – Section 465(1)(f) – Appeal against dismissal of winding-up petition – Allegations of directors acting in their own interest – The court held that the petition presented had factual circumstances warranting a winding up due to unfair conduct of directors, leading to detrimental consequences for the minority member – The earlier decision of the Judicial Commissioner was found to have ignored relevant factors and standards – The appeal was allowed and the company ordered to be wound up. (Paras 82, 132, 145, 147)
Facts of the case: The petitioner, a minority shareholder and director, was removed from the board, leading to the appointment of the majority shareholder's family members, and subsequent claims of unfair actions by the directors without due accountability. (Paras 1, 84, 120)
Findings of Court: The High Court found the removal and subsequent appointments as unjust, resulting in financial ramifications for the petitioner, supporting winding up of the company. (Paras 144, 147)
Issues: The main issue considered was whether the actions of the directors constituted conduct unfair and unjust toward the members. (Paras 90, 132)
Ratio Decidendi: The court concluded that the directors' decisions benefitted their family at the expense of the company and the petitioner, justifying the winding up order on the grounds of unfair conduct. (Paras 133, 144)
Result: The winding up petition was allowed. (Para 147)
JUDGMENT
[1] The appellant in this appeal had presented Winding-Up Petition No: AA-28NCC-41-11-2017 against the respondent company, Far Origin Sdn Bhd, invoking s 465(1)(f) of the Companies Act 2016 .
[2] Section 465 (1) of the Companies Act 2016 sets out the circumstances in which a company may be wound up by the court and under s 465(1)(f), the court may order the winding up if:
(f) the directors have acted in the affairs of the company in the directors' own interest rather than in the interests of the members as a whole or acted in any other manner which appears to be unfair or unjust to members...
[3] The Petitioner's Winding-Up Petition was however dismissed by the learned Judicial Commissioner, as the learned judge then was, hence this appeal. For purposes of convenience, the Petitioner shall continue to be referred to as such.
[4] Having heard submissions by learned counsel for the parties and having considered the affidavits and exhibits filed, the Petitioner's appeal was allowed. The grounds for having done so are set out below.
Background
[5] The respondent company was incorporated on 27 September 1995. The original subscribers to the Articles and Memorandum of association were the directors then namely, one Ng Heng Hooi and one Ng Siew Kian.
[6] As is commonly the case, a wide variety of businesses were catered for in the respondent's Memorandum of Association. However, in the records of the Suruhanjaya Syarikat Malaysia ('SSM'), the nature of the respondent's business was described as 'commercial trading'.
[7] On 1 February 2002, one Toi Sin Fatt was appointed as director of the respondent. Following closely on his appointment was the appointment of the Petitioner as a director of the respondent.
[8] Both Toi Sin Fatt and the Petitioner were then the only two directors of the respondent. They were also its only shareholders.
[9] When Toi Sin Fatt and the Petitioner were appointed directors, the respondent had an issued share capital of RM450,000.00 made up of 450,000 ordinary shares.
[10] Of its 450,000.00 issued ordinary shares, Toi Sin Fatt held 270,000 shares, which amounted to 60% of the respondent's share capital and the Petitioner held 180,000 shares, which made up the balance 40% of the respondent's share capital.
[11] The composition of the board of directors and the shareholding in the respondent made up of only Toi Sin Fatt and the Petitioner lasted some 14 years, up to 2016.
[12] Unfortunately, the relationship between the two men broke down. There were allegations hurled to and from, all of which were of little relevance for the purposes of this case and need not be explored further. Suffice to say that the relationship between the two men was acrimonious enough for the following events to follow.
[13] On the 15 June 2016, a notice of an Extraordinary General Meeting ('EGM') of the respondent was issued. The agenda for this EGM consisted of two proposed resolutions; one, for the removal of the Petitioner as a director of the respondent and, the other, for the appointment of one Ng Yok Fong as director in his stead.
[14] Ng Yok Fong was the wife of Toi Sin Fatt.
[15] The Petitioner attended the EGM of 15 June 2016. The minutes of the meeting disclosed that at the meeting, the Petitioner sought to know why he was being removed.
[16] However, the reply, which was to be found in the minutes, did not make much sense read on its own without more. It was recorded that the Secretary was instructed by the Chairman to state that 'our company is related and deemed Holding/Subsidiary Company as defined under s 5(1)(a)(i), (ii) and (iii) of the Companies Act 1965'. The Chairman of the EGM on that day was of course, Toi Sin Fatt, who was the only other director.
[17] With Toi Sin Fatt's majority shares and upon his demand for a poll, both the proposed resolutions were passed. Thus, the Petitioner ceased to be a director of the respondent and in his stead, Toi Sin Fatt's wife, Ng Yok Fong, was appointed.
[18] Ng Y
