The Take-Over Code's provisions do not confer a private right of action for damages against parties failing to comply with mandatory offer requirements, emphasizing the statute's regulatory intentions.

Introduction

[1] The plaintiffs' claim against the defendants is for damages arising from a breach of statutory duty. The breach in issue is the failure or refusal of the defendants to undertake a mandatory general offer to purchase the remaining voting shares in Palmco Holdings Berhad ('Palmco') after having acquired, between March 1997 and August 1998, allegedly in concert, slightly more than 33% of the issued share capital of Palmco.

Salient Facts

[2] The plaintiffs in this suit were, in 1997, minority shareholders in Palmco Holdings Berhad ('Palmco'). In March 1997 the Board of Directors of the first defendant, IOI Corporation Berhad ('IOI') resolved to acquire some 52,463,000 shares equivalent to 32.96% of the issued share capital of Palmco from Mega First Corporation Berhad at the price of RM4.35 per share. On 24 March 1997 IOI announced its commitment to make the said acquisition. On 25 March 1997 IOI acquired a further 38,000 shares representing 0.024% of the issued share capital of Palmco. On the same day the second defendant, Tan Sri Dato' Lee Shin Cheng (LSC) ('the second defendant') who is the Managing Director of IOI, acquired 77,000 or 0.048% of the issued share capital of Palmco. He subsequently disposed of these 77,000 shares on 8 April 1997. The plaintiffs contend that the cumulative effect of the acquisitions at this stage by IOI in March 1997, directly or indirectly through its director, who was acting in concert with it, amounts to 33.032% of the issued share capital of Palmco. This triggered the 33% threshold level prescribed in r 34.1 of the Malaysian Code on Take-Overs and Mergers 1987 ('the 1987 Take-Over Code') which required the 1st and 2nd defendants to undertake a mandatory offer.

[3] Subsequently on 23 June 1998, the third defendant, Lee Yeow Chor, ('the third defendant') a director of IOI and the son of the second defendant, acquired 20,000 Palmco shares and on 12 August 1998 a further 50,000 Palmco shares from the open market. The aggregate number of shares acquired therefore amounted to 70,000 or 0.046% of the issued share capital of Palmco. The plaintiffs contend that as there was an unfulfilled duty on the part of IOI and LSC to undertake a mandatory offer which remained unfulfilled as of August 1998, the third defendant likewise became obliged to undertake a mandatory offer on terms not less favourable than that incumbent upon the first and second defendants. The plaintiffs' claim is premised on the rebuttable presumption that the second and third defendants who were the managing director and director respectively of the first defendant, were acting in concert with the first defendant.

Investigations By The Securities Commission

[4] Further to requests for investigation by the first plaintiff, the Securities Commission sought explanations from the first and second defendants in relation to the first set of acquisitions in March 1997. On 5 February 1999, the Securities Commission made a ruling requiring the first and second defendants to undertake a mandatory offer. These two defendants appealed against the decision of the Securities Commission in April 1999. The Securities Commission responded by issuing a statement on 28 May 1999 stating that:

(a) The first and second defendants had breached s 6(4) of the Malaysian Code on Take-Overs and Mergers 1998 ('the 1998 Take-Over Code');

(b) Having considered the appeals the appropriate remedy to be handed out was a public reprimand.

[5] No mandatory offer was undertaken by the first and second defendants. On 1 June