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2012 MarsdenLR 1513
HASNAH MOHAMMED HASHIM
FOLIN & BROTHERS SDN BHD & ORS – Appellant
Versus
FOLIN FOOD PROCESSING SDN BHD & ORS – Respondent
The court emphasized the binding nature of consent orders in corporate liquidation processes, mandating timely revaluation of shares and equitable cost-sharing among stakeholders.
Headnote:(A) Companies Act 1965 - Section 181 - Consent Order dated 4.6.2009 - Revaluation of shares - The Court ruled that the liquidators of the company must ensure compliance with a consent order for the revaluation of shares and deemed the valuation to be a just obligation under corporate governance principles. There was an independent valuation ordered by the Court of Appeal which needed to be completed within a specified timeframe (Paras 11-12).
(B) Liquidation Process - Equal sharing of costs - The Court provided that the fees for the accountant should be equally shared between the parties involved, citing the need for reasonable management of funds in liquidation (Paras 25-26).
(C) Non-compliance consequences - The Court emphasized the necessity for parties to adhere to the outcomes of consent orders to avoid prolonged litigation (Paras 29-30).
Facts of the case:
The Plaintiffs, as liquidators, sought to realize the assets of the company. The sole asset was the 99.9% shareholding of the 1st Defendant. The 2nd Defendant was appointed to value the shares as part of a consent order agreed upon by the parties (Paras 1-4).
Findings of Court:
The Court found that the existing agreement concerning the valuation must be upheld and clarified the fee-sharing arrangement among the parties to support the timely revaluation (Paras 18-19).
Issues: The key issues included the interpretation and enforcement of the consent order regarding share valuation and the appropriateness of fees charged (Paras 16-17).
Ratio Decidendi: The core reasoning centered on the binding nature of consent orders and the equitable division of costs to prevent unnecessary delays in the liquidation process (Paras 24, 27).
Result: The application was granted in part, with specific directions on the revaluation process and cost allocation.
| Table of Content |
|---|
| 1. plaintiff's application outlines re-valuation orders. (Para 1 , 2) |
| 2. requirements for financial accounts and valuation details. (Para 3 , 4 , 5 , 6) |
| 3. procedural terms for acceptance and realization of shares. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13) |
Enclosure 59 is the application by the Plaintiff for the following orders:
(1) That the 2nd Defendant be directed to forthwith and without delay re-value the shares of the 1st Defendant, the exercise of which is to be completed within 6 weeks from the date of the Order herein and the 2nd Defendant shall provide a copy of its Report to the solicitors for the Plaintiffs and the solicitors for the 3rd, 4th and 5th Defendants; or alternatively, a nomination be accepted in place of the 2nd Defendant if the 2nd Defendant legitimately decline or refuse to carry out the re-valuation of the shares of the 1st Defendant;
(2) That if this Honourable Court so directs that new accountants be appointed in place of the 2nd Defendant, a direction be given that the newly appointed accountants be given 6 weeks to re-value the shares of the 1st Defendant (with the assistance of the 2nd Defendant who has prior knowledge and experience) and shall thereafter provide a copy of its Report to the solicitors for the Plaintiffs and the solicitors for the 3rd, 4th and 5th Defendants;
(3) That the re-valuation of the shares of the 1st Defendant shall be current, or alternatively, a direction be given as to how to deal with the estimated accumulated cash in excess of RM1,248,000.00 and the enhanced value of the 1st Defendants Property since the date of the first valuation of the shares of the 1st Defendant;
(4) That within 7 days from the date of the Order herein, the Board of Directors of the 1st Defendant shall provide the 2nd Defendant with:-
(a) a copy of the audited accounts of the 1st Defendant for the year ending 31.12.2007 and a copy of the unaudited accounts of the 1st Defendant for the year ending 31.12.2008 which had been approved by the Boards of Directors of the 1st Defendant; and
(b) the status of all pending litigation against the 1st Defendant, if any.
(5) That the 3rd Defendant be directed to provide to the 2nd Defendant and the Plaintiffs the annual financial accounts of the 1st Defendant for 2009, 2010 and 2011 (6 months until 30.6.2011) within 7 days from the date of the Order herein, failing which, the 3rd Defendant shall forthwith and without delay surrender the 1st Defendants complete accounting records from 1.1.2008 until 30.6.2011 to the 2nd Defendant for them to appoint an accountant to produce the said annual financial accounts. In the event the 2nd Defendant declines or refuses to appoint an accountant to produce the said annual financial accounts, that the Plaintiffs be allowed to appoint an accountant to produce the said annual financial accounts upon receipt of the 1st Defendants complete accounting records from 1.1.2008 until 30.6.2011, which will be subsequently presented to and approved by the Board of Directors of the 1st Defendant and thereafter be provided to the 2nd Defendant;
(6) That the documents and information provided to the 2nd Defendant pursuant to paragraphs 4 and 5 above shall be deemed to be true and accurate for the purpose of the exercise to re-value the shares of the 1st Defendant and the 2nd Defendant shall be entitled to rely on the valuation of the property valuer appointed by the 2nd Defendant and the documents and information provided to the 2nd Defendant pursuant to paragraph 4 and 5 above in arriving at the fair price of the shares of the 1st Defendant;
(7) That the parties be given one week to either accept or reject the purchase of the shares of the 1st Defendant upon the availability of the Report concerning the re-valuation of the shares of the 1st Defendant;
(8) That upon the non-purchase of the 1st Defendants shares at the re-valued price, the parties be at liberty to realise their investment in the 1st Defendant
