Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 MarsdenLR 1980

HIGH COURT MALAYA KUALA LUMPUR
LEE BEE SUN – Appellant
Versus
SIEW SEOW KIM & ORS – Respondent
[Originating Summons No: WA-24NCC-249-05-2024]

Petitioner Advocates:Raspreet Kaur Sidhu,Nurul Farhana ,Respondent Advocate: Darren Lai,J S Laiand Nurul Athirah

A minority shareholder must establish conduct that is specifically oppressive to their distinct interests for a claim under Section 346 of the Companies Act 2016 to succeed.

Headnote:(A) Companies Act 2016 - Section 346 - Minority oppression claim - Plaintiff alleges oppressive conduct by defendants regarding share purchase and management - Claim dismissed as no evidence of quasi-partnership established; plaintiff's rights as director, not member, inadequately pleaded. (Paras 1, 31, 32, 40, 65)

(B) Oppressive conduct defined - Conduct not merely adverse to minority opinion; requires visible departure from standards of fair dealing. (Para 24)

(C) Remedy for oppression - Must prove conduct is oppressive and prejudicial to distinct minority shareholder interests, as opposed to the company or all shareholders alike. (Paras 25, 97)

Facts of the case:
Plaintiff claims she was oppressed as a shareholder by the actions of the defendants regarding a proposed share sale and management access. Defendants argued conduct was within management discretion supported by prior agreements.

Findings of Court:
No valid claim of oppression established; defendant's actions deemed justified.

Issues: Did the defendants' conduct constitute oppression under Section 346? Was there a legitimate expectation of management participation by the plaintiff?

Ratio Decidendi: Court held that the plaintiff failed to demonstrate that the conduct was oppressive or that her rights to participate stemmed from her position as a shareholder rather than a director.

Result: Claim dismissed with costs of RM15,000.00.

Judgement Key Points

Key Points: - (!) Reproduces Section 346 of the Companies Act 2016 for the court’s approach to oppression claims. - (!) Cites the leading case requiring a "visible departure from the standards of fair dealing" and "disregard" to establish oppression. - (!) Confirms oppression requires unfair conduct affecting distinct minority interests, not general company effects. - (!) Court notes no evidence the plaintiff’s rights derived from being a member; no quasi-partnership established. - (!) Affirms the standard of "unfairness" in commercial context and the role of articles/fiduciary duties. - (!) Sets out factors for quasi-partnership: personal relationship, participation agreement, and transfer restrictions. - (!) Outlines the test distinguishing oppression (s 346) from company-wide injuries that fall under s 347. - (!) Emphasizes the need for distinct, individual harm to the minority to sustain oppression. - (!) Summarizes that oppression vests in the shareholder when the act is oppressive and harms them personally. - (!) Describes the necessity to show conduct unfairly prejudicial to the minority and distinct harm. - (!) - (!) Court’s decision: Plaintiff failed to prove minority rights as a member or quasi-partnership; remedy not applicable; claim dismissed with costs.

Question 1?

What is the test for establishing oppression under Section 346 of the Companies Act 2016 in a non-quasi-partnership company?

Question 2?

What constitutes a "quasi-partnership" or equitable basis for legitimate expectations to participate in management under s 346?

Question 3?

What remedies or distinctions between oppression (s 346) and derivative/ordinary company actions (s 347) are applied in this case?

Table of Content
1. plaintiff's oppression claim basis. (Para 1 , 4)
2. dispute over share valuation and alleged oppression. (Para 5 , 6 , 7)
3. alleged unauthorized payments to third parties. (Para 8 , 9 , 10)
4. lack of checks and balances in company. (Para 11 , 12 , 13)
5. plaintiff barred from company access. (Para 14 , 15)
6. defendants' denial of wrongdoing claims. (Para 16 , 18 , 20)
7. role of directors and shareholders' rights. (Para 22 , 36)
8. failed to prove oppression claims under company law. (Para 30 , 42 , 43)
9. court's dismissal of plaintiff's claim. (Para 63 , 64)

Mohd Arief Emran Arifin J:

(Originating Summons — Minority Oppression Claim)

A.Introduction

Summary Of The Plaintiff's Claim

[1] The Plaintiff claims that the actions of the 1st and 2nd defendants have been oppressive or have unlawfully disregarded her interests as a shareholder of the Company. She argues that there has been a visible departure from the standards of fair dealing, and that the actions of the 1st and 2nd defendants sufficiently violate these standards, constituting a breach of fair play. Therefore, she now seeks the remedies available under s 346 of the Companies Act 2016 .

B. Brief Facts

[2] The 3rd defendant, Super Resources & Trading Sdn Bhd, was incorporated by Goh Wei Lim, Yip Kien Meng, Wong Chee Wai, and Sok Kok Leong on 8 October 2003. At the material time, the Directors of the Company were Goh Wei Lim, Wong Chee Wai, and Soh Kok Leong. Goh Wei Lim is the Plaintiff's husband.

[3] Thereafter, the shares were transferred to third parties. The current shareholders in the Company are (i) the Plaintiff, who holds 200,000 of the shares in the 3rd defendant, and (ii) the 1st defendant, who holds 300,000 of the shares in the Company. The Directors of the Company are Goh Wei Lim, her husband, the Plaintiff, and the Defendants.

[4] The complaints filed by the Plaintiff are summarised in the following paragraphs.

(i) Alleged Oppression In The Decision Not To Purchase The Plaintiff's Shares At The Price Suggested By The Plaintiff — Oppressive Act 1

[5] The Plaintiff claims that the parties had agreed, in principle, that the shares held by her in the Company and other shares held by her and Goh Wei Lim are to be sold to the 2nd defendant.

[6] The Plaintiff contends that she had suggested the sum of RM5,000,000.00 being a reasonable sum that should be paid by the 2nd defendant. The 2nd defendant disagreed and suggested that the shares in the companies are only worth RM3,000,000.00. This was discussed at the meetings held on 4 April 2024, 22 April 2024, 3 May 2024, and 6 May 2024. The valuation of the 3rd defendant was also put forth during the meeting on 3 May 2024.

[7] There were allegedly heated discussions between the Plaintiff and the Defendants at these meetings. At the meeting held on 6 May 2024, apparently, the Plaintiff was not allowed to speak, and the 1st and 2nd defendants had made a proposal to the Plaintiff to consider. The proposal relates to the offer to purchase her shares in toto. A solicitor was also tasked to draft the sale and purchase agreement.

(ii) Alleged Payments Made By The Company For The Debts Of Third Parties — Oppressive Act 2

[8] As I have indicated earlier, Goh Wei Lim, the Plaintiff's husband, is a Director of the Company. He is also the Director responsible for approving the payments to be made by the Company through its Internet banking account.

[9] The Plaintiff alleges that Goh Wei Lim was forced to agree and approve payments made to PUM Cullet Sdn Bhd and LKF Marketing Sdn Bhd without obtaining any approval from the Plaintiff. The Plaintiff suggests that the said payments were made on behalf of MYGRIT Abrasive Sdn Bhd. The 3rd defendant holds 40% of the shares in MYGRIT Abrasive Sdn Bhd.

[10] The Plaintiff had raised her objection to the said payment and was rebuffed by the 1st defendant. He stated that "I as majority shareholder of Super Resources & Trading Sdn Bhd, hereby give you instruction to approve the below mentioned t

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