Back
2024 MarsdenLR 2944
COURT OF APPEAL PUTRAJAYA
KEE HIN VENTURES SDN BHD – Appellant
Versus
GREAT PARTNERS INDUSTRIES LTD & ORS – Respondent
[Civil Appeal No: W-02(NCC)(W)-646-04-2022]
Minority shareholders are entitled to dividends as per the company's articles, and acknowledgment of debt resets the limitation period for claims.
Headnote:(A) Companies Act 1965 – Section 181 – Limitation Act 1953 – Sections 6 and 26(2) – Appeal concerning entitlement to dividends by minority shareholders against a private limited investment holding company – The High Court allowed the plaintiffs' claim for dividends declared from 2013 to 2016 but dismissed the claim for undeclared dividends from 2008 to 2012 and 2017 – The court found that the plaintiffs were entitled to RM3,605,856.57 in dividends, confirmed by the defendant's financial statements and an acknowledgment letter – The claim for the 2013 dividend was ruled not time-barred due to an acknowledgment of debt – Interest on dividends awarded at 8% per annum from the date of the Award until judgment. (Paras 22-35, 54)
(B) Appeal – Standard of review – The appellate court reviews legal questions de novo, without deference to the trial judge's findings. (Paras 16-20)
Facts of the case: The plaintiffs, minority shareholders, claimed dividends from the defendant, a private limited company, for the years 2013 to 2016 and for undeclared dividends from 2008 to 2012 and 2017. The High Court ruled in favor of the plaintiffs for the declared dividends but dismissed the claim for undeclared dividends.
Findings of Court: The plaintiffs are entitled to RM3,605,856.57 in dividends for 2013 to 2016, with interest awarded at 8% per annum from the date of the Award until judgment.
Issues: Whether the plaintiffs are entitled to interest on dividends and whether the claim for the 2013 dividend is time-barred.
Ratio Decidendi: The court held that the acknowledgment of debt in the March 2017 Letter resets the limitation period, allowing the claim for the 2013 dividend. The court also ruled that the plaintiffs' claim is based on the Award, which allows for interest despite the defendant's articles of association.
Result: The appeal is allowed in part, with specific amounts awarded to each plaintiff and costs ordered against the defendant.
JUDGMENT
Introduction
[1] This is an appeal in respect of a claim for dividends in a company by shareholders.
[2] The Appellant which is the Defendant in the Kuala Lumpur High Court Suit No WA-22NCC-630-11/2019 ("Suit") is a private limited investment holding company.
[3] The Respondents who are the Plaintiffs in the Suit are the minority shareholders of the Appellant.
[4] The majority shareholders and directors of the Appellant are Cheng Ping Keat ("CPK") and Cheng King Fa ("CKF").
[5] The sole asset of the Appellant is the shares in a public listed company known as Khind Holdings Sdn Bhd ("KHSB").
Background
[6] There were disputes between the Respondents and the majority shareholders of the Appellant in 2008 in relation to the payment of dividends by the Appellant.
[7] As the result, the Respondents commenced an oppression petition against the majority shareholders and others under s 181 of the Companies Act 1965 .
[8] However, the petition was stayed and the disputes were referred instead to arbitration pursuant to an arbitration clause in the shareholders' agreement.
[9] The arbitral tribunal via its award dated 11 October 2016 ("Award") dismissed the majority shareholder's claim but allowed the Respondents' counterclaim for outstanding dividends owed.
[10] Subsequently, the Respondents on 25 April 2018 via Kuala Lumpur High Court Originating Summons No WA-24NCC(Arb)-50-11/2017 ordered the Award to be enforced as a judgment of the Court.
[11] The majority shareholders thereafter applied to the High Court to set aside the aforesaid enforcement order but their application was dismissed on 16 July 2018.
[12] Consequently, the Respondents on 8 November 2019 commenced the Suit against the Appellant for recovery of dividends declared by the Appellant for the years 2013 to 2016 amounting to RM3,605,856.57 ("First Head of Claim") as well as dividends undeclared by the Appellant for the years 2008 to 2012 and 2017 amounting to RM5,490,238.53 notwithstanding those dividends were declared and received by the Appellant from KHSB ("Second Head of Claim").
In The High Court
[13] After trial, the learned Judicial Commissioner allowed the Respondents' First Head of Claim but dismissed the Respondents' Second Head of Claim.
[14] The learned High Court Judicial Commissioner on 11 June 2022 held as follows on the Respondents' First Head of Claim in the grounds of judgment as reported in [2022] MLRHU 2210 ("grounds of judgment"):
"Finding on Issue 1: The Plaintiffs Are Entitled to the 2013 to 2016 Dividends
[22] It is not in dispute that the Award provides that the plaintiffs are to be paid their dividends, and that the Award has been enforced at the High Court, by way of the Enforcement Order.
[23] It is also not in dispute that the total dividends declared by the defendant for 2013 to 2016 are RM7,358,891.00. This is set out in the financial statements of the defendant for 2013 to 2016.
[24] The plaintiffs collectively hold 49% of the shares of the defendant, and 49% of the declared dividends totalling RM7,358,891.00 would amount to RM3,605,856.57.
[25] This amount of RM3,605,856.57 being the plaintiffs' entitlement to dividends between 2013 to 2016 has been verified and confirmed by the following:
a. The statement of CPK, a shareholder and director of the defendant, during cross-examination. CPK admitted to the amount of dividends of RM3,605,856.57 owing to the plaintiffs as reflected in the accounts of the defendant. His only qualifications were that the defendant has a lien on the amount and that the claim for the dividends due is time- barred.
b. A letter dated 31 March 2017 ("March 2017 Letter"), issued by the defendant's solicitors to the plaintiffs' solicitors. The letter confirmed the total declared dividends of the defendant between 2013 to 2016, and stated that: "The amount due to your clients based on 49% shares in the Company totals RM3,605,856.57."
c. The defendant's financial statements for 2017, 2018 and 2019, which acknowledged t
