Agreements requiring Ministerial consent under the Insurance Act 1996 are void if consent is not obtained, emphasizing the importance of regulatory oversight in the insurance sector.

JUDGMENT

Introduction

Nallini Pathmanathan FCJ

[1] These are our full grounds of judgment delivered after the issuance of our ex-tempore grounds handed down immediately after the hearing of this appeal on 30 July 2024.

[2] The pivotal issue in this appeal turns on:

(i) whether two call and put option agreements in relation to the acquisition and disposal of a 49% shareholding in the controller of an 'insurer' as defined under the Insurance Act 1996 , are valid conditional or contingent contracts, and can consequently be specifically performed notwithstanding the non-procurement of the consent of the Minister of Finance; or

(ii) whether these agreements are invalid and cannot be specifically enforced for that same reason, namely the non-procurement of the consent of the Minister of Finance under s 67 of the Insurance Act 1996 .

[3] Section 67 requires the approval of the Minister to be obtained prior to entry into, and the carrying out of, the said agreements. It provides in essence that all agreements resulting in the acquisition or disposal of an aggregate of 5% in the shareholding of the controller of a licensed insurer required the consent of the Minister of Finance. The agreements in issue contained a condition precedent that the obligations of the parties would only come into force upon the obtaining of the consent of the Minister of Finance.

[4] It is not in dispute that such consent was never obtained. The Insurance Act 1996 has since been repealed by the Financial Services Act 2013. (The relevant applicable legislation at the time of the dispute was an issue between the parties).

[5] Nearly 16 years after the entry into the first agreement and some nine years after the entry into the supplementary agreement the Minister's consent was not obtained. Despite not obtaining the Minister's consent for the agreements, we found that parties proceeded to act on the agreements.

[6] In the courts below both parties' cases, as put forward to those Courts, centred not on whether the Minister of Finance's consent was obtained but on whether Bank Negara's approval had been obtained. The requirement for the Minister of Finance to give his consent was not a central issue. Both the High Court and Court of Appeal upheld the agreements as being valid and specifically enforceable.

[7] It was on appeal to this Court that the issue of the lack of consent of the Minister of Finance was raised and became the central issue. Leave was granted for the full merits of the consequences on the agreements, of such lack of consent from the Minister, to be ventilated in full.

[8] It is a matter of importance because it touches on whether such failure to obtain the requisite consent resulted in a contravention of the statute, and the consequences of such a contravention. The relevant legislation to be applied was also in issue as the Appellant, Detik Ria maintained that the Insurance Act 1996 prevailed while the Respondents, Prudential Corporation Holdings Limited and The Prudential Assurance Company Limited maintained that the Financial Services Act 2013 was the relevant legislation to be applied. The latter required Bank Negara's approval rather than that of the Minister of Finance.

[9] Ultimately, we found in favour of the Appellant, reversing the decision of the courts below. We now give our full reasons for so doing. We commence with the material facts.

The Parties

[10] Prudential Assurance Malaysia Berhad ('PAMB') is a licensed insurer meaning it is a company licensed to conduct the business of underwriting insurance within the meaning of the Insurance Act 1996 and since its repeal, the Financial Services Act ('FSA') 2013.

[11] Sri Han Suria Sdn Bhd ('SHS') is a 100% shareholder of PAMB. For the purposes of s 67 of the Insurance Act, it is the 'controller' of the licensed insurer. SHS has two shareholders, as follows:

(a) The 2nd Respondent before us, The Prudential Assurance Company Limited ('Prudential Assurance') which held 51% of its shares;

(b) T