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2012 MarsdenLR 1248
HASNAH MOHAMMED HASHIM
FOLIN BROTHERS SDN BHD & ORS – Appellant
Versus
FOLIN FOOD PROCESSING SDN BHD & ORS – Respondent
The court upheld the necessity to appoint a Receiver and Manager to protect company assets and to resolve disputes among shareholders, highlighting the duty to safeguard minority interests during management conflicts.
Headnote:(A) Rules of the High Court, 1980 - Order 30; Specific Relief Act, 1950 - Section 43; Companies Act, 1965 - Sections 36(1) and (2) - Appointment of Receiver and Manager - Court granted the appointment preserving the company’s sole asset and addressing minority shareholders' concerns - Dismissed Plaintiff's claim and allowed Defendant's counterclaim for specific performance. (Paras 2, 4, 7)
(B) Minority Shareholders - Court's duty to protect the interests of minority shareholders and maintain company assets in dispute - Effective intervention necessary to manage the company amid allegations of misconduct and hostilities. (Paras 5, 8)
Facts of the case:
The plaintiffs, as Liquidators of the plaintiff company, sought to realize company assets given ongoing disputes among shareholders while the company remained dormant, and there were allegations of oppression by minority shareholders. The court addressed these issues by appointing a Receiver and Manager, to ensure sound management of the company pending revaluation.
Findings of Court:
The appointment of a Receiver and Manager was justified due to allegations of misconduct by a shareholder undermining the company’s income and due to open hostilities among parties. The court stipulated conditions to maintain the status quo until share revaluation was completed.
Issues: The main issues included the necessity of appointing a Receiver to safeguard assets amid shareholder conflict and claims of oppressive conduct against minority shareholders.
Ratio Decidendi: The court concluded the appointment of a Receiver was necessary to protect company assets and manage conflicts among shareholders, emphasizing the importance of maintaining an impartial party to preserve the company’s interests during ongoing disputes.
Result: The application for the appointment of a Receiver was granted, and the plaintiffs' claims were dismissed.
| Table of Content |
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| 1. order for appointment of receiver and manager (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
(1) an order pursuant to Order 30 of the Rules of the High Court , 1980 read together with Section 43 of the Specific Relief Act , 1950 that a suitably qualified person or persons as may be nominated by the 3rd, 4th and 5th Defendants or as decided fit by this Honourable Court, be appointed as Receiver(s) and Manager(s) of the 1st Defendant until such further order by this Honourable Court;
(2) consequent to prayer (1) above, an order that the Receiver(s) and Manager(s) so appointed shall have all the powers otherwise vested in or possessed by the directors of the 1st Defendant including, without prejudice to the generality of the powers hereby conferred:-
(i) all the powers otherwise vested in a liquidator pursuant to Section 36 (1) and (2) of the Companies Act , 1965;
(ii) the power to appoint and remunerate from the Companys assets, solicitors, and such other professionals or agents that may be necessary to enable the Receivers) and Manager(s) to effectively discharge his/their duties;
(iii) that the fees, costs and expenses of the Receiver(s) and Managers(s) form a charge upon and be paid out of the assets of the Company;
(iv) that the Receiver(s) and Manager(s) be at liberty to seek further directions and orders pertaining to their appointment including, but not limited to, the quantum of their remuneration;
(3) that pursuant to Order 30 rule 2(3) of the Rules of the High Court , 1980, the Receivers) and Manager(s) so appointed be granted dispensation from having to provide security;
(4) that the Receiver(s) and Manager(s) so appointed be directed to submit accounts at such intervals deemed fit and proper by this Honourable Court;
(5) further and/or in the alternative, an order pursuant to Order 29 of the Rules of the High Court , 1980 that the 2nd and 3rd Plaintiffs be restrained until further order of this Court from dealing with any assets of the 1st Defendant including money in the banking accounts of the 1st Defendant without the consent of the 3rd, 4th and 5th Defendants;
(6) such other and/or further orders and/or directions which this Honourable Court deems just and appropriate;
(7) the costs of this application be provided for.
The 2nd and 3rd Plaintiffs are the Liquidators of the 1st Plaintiff. The sole asset of the 1st Plaintiff is its 99.9% shareholding in its subsidiary, the 1st Defendant. The 2nd and 3rd plaintiff each hold 1 share each. The 3rd to 5th Defendant each hold 1 share each. The balance shares belong to the estate of Wong Foh Ling and Wong Boon Sun, who are both have been declared bankrupt. The sole asset of the 1st Defendant is a property that generate a monthly rental income of RM48,000.00. The said company has is a dormant company with no other business activities.
The Liquidators decided to realize the assets of the 1st Plaintiff by way of a voluntary winding up of the 1st Defendant. A petition ( D4-26-74-2008 ) was filed by the 3rd to 5th Defendant pursuant to section 181 of the Companies Act 1965 alleging oppression as minority shareholders of the 1st Defendant. On 4.6.2009 a Consent Order was entered whereby the Parties agreed that the 2nd Defendant were to be appointed as expert to provide fair evaluation of the 1st Defendants shares:
"(1) Ernst & Young to be appointed as expert to value the shares of the 1st Respondent with unfettered and unrestricted access to the books of the 1st Respondent which the exercise is to be completed within 90 days from 4th day of June, 2009;
(2) Upon ascertainment of a fair price of the shares of the 1st Respondent, a sale and purchase agreement ("Sale and Purchase Agreement") is to be entered into between the relevant parties within 30 days;
(3) The Sale and Purchase Agreement to provide that 10% of the purchase price is to be paid upon signing and the balance is to be paid within 3 months with the right to extension of 30 days subject
