Kang Hwee Gee J:

The Background

The 1st respondent, Paloh Medical Centre Sdn Bhd is a private limited company incorporated on 29 March 1991 under the Companies Act 1965.

The main object of the company was to establish and run hospitals and provide medical services, and to carry on the business of providing medical supplies.

The petitioner, Beb Chun Chuan, IGB Corporation Bhd and Yayasan Perak (the 4th respondent) were its shareholders and together with the petitioner were its founder shareholders.

For the purpose of building the hospital and medical mall the State Government of Perak had agreed to alienate to the company a piece of land.

Later the founder shareholders approached the 2nd respondent, Hospital Pantai Berhad, a company with substantial experience in operating a private hospital, to join the company so that its expertise could be utilised in setting up the medical centre.

The issued and paid-up capital of the company at this point of time was RM4 million of RM1 each, which was held as follows: (i) IGB Corporation Bhd - 1,500,000 shares (ii) Yayasan Perak - 896,000 shares (iii) Beh Chun Chuan (petitioner) - 1,604,000 shares

Upon Hospital Pantai Bhd joining the company, it became necessary to define the rights and obligations of the parties in a shareholders' agreement and the same was entered into between the founder shareholders on one part and Hospital Pantai Bhd on the other, on 11 October 1991.

The issued and paid up capital of the company was increased to RM6 million and the share ownership structure after the shareholders' agreement was revised as follows: (i) IGB Corporation Bhd - 1,500,000 shares (ii) Yayasan Perak - 900,000 shares (iii) Beh Chun Chuan - 1,500,000 shares (iv) Hospital Pantai Bhd - 2,100,000 shares

Subsequently, IGB Corporation disposed off all its shares to the petitioner and the 2nd respondent. The disposal resulted in the further change in the issued share capital structure of the company. Eventually at the time of this petition, the petitioner came to hold only a minority shareholding of 30.36%; the 2nd respondent (Pantai Hospital Bhd) the majority of 49.58% and the 4th respondent (Yayasan Perak) 15%, with their corresponding voting rights.

The board of directors of the company was appointed in accordance with the terms of the shareholders' agreement which allowed the respective shareholder to appointed himself and nominate others who were not shareholders to sit on the board. The 3rd respondent Mohd Sultan bin Haji Sickander was a nominee director of the 2nd respondent.

The land the company applied for was alienated to the Company sometime at the end of 1992 end eventually, the hospital and medical mall was built on the land. It began operation sometime on 28 October 1995. By 1995 however, the relationship of the petitioner with the other board members particularly with the managing director, the 3rd respondent deteriorated over some disagreements on the management of the hospital.

On 29 December 1997, at an extraordinary general meeting requisitioned by the 2nd respondent, the petitioner and his nominee director one Beh Choon Lian (nominated under the shareholders' agreement), were removed from the board on the ground that they had contravened art. 72(h) of the articles of the company in failing to declare their interests in two other companies which had entered into tenancy agreements with the company.

Two salient provisions of the shareholder agreement may be noted:

Clause 22.1 provides that the agreement shall continue in force for a period of five years from the date it was signed unless it was extended by mutual consent.

Clause 14.1 provides that, upon the effective date, the parties shall procure that the memorandum and articles of the company be amended so that the provisions in the memorandum and articles of association shall comply with the terms of this agreement. The effective date was defined in the agreement as the date when the land on which the hosp