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2025 MarsdenLR 4375
HIGH COURT MALAYA KUALA LUMPUR
GENISYS INTEGRATED ENGINEERS PTE LTD – Appellant
Versus
ONN KIEN HOE & ANOR – Respondent
[Companies (Winding-Up) No: WA-28PW-406-09/2023]
Liquidators can be removed for gross negligence and unprofessional conduct, especially when supervisory failures lead to significant financial misconduct and show bias against stakeholders.
Headnote:(A) Companies Act 2016 - Section 482 - Removal of Liquidators - Justifiable cause established for removal due to a total lack of supervision leading to misappropriation of funds exceeding RM15 million, prolonged liquidation process, and failure to act impartially. (Paras 19, 23)
(B) Liquidators' Duties - Duty to supervise employees and manage liquidations expediently; failure constitutes gross negligence and a dereliction of duty, justifying removal. (Para 23)
Facts of the case:
The Applicant sought to remove the Respondents as Liquidators of the Company, alleging negligence, misappropriation of funds, and lack of progress in liquidation despite the Company being solvent. (Paras 4, 5, 7)
Findings of Court:
The Court found the Respondents' oversight was grossly negligent, and they exhibited bias against the Applicant. Their inability to finalize the liquidation, coupled with the admitted misappropriation, warranted their removal. (Paras 23, 24)
Issues: Whether the Respondents' failure to supervise constituted sufficient cause for their removal as Liquidators, and if their alleged conduct reflected unprofessionalism and bias. (Paras 11, 23)
Ratio Decidendi: The Court held that significant oversight failures and unprofessional conduct, paralleling findings from prior cases, justified the removal of Liquidators under the applicable Companies Act, emphasizing that the interest of shareholders was paramount. (Paras 19, 24)
Result: The application for removal was allowed, with costs awarded. (Para 24)
| Table of Content |
|---|
| 1. application for removal of liquidators initiated. (Para 1 , 2) |
| 2. background on company and liquidators' appointment. (Para 3 , 4 , 5 , 6) |
| 3. grounds for removal based on mismanagement and misconduct. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 4. respondents' defense to allegations of negligence. (Para 16 , 17 , 18) |
| 5. legal basis for removal of liquidators. (Para 19 , 20 , 21 , 22) |
| 6. court's findings justify removal of liquidators. (Para 23) |
Introduction
[1] Genisys Integrated Engineers Pte Ltd ("the Applicant") filed Enclosure 1 for leave to commence an application for the removal of Onn Kien Hoe and Mok Yuen Lok ("the Respondents") as the Liquidators of UEM Genisys Sdn Bhd ("the Company") and that Tan Peng Sam @ Cheng Peng Sam be appointed as the new Liquidator of the Company, and for other consequential orders including for assessment of remuneration of the current Liquidators.
[2] During the hearing on 29 January 2024, the Applicant was given leave to commence an action to remove the Liquidators of the Company. This Court then directed that:
(a) encl 1 be converted to a proper application for the removal of the Respondents as Liquidators of the Company;
(b) This Court will decide on the main issue, which is the removal of the Respondents as Liquidators in these proceedings while the parties are to file a separate application for ratification/assessment of remuneration;
(c) Pursuant to the application by the Applicant for interim orders in Enclosure 20, Tan Peng Sam @ Cheng Peng Sam was appointed as an Additional Liquidator of the Company pending the disposal of encl 1; and
(d) The Respondents be allowed to file a comprehensive affidavit to address all the issues raised by the Applicant earlier.
Background Facts
[3] The Company is a joint venture company formed between the Applicant with 49% shareholding and UEM Group Berhad (formerly known as United Engineers (Malaysia) Bhd ("UEM") with 51% shareholding.
[4] Pursuant to a Court order dated 20 October 2005, the Company was wound up and by a subsequent Court order dated 17 January 2006, the First and the Second Respondents, were appointed as Joint Liquidators of The Company (collectively "the Liquidators" or "the Respondents").
[5] The winding-up of the Company was pursuant to a shareholders' dispute under s 181 of the then Companies Act 1965 (" CA 1965") and is not the usual Court-ordered winding-up due to insolvency. The Company was solvent at the time of the winding-up order, but its operations were disrupted by a shareholders' dispute. The Liquidators were nominated by UEM, the other shareholder of the Company.
[6] Following its liquidation, all the Company's creditors had been fully paid as of 31 December 2016. This is as set out in the Liquidators' Status Report dated 18 April 2018. The only parties remaining, thereafter, that had legitimate interest in the winding-up of the Company were the contributories ie the two shareholders of the Company.
Grounds For Removal
[7] (i) The Applicant alleges that the Respondents have failed to faithfully and vigorously exercise their statutory duties as Liquidators of the Company and/or failed to apply reasonable professional skill and exercise due diligence in conducting the affairs of the Company. It would be against the interest of the shareholders of the Company to allow the Respondents to remain as Liquidators of the Company any longer.
(ii) The Applicant Avers That Since Their Appointment, Over 17 Years Since The Winding-Up Of The Company, The Respondents Had Not Been Able To Complete The Liquidation Process. Although All Creditors Had Been Fully Paid In The Year 2016, The Respondents Were, Thereafter, Still Not Able To Complete The Liquidation Process For Over Seven (7) Years.
[8] The above were the initial grounds to justify the removal of the Liquidators. However, another ground, which is more significant, came to light in the course of these proceedings.
[9] On 29 November 2023, the First Respo
