The court affirms the validity of double derivative actions under Malaysian law, emphasizing the need for judicial intervention in cases of alleged fraud by corporate management controlling multiple companies.

[1]This judgment discusses, among others, the following issues:

(a)whether a Common Law “double derivative action” filed in Malaysia against, among others, a company incorporated in England, should be struck out on the ground that Common Law derivative suits have been abolished in England by Chapter 1 of Part 11 (ss260–264) of the United Kingdom’s Companies Act 2006 [CA (UK)] and permission from the English High Court is required for a statutory derivative action. A determination of this issue entails a discussion on whether a Common Law “double derivative action” is valid in law or not. I will explain subsequently in this judgment the use of the phrase “double derivative action”;

(b)in deciding whether this “double derivative action” (This Suit) filed by the plaintiffs in this case (Plaintiffs) should be struck out or otherwise, how should the court deal with 2 opinions by English Queen’s Counsel (QC) which have been exhibited in the affidavits filed by opposing parties in this case?;

(c)whether This Suit should be struck out on the ground that it is “impossible” for the relief of restitution to be granted in This Suit; and

(d)whether This Suit which has been filed against, among others, practising lawyers, Messrs Gunavathy Manikam (Messrs Gunavathy) and Messrs AR Yahya & Co (Messrs Yahya) [Messrs Gunavathy and Messrs Yahya will be collectively referred in this judgment as “Defendant Lawyers”], should be struck out as all communications between the Defendant Lawyers and their clients, are legally privileged and cannot be admitted as evidence under s126(1)Evidence Act 1950EA).

B. This Suit

[2]In This Suit, the parties are as follows:

(a)the Plaintiffs are MrRanjeet (MrRanjeet) and Tan Sri Syed Mohd. Yusof bin Tun Syed Nasir (Tan Sri Syed Mohd. Yusof);

(b)Zavarco PLC is a company incorporated in the United Kingdom on or about 29.6.2011. Zavarco PLC’s former name was Vasseti (UK) PLC;

(c)the second defendant is Zavarco Bhd. which was formerly known as Vasseti Bhd.;

(d)the third defendant is Open Fibre Sdn. Bhd. (Open Fibre);

(e)the fourth and fifth defendant are Messrs Gunavathy and Messrs Yahya respectively;

(f)the sixth defendant is Encik Zulizman bin Zainal Abidin (Encik Zulizman);

(g)the seventh defendant is Puan Ku Hasniza binti Hani Ku Hashim (Puan Ku Hasniza);

(h)the eighth defendant is Puan Roslina binti Ibrahim (Puan Roslina);

(i)the ninth defendant is MrShailen a/l Popatlal (MrShailen);

(j)the tenth defendant is Tunku Mazlina Binti Tunku Abdul Aziz (Tunku Mazlina);

(k)the eleventh defendant is Encik Zarudin bin Ramlee (Encik Zarudin);

(l)the twelfth defendant is MrTeoh Hock Peng (MrTeoh);

(m)the thirteenth defendant is Paneagle Holdings Bhd. (Paneagle Holdings);

(n)the fourteenth defendant is Vertu Capital Ltd. (Vertu), a company incorporated in the Cayman Islands;

(o)the fifteenth defendant is Aries Telecoms Ltd. (Aries), a company incorporated in Jersey; and

(p)the sixteenth defendant is MrVinai Varayananda (MrVinai), a Thai national.

[3]In This Suit, the Statement of Claim (SOC) alleges as follows:

(1)the Plaintiffs are shareholders of Zavarco PLC but they are not shareholders of Zavarco Bhd.;

(2)the Plaintiffs allege that the “wrongdoers” are in control of Zavarco PLC and Zavarco Bhd. and these “wrongdoers” have perpetrated fraud on the minority.

V Telecoms Bhd. (V Telecoms)

(3)V Telecoms is now known as Aries Telecoms (M) Bhd.;

(4)V Telecoms is the operating entity within Zavarco PLC’s group of companies. V Telecoms’ principal business is in the provision of fibre optic network. V Telecoms has licenses as network facilities provider as well as network services provider (Telecommunication Business). The Telecommunication Business was at the material time, the core business of Zavarco PLC and Zavarco Bhd.;

Share swaps

(5)sometime in 2009 or 2010, MrRanjeet and MrShaileen discussed ways to collaborate to enhance the business of V Telecoms. It was agreed between MrRanjeet and MrShaileen that —

(a)V Telecoms would be injected into Zavarco Bhd. and b