The court upheld the authority to determine the buy-out valuation of shares based on net tangible assets, emphasizing the role of expert opinions while affirming its judicial discretion in valuation amidst uncertainties.

Azizul Azmi Adnan J:

GROUNDS OF JUDGMENT

(Enclosure84)

INTRODUCTION

[1]The petitioner in this case, Zen Courts Sdn Bhd (Zen Courts)obtained an order for its shares in Bukit Jalil Development Sdn Bhd, the first respondent (referred to in this judgment as “JV Co”), to be bought out by the second respondent, Ho Hup Construction Company Berhad at a price to be determined by the court.

[2]The value of the shares in JV Co that were held by Zen Courts as at 27 March 2012, based on the NTA of JV Co, was determined to be RM90.09 million.

[3]This judgment explains the bases upon which this valuation was arrived at.

Background

[4]Zen Courts holds 30% of the issued and paid up capital of JV Co. The majority shares are held by Ho Hup Construction Company Berhad, the second respondent. The third respondent, Ho Hup Equipment Rental Sdn Bhd, which owns a small portion of the shares in JV Co, is a wholly-owned subsidiary of the second respondent. Unless the context otherwise requires, references in this judgment to “Ho Hup” are to be taken to mean the second and third respondents collectively.

[5]Zen Courts commenced this action in 2011, claiming minority oppression. On 27 March 2012, Abdul Aziz J. (as he then was) ordered that there be a buy-out by Ho Hup of Zen Courts’ shares in JV Co. The relevant portion of Abdul Aziz J.’s buy-out order is reproduced below:

…IT IS HEREBY ORDERED AS FOLLOWS:

(i) That the second respondent shall buy-out all the 4,500,000 shares of the petitioner in the first respondent, at the price of those shares to be determined by an independent valuer on a ‘net tangible asset’ basis, such valuation to be as at the date of this order.

…

(v) That the court will determine the final value of the shares and the terms of the buy-out order.

[Emphasis added]

[6]Thus, in accordance with the buy-out order, the court is to make a determination of fact, viz., the price of the buy-out shares based on the net tangible assets of JV Co.

[7]The parties agreed to appoint Ferrier Hodgson MH Sdn Bhd (“Ferrier Hodgson”) to undertake the valuation. Ferrier Hodgson valued Zen Courts’ 30% stake in JV Co at RM35.97 million. Zen Courts was dissatisfied with the valuation, and applied in Enclosure 80 for an order that (among others):

i. Representations be made on the Valuation Report dated 31.12.2012 prepared by Messrs. Ferrier Hodgson MH Sdn. Bhd., in such manner that this honourable court shall deem fit, in particular and including any directions on the filing of affidavits, the attendance of experts at court to give testimony, and the cross examination of the said experts;

[8]Shortly after, Ho Hup made the application in Enclosure 84 to move the court to make a determination of the buy-out price pursuant to the terms of the buy-out order granted by Abdul Aziz J.

[9]In July 2013, Mary Lim J. (as her ladyship then was), dismissed the application in Enclosure 80 and proceeded to hear and determine the application in Enclosure 84. The appeals against these decisions culminated in the decision by the Federal Court (¹The grounds for which are re