JUDGMENT

Raja Rozela Raja Toran JC:

(Winding-Up Petition)

Introduction

[1] This is my decision on two petitions seeking to wind up Alphacapital (M) Berhad ("the Company" or "the Respondent") under ss 346(2)(e), 465(1)(f) and 465(1)(h) of the Companies Act 2016 ("CA 2016"). Both petitions were heard together as they involve the same facts and issues. My decision in Petition 556 therefore applies equally to Petition 557.

[2] The Petitioners are investors who subscribed to Redeemable Preference Shares Islamic ("RPS-i") issued by the Respondent pursuant to Subscription Agreements and an Information Memorandum dated 10 October 2021. They allege that the Respondent has failed to pay monthly returns and to redeem the RPS-i upon maturity, and that its conduct warrants winding up on the grounds of insolvency and that it is just and equitable to do so.

[3] The Respondent opposes the petition. It contends that no debt presently exists; that the alleged obligations are conditional upon distributable profits and unfulfilled contractual preconditions; that three Petitioners were ineligible to participate as "Sophisticated Investors" within the meaning of the Capital Markets and Services Act 2007 ("CMSA"); and that this petition constitutes an abuse of process to exert pressure for repayment.

Background Facts

[4] The Petitioners each subscribed for varying amounts of RPS-i under the Company's structured investment arrangement. The terms entitled the holders to an expected preferential profit "based on profits declared by the Company" and permitted redemption upon the expiry of a fixed tenure, extendable by up to twelve months at the Company's discretion.

[5] The Petitioners claim that the Respondent promised monthly returns but ceased making payments in 2023 and failed to redeem the shares at maturity. They issued several demands which went unanswered.

[6] The Respondent admits that payments were suspended but explains that the Company incurred significant operational losses of some RM12.5 million by December 2023. In those circumstances, it had no distributable profits from which dividends could lawfully be declared. It further contends that certain Petitioners had not met the minimum RM250,000.00 investment threshold required of "Sophisticated Investors" but nevertheless signed declarations affirming eligibility.

[7] Against that background the Petitioners filed this petition, relying on ss 346(2)(e), 465(1)(f) and 465(1)(h) of the CA 2016.

The Petitioners' Case

[8] The Petitioners submit that the Respondent's failure to pay the promised monthly returns and to redeem the RPS-i evidences its inability to pay debts within the meaning of s 465(1)(f). They also allege mismanagement, lack of transparency, and loss of confidence in the directors, rendering it just and equitable under s 465(1)(h) to wind up the Company.

[9] They maintain that their entitlement to the contractual returns and redemption sums is clear and unconditional, and that the Respondent's invocation of financial losses or investor eligibility is a mere afterthought.

The Respondent's Case

[10] The Respondent contends that the petition is legally unsustainable because:

(a) The RPS-i returns are contingent upon distributable profits and cannot be treated as debts;

(b) The Petitioners have not shown that the contractual maturity dates for redemption have lapsed;

(c) Several Petitioners were ineligible under the CMSA to invest as "Sophisticated Investors", having misrepresented their status; and

(d) The petition is a disguised attempt to recover an investment and constitutes an abuse of the winding-up jurisdiction.

[11] The Respondent relies on the principle, reaffirmed in Vizione Construction Sdn Bhd v. Pembinaan Gerak Yakin Sdn Bhd [2024] MLJU 1513 and Anjakan Rezeki Sdn Bhd v. Ui Lead Sdn Bhd, that a winding-up petition is not a legitimate substitute for a civil action where the debt is bona fide disputed.

[12] It further cites Teoh Teik Lin lwn. Rockwills Trustee Berhad, applying L'Estrange v. F Gr