Oppression actions under the Companies Act require a distinct personal injury separate from corporate wrongs, which are typically addressed through derivative actions.

Ong Chee Kwan JC:

Introduction

[1] In an oppression action by minority shareholders, the court will need to determine the true or real complaint by the aggrieved party and whether the alleged wrongs are in fact wrongs done on the company for which the more appropriate remedy would be by way of a derivative action by the minority shareholders. There could be instances where the wrongs have features of both corporate wrongs and personal wrongs against the minority shareholders. Under what circumstances would the bringing of an oppression action in such an instance would not be an abuse of the court process? Further, can the court look at conduct post the oppression action including the manner the legal proceedings are being conducted to determine the likelihood of the oppressive action continuing in the future? These are issues explored in this judgment.

Salient Facts

[2] The plaintiff together with the 1st to 4th defendants are the Directors of the 5th to the 7th defendants above named.

[3] The 5th defendant ('PCSB') has an issued and paid-up capital of RM1,000,000.00 divided into 1,000,000 ordinary shares of RM1.00 each and the plaintiff ('DSI') and 1st defendant ('DRAO') are the registered and beneficial owners of the issued and paid up capital in the following proportion:

(a) DSI: 300,000 ordinary shares - 30%

(b) DRAO: 700,000 ordinary shares - 70%

[4] The 6th defendant ('PVSB') is a wholly owned subsidiary of PCSB.

[5] The 7th defendant's ('Jati') 4,001,600 ordinary shares of RM1.00 each are held by PVSB (50.5%), Sentral Bistari Sdn Bhd (47.5%), DSI (1%) and DRAO (1%).

[6] A chart showing the corporate structure of the Group is set out below:

[7] The core business of the Group, namely owning and operating an independent power producing facility is held under "TTPC", an 80% owned subsidiary of Jati in which DSI and DRAO each own one share.

[8] On or about January 2019, UMNO filed a suit ('UMNO Suit') against DSI, DRAO, PCSB, Jati and one Dato' Seri Abdul Azim Bin Mohd Zabidi (a former treasurer of UMNO) in the High court of Malaya at Kuala Lumpur Suit No WA-22NCVC-4-01-2019.

[9] The UMNO suit is based on UMNO's alleged claim that UMNO is the beneficial owner of 100% shareholding of PCSB and the 2% shareholding of Jati held by DSI and DRAO.

[10] The main remedies in the UMNO suit are against DSI and DRAO to enforce an alleged trust to ultimately reclaim ownership of the shares. It should be emphasised that notwithstanding the UMNO Suit, DSI and DRAO are and remain the registered and beneficial owners of the shares registered in their respective names in PCSB and Jati.

[11] Notwithstanding that both DSI and DRAO consistently maintained that they have good defences to the UMNO suit, DSI claimed that on or around 13 January 2019, DRAO had approached DSI and expressed the fervent desire to settle.

DSI's Version Of Settlement Negotiation With UMNO

[12] According to DSI's version of the story, DRAO explained that even though he denied the claims by UMNO, DRAO was suffering from a relapse of intolerable mental stress as a result of the UMNO suit.

[13] DRAO was so concerned for his health and well-being that DRAO insisted and persuaded DSI to use his connections and good relationships within UMNO to negotiate a settlement on their behalf.

[14] DRAO was so keen to settle that DRAO expressed that he would be willing to fund the entire cost of such a settlement.

[15] In the same vein, DRAO also expressed that he did not want to continue as a shareholder of PCSB as his health would not permit him to bear the stress. Therefore, DRAO also expressed his desire to sell his 70% stake in PCSB to DSI.

[16] On DRAO's behalf and after complicated negotiations with UMNO, DSI claimed that DSI and UMNO had reached a stage where a draft Settlement Agreement was prepared.

[17] In conjunction with the proposals for an agreement with UMNO, a draft Settlement Agreement (for the Sale and Purchase between DRAO and DSI) was also prepared between DSI and DRAO which refle