Specific performance of share transfer cannot be ordered post winding-up without court sanction as it violates Section 223 of the Companies Act 1965.

Introduction

[1] This is an appeal directed against part of the decision of the learned High COURT Judge given on 5 August 2014 in not granting the order for specific performance of Clause 15 of the Agreement dated 2 March 1999 or in lieu thereof, damages in favour of the appellant. On 31 March 2015, we heard both learned counsel for the appellant and the respondent and accordingly dismissed the appeal unanimously.

Facts

[2] The Agreement entered into between the appellant and the respondent on 2 March 1999 was with respect to the sale and purchase of shares in Amore Marketing (M) Sdn Bhd (Amore) in which the appellant agreed to purchase from the respondent 1,540,000 shares in Amore for 40 sen only per share with the total purchase price of RM616,000.00. After the execution of the Agreement, the name of Amore Marketing (M) Sdn Bhd was changed to Amore New Image (M) Sdn Bhd However, since May 1999, the appellant alleged, they had encountered problems with the respondent relating to matters concerning the value of the stock which was purportedly overstated, the payment of commission which was supposed to be paid to the appellant for the purchase of 'Man Yoo' product from the Korean supplier and the exclusion of the appellant's representatives from the management of Amore. These problems resulted in due course, in irreconcilable differences between the appellant and respondent which could not be resolved.

[3] By Clause 15 of the Agreement, the appellant agreed that it could at its option sell its shares to the respondent in the event that the projected profit could not be reached or there was any irreconcilable dispute between the parties. For easy reference, Clause 15 of the Agreement is reproduced below:-

"Should projected profits not be achieved within two (2) years from the date herein or irreconcilable differences occur between the shareholders, New Image can at its option sell its shares in AMORE to LOH at cost of 40 sen per share or such higher figure as is arrived by dividing shareholders equity by the number of paid-up shares receiving as settlement all New Image stock held by AMORE and such fixed assets as are agreeable with a cash settlement for the balance and the right of access to all distributors and staff so as to operate again as a separate business. Unless a shorter period is agreed three months to be given.".

[4] Due to the differences that had arisen, there were subsequently negotiations entered into between the parties in the year of 2000 with respect to the selling price of the shares which were indicative of the exercise by the appellant, qua the shareholder of Amore, of their option to sell their shares in Amore to the respondent pursuant to Clause 15 of the Agreement. The learned Judge, in this respect, found that the appellant had in fact exercised the said option under Clause 15 of the Agreement. Based on the Statement Of Agreed Facts however, para 4 thereof revealed that the negotiations failed and the appellant proceeded to file a winding up petition dated 22 January 2001 against Amore vide D2-28-73-2001 (the Petition). The Petition was nevertheless dismissed on 15 January 2002.

[5] As events transpired, the appellant, circa one year after the dismissal of the Winding Up Petition, filed the instant action in the Kuala Lumpur High COURT against the respondent on 2 January 2003 seeking inter alia an order that the respondent buy the appellant's shares in Amore pursuant to Clause 15 of the Agreement dated 2 March 1999. A more was in the meantime, wound up prior to the commencement of the trial of the instant suit in the COURT below vide an order dated