Kang Hwee Gee J:

Originating Summons D5-24-22-1999 consolidated with D4-24-163-1999

The summons require the determination of issues across a broad spectrum of legal principles. The chronological narrative however, is not in dispute and may be summarised as follows:

In The Beginning

The plaintiffs were individual minority shareholders of United Malayan Banking Corporation Berhad (UMBC) a public unlisted company. Between them the plaintiffs held 5.01% of the issued and paid up voting shares of UMBC.

The controlling shareholders of UMBC at the material time, were Dato' Keramat Holdings Bhd and its wholly owned subsidiary UMBC Holdings Sdn Bhd (the UMBC group). Collectively they held 201,168,890 ordinary shares of UMBC representing 60.35% of the issued and paid up voting shares of UMBC.

The other substantial shareholders were Petroleum Nasional Bhd (Petronas) and Perbadanan Nasional Bhd (Pernas). Between them they held some 30% of the issued and paid up voting shares of UMBC.

The 1st defendant, Sime Darby Bhd and its wholly owned subsidiary, the 2nd defendant Sime Darby Financial Services Holdings Sdn Bhd (Sime Darby Group) were desirous of acquiring the entire issued and paid up voting shares of UMBC from the UMBC group.

As UMBC was a commercial bank the prior written approval of the Minister of Finance (MOF) would have to be obtained first, under s. 45 of the Banking and Financial Institution Act 1989 (BAFIA) to enter into an agreement or arrangement to acquire 5% or more of its shares; second, under s. 46 for approval to hold more than 20% of its shares; third, under s. 49 for approval to enter into an agreement or arrangement which would result in the change in its control, the sale, disposal or transfer of its business, its amalgamation, merger or reconstruction; and generally under s. 118 for any exemption from the application of any of the provisions of the Act.

Additionally, the approval of the Foreign Investment Committee would also have to be obtained, but this was not in issue as its approval was obtained later in the course of the acquisition.

On 10 November 1995 the defendants obtained the approval of the Minister of Finance (MOF) granting,

(a) the 1st defendant to acquire and hold 60.35% of the issued capital of UMBC;

(b) the 1st defendant, the 2nd defendant (then known as Sime Communications Sdn Bhd), SD Holdings Bhd (the 2nd defendant's immediate holding company) and Permodalan Nasional Berhad pursuant to s. 118 of BAFIA, to hold an interest in UMBC shares over and above the limits set down under s. 46 of BAFIA.

Following the approval, on 11 November 1995 the 1st defendant announced that the Sime Darby Group had entered into a Conditional Share Sale Agreement with the UMBC group to acquire their entire shareholding of 60.35% in UMBC for a cash consideration of RM1,300,000,000, that is to say at approximately RM6.46 per share.

On 18 January 1996 however, Bank Negara informed the defendants by letter that the MOF would not allow them to acquire any additional shares of UMBC over and above the permitted 60.35% approved earlier. In consequence thereof, on 20 January 1996 the defendants through their adviser Amanah Merchant Bank (Amanah) applied to the Securities Commission (SC) to waive the requirement of having to make the mandatory general offer (MGO) which they were liable to under r. 34.1 of the 1987 Code for the remaining shares in UMBC should they proceed to complete the acquisition.

The SC by a letter dated 16 February 1996 rejected the defendants' application but intimated that it would be prepared to consider a restricted MGO on the shareholdings of a number of private non institutional investors who were essentially the plaintiffs in the present proceeding holding between them approximately 5.01% of the issued shares of UMBC.

Accordingly, on 28 March 1996, the defendants through Amanah made another application to the SC on the term as suggested.

The defendants received a favourable reply from the SC