Lord Templeman:

By s. 218(1)(i) of the Companies Act 1965 a company incorporated in Malaysia may be wound up if the High Court:

... is of opinion that it is just and equitable that the company be wound up.

On the petition of the appellant, Tay Bok Choon, the respondent company, Tahansan Sdn. Bhd., was on 25 February 1983 ordered by N.H. Chan J to be wound up. That order was set aside by the Federal Court (Salleh Abas LP and Wan Suleiman and George Seah FJJ) on 11 July 1984. The petitioner, with leave of the Federal Court, appeals to His Majesty the Yang di-Pertuan Agong.

The company was incorporated on 7 November 1977 as a private company limited by shares. The articles conferred on the directors power, in their discretion and without assigning any reason, to refuse to register a transfer of shares to any person of whom they did not approve. The memorandum and articles were subscribed by four subscribers who were appointed by the articles to be the first directors of the company. The nominal capital of the company was 400,000 shares of RM1 each; 25,000 shares were issued to each of the four directors and were paid up. The principal business of the company was the manufacture of window louvres at a factory in Kuala Lumpur. One of the shareholders, Tee Ah Kew, was a relation of the petitioner. In February 1980 possibly at the instigation of Tee but in any event with the approval of the directors, 25,000 shares then held by Chew Kew Hui were transferred to the petitioner for RM18,750. In the course of the negotiations for the transfer of shares to the petitioner and for the approval of the directors it was agreed between the directors and the petitioner that the petitioner would be appointed a director and chairman of the board of directors. The petitioner was subsequently so appointed and in addition his son, Tay Hock Yam, was appointed to be a fifth director. In March 1980 a finance company Balfour Williamson (S) Pte. Ltd. introduced by the petitioner agreed to finance the company if the paid up capital was increased from RM100,000 to RM200,000 and if each of the four shareholders guaranteed the liabilities of the company to Williamson. Accordingly 25,000 shares were issued to each of the four shareholders for cash paid to the company. The petitioner lent RM25,000 to Tee and RM16,000 to another shareholders Mak Boon Seng. All the four shareholders entered into guarantees with Williamson. Monthly salaries were paid to three working directors, Tee, Mak and Tay, the petitioner's son. In 1979 the company, after paying directors' remuneration of RM40,000, made a trading loss of RM29,483. In 1980 the company, after paying directors' remuneration of RM33,000, made a net trading profit of RM6,849. On 30 June 1981 the remuneration of each of the three working directors was increased to RM1,500 per month. On 23 September 1981 the board, against the opposition of the petitioner and his son Tay, terminated all the executive powers of the directors and conferred them on Mak alone as managing director. On 27 November 1981 the petitioner was removed as director and as chairman of the board and his son Tay was removed as director. On 8 April 1982 the petitioner presented his petition to wind up the company. The trading profit for 1981 after providing RM46,000 for directors' remuneration had increased to nearly RM125,000. The directors' report dated 3 July 1982 affirmed that no dividend had been paid and that it was not intended to declare a dividend but on 5 August 1982 the company declared a dividend of 30% for 1981. In the distribution of this dividend the petitioner was paid RM9,000 after deduction of RM6,000 for income tax. Also on 5 August 1982 the remuneration of the directors Mak and Tee was increased to RM2,500 per month each.

The Courts of Malaysia are agreed that the principles enunciated in In Re Westbourne Galleries [1973] AC 360 apply to a petition under s. 228 for a winding up on just and equitable grounds. In that case