Written by Fatin Ismail
Brief Facts
The plaintiff, a shareholder and director, alleged that the first and second defendants, also shareholders and directors of the third defendant, Super Resources & Trading Sdn Bhd (‘the Company’), acted oppressively and disregarded the interests of the plaintiff.
The Plaintiff’s Allegations
The plaintiff had made numerous allegations in regard to alleged acts of oppression by the first and second defendants. The allegations include:
- The dispute over the proposed sale of the plaintiff’s shares. The Plaintiff contended that she had suggested the sum of RM5million, however the second defendant disagreed and suggested that the shares were only worth RM3million. Multiple meetings were held in relation to this dispute, and in one instance, the plaintiff was allegedly not allowed to speak and the first and second defendants made a proposal for the plaintiff to consider.
- The alleged payments made by the Company for the debts of third parties. The third party in question is a company called MYGRIT Abrasive Sdn Bhd, of which 40% of the shares are held by the Company, Super Resources & Trading Sdn Bhd. The plaintiff had raised objections to the said payment, but was rebuffed by the first defendant, as the majority shareholder, who gave instructions to approve the transactions.
- The alleged attempt to prohibit the plaintiff from participating in the business and management of the company. The plaintiff was allegedly barred from the company premises, denied access to internal systems and accounts as well as excluded from management decisions.
The Defendant’s Response
The defendants, however, denied all the claims by the plaintiff and instead argued that the actions taken were in the best interest of the Company. Furthermore, the defendants averred that the actions by the plaintiff in filing this suit were to ensure that the defendants had no other option but to purchase the shares at the price and on the terms of the plaintiff.
The defendants also alleged that the plaintiff was not cooperative and had refused to perform her duties and the defendants had consistently urged the plaintiff to be present to ensure that all necessary approvals for payments were duly undertaken. It was also asserted that the Plaintiff’s access to the account had to be restricted to enable the Company to run effectively and that the plaintiff had been difficult and had been attempting to impede the operations of the company.
The law on minority oppression
Section 346 of the Companies Act 2016 states that:
Remedy in cases of an oppression
(1) Any member or debenture holder of a company may apply to the Court for an order under this section on the ground —
(a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders including himself or in disregard of his or their interests as members, shareholders or debenture holders of the company; or
(b) that some act of the company has been done or is threatened or that some resolution of the members, debenture holders or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or debenture holders, including himself.
(2) If on such application the Court is of the opinion that either of those grounds is established, the Court may make such order as the Court thinks fit with the view to bringing to an end or remedying the matters complained of, and without prejudice to the generality of subsection (1), the order may —
(a) direct or prohibit any act or cancel or vary any transaction or resolution;
(b) regulate the conduct of the affairs of the company in the future;
(c) provide for the purchase of the shares or debentures of the company by other members or debenture holders of the company or by the company itself;
(d) in the case of a purchase of shares by the company, provide for a reduction accordingly of capital of the company; or
(e) provide that the company be wound up.
Findings of the Court
The court in considering the petition and affidavits filed by the plaintiff, found that the plaintiff did not allege that the Company was a quasi-partnership type entity. There was no evidence or assertion that the Company was either:
- formed or continued on the basis of a personal relationship involving mutual confidence;
- the Company was formed out of a pervious partnership; and
- formed as a result of a family relationship or was created as a vehicle for business run by family members.
The court also found that the plaintiff failed to prove the existence of:
- any agreement or understanding that the members of the Company to participate in the conduct of the business; or
- any restrictions on the transfer of shares in the entity that did not allow members to exit despite being unhappy with management decisions.
It was found that no such averments were made in any affidavits of the plaintiff. The court could not entertain such arguments from the Bar without any supporting facts put forth in the plaintiff’s affidavit.
Furthermore, it was found that there was no sufficient evidence to show that they were oppressed as members of the company by any action of the company or action of the directors.
Proposed Purchase of Shares
The plaintiff alleged that the defendants acted oppressively during negotiations to purchase her shares, particularly in failing to agree on a fair price and conducting meetings unfairly. The court found that these were commercial disagreements and did not amount to oppressive conduct under s 346 of the Companies Act. The dispute over valuation was not sufficient to invoke the statutory remedy.
Payments made to third parties for debts of another company
The plaintiff had also claimed that company funds were misused to pay debts of a separate entity. Even assuming the allegations were true, the court held that the wrongs were committed against the company itself, not its members. Therefore, the appropriate course of action would be a derivative claim under s 347 of the Companies Act. The defendants also produced documentation suggesting the payments were made for commercial reasons, and the first defendant had assured personal responsibility for them.
Removal from Management and Restricted Access
The plaintiff alleged she was unfairly excluded from management and denied access to company premises and accounting systems. The court emphasised that she had no legitimate expectation to participate in management based solely on her shareholding. Any rights she had in this regard stemmed from her position as a director, not as a shareholder. The same applied to her husband’s access rights. The court clarified that ‘legitimate expectation’ is not a standalone ground under s 346 but may be relevant in cases involving equitable considerations.
Conclusion
The plaintiff’s claims did not satisfy the requirements of s 346 of the Companies Act. The court found that there was no oppressive conduct in the plaintiff’s capacity as a member of the company and directed the plaintiff to pursue alternative remedies where appropriate, such as a derivative action under s 347 of the Companies Act. The court dismissed the plaintiff’s claim.
Published on 11 September 2025