LOW YEE MENG 1. LAU KOK LOON @ LAU SAY SIOK (NO. K/P: 430804-10-5423) 2. LAU TEIN KANG (NO. K/P: 780319-14-6045) 3. SEMENYIH JAYA SDN BHD (NO SYARIKAT: 106778-U)

LOW YEE MENG 1. LAU KOK LOON @ LAU SAY SIOK (NO. K/P: 430804-10-5423) 2. LAU TEIN KANG (NO. K/P: 780319-14-6045) 3. SEMENYIH JAYA SDN BHD (NO SYARIKAT: 106778-U)

The court found on the balance of probabilities that the plaintiff acted in good faith and that the proposed derivative claim was prima facie in the best interest of the Company because Defendant 1 failed to provide any adequate accounting for withdrawals of approximately RM10.6 million, the plaintiff had locus standi as a director and shareholder and had complied with s.348(2), and there was no cogent evidence of a collateral motive; consequently leave under ss.347 and 348 Companies Act 2016 was granted in terms of prayers (a)-(e).

Citation
WA-24NCC-175-04/2019 (Mahkamah Tinggi)
Parties
Plaintiff (administrator of Deceased's Estate; Director and 48% Shareholder): Low Yee Meng; Defendant 1 (director; 1 Share): Lau Kok Loon @ Lau Say Siok; Defendant 2 (director; 52% Shareholder): Lau Tein Kang; Defendant 3 (the Company): Semenyih Jaya Sdn Bhd
Court
High Court
Jurisdiction
Malaysia
Judgment Date
21 May 2020
Case Number
WA-24NCC-175-04/2019 (Mahkamah Tinggi)
Procedural Posture
Originating Summons for Leave to Bring Derivative Action Under Sections 347 and 348 Companies Act 2016 / High Court Leave Application Granted (judgment on Application for Leave)
Outcome
Leave granted under Sections 347 and 348 Companies Act 2016 to the plaintiff to initiate derivative proceedings on behalf of Semenyih Jaya Sdn Bhd; costs to be in the cause.
Legal Topics
Derivative Proceedings, Leave to Sue on Behalf of Company, Breach of Directors' Fiduciary Duties, Misappropriation of Company Funds, Locus Standi, Good Faith and Best Interest Test
Source Language
Malay/English
Companies Law Corporate Governance Equity and Fiduciary Duties Derivative Proceedings Leave to Sue on Behalf of Company Breach of Directors' Fiduciary Duties Misappropriation of Company Funds Locus Standi +1 more

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Parties

Low Yee Meng

Plaintiff (administrator of Deceased's Estate; Director and 48% Shareholder)

Lau Kok Loon @ Lau Say Siok

Defendant 1 (director; 1 Share)

Lau Tein Kang

Defendant 2 (director; 52% Shareholder)

Semenyih Jaya Sdn Bhd

Defendant 3 (the Company)

Procedural Posture

Originating Summons for Leave to Bring Derivative Action Under Sections 347 and 348 Companies Act 2016 / High Court Leave Application Granted (judgment on Application for Leave)

Legal Issues

  1. 1 Whether the plaintiff merits leave under ss.347 and 348 Companies Act 2016 to bring derivative proceedings
  2. 2 Whether the plaintiff is acting in good faith
  3. 3 Whether the proposed action is prima facie in the best interest of the company

Ratio Decidendi

The court found on the balance of probabilities that the plaintiff acted in good faith and that the proposed derivative claim was prima facie in the best interest of the Company because Defendant 1 failed to provide any adequate accounting for withdrawals of approximately RM10.6 million, the plaintiff had locus standi as a director and shareholder and had complied with s.348(2), and there was no cogent evidence of a collateral motive; consequently leave under ss.347 and 348 Companies Act 2016 was granted in terms of prayers (a)-(e).

Court Disposition

Leave granted under Sections 347 and 348 Companies Act 2016 to the plaintiff to initiate derivative proceedings on behalf of Semenyih Jaya Sdn Bhd; costs to be in the cause.

Orders

  • Leave granted for plaintiff to commence legal action on behalf of the Company against Defendant 1 and Defendant 2 for dereliction of duties and breach of fiduciary duty (prayer a)
  • Leave granted to commence action to recover RM10,604,167.43 (including interest) alleged to have been misappropriated by Defendant 1 (prayer b)