CHIPTAR HOLDINGS SDN BHD 1. ) THC RICE (K.L.) SDN BHD 2. ) TER THIAN TIN 3. ) CHONG FONG HAR 4. ) CHANG NGI MOOI

CHIPTAR HOLDINGS SDN BHD 1. ) THC RICE (K.L.) SDN BHD 2. ) TER THIAN TIN 3. ) CHONG FONG HAR 4. ) CHANG NGI MOOI

On an objective assessment the First Rights Issue was exercised for the improper purpose of diluting Chiptar rather than bona fide raising capital; the conduct amounted to oppression under s346 Companies Act 2016 and justified equitable relief including cancellation/rectification and a buyout mechanism requiring the 2nd–4th Defendants to purchase Chiptar's shares at fair value as at 8.6.2020 with independent valuation and ancillary orders to achieve a clean break.

Citation
WA-24NCC-530-11/2020 (Mahkamah Tinggi)
Parties
Plaintiff: Chiptar Holdings Sdn Bhd; 1st Defendant: THC Rice (K.L.) Sdn Bhd; 2nd Defendant: Ter Thian Tin; 3rd Defendant: Chong Fong Har; 4th Defendant: Chang Ngi Mooi
Court
High Court
Jurisdiction
Malaysia
Judgment Date
1 March 2023
Case Number
WA-24NCC-530-11/2020 (Mahkamah Tinggi)
Procedural Posture
Originating Summons (companies Act S346) / Judgment (final)
Outcome
Originating Summons allowed in part; declarations of improper conduct made and remedial buyout and ancillary orders granted
Legal Topics
Oppression, Dilution of Shares, Rights Issue, Directors' Fiduciary Duties, Relief by Buyout, Valuation
Source Language
Malay/English
Company Law Corporate Governance Equity and Trusts Commercial Litigation Oppression Dilution of Shares Rights Issue Directors' Fiduciary Duties +2 more

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Parties

Chiptar Holdings Sdn Bhd

Plaintiff

THC Rice (K.L.) Sdn Bhd

1st Defendant

Ter Thian Tin

2nd Defendant

Chong Fong Har

3rd Defendant

Chang Ngi Mooi

4th Defendant

Procedural Posture

Originating Summons (companies Act S346) / Judgment (final)

Legal Issues

  1. 1 Whether the First Rights Issue was exercised for an improper purpose to dilute the majority shareholder
  2. 2 Whether the conduct of directors in proposing/implementing multiple rights issues amounts to oppression under s346 Companies Act 2016
  3. 3 Whether subsequent Second/Third/Fourth Rights Issues evidence a continuing tendency to oppress

Ratio Decidendi

On an objective assessment the First Rights Issue was exercised for the improper purpose of diluting Chiptar rather than bona fide raising capital; the conduct amounted to oppression under s346 Companies Act 2016 and justified equitable relief including cancellation/rectification and a buyout mechanism requiring the 2nd–4th Defendants to purchase Chiptar's shares at fair value as at 8.6.2020 with independent valuation and ancillary orders to achieve a clean break.

Court Disposition

Originating Summons allowed in part; declarations of improper conduct made and remedial buyout and ancillary orders granted

Orders

  • Declaration that 2nd and 3rd Defendants jointly and severally conducted affairs of 1st Defendant in a manner oppressive to the Plaintiff by causing issuance of 8,043,478 shares to 2nd Defendant
  • Declaration that 2nd to 4th Defendants jointly and severally conducted affairs of 1st Defendant in a manner oppressive to the Plaintiff in seeking issuance of 3,012,422 further shares