ICAPITAL.BIZ BERHAD CITY OF LONDON INVESTMENT MANAGEMENT COMPANY LIMITED

WA-24NCC-517-11/2021 Kand. 92 15/07/2022 15:54:39 DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN DAGANG) SAMAN PEMULA NO.: WA-24NCC-517-11/2021 Dalam perkara Perenggan 21(2) Perlembagaan icapital.biz Berhad (“ICAP”); Dan Dalam perkara Perenggan 3.7.1(iii) Guidelines for Public Offerings of Securities of Closed-end Funds Suruhanjaya Sekuriti Malaysia; Dan Dalam perkara Perenggan 7.40 Bursa Malaysia Securities Berhad Main Market Listing Requirements; Dan Dalam perkara pemerolehan saham ICAP oleh City of London Investment Management Company Limited (“CLIM”) melalui penamanya pada 30.9.2019 dan pemerolehan saham ICAP seterusnya yang mengakibatkan CLIM melalui penama-penamanya, agen-agennya, pelanggan-pelanggannya dan/atau pekerja-pekerjanya, memegang melebihi 20% daripada jumlah modal saham terbitan ICAP secara agregat dan mendapatkan hak mengundi atas saham yang melebihi 20% daripada jumlah modal saham terbitan ICAP; Dan Dalam perkara Seksyen-seksyen 33, 136, 137 dan 144 Akta Syarikat 2016; S/N XFJQ3UBe1E6TSWqWlPraA **Note : Serial number will be used to verify the originality of this document via eFILING portal Dan Dalam perkara Seksyen-seksyen 69E Akta Syarikat 1965; Dan Dalam perkara Seksyen-seksyen 11, 41, 42 dan 53 Akta Relief Spesifik 1950; Dan Dalam perkara Aturan 5, Aturan 7, Aturan 28, Aturan 29 dan Aturan 92 kaedah 4, Kaedah-kaedah Mahkamah 2012. ANTARA ICAPITAL.BIZ BERHAD (No. Syarikat : 674900-X) … PLAINTIF DAN CITY OF LONDON INVESTMENT MANAGEMENT COMPANY LIMITED … DEFENDAN J U DG M E N T [1] This was an application by the Plaintiff via Originating Summons dated 11.11.2021 (Enclosure 1) for various declaratory and injunctive reliefs against the Defendant which essentially revolves around the interpretation of paragraph 21(2) of the Plaintiff’s Constitution (“this Originating Summons”). S/N XFJQ3UBe1E6TSWqWlPraA Page 2 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [2] The reliefs sought by the Plaintiff in this Originating Summons are substantially as follows: “1. a declaration that the Defendant is a shareholder of the Plaintiff within the meaning of paragraph 21(2) of Plaintiff s Constitution, paragraph 3.7.1(iii) of the Securities Commission Guidelines for Public Offerings of Securities of Closed-end Funds (“SC Guidelines”) and paragraph 7.40 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (“Listing Requirements”); 2. a declaration that the Defendant, either by itself and/or through its nominees, agents, clients and/or employees, have breached paragraph 3.7.1(iii) of the SC’s Guidelines and/or paragraph 7.40 of the Listing Requirements and/or paragraph 21(2) of the Plaintiffs Constitution by acquiring an aggregate shareholding exceeding 20% of the total issued capital of the Plaintiff and/or by exercising or controlling the exercise of the voting rights in respect of the total issued capital of the Plaintiff exceeding 20%; 3. an Order that the Defendant, its nominees, agents, clients and/or employees do divest and/or cause to divest such shares in the Plaintiff which were acquired in excess of 20% of the total issued capital of the Plaintiff, either by way of open market sale at the market price of the said shares at the material time, or in a manner otherwise directed by this Honourable Court on a “last in first out” basis, within three hundred and eighty-one (381) market days of the date of this Order; 4. an Order that the Defendant, its nominees, agents, clients and/or employees do divest and/or cause to divest such shares in the Plaintiff which were acquired in excess of 20% of the total issued capital of the Plaintiff, in a manner that would prevent any adverse impact on the Plaintiff’s share price and/or further in a manner that would not cause any market disruptions, and/or yet further without causing any detriment to the Plaintiffs other shareholders; 5. an Order that the Defendant, its nominees, agents, clients and/or employees do not exercise and/or control the exercise of the voting rights in respect of the Plaintiffs shares that are held by its nominees, agents, clients and/or employees in excess of 20% of the total issued capital of the Plaintiff while divesting such shares in the S/N XFJQ3UBe1E6TSWqWlPraA Page 3 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal Plaintiff which were acquired in excess of 20% of the total issued capital of the Plaintiff as sought in prayer (3) above; 6. an Order that the Defendant, its nominees, agents, clients and/or employees be permanently restrained and enjoined from acquiring any further shares in the Plaintiff that would result in the Defendant’s aggregate shareholding in the Plaintiff, whether directly or indirectly and whether through its nominees, agents, clients and/or employees, to exceed 20% of the total issued capital of the Plaintiff;” (own emphasis added) [3] By way of Notice of Application dated 16.12.2021 (Enclosure 14) the Plaintiff had applied for an inter partes injunction to essentially restrain the Defendant, by itself or its agents or nominees, from acquiring any further shares in the Plaintiff or acquiring shares in the Plaintiff in excess of 20% of the total issued capital of the Plaintiff and from exercising the voting rights in respect of the shares held by the Defendant’s nominees, agents, clients and/or employees in excess of 20% of the total issued capital of the Plaintiff. [4] I granted an ad interim injunction in respect of Enclosure 14 with some amendments and fixed an early hearing date for the disposal of this Originating Summons and Enclosure 14, both of which were fixed for hearing and decided on the same date. A] SALIENT BACKGROUND FACTS [5] The Plaintiff is a public listed company incorporated in Malaysia on 11.12.2004 and was listed on the Main Board of Bursa Malaysia (“Bursa”) on 19.10.2005. The Plaintiff is approved and recognised as a “closed-end fund” as defined under Chapter 1 of the Main Market Listing Requirements (“the Listing Requirements”) issued by Bursa and Chapter 2 of the Securities Commission Guidelines for Public Offerings of Securities of Closed-end Funds (“the SC S/N XFJQ3UBe1E6TSWqWlPraA Page 4 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal Guidelines”) issued by the Securities Commission Malaysia (“SC”) as follows: Chapter 1 of the Listing Requirements “closed-end fund means an applicant or a listed corporation which is engaged wholly in the business of investing its funds in securities for the purposes of - (a) spreading investment risks; and (b) managing a portfolio of investments, to gain revenue and profit for the benefit and on behalf of its shareholders.” Chapter 2 of the SC Guidelines “closed-end fund means an applicant or a listed corporation which is engaged wholly in the business of investing its funds in securities for the purposes of – (a) spreading investment risks; and (b) managing a portfolio of investments, to gain revenue and profit for the benefit and on behalf of its shareholders." to gain revenue and profit for the benefit and on behalf of its shareholders;” [6] As a Closed-end Fund, the Plaintiff invests in a portfolio of securities and is managed by a fund management firm. Capital does not regularly flow in and out of the Closed-end Fund when investors buy and sell shares of the Closed-end Fund. After the initial public offering (IPO), shares of Closed-end Fund are traded on an exchange like stocks. A Closed-end Fund will raise its capital during the IPO, the fund manager will then buy and sell securities befitting the Closed-end Fund’s investment strategy. S/N XFJQ3UBe1E6TSWqWlPraA Page 5 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [7] The Plaintiffs primary investment objective is long-term capital appreciation of its investments with dividends and/or interest income from its investments being a secondary consideration. [8] The Defendant is registered as an Investment Advisor with the United States Securities and Exchange Commission, authorised and regulated by the Financial Conduct Authority and regulated by the Dubai Financial Services Authority. The Defendant is an institutional fund manager specialising in investments in closed- end funds. [9] As at 21.12.2021, a total of 31,149,100 shares in the Plaintiff representing 22.249% of the total issued shares in the Plaintiff have been acquired through nominees appointed by the Defendant’s clients, which nominees comprise of the following nominee institutions: i) DB (Malaysia) Nominee (Asing) Sdn Bhd; ii) HSBC Nominees (Asing) Sdn Bhd; iii) Cartaban Nominees (Asing) Sdn Bhd; and iv) Standard Chartered Bank Malaysia Bhd. (collectively “the Nominees”) [10] The Defendant is authorised by its clients to exercise its absolute discretion to, inter alia: i) make investment decisions on behalf of its clients including the decision to acquire and/or dispose shares in the Plaintiff; ii) manage its clients’ investments including its investments in the Plaintiff; iii) give trading instructions to its clients’ respective brokers to acquire and/or dispose of securities, including shares in the Plaintiff, on behalf of its clients; and S/N XFJQ3UBe1E6TSWqWlPraA Page 6 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal iv) to exercise or control the exercise of the voting rights of its clients with regards to their respective shareholding in the Plaintiff. [11] According to the Defendant, its discretion regarding the purchase of the Plaintiff’s shares by each of its client is subjected to the risk limits for the country and individual security exposure for each client that are contained in their respective investment management agreements. [12] As at the date of the Defendant’s Affidavit In Support (Enclosure 12), that is 6.12.2021, the Defendant avers that it has 15 clients that indirectly hold shares in the Plaintiff that are known to the Defendant. [13] On 10.8.2011, following the Defendant’s acquisition (on behalf of its clients) of 7,171,600 of the Plaintiff's shares through the Nominees, the Defendant gave notice pursuant to Section 69E of the Companies Act 1965 (“CA 1965”), to notify the Plaintiff of its interest in the voting shares of the Plaintiff as a “substantial shareholder”. [14] Subsequently, the Defendant (on behalf of its clients), through the Nominees, has from time to time increased its aggregate shareholding in the Plaintiff. Following each of its acquisition of the Plaintiff’s shares, the Defendant has issued the statutory notice under Section 69F CA 1965 to notify the Plaintiff of the changes in its interest in the voting shares of the Plaintiff as a “substantial shareholder”. [15] Following the repeal of CA 1965 and the coming into force of the Companies Act 2016 (“CA 2016”) effective from 31.1.2017, the Defendant issued the requisite statutory notices under Section 137 (and Section 138) CA 2016 to notify the Plaintiff of the changes in its interest in the voting shares of the Plaintiff as a “substantial shareholder” (the Defendant’s notices issued pursuant to Sections 69E and 69F CA 1965 as well as the notices issued pursuant to Section 137 (and Section 138) CA 2016 shall collectively be referred to as “the Notices”). S/N XFJQ3UBe1E6TSWqWlPraA Page 7 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [16] The Defendant, through the Nominees, has consistently exercised the voting rights over the shares in the Plaintiff that were held by the Defendant’s clients as follows: i) the Defendant through the Nominees had, from 2010 to 2020, consistently exercised the voting rights over the shares at the Annual General Meetings (“AGM”) of the Plaintiff; and ii) the Defendant, through the Nominees, had submitted requisitions to the Board of Directors of the Plaintiff to table resolutions for shareholder’s approvals at the AGM of the Plaintiff. [17] In this regard, the Defendant contends that as the appointed investment manager of its clients, it is entitled to take all appropriate actions to safeguard the interests of its clients, including where necessary, exercising the right to vote as accorded to its clients’ shares and tabling resolutions for discussion and approval. [18] By letter dated 24.11.2017, the Plaintiff had notified its shareholders (including the Defendant) that pursuant to the SC Guidelines and the Listing Requirements, no shareholder of the Plaintiff is allowed to hold more than 20% of the total issued capital of the Plaintiff (as also provided under paragraph 21(2) of the Plaintiff's Constitution) (“20% Maximum Shareholding Limit”). [19] The Plaintiff had vide its letter to the Defendant dated 24.11.2017 and notices issued by the Plaintiff’s Investment Advisor on the Regulatory News Service (“RNS”) Newswire on 5.12.2017 and 19.1.2018, reminded the Defendant to adhere to the 20% Maximum Shareholding Limit. The RNS is part of the London Stock Exchange. It is the leading provider of regulatory and non- regulatory information in the United Kingdom. [20] In reply, the Defendant, vide its letter dated 27.11.2017 and notice issued on the RNS Newswire on 6.12.2017, stated that it is not bound by the 20% Maximum Shareholding Limit and stated, inter alia, as follows: S/N XFJQ3UBe1E6TSWqWlPraA Page 8 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal “1. CLIM is an investment adviser and does not hold or own any shares in the Fund, either as nominee or as beneficial owner. 2. CLIM is entitled to exercise or control the exercise of voting rights in respect of shares in the Fund that are held by its clients. 3. CLIM reports the aggregate shareholdings of its clients in accordance with Section 138 of the Companies Act 2016. 4. The Guidelines for Public Offerings of Securities of Closed-end Funds provide that the Memorandum and Articles of Association of the closed-end fund (CEF) shall provide that no shareholder of the CEF shall hold more than 20% of the total issued and paid up shares of the CEF (Paragraph 3.7.1 (iii)). “Shareholder” is understood by us to refer to either the “depositor” and/or “beneficial owner” (as defined under the Securities Industry (Central Depositories) Act 1991). CLIM is neither a depositor nor a beneficial owner. 5. Article 21(2) of the Fund's Constitution stipulates “no member shall hold more than 20% of the total issued capital of the Company.” CLIM is not a member of the Company.” (own emphasis added) [21] On 30.9.2019, the Defendant (on behalf of its clients) acquired a further 159,500 shares in the Plaintiff through its nominee, DB (Malaysia) Nominees (Asing) Sdn. Bhd. Pursuant to this acquisition by the Defendant (through the Nominee), the Defendant had acquired a total of 28,111,000 shares in the Plaintiff which is equivalent to 20.079% of the total issued capital of the Plaintiff. Therefore, the Plaintiff claims that this is exceeding the 20% Maximum Shareholding Limit which is in turn a breach of paragraph 21(2) of the Plaintiffs Constitution which provides for the same. However, the Defendant contends that it is merely an investment adviser and does not hold any shares in the Plaintiff and as such has not breached paragraph 21(2) of the Plaintiff’s Constitution. S/N XFJQ3UBe1E6TSWqWlPraA Page 9 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [22] On 15.10.2019, the Plaintiff issued a letter to the Defendant to, inter alia: i) notify the Defendant that pursuant to its acquisition of the Plaintiff’s shares on 30.9.2019 (through the Nominees), the Defendant had exceeded the 20% Maximum Shareholding Limit stipulated by paragraph 21(2) of the Plaintiffs Constitution; and ii) request the Defendant to take immediate action to rectify the aforesaid breach and to reduce its aggregate shareholding in line with the 20% Maximum Shareholding Limit stipulated by paragraph 21(2) of the Plaintiffs Constitution. Plaintiff’s Complaint to the Securities Commission [23] By way of letters dated 15.10.2019, the Plaintiff notified SC and Bursa of the Defendant exceeding the 20% Maximum Shareholding Limit stipulated by paragraph 21(2) of the Plaintiffs Constitution. [24] By way of its letter dated 18.10.2019, the Defendant, inter alia, reiterated its position that it does not consider itself bound by the 20% Maximum Shareholding Limit. [25] The Defendant continued to increase its aggregate shareholding in the Plaintiff. As at 31.10.2019, the Defendant through the Nominees acquired a total of 28,326,600 shares in the Plaintiff which is equivalent to 20.233% of the total issued capital of the Plaintiff. [26] According to the Plaintiff, on 2.12.2019, the Plaintiff attended a meeting with SC to, inter alia, raise its concerns in respect of the Defendant exceeding the 20% Maximum Shareholding Limit stipulated by paragraph 21(2) of the Plaintiff’s Constitution. S/N XFJQ3UBe1E6TSWqWlPraA Page 10 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [27] During the said meeting, SC conveyed to the Plaintiff, inter alia, that the Defendant was not considered a “shareholder” for purposes of the 20% Maximum Shareholding Limit. [28] Following the said meeting, on 30.1.2020, the Defendant increased its aggregate shareholding in the Plaintiff by way of an open market purchase of 86,600 shares which increased the Defendant’s aggregate shareholding in the Plaintiff to 20.295% of the total issued capital of the Plaintiff. [29] On 11.2.2020, the Plaintiff issued a letter to SC, referring to the meeting on 2.12.2019 and, amongst others, requested that SC revert in writing with its official position on the interpretation of “shareholder” for purposes of the 20% Maximum Shareholding Limit and whether the Defendant exceeded the 20% Maximum Shareholding Limit in view of its aggregate shareholding in the Plaintiff. [30] By way of its letter dated 20.2.2020, SC stated that its position on the matter “remains the same as communicated during the Meeting”. Plaintiff’s Judicial Review [31] On 2.3.2020, the Plaintiff filed a judicial review against the decision of SC communicated at the meeting on 2.12.2019 (Application for Judicial Review No. WA-25-104-03/2020) (“the Plaintiff’s Judicial Review”). The Plaintiff was granted leave to commence judicial review proceedings on 30.7.2020. [32] Subsequent to the commencement of the Plaintiffs Judicial Review (in which the Defendant was a party), the Defendant continued to increased its aggregate shareholding in the Plaintiff as follows: i) on 17.6.2020, the Defendant through the Nominees acquired 337.000 of the Plaintiffs shares; S/N XFJQ3UBe1E6TSWqWlPraA Page 11 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal ii) on 18.6.2020, the Defendant through the Nominees acquired a further 325,600 of the Plaintiffs shares; iii) on 16.7.2020, the Defendant through the Nominees acquired a further 150.000 and 171.900 of the Plaintiff s shares; and iv) on 1.9.2020, the Defendant through the Nominees acquired a further 89.900 of the Plaintiffs shares. [33] By way of its solicitor’s letter dated 21.9.2020, the Defendant undertook not to acquire any further shares in the Plaintiff until the determination of the Plaintiffs Judicial Review (“Defendant’s undertaking dated 21.9.2020”). In the Defendant’s undertaking dated 21.9.2020 the Defendant expressly stated that its undertaking was not be construed as an admission of the Defendant liability or the Plaintiff’s claims or allegations in any way and that the undertaking was only given with a view to prevent further protracted and/or unnecessary litigation with the Plaintiff. [34] The positions taken by the parties at the Plaintiff’s Judicial Review are essentially as follows: 34.1 SC, inter alia, took the position that: i) its decision communicated to the Plaintiff at the meeting on 2.12.2019 was an “opinion” that was not amenable to judicial review; and ii) the Plaintiff’s “remedy lies with obtaining the appropriate relief vis-a-vis CLIM for any breach of ICAP’s Constitution”. 34.2 At the continued hearing of the Plaintiff’s Judicial Review on 29.9.2021, the Defendant agreed with the position taken by SC that the decision communicated to the Plaintiff at the meeting on 2.12.2019 was an “opinion” which was not S/N XFJQ3UBe1E6TSWqWlPraA Page 12 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal amenable to judicial review and that the matter should proceed by way of a private law action. 34.3 The Defendant also took the position that: i) Paragraph 3.7.1 (iii) of the SC Guidelines as issued by and published by SC only imposes the obligation on the Plaintiff to provide in its Constitution that no shareholder of the Plaintiff shall be entitled to hold more than 20% in the Plaintiff’s issued and paid up share capital. As such, this is not binding upon the Defendant; ii) The SC Guidelines do not apply to the Defendant; and iii) The Notices issued by the Defendant pursuant to Division 3A of the CA 1965 as well as Sections 137 and 138 CA 2016 have to be read together with Sections 8 and 136 CA 2016 and that the Defendant is required to file the Notices for the following reasons: a) The Defendant has a “deemed interest” in the shares of the Plaintiff, as the Defendant is an entity that is entitled to exercise or control the exercise of rights attached to the Plaintiff’s shares. b) Further, the Defendant had exceeded the 5% limit as stipulated in Section 136 of the CA 2016. c) At best, Sections 69E and 69F CA 1965 and Section 137 CA 2016 merely creates a reporting obligation on the part of the Defendant, which the Defendant has duly complied with. [35] The High Court struck out the Plaintiff’s Judicial Review application with costs of RM5,000.00 in favour of the Defendant on the ground that “Mode Of Proceedings” yang difailkan oleh pemohon iaitu S/N XFJQ3UBe1E6TSWqWlPraA Page 13 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal permohonan semakan kehakiman bukanlah satu mod yang sesuai untuk difailkan dalam kes ini” (“High Court’s JR decision”). [36] This then led to the Plaintiff filing this Originating Summons. B] WHETHER THE DEFENDANT IS A “SHAREHOLDER” PURSUANT TO PARAGRAPH 21(2) OF THE PLAINTIFF’S CONSTITUTION [37] Parties had filed extensive written submissions and also submitted orally at length in respect of this Originating Summons. Ultimately, the main issue in this Originating Summons is whether the Defendant is a “shareholder” pursuant to paragraph 21(2) of the Plaintiff’s Constitution and in this regard whether the Defendant is subject to the 20% Maximum Shareholding Limit under the paragraph 21(2) of the Plaintiff’s Constitution read together with paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 read with paragraph 7.01(2) of the Listing Requirements. [38] Paragraph 21(2) of the Plaintiff's Constitution states as follows: “Notwithstanding anything contained in this Constitution to the contrary, no member shall hold more than 20% of the total issued capital of the Company.” (own emphasis added) [39] In this Originating Summons, the Plaintiff refers to the Defendant as the “shareholder” of the Plaintiff and that the Defendant falls within the definition of “shareholder” pursuant to paragraph 21(2) of the Plaintiff's Constitution. However, for clarity, it should be noted that paragraph 21(2) of the Plaintiff's Constitution uses the term “member”, the true meaning of which is an issue in this action. [40] The Plaintiff uses of the word “shareholder” and ties it to paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements that also uses the term “shareholder”. S/N XFJQ3UBe1E6TSWqWlPraA Page 14 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [41] Paragraph 3.7.1(iii) the SC Guidelines provides as follows: “3.7 Provisions in the Memorandum and Articles of Association 3.7.1. The Memorandum and Articles of Association of the closed- end fund shall provide for the following - i. That any amendment to a closed-end fund's investment policies and objectives shall be approved by the shareholders of the closed-end fund by way of a special resolution; ii. That the closed-end fund shall not either on its own or in conjunction with any person take legal or effective management control of its underlying investments; iii. That no shareholder of the closed-end fund shall hold more than 20% of the total issued and paid up shares of the closed-end fund; and iv. That the closed-end fund shall not conduct any other business other than that of a closed-end fund.” (own emphasis added) [42] Paragraphs 7.40 and 7.01(2) the Listing Requirements provide as follows: “7.40 Maximum holdings No shareholder of a closed-end fund shall hold more than 20% of the total number of issued shares of the closed-end fund.” “7.01 Introduction (1) Parts B to N of this Chapter set out the provisions which an applicant or a listed corporation must ensure are contained in its constitution. S/N XFJQ3UBe1E6TSWqWlPraA Page 15 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal (2) Part O of this Chapter sets out the additional provisions which a closed-end fund must ensure are contained in its constitution. (3) Part P of this Chapter sets out the additional provisions which a special purpose acquisition company must ensure are contained in its constitution.” (own emphasis added) [43] It was submitted by learned counsel for the Plaintiff that based on the above provisions of the SC Guidelines and the Listing Requirements, the 20% Maximum Shareholding Limit is therefore a mandatory legal requirement. It was further submitted by learned counsel for the Plaintiff that the 20% Maximum Shareholding Limit was included in paragraph 21(2) of the Plaintiff's Constitution in compliance with those provisions. This is not in dispute. [44] Learned counsel for the Plaintiff also submitted that the SC Guidelines (and the Listing Requirements) do not expressly define who is a “shareholder” of a Closed-end Fund. He then further submitted as follows: i) the definition of a “shareholder” of a Closed-end Fund has been manifestly left open to cover any party who controls or who has a controlling interest in the shares of a Closed-end Fund through one or more accounts, whether directly or indirectly; ii) the mischief that the 20% Maximum Shareholding Limit addresses is the exercise of control over the Closed-end Fund by any single party, with either direct or indirect control or controlling interest in the shares of the Closed-end Fund through one or more accounts which collectively exceeds 20% of the issued and paid-up capital of the Closed-end Fund; iii) the 20% Maximum Shareholding Limit is to protect shareholders of the Closed-end Fund from detrimental S/N XFJQ3UBe1E6TSWqWlPraA Page 16 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal actions from any single party, with either direct or indirect control or controlling interest in the shares of a Closed-end Fund through one or more accounts which collectively exceeds 20% of the total issued and paid-up share of the Closed-end Fund; iv) the 20% Maximum Shareholding Limit is also to ensure that no single party, with either direct or indirect control or controlling interest in the shares of a Closed-end Fund, through one or more accounts which collectively exceeds 20% of the total issued and paid-up shares of the Closed-end Fund would benefit that single party to the detriment of the Closed- end Fund and its other shareholders. [45] Thus, the Plaintiff’s main complaint and the central issue in this Originating Summons is that the Defendant is a single party with control or controlling interests in the shares of the Plaintiff through one or more accounts of its clients, which collectively exceeds 20% of the issued and paid-up capital of the Plaintiff. That the Defendant controls the largest block of shares in the Plaintiff. [46] This Originating Summons was initiated by the Plaintiff arising from the Defendant’s refusal to comply with the 20% Maximum Shareholding Limit on the basis that it only applies to a registered shareholder of the Plaintiff, that is in respect of the shares of its clients individually and not to the collective shareholding of its clients over which the Defendant exercises absolute control or has controlling interests. [47] Learned counsel for the Plaintiff had gone to great length to explain the background of a Closed-end Fund, its unique features and how it is regulated by SC. He had also embarked on providing the genesis of the 20% Maximum Shareholding Limit in a Closed-end Fund as well as numerous authorities regarding, inter alia, the rules of interpretation of contract and statutes and how paragraph 21(2) of the Plaintiff's Constitution ought to be interpreted. [48] However, with respect, I do not intend to go into detail of the aforementioned matters. S/N XFJQ3UBe1E6TSWqWlPraA Page 17 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [49] This is because the Plaintiff’s claim will essentially depend on the definition and true meaning of “shareholder” (“member”) in paragraph 21(2) of the Plaintiff's Constitution read together with, inter alia, the relevant statutory provisions, the SC Guidelines and the Listing Requirements. The background of a Closed-end Fund, the genesis of the 20% Maximum Shareholding Limit and the authorities on the interpretation of contract and statutes will be useful and would aid in determining the true meaning of “shareholder” in paragraph 21(2) of the Plaintiff's Constitution if there is ambiguity. However, I do not find there to be any ambiguity in the definition of “shareholder” (“member”) in paragraph 21(2) of the Plaintiff's Constitution. [50] That being the case the next issue is whether it is necessary to adopt the purposive approach of interpretation of paragraph 21(2) of the Plaintiff's Constitution and apply the Mischief Rule of Interpretation in interpreting the relevant provisions of the SC Guidelines and the Listing Requirements to “supress the mischief”. The Plaintiff contends that the Defendant is in fact subject to the 20% Maximum Shareholding Limit as the definition of “shareholder” in paragraph 21(2) of the Plaintiff's Constitution is not only limited to registered shareholders. This is the “mischief” the Plaintiff sought the Court to suppress or prevent. [51] The Plaintiff essentially relies on the following facts to show that the Defendant ultimately has control over the Plaintiff’s shares that were purchased on behalf of the Defendant’s clients: i) The Defendant is not a registered shareholder of the Plaintiff. ii) The registered shareholders of the Plaintiff are the Nominees (who are appointed by the Defendant’s clients) for the Defendant’s clients; iii) Thus, the legal owners of the shares of the Plaintiff are the Nominees while the beneficial owners of the shares of the Plaintiff are the clients of the Defendant. S/N XFJQ3UBe1E6TSWqWlPraA Page 18 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal iv) The Defendant has been granted the absolute discretion by its clients over the rights in the shares held by the Nominees for its clients. v) Through the Notices the Defendant has declared “indirect interests” in the Plaintiff’s shares that were purchased on behalf of the Defendant’s clients. The Notices were issued pursuant to, inter alia, Section 137 CA 2016. vi) The Defendant has absolute discretion in the exercise of the rights attached to the shares which includes the exercise of voting rights in respect of the aggregate shares held by the Nominees. The Defendant has repeatedly exercised these voting rights in block. [52] Having laid out the Plaintiff’s case I will now begin by analysing paragraph 21(2) of the Plaintiff's Constitution to determine the true meaning of “shareholder” as stated therein and whether the 20% Maximum Shareholding Limit applies to the Defendant. i) Meaning of “member” (shareholder) in paragraph 21(2) of the Plaintiff's Constitution [53] Paragraphs 8(y) and (cc) of the Plaintiff’s Constitution define “member/members” and “Register” as follows: “(y) “member/members” means any person/persons for the time being holding shares in the Company and whose names appear in Register (except Bursa Malaysia Depository Nominees Sdn Bhd) including Depositors whose names appear on the Record of Depositors. (cc) “Register” means the Register of Members to be kept pursuant to the Act.” (own emphasis added) S/N XFJQ3UBe1E6TSWqWlPraA Page 19 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [54] There is no ambiguity in the above definition of “member/members” in the Plaintiff’s Constitution. The Defendant does not own any shares in the Plaintiff in that its name does not appear on the Record of Depositors of the Plaintiff or the Register of Members. Therefore, it is clear that the Defendant is not a “member” (shareholder) of the Plaintiff pursuant to paragraph 21(2) of the Plaintiff's Constitution based on the unambiguous definition of “member” in paragraphs 8(y) and (cc) of the Plaintiff's Constitution. [55] In Bratton Seymour Service Co Ltd v. Oxborough [1992] BCLC 693, the English Court of Appeal dealt with the issue of whether it was possible to imply terms into the articles of association of a company. The English Court of Appeal held as follows: “Section 14(1) of the Companies Act 1985 provides that ‘the memorandum and articles, when registered, bind the company and its members to the same extent as if they respectively had been signed and sealed by each member’. By virtue of s 14 the articles of association become, upon registration, a contract between a company and members. It is, however a statutory contract of a special nature with its own distinctive features. It derives its binding force not from a bargain struck between parties but from the terms of the statute. It is binding only insofar as it affects the rights and obligations between the company and the members acting in their capacity as members. If it contains provisions conferring rights and obligations on outsiders, then those provisions do not bite as part of the contract between the company and the members, even if the outsider is coincidentally a member. Similarly, if the provisions are not truly referable to the rights and obligations of members as such it does not operate as a contract. Moreover the contract can be altered by a special resolution without the consent of all the contracting parties. It is also, unlike an ordinary contract, not defensible on the grounds of misrepresentation, common law mistake, mistake in equity, undue influence or duress. Moreover, as Dillon LJ, has pointed out, it cannot be rectified on the grounds of mistake. Turning now to the present case, the question is whether the implied term of requiring members to contribute to maintenance of the amenities can be implied not on the basis of any language to be S/N XFJQ3UBe1E6TSWqWlPraA Page 20 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal found in the articles, but on the basis of extrinsic circumstances. The question is, is it notionally ever possible to imply a term in such circumstances? I will readily accept that the law should not adopt a black-letter approach. It is possible to imply a term purely from the language of the document itself: a purely constructional implication is not precluded. But it is quite another matter to seek to imply a term into articles of association from extrinsic circumstances. Here, the company puts forward an implication to be derived not from the language of the articles of association but purely from extrinsic circumstances. That, in my judgment, is a type of implication which, as a matter of law, can never succeed in the case of articles of association. After all, if it were permitted, it would involve the position that the different implications would notionally be possible between the company and different subscribers. Just as the company or an individual member cannot seek to defeat the statutory contract by reason : of special circumstances such as misrepresentation, mistake, undue influence and duress and is furthermore not permitted to seek a rectification, neither the company nor any member can seek to add to or to subtract from the terms of the articles by way of implying a term derived from extrinsic surrounding circumstances. If it were permitted in this case, it would be equally permissible over the spectrum of company law cases. The consequence would be prejudicial to third parties, namely potential shareholders who are entitled to look to and rely on the articles of association as registered. Despite Mr Asprey’s lucid and incisive argument, I take the view that on this ground alone the implication cannot succeed. (own emphasis added) [56] I accept that unlike the case of Bratton Seymour (supra) the “extrinsic circumstances” here is the definition of “shareholder” which the Plaintiff seeks to import by reference to, inter alia, paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. [57] Whilst I also accept that the Plaintiff as a Closed-end Fund is governed by, inter alia, the Listing Requirements and the SC Guidelines, however, caution must be exercised when applying the S/N XFJQ3UBe1E6TSWqWlPraA Page 21 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal definition of “shareholder” in the Listing Requirements and the SC Guidelines to paragraph 21(2) of the Plaintiff's Constitution. The use of the term “shareholder” and the context in which it is used in paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements must be examined carefully. [58] Therefore, the next issue is whether the purposive approach of interpretation of paragraph 21(2) of the Plaintiff's Constitution should be applied or is required to be applied in the present case. ii) Purposive Approach of Interpretation [59] In order to persuade the Court that the Defendant ought to be considered as a “shareholder” or “member” of the Plaintiff thus falling within paragraph 21(2) of the Plaintiff's Constitution, the Plaintiff relied on the following: i) The filing of the Notices by the Defendant pursuant to Section 138 CA 2016; ii) Paragraph 3.7.1(iii) of the SC Guidelines; and iii) Paragraph 7.40 of the Listing Requirements. [60] Therefore, the essential question is: whether the meaning of “member” (“shareholder”) in paragraph 21(2) of the Plaintiff's Constitution can be extended to include the Defendant by virtue of the Defendant filing the Notices and the interpretation of “shareholder” in paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements? [61] This is despite the clear meaning of the term “member” (“shareholder”) in the Plaintiff’s Constitution as stated earlier in this Judgment as “any person/persons for the time being holding shares in the Company” and whose name appear on the Register of Members including “the Record of Depositors”. [62] It should also be noted that the Defendant is neither a registered shareholder nor a beneficial shareholder of the Plaintiff. S/N XFJQ3UBe1E6TSWqWlPraA Page 22 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal Paragraph 3.7.1(iii) of the SC Guidelines and Paragraph 7.40 of the Listing Requirements [63] The wording of paragraph 21(2) of the Plaintiff's Constitution is consistent with the wording of paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. [64] Therefore, paragraph 21(2) of the Plaintiff's Constitution complies with paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. [65] It is the Plaintiff’s contention that the Defendant is a de facto member/shareholder of the Plaintiff for the purposes of the 20% Maximum Shareholding Limit in paragraph 21(2) of the Plaintiff’s Constitution read with paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. The Plaintiff further contends that because the Defendant has control or controlling interest in the Plaintiff’s shares, the Defendant must be regarded as holding the shares for the instant purposes. [66] The Plaintiff takes the position that as the SC Guidelines and Listing Requirements do not expressly define “shareholder”, they cast a wide net to achieve the purpose of the 20% Maximum Shareholding Limit. [67] This then goes to the issue of the issuance of the Notices by the Defendant and the declaration contained therein. The Notices pursuant to Section 138 CA 2016 (Indirect Interest) [68] There are several provisions of CA 2016 that are relevant to the Notices and they are: i) Section 2(a) CA 2016 on the definition of “member”; ii) Section 147(1) CA 2016; iii) Section 136(1) CA 2016; S/N XFJQ3UBe1E6TSWqWlPraA Page 23 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal iv) Section 137 CA 2016; v) Section 138 CA 2016; and vi) Sections 8(4), 8(6), 8(9) and 8(10). [69] In order to provide a complete picture, all the above provisions of CA 2016 are reproduced below in accordance with the above sequence to show how they apply. Section 2(a) CA 2016 "member" means- (a) in the case of a company limited by shares, a person whose name is entered in the register of members as the holder for the time being of one or more shares in the company; or (b) in the case of a company limited by guarantee, a person whose name is entered in the register of members; Section 147(1) CA 2016 “(1) A depositor whose name appears in the record of depositors maintained by the central depository in accordance with section 34 of the Securities Industry (Central Depositories) Act 1991 in respect of the securities of a company which have been deposited with the central depository shall be deemed to be a shareholder, debenture holder or option holder of the company, as the case may be, and shall, subject to the provisions of the Securities Industry (Central Depositories) Act 1991 and any regulations made under that Act, be entitled to the number of securities stated in the record of depositors.” Section 136(1) CA 2016 “(1) For the purposes of this Subdivision, a person has a substantial shareholding in a company- (a) if the person has an interest in one or more voting shares in the company and the number or the aggregate number of such S/N XFJQ3UBe1E6TSWqWlPraA Page 24 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal shares is not less than five per centum of the total number of all the voting shares included in the company; or (b) being a company the share capital of which is divided into- (i) two or more classes of the shares, if the person has an interest in one or more voting shares include in one of those classes; and (ii) the number or the aggregate number of such shares is not less than five per centum of the aggregate number of the total number of all the voting shares included in that class of shares. (2) A person who has a substantial shareholding in a company is a substantial shareholder in such company.” Section 137 CA 2016 “(1) A substantial shareholder in a company shall give notice in writing to the company if he has any interest related to any particular shares. (2) The notice shall- (a) contain the name, nationality, address and full particulars of the voting shares in which the substantial shareholder has an interest; and (b) include, unless the interest cannot be related to a particular shares- (i) the name of the person who is registered as the shareholder; and (ii) the full particulars and the circumstances by reason of which the substantial shareholder has the interest. (3) The substantial shareholder shall give the notice referred to in subsection (1) to the company- S/N XFJQ3UBe1E6TSWqWlPraA Page 25 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal (a) in the case of a company whose shares are quoted on a stock exchange, within three days after the person becomes a substantial shareholder; or (b) in any other case, within five days after the person becomes a substantial shareholder. (4) The notice shall be given notwithstanding that the person has ceased to be a substantial shareholder before the expiration of the period referred to in subsection (3). (5) Any person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit and, in the case of a continuing offence, to a further fine not exceeding one thousand ringgit for each day during which the offence continues after conviction.” Section 138 CA 2016 “(1) A substantial shareholder shall give notice to the company in writing if there is a change of his interest in voting shares in the company- (a) in the case of a company whose shares are quoted on a stock exchange, within three days after the date of the change; or (b) in any other case, within five days after the date of the change. (2) The notice under subsection (1) shall contain- (a) the name and full particulars of the substantial shareholder; and (b) the date and circumstances by reason of which that change has occurred. (3) For the purposes of subsection (1), where a substantial shareholder in a company acquires or disposes of voting shares in the company, the acquisition or disposal shall be deemed to be a change in the interest of the substantial shareholder in voting shares in the company. S/N XFJQ3UBe1E6TSWqWlPraA Page 26 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal (4) Any substantial shareholder who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit and, in the case of a continuing offence, to a further fine not exceeding one thousand ringgit for each day during which the offence continues after conviction.” Sections 8(4), 8(6), 8(9) and 8(10) CA 2016 “(4) A person shall be deemed to have an interest in a share where a body corporate has an interest in a share and- (c) the body corporate is, or its directors are accustomed, or is under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person in relation to that share; (d) that person has a controlling interest in the body corporate; or (e) that person or his associates, or that person and his associates are entitled to exercise or control the exercise of not less than twenty per centum of the votes attached to the voting shares in the body corporate.” “(6) A person shall be deemed to have an interest in a share in any one or more of the following circumstances where he- (a) has entered into a contract to purchase a share; (b) has a right, otherwise than by reason of having an interest under a trust, to have a share transferred to himself or to his order, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; (c) has the right to acquire a share or an interest in a share, under an option, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; S/N XFJQ3UBe1E6TSWqWlPraA Page 27 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal (d) is entitled, otherwise than by reason of his having been appointed a proxy or representative to vote at a meeting of members of a corporation or of a class of its members, to exercise or control the exercise of a right attached to a share, not being a share of which he is the registered holder.” “(8) For the purpose of determining whether a person has an interest in a share, it is immaterial that the interest cannot be related to a particular share. (9) For the purposes of this section, an interest in a share shall be disregarded as an interest if it is- (a) an interest of a person who holds the share as bare trustee; (b) an interest of a person whose ordinary business includes the lending of money or the giving of financing if he holds the interest only by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money or the giving of financing; (c) an interest of a person being an interest held by him by reason of his holding a prescribed office; and (d) a prescribed interest being an interest of such person, or of the persons included in such class of persons, as is prescribed. (10) An interest in a share shall not be disregarded by reason only of- (a) its remoteness; (b) the manner in which it arose; (c) the fact that the exercise of a right conferred by the interest is, or is capable of being made subject to restraint or restriction; or (d) the fact that it is held by, or in the name of, a central depository or its nominee company under the Securities Industry (Central Depositories) Act 1991.” (own emphasis added) S/N XFJQ3UBe1E6TSWqWlPraA Page 28 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [70] It was submitted by learned counsel for the Defendant that the terms “shareholders” and “substantial shareholders” under CA 2016 are brought to life by legal definitions given to it by the law. Therefore, these specifically defined terms must be read within their accorded meanings. [71] It was further submitted on behalf of the Defendant as follows: i) The Defendant is not a registered holder of the Plaintiff’s shares and hence, it is not a shareholder. However, the law deems the Defendant to be a substantial shareholder, because it controls the right to vote of its clients who are shareholders of the Plaintiff. Therefore, the law deems the Defendant (who is a fund manager) to be a substantial shareholder even though it is not a “shareholder” because the concept of substantial shareholder is tied to control (i.e.: Control Test) whereas the concept of shareholder is tied to ownership (i.e.: Ownership Test). ii) It is important to keep the distinction between “shareholders” and “substantial shareholders” clear because the law imposes different obligations on different parties and grants different rights to different parties depending on whether one is a shareholder or a substantial shareholder. For example the Plaintiff is entitled to distribute dividends to a “shareholder” but not to a “substantial shareholder” unless he is also a shareholder. iii) The Defendant’s filing of the Notices under section 138 of the CA 2016 is pursuant to its obligations as a substantial shareholder (not as a shareholder). This is because the Defendant is not a “registered holder” of any the Plaintiff shares. iv) Therefore, the filing of Notices by the Defendant does not amount to any admission that the Defendant is a “shareholder” of the Plaintiff. S/N XFJQ3UBe1E6TSWqWlPraA Page 29 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal v) The 20% Maximum Shareholding Limit is a requirement imposed on the Plaintiff under paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. vi) That the definition of “shareholder” in paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements does not extend beyond the literal meaning of shareholder as there is no deeming provision under the SC Guidelines, the Listing Requirements and the Plaintiff’s Constitution which is similar to the deeming provision in Section 8(6)(d) CA 2016 regarding the definition of “substantial shareholder” which deems a person to be a substantial shareholder by virtue of the person’s interest (control) over the right to vote. [72] I agree with learned counsel for the Defendant’s above submissions. [73] The following differences and distinctions must be noted: i) Paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements do not use the term “substantial shareholder” which is used in CA 2016 as can been seen in the relevant provisions of CA 2016 stated earlier. ii) The difference in the obligations imposed by CA 2016 regarding the declaration of interest by a “substantial shareholder” and the restriction imposed by the SC Guidelines and the Listing Requirements regarding the 20% Maximum Shareholding Limit. iii) The term “substantial shareholder” in CA 2016 cannot be automatically equated to mean “shareholder” under paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. [74] The Defendant’s disclosure obligation under Sections 137 and 138 CA 2016 can be summarised as follows: S/N XFJQ3UBe1E6TSWqWlPraA Page 30 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal i) The Nominees are the registered shareholders of the Plaintiff shares. ii) The Defendant is not a registered shareholder of the Plaintiff’s shares. iii) The Nominees gave the Defendant the right to control the voting of Plaintiff’s shares registered in the Nominees names. iv) Where the aggregate number of the Plaintiff’s shares held by the Nominees is 5% or more (Section 136(1)(a) CA 2016 read together with Section 8(d) CA 2016) then the Defendant, whilst it does not own the said shares, is obligated to disclose its interest in the Plaintiff’s shares pursuant to Sections 137 or 138 CA 2016. [75] Hence, the issuance of the Notices by the Defendant does not mean that it is a “shareholder” or “member” of the Plaintiff pursuant to paragraph 21(2) of the Plaintiff's Constitution. C] ISSUE OF OWNERSHIP AND CONTROL (MISCHIEF RULE OF INTERPRETATION) i) The SC Guidelines [76] There is a distinction made between the term “shareholder” and “substantial shareholder” in the SC Guidelines. As stated earlier paragraph 3.7.1(iii) of the SC Guidelines does not use the term “substantial shareholder”. However, the term “substantial shareholder” was used in paragraph 10.2 of the SC Guidelines as follows: “10.2 where a closed-end fund has a direct or indirect relationship with- S/N XFJQ3UBe1E6TSWqWlPraA Page 31 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal (a) substantial shareholder; (b) shareholders which have a controlling interest in the closed-end fund; or (c) any persons having a controlling interest in the persons referred to in paragraph (a) or (b) which relationship could result in a conflict of interest in relation to the general body of shareholders, the conflict may render the closed-end fund unsuitable to offer its securities to the public. As such, the nature, character and extent of any such relationship and conflict of interest must be disclosed in the prospectus and to the SC.” (own emphasis added) [77] The fact that the terms “substantial shareholder” and “shareholders which have a controlling interest” were excluded from paragraph 3.7.1(iii) of the SC Guidelines must be considered to be deliberate. [78] Therefore, the issue of the ownership of the Plaintiff’s shares in paragraph 3.7.1(iii) of the SC Guidelines where the words “No shareholder of the closed-end fund shall hold” cannot be equated with control of the Plaintiff’s shares. [79] In this regard, in the Plaintiff’s Judicial Review, SC had stated its position on the interpretation of paragraph 21(2) of the Plaintiff's Constitution and also referred to the Guidelines on Unit Trust Funds (“GUTF”) which was relied on by the Plaintiff in the Plaintiff’s Judicial Review proceedings. The following are excepts taken from SC’s affidavits filed in the Plaintiff’s Judicial Review: Paragraphs 20 to 22 of SC’s Affidavit in Reply “20. At this December meeting, SC informed ICAP of its views that: i) CLIM is an investment adviser and does not hold any shares in ICAP (whether for its own account, as nominee, or as beneficial owner); S/N XFJQ3UBe1E6TSWqWlPraA Page 32 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal ii) the term “shareholder” in Paragraph 3.7.1 (iii) of the CEF Guidelines refers to a shareholder of a closed-end fund; iii) the representation made by CLIM to ICAP that it is a substantial shareholder of ICAP was based on the requirements under the Companies Act 2016; and iv) the interpretation of the term “shareholder” in Paragraph 3.7.1 (iii) of the CEF Guidelines does not give rise to the same meaning as a “substantial shareholder” in the context of the Companies Act 2016. 21. After the December Meeting, ICAP issued a letter dated 11.2.2020 to the SC. ICAP requested for the SC to provide a written confirmation of its official position regarding the interpretation of Paragraph 3.7.1 (iii) of the CEF Guidelines. 22. By way of letter dated 20.2.2020, the SC responded to inform ICAP that the SC maintains its position as communicated during the December Meeting.” Paragraphs 8(ii) of SC’s Affidavit in Reply (2) “(ii) ICAP’s position set out in paragraph 16(2) on the issue of control stems from ICAP’s reliance on the Guidelines on Unit Trust Funds (‘GUTF’). This is evident from paragraphs 5.10 and 5.11 of ICAP’s letter dated 11.2.2020' to the SC, where ICAP had relied on the definition of a ‘Collective Investment Scheme’ in the GUTF in arriving at its position that the rationale for the 20% Maximum Shareholding Limit is “to prevent control or manipulation by a single party”. Such reliance is misconstrued as the GUTF is not applicable to a listed CEF such as ICAP.” Paragraph 9 of SC’s Affidavit in Reply (3) “9. ICAP relies on Paragraph (b) of the GUTF (worded the same in both versions of the GUTF) which defines a Collective Investment Scheme as an arrangement where “the persons who participate in the arrangements do not have day-to-day control over the management of the fund's assets” (‘Paragraph (b) of the Definition’). S/N XFJQ3UBe1E6TSWqWlPraA Page 33 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal Paragraph 12 of SC’s Affidavit in Reply (3) “12. I also state that ICAP is not subject to the requirements of the GUTF, which apply to a unit trust fund. It is not disputed that ICAP is a closed-end fund and not a unit trust fund. As such, ICAP is only subject to the requirements of the CEF Guidelines. ICAP is fully aware of the distinction between a closed-end fund and a unit trust fund. This is evident from its own statement at page 2 of ICAP's 2020 Annual Report where ICAP stated that “there are major differences between a unit trust fund and a closed-end fund”. Paragraph 11 of SC’s Affidavit in Reply (3) “11. ICAP’S reliance and contention on Paragraph (b) of the Definition are fundamentally misconstrued given the following: (i) ICAP as a fund is managed by an external fund manager. Capital Dynamics Assets Management Sdn. Bhd. (“Capital Dynamics”). Capital Dynamics has appointed a Designated Person, Tan Teng Boo, who is responsible for managing the assets of ICAP. This is consistent with Paragraph (b) of the Definition and Paragraph (d) of the 2020 GUTF; and (ii) ICAF’s shareholders (whether CLIM or otherwise) would not have de facto day-to day control over the management of ICAP’s assets (as alleged by ICAP) even if their shareholding in ICAP exceeds 20%. This is because as a closed-end fund, ICAP’s assets are managed by its fund manager in accordance with the approved investment policies and objectives.” (own emphasis added) [80] Therefore, SC took the view that the issue of single party control does not arise in the context of a closed-end fund, as the Closed- end Fund is managed by an external fund manager (Capital Dynamics). Even if the shareholders of the Closed-end Fund exceed the 20% Maximum Shareholding Limit, the shareholders of the Closed-end Fund would not have any de facto day-to-day control over the management of the Plaintiff’s assets. [81] Whilst I note the provisions of paragraph 3.7.1(i) of the SC Guidelines and 7.38 of the Listing Requirements that state, “any S/N XFJQ3UBe1E6TSWqWlPraA Page 34 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal amendment to a closed-end fund’s investment policies and objectives shall be approved by the shareholders of the closed-end fund by way of a special resolution”, however, I also note the prohibition regarding the control of the closed-end funds’ underlying investments and business in paragraphs 3.7(ii) and (iv) of the SC Guidelines and paragraphs 7.39 and 7.41 of the Listing Requirements which provide as follows: Paragraph 3.7(ii) of the SC Guidelines “That the closed-end fund shall not either on its own or in conjunction with any person take legal or effective management control of its underlying investments;” Paragraph 7.39 of the Listing Requirements “A closed-end fund shall not, either on its own or in conjunction with any person, take legal or effective management control of its underlying investments” Paragraph 3.7(iv) of the SC Guidelines “That the closed-end fund shall not conduct any other business other than that of a closed-end fund.” Paragraph 7.41 of the Listing Requirements “A closed-end fund shall not conduct any other business other than that of a closed-end fund.” (own emphasis added) [82] This is consistent with SC’s position regarding the day-to-day control over the management of the Plaintiff’s assets (“underlying investments”) which based on the GUTF must be managed by a fund manager. The shareholders of the Plaintiff (including the Defendant’s clients whose shares in the Plaintiff the Defendant is entitled to exercise or control the exercise of voting rights) are S/N XFJQ3UBe1E6TSWqWlPraA Page 35 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal prohibited from taking legal or effective management control of the Plaintiff’s assets. [83] Therefore, even if the Defendant is considered a “shareholder” of the Plaintiff for the purposes of paragraph 21(2) of the Plaintiff's Constitution, it cannot control the Plaintiff’s assets or “underlying investments”. In this regard I also note that the Defendant does not derive any benefit from the shares owned by its clients as the dividends are not paid to the Defendant. This defeats the Plaintiff’s argument of a single party’s control or take-over of the day-to-day management of the Closed-end Fund (assets). No shareholder of the Plaintiff has that right. [84] Hence, I am unable find fault in SC’s above interpretation of paragraph 21(2) of the Plaintiff's Constitution and specifically on whether the Defendant is a de facto member/shareholder of the Plaintiff for the purposes of the 20% Maximum Shareholding Limit in paragraph 21(2) of the Plaintiff's Constitution. [85] I am aware that SC’s “opinion” is not binding on the Court in determining whether the Defendant is a shareholder/member of the Plaintiff pursuant to paragraph 21(2) of the Plaintiff's Constitution (Rosliza bt Ibrahim v. Kerajaan Negeri Selangor [2021] 2 MLJ 181 (FC)). [86] While the Court retains the jurisdiction to determine the interpretation of statutes including the SC Guidelines (see Section 35 of the Interpretation Act 1948) and delegated legislation such as the Listing Requirements (established under Section 8 of the Capital Markets and Services Act 2007), however, the Court takes cognisance of the statutory or regulatory bodies’ interpretation of these statutes and delegated legislation. In this regard the Federal Court in the recent case of Bursa Malaysia Securities Bhd v. Mohd Afrizan Husain [2022] 4 CLJ 657 held as follows: “[101] More importantly, there would be complete chaos in the market and exchange if individuals such as the liquidator here choose to undertake their own interpretation of the rules and proceed to implement or act on their comprehension of the meaning to be attributed to the AMLR or the Main Listing Requirements, rather than S/N XFJQ3UBe1E6TSWqWlPraA Page 36 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal an accepted interpretation. There must be acquiescence from Bursa or the court to warrant such steps being undertaken by parties who have chosen to participate in and comply with the law relating to markets and exchanges.” (own emphasis added) ii) The Listing Requirements [87] Similar to the case of the SC Guidelines, the Listing Requirements also makes a distinction between a “shareholder” and another term “controlling shareholder” in paragraph 1.01 of the Listing Requirements where the term is defined as follows” “controlling shareholder means any person who is or a group of persons who controlling shareholder together are entitled to exercise or control the exercise of more than 33% of the voting shares in a company (or such other percentage as may be prescribed in the Take- Overs and Mergers Code as being the level for triggering a mandatory general offer) or who is or are in a position to control the composition of a majority of the board of directors of such company.” (own emphasis added) [88] Paragraph 7.40 of the Listing Requirements uses the words, “No shareholder of a closed-end fund shall hold” which again refers to ownership of the shares whereas there is also the term, “controlling shareholder” in paragraph 1.01 of the Listing Requirements which involve control of the shares. [89] Again, this raises the question as to the reason why paragraph 7.40 of the Listing Requirements does not use or include the term “controlling shareholder”. The exclusion must be considered to be deliberate. This is further supported by the fact that “controlling shareholder” in paragraph 1.01 of the Listing Requirements is regarding the control of the exercise of 33% of the voting shares as compared to paragraph 7.40 of the Listing Requirements which concerns the “holding” (ownership) of shares exceeding 20%. S/N XFJQ3UBe1E6TSWqWlPraA Page 37 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [90] These differences only reinforce the point that the ownership of the Plaintiff’s shares based on paragraph 21(2) of the Plaintiff's Constitution cannot be equated to control over the said shares. D] CONCLUSION [91] It is not necessary to apply the purposive approach to interpret the meaning of the term “member” (shareholder) in paragraph 21(2) of the Plaintiff's Constitution nor is it necessary to apply the Mischief Rule of Interpretation to the interpret the term “shareholder” in paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. [92] The mischief as alleged by the Plaintiff is the exercise of control over Closed-end Fund by a single party. This is not the case in the instant case. I am of the considered view that there is a clear demarcation between the ownership of the Plaintiff’s shares and the control of the Plaintiff’s shares. The term “member” (shareholder) in paragraph 21(2) of the Plaintiff's Constitution refers to the ownership of the Plaintiff’s shares and not control of the said shares. This is consistent with the meaning of “shareholder” in paragraph 3.7.1(iii) of the SC Guidelines and paragraph 7.40 of the Listing Requirements. [93] It is not for the Court to imply a new meaning or extend the meaning of “member” (shareholder) in paragraph 21(2) of the Plaintiff's Constitution to include control over the Plaintiff’s shares when the definition of “member” (shareholder) is clear and is confined to the ownership of the shares. In this regard, the Federal Court in Fairise Odyssey (M) Sdn Bhd v. Tenaga Nasional Bhd [2019] 6 MLJ 281 held as follows: “[57] Coming back to the instant case, the words used in s 12 are clear and they mean what they say, ie that there has to be an approval by the state authority for the respondent to construct the transmission lines on the state land. The word ‘approval’ is in general use and is well S/N XFJQ3UBe1E6TSWqWlPraA Page 38 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal understood. There is absent the words ‘approval in writing’. Applying the first and most elementary rule of construction, it is to be assumed that the words and phrases are used in their ordinary meaning. Parliament had deemed it fit not to provide for the words ‘approval in writing’. The intention of Parliament in our view is made clearer if we were to contrast s 12 with other provisions in the 1990 Act, namely ss 11(4), 14(2)(a) and 37(13)(a) which specifically stipulate for certain acts to be done in writing. [58] It is trite that the duty of the court is limited to interpreting the words used by the Legislature and it has no power to fill the gaps disclosed. To do so would be to usurp the function of the Legislature (see Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui [1984] 1 MLJ 169 which referred to Magor and St Mellons Rural District Council v Newport Corporation [1951] 2 All ER 839; [1952] AC 189). We are therefore of the view that it is not for the court to fill the gap by inserting or adding the word ‘in writing’ to the word ‘approval of the State Authority’ in s 12. We therefore agree with the courts below that the words ‘approval of the State Authority’ cannot be read to mean ‘approval of the State Authority in writing’. It is not up to the court to rewrite the statute to add the words ‘in writing’ to the words ‘approval’ in s 12.” (own emphasis added) [94] As I have arrived at the conclusion that the Defendant is not a shareholder of the Plaintiff, therefore, I agree with learned counsel for the Defendant’s submission that the Plaintiff’s Constitution being a company’s constitution is not enforceable against third parties. The following passage from Malayan Banking Ltd v. Raffles Hotel [1996] 1 MLJ 206 makes this clear: “In considering this section, it must be borne in mind that the articles do not in any circumstances, as between the company and a person who is not a member, constitute a contract of which that person can take advantage : see 6 Halsbury’s Laws of England, 3rd edition, page 129, paragraph 270. As was said by Astbury J. in Hickman v. Kent Or Romney Marsh Sheep Breeders' Association, at pages 897 and 900 respectively:— S/N XFJQ3UBe1E6TSWqWlPraA Page 39 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal “An outsider to whom rights purport to be given by the articles in his capacity as such outsider, whether he is or subsequently becomes a member, cannot sue on those articles treating them as contracts between himself and the company to enforce those rights. Those rights are not part of the general regulations of the company applicable to all shareholders and can only exist by virtue of some contract between such person and the company, and the subsequent allotment of shares to an outsider in whose favour such an article is inserted does not enable him to sue the company on such an article to enforce rights which are res inter alios acta and not part of the general rights of the corporators as such.” (own emphasis added) [95] Similarly, in Perdana Petroleum Bhd (formerly known as Petra Perdana Bhd) v. Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra & Ors [2021] 6 MLJ 663 the Court of Appeal held that the legal status of the memorandum and articles of association under both CA 2016 and the repealed Companies Act 1965 remained the same in that it was a contract between the members, as members, and the company. That even the directors of the company are considered a third party. This can be seen from the following passage where the Court of Appeal held: “[73] In our view, without more, the articles of association do not become terms in a contract between a company and a third party (ie person or persons other than its members qua members), whether it be officers of the company or otherwise. However, the articles may be incorporated into such contracts, expressly or impliedly. It is also the case that courts take the view that comparatively little is required for the incorporation of a term in the article that provides indemnity to an auditor or director who is appointed. However, it remains necessary that there be an incorporation of the particular article in question.” (own emphasis added) S/N XFJQ3UBe1E6TSWqWlPraA Page 40 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal [96] Therefore, the Plaintiff cannot enforce the Plaintiff’s Constitution on the Defendant, who is not a member of the Plaintiff company. [97] For the reasons stated above, I dismissed this Originating Summons and Enclosure 14 and after hearing arguments from parties on costs, awarded costs of RM30,000.00 in favour of the Defendant. Dated this 22nd day of June, 2022 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judicial Commissioner High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) COUNSEL FOR THE PLAINTIFF Steven Thiru (David Dines Mathew, Chong Jen Hui, Henna Nikita Sanghvi and Ong Eng Hong (intern) together with him) Messrs Steven Thiru & Sudhar Partnership Unit A1-12-01, Arcoris Mont Kiara Jalan Kiara, Mont Kiara 50480 Kuala Lumpur. Tel: 03-6411 9000 Email: info@stsp.my S/N XFJQ3UBe1E6TSWqWlPraA Page 41 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal COUNSEL FOR THE DEFENDANT Jack Yow Pit Pin (Leow Ho Eng together with him) Messrs Rahmat Lim & Partners Suite 33.01, Level 33 The Gardens North Tower, Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur. Tel: 03-2299 3951 Email: daphne.koo@rahmatlim.com / enquiries@rahmatlim.com LEGISLATION / RULES CITED Companies Act 2016 ▪ Section 2(a) – definition of “member” ▪ Sections 8(4), 8(6), 8(9) and 8(10) ▪ Section 136(1)(a) ▪ Section 137 ▪ Section 138 ▪ Section 147(1) Companies Act 1965 ▪ Section 181 ▪ Section 69E ▪ Section 69F Capital Markets and Services Act 2007 ▪ Section 8 Interpretation Act 1948 ▪ Section 35 S/N XFJQ3UBe1E6TSWqWlPraA Page 42 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal Bursa Malaysia Securities Berhad Main Market Listing Requirements ▪ Chapter 1 ▪ Paragraph 1.01 – definition of “controlling shareholder” ▪ Paragraph 7.01(2) ▪ Paragraph 7.38 ▪ Paragraph 7.39 ▪ Paragraph 7.40 ▪ Paragraph 7.41 Securities Commission Guidelines for Public Offerings of Securities of Closed-end Funds ▪ Chapter 2 ▪ Paragraph 3.7.1(i), (ii), (iii) and (iv) CASES CITED 1. Bratton Seymour Service Co Ltd v. Oxborough [1992] BCLC 693 2. Bursa Malaysia Securities Bhd v. Mohd Afrizan Husain [2022] 4 CLJ 657 3. Fairise Odyssey (M) Sdn Bhd v. Tenaga Nasional Bhd [2019] 6 MLJ 281 4. Malayan Banking Ltd v. Raffles Hotel [1996] 1 MLJ 206 5. Perdana Petroleum Bhd (formerly known as Petra Perdana Bhd) v. Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra & Ors [2021] 6 MLJ 663 6. Rosliza bt Ibrahim v. Kerajaan Negeri Selangor [2021] 2 MLJ 181 S/N XFJQ3UBe1E6TSWqWlPraA Page 43 of 43 **Note : Serial number will be used to verify the originality of this document via eFILING portal