1. ) LGB ENGINEERING SDN. BHD. 2. ) RAYSTON (BUTTERWORTH) SDN. BHD. 3. ) RAYSTON CONSORTIUM (BUTTERWORTH) SDN. BHD. RAYSTON RESOURCES SDN. BHD.

1. ) LGB ENGINEERING SDN. BHD. 2. ) RAYSTON (BUTTERWORTH) SDN. BHD. 3. ) RAYSTON CONSORTIUM (BUTTERWORTH) SDN. BHD. RAYSTON RESOURCES SDN. BHD.

The Court allowed the appeal: where an invalidating factor (the wrongful one‑share transfer) has been removed, prior resolutions invalidated solely for lack of quorum are curable; Members' Written Resolution No.1/2017 passed after commencement of CA2016 under s.303 validly ratified the prior corporate acts; s.303 was not being applied retrospectively to create rights but used prospectively to decide existing matters; the High Court erred in granting consequential orders affecting subsidiary subscriptions beyond the plaintiff's locus; validation under the statutory curative power is appropriate absent substantial injustice.

Citation
B-02(NCC)(A)-300-02/2019 (Mahkamah Rayuan)
Parties
Appellant: LGB Engineering Sdn Bhd; Appellant: Rayston (Butterworth) Sdn Bhd; Appellant: Rayston Consortium (Butterworth) Sdn Bhd; Respondent: Rayston Resources Sdn Bhd
Court
NCC
Jurisdiction
Malaysia
Judgment Date
2 March 2022
Case Number
B-02(NCC)(A)-300-02/2019 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court Originating Summons
Outcome
Appeal allowed; High Court orders set aside; Members' Written Resolution No.1/2017 declared valid and ratified; costs awarded to appellants
Legal Topics
Quorum Requirements, Members' Written Resolution (s.303 Companies Act 2016), Ratification and Validation of Corporate Acts, Pre Emptive Rights and Share Transfer, Ultra Vires and Curable Nullities, Minority Shareholder Conduct and Oppression
Source Language
Malay/English
Company Law Corporate/commercial Law Civil Procedure Contract Law Quorum Requirements Members' Written Resolution (s.303 Companies Act 2016) Ratification and Validation of Corporate Acts Pre Emptive Rights and Share Transfer +2 more

Case Brief

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Parties

LGB Engineering Sdn Bhd

Appellant

Rayston (Butterworth) Sdn Bhd

Appellant

Rayston Consortium (Butterworth) Sdn Bhd

Appellant

Rayston Resources Sdn Bhd

Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court Originating Summons

Legal Issues

  1. 1 Whether resolutions declared void for lack of quorum could be validly ratified by a subsequent members' written resolution under s.303 CA 2016
  2. 2 Whether application of s.303 CA 2016 to ratify prior acts amounted to impermissible retrospective law
  3. 3 Whether High Court erred in ordering reversal of subsequent subscription/allotment in subsidiary beyond plaintiff's locus

Ratio Decidendi

The Court allowed the appeal: where an invalidating factor (the wrongful one‑share transfer) has been removed, prior resolutions invalidated solely for lack of quorum are curable; Members' Written Resolution No.1/2017 passed after commencement of CA2016 under s.303 validly ratified the prior corporate acts; s.303 was not being applied retrospectively to create rights but used prospectively to decide existing matters; the High Court erred in granting consequential orders affecting subsidiary subscriptions beyond the plaintiff's locus; validation under the statutory curative power is appropriate absent substantial injustice.

Court Disposition

Appeal allowed; High Court orders set aside; Members' Written Resolution No.1/2017 declared valid and ratified; costs awarded to appellants

Orders

  • Set aside the High Court orders in Subsequent OS No. 51 relating to invalidation of Members' Written Resolution No.1/2017
  • Declare Members' Written Resolution No.1/2017 valid and effective