Malaysia Case Law: Decisions & Judgments

Topic

Misappropriation of company funds

Legal area

Court

6 Mar 2025

1. ) BINA HARTA GROUP SDN. BHD. 2. ) LEE LUN TEONG 3. ) OO HENG TENG 4. ) CONEFF CORPORATION SDN. BHD. 1. ) YEE CHEE PANG 2. ) YEE JUNG DNG

Citation

WA-24NCC-122-03/2024 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24NCC-122-03/2024 (Mahkamah Tinggi)

The court held that the definition of a preference share in s2 of the Companies Act 2016 does not operate as an absolute prohibition on a company conferring voting rights by its constitution; Clause 7(e) did not contravene s32(2). Consequently the Plaintiffs failed to establish a good arguable case for an injunction restraining EGM resolutions. However, the Defendants demonstrated serious issues of misappropriation, HDA breaches and mismanagement warranting the grant of their interlocutory reliefs in Enclosure 19 except for Prayer 7; the EGM resolutions of 29.1.2024 are to be implemented imme…
7 Feb 2025

KARTHIYANI (M) SDN. BHD. 1. ) Karthiyani A/p Govindan 2. ) Khamhini A/p Devarajah [BERDAGANG SEBAGAI PEMILIK TUNGGAL DI PERKHIDMATAN PERUNDINGAN KORPORAT KASIH MURNI (NO. PENDAFTARAN: 201303071450 [002210912-K]) 3. ) RAYYANI SINAR BUMI SDN.

Citation

BA-22NCC-77-06/2022 (Mahkamah Tinggi)
Court

High Court
Case number

BA-22NCC-77-06/2022 (Mahkamah Tinggi)

On the combined subjective-objective test for directors’ duties the court found Defendants 1 and 2, as directors, failed to act bona fide in the company's best interests, authorised and effected substantial unauthorised payments without contemporaneous board authority or documentary support, conduct amounted to breach of s213 duties and, given the facts and admissions, included elements of fraud; funds and proceeds are properly subject to constructive trust and restitution; Defendant 1 is liable for disposal of the company car; Defendant 2's counterclaim fails for want of causa and proof; cos…
10 Apr 2023

Semenyih Jaya Sdn. Bhd. 1. ) LAU KOK LOON @ LAU SAY SIOK 2. ) Lau Tein Khang

Citation

WA-22NCC-211-05/2020 (Mahkamah Tinggi)
Court

High Court
Case number

WA-22NCC-211-05/2020 (Mahkamah Tinggi)

The 1st Defendant breached statutory and fiduciary duties by causing transfers of RM10,608,167.43 to his personal account without proper authority or board consensus and failing to account for the funds; the 2nd Defendant breached duties by failing to investigate or require accounting; shareholder assent or claimed ultimate beneficial ownership and the Duomatic principle do not validate dishonest or unauthorised depletion of company assets; consequently the transfers are null and the 1st Defendant must return RM10,608,167.43 with interest and pay costs.
15 Sept 2022

SEA TACKLE SDN BHD 1. ) WONG POH WAH 2. ) TEO TZI SIN 3. ) XXXX 4. ) OU WEE CHUAN 5. ) GREATSEA TACKLE SDN BHD 6. ) YOIDORE SDN BHD 7. ) TAN HONG CHAN

Citation

BA-22NCvC-392-08/2018 (Mahkamah Tinggi)
Court

High Court
Case number

BA-22NCvC-392-08/2018 (Mahkamah Tinggi)

D1 and D2, as directors, owed fiduciary duties and placed themselves in undisclosed and actual conflicts of interest (restaurant business and supplier relationships), misappropriated company funds and assets (documentary and bank evidence supported payments), executed unauthorised transactions (tenancy, purchases, transfers) and therefore breached fiduciary duties; their conduct removed any protection under Said v Butt and rendered them personally liable; plaintiff proved breaches on balance of probabilities and is entitled to compensatory damages of RM1,000,000 (to be borne equally by D1 and…
28 Apr 2022

CHAN TAI PING 1. ) NING YANG PROPERTIES SDN BHD [Business Registration No.: 948710-H 2. ) Lee Zhen Ning 3. ) Lee Wah Ching

Citation

WA-22NCC-567-11/2020 (Mahkamah Tinggi)
Court

High Court
Case number

WA-22NCC-567-11/2020 (Mahkamah Tinggi)

Plaintiff failed to prove on the balance of probabilities the alleged misappropriation; the pleaded misconduct, even if true, would primarily be a wrong to the company requiring a derivative action; removal of the plaintiff as director was valid under the articles and majority rule and did not constitute oppression qua shareholder; other monetary claims were unsupported, time-barred or abandoned; claim dismissed with costs.
30 Nov 2021

VIGNA RAJ A/L SITHAMPARANATHAN 1. ) METRO ELDERCARE SDN BHD 2. ) RAMESH SIVARAJ A/L RAJASINGAM CHELLIAH PENCELAH Ushadevi A/p Velayutham

Citation

BA-24NCvC-448-06/2020 (Mahkamah Tinggi)
Court

High Court
Case number

BA-24NCvC-448-06/2020 (Mahkamah Tinggi)

The application for leave was dismissed because the plaintiff failed to prove on the balance of probabilities that he acted in good faith to protect the company's interest and not for collateral personal purposes; the allegations primarily concerned the plaintiff's personal losses and inconsistent concurrent proceedings, and did not establish company loss or satisfy the higher threshold required under s348(4).
21 Sept 2021

RISING SUN MACHINERY PARTS SDN BHD 1. ) PANG CHI CHIANG 2. ) PANG CHEE WEE 3. ) TAN BENG SIANG 4. ) DATCHE TRADE MARKETING SDN BHD

Citation

WA-24NCC-45-02/2021 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24NCC-45-02/2021 (Mahkamah Tinggi)

The court found the plaintiff's pleaded complaints and sought reliefs were corporate wrongs against the 4th Defendant (misconduct/misappropriation) and the remedies sought (restitution of RM2,061,000 and reflective-loss compensation) were derivative in nature; therefore the Originating Summons was an abuse of process and was struck out under Order 18 Rule 19 ROC. Costs of RM8,000 awarded to defendants and plaintiff granted liberty to apply for leave to commence derivative proceedings under s347 CA 2016.
23 Feb 2021

1. RANJEET SINGH SIDHU 2. LOO SENG KIT 3. AMRIT KAUR AP MANJEET SINGH 4. HIROFUMI OUCHI ZAVARCO PLC

Citation

W-02(NCvC)(W)-1040-05/2018 (Mahkamah Rayuan)
Court

NCvC
Case number

W-02(NCvC)(W)-1040-05/2018 (Mahkamah Rayuan)

The High Court's findings that appellants failed to produce contemporaneous documentary proof for the alleged advances, that the relevant shares were unpaid and thus subject to the company's lien, and that the appellants (as signatories and senior officers) breached fiduciary and directors' duties in diverting company funds were supported by the evidence and legal authorities; those findings were not plainly wrong and therefore the appeal was dismissed.
13 Jul 2020

WAN FAUZIANA BINTI WAN YAAKUB (NO. K/P : 710607-11-5418) MEDINA WEALTH MANAGEMENT (M) SDN. BHD. (NO SYARIKAT : 887468-M)

Citation

WA-12BNCVC-43-04/2019 (Mahkamah Tinggi)
Court

High Court
Case number

WA-12BNCVC-43-04/2019 (Mahkamah Tinggi)

On the balance of probabilities the court found the respondent proved the sixteen cheques totalling RM161,000 were paid out without the company's authorization; the appellant failed to discharge the burden to prove the payments were lawful salary (no documentary evidence, failed to call the husband), so the Session Court judgment in favour of the respondent was upheld and the appeal dismissed.
21 May 2020

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)

Citation

WA-24NCC-175-04/2019 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24NCC-175-04/2019 (Mahkamah Tinggi)

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).