Loh Siew Cheang’s Corporate Powers Accountability (Third Edition) is a must-have for corporate litigators and corporate lawyers
A master craftsman would have essential tools for his trade. Likewise, a corporate litigator would have with him the essential text of Dato’ Loh Siew Cheang’s Corporate Powers Accountability.
Loh’s seminal text saw its second edition published in 2002. Sixteen years later, I looked forward to reading a copy of the third edition which was published in May 2018. I received a review copy of the book thanks to LexisNexis’ collaboration with The Malaysian Lawyer. I am extremely grateful to the publishers for extending me a copy of this book and the book will immediately find its place on my bookshelf.
The Corporate Powers Accountability third edition is now expanded and updated to take into account the introduction of the Companies Act 2016 (“Act”) as well as all recent cases drawn from Malaysia and other jurisdictions.
I strongly recommend this book for corporate litigators, corporate lawyers and corporate secretarial practitioners.
From Constitution to Winding Up
Here, I attempt to cover the breadth of the contents of this book. I only set out certain key highlights.
The Malaysian Position on Lifting the Corporate Veil
Corporate Powers Accountability first starts off with introducing the corporate person. The concepts of corporate personality and its separate legal status. Loh then delves straight into the lifting of the corporate veil in light of the UK Supreme Court decision in Prest v Petrodel Resources Ltd. It is not easy to reconcile all of the conflicting case law leading up to that point. The author though distils the two crucial principles from Prest of evasion and concealment. Importantly, Loh also explains how to apply the Malaysian authorities on the lifting or piercing of the corporate veil.
The Constitution and Principles under the Companies Act 2016
We next move to the constitutional structure of the corporate person. There is a very in-depth analysis of the change in the legal position under the Act. The articles of association, or now the constitution, are an optional contractual document. The default provision is that under the Act. But there cannot be any terms that offend the Act. There is a very useful analysis on how this legal position will now affect shareholders’ agreements. Private bargains and shareholders’ agreements
The chapters on directors’ duties are very comprehensive. The author analyses the extent of the duty to act in the best interest and proper purpose under section 213(1) of the Act. The recent decisions in the Court of Appeal case of Pioneer Haven and the Federal Court case of Petra Perdana are referenced. The business judgment rule under section 214 of the Act is also explained. Finally, a separate chapter is dedicated to setting out the duty to exercise reasonable care, skill and diligence.
Oppression and Other Shareholder Remedies
From a corporate litigator’s perspective, there are the stand-out chapters dedicated to the oppression remedy, statutory derivative action and winding up on the just and equitable ground. In particular, the oppression chapter covers the full range of issues starting from
- the proper plaintiff principle.
- relationship with other proceedings such as arbitration.
- the test of fairness, grounds to establish oppression.
- the types of remedies.
- valuation issues.
- practical tips for legal proceedings.
Meetings and Written Resolutions
Lastly, several chapters are dedicated to focusing on the key procedure of holding company meetings. The disclosure standards required, the legal principles for holding a meeting, the notice requirements and the powers of the chairman of a meeting. The statutory powers to convene and to requisition such meetings are explained as well as the legal issues surrounding the use of proxies. With the Act’s introduction of the written resolution for private limited companies, one chapter also is dedicated to directors’ circular resolutions and the members’ resolutions.
When I first started out in practice, I had no company law knowledge. The second edition of Corporate Powers Accountability was my introduction and essential guide to company law disputes. I have no doubt that this third edition will now continue to serve many lawyers and practitioners and be their go-to guide.
With the recent coming into force of the Act, and with little to no case law, the author performed a Herculean task in interpreting some of the more difficult sections of the Act. It will be interesting to see how the court will also interpret these sections. No doubt with more cases interpreting the Act, and with developments in other jurisdictions, we can eventually look forward to the fourth edition of this book. My only hope is that we will not have to wait quite as long for the release of the fourth edition.