Seven Key Changes of the Companies Amendment Bill 2019

The Companies Amendment Bill 2019 has been issued and appears to have been tabled for First Reading before the Dewan Rakyat on 8 July 2019. The amendment Bill has also been passed by the Dewan Rakyat on 10 July 2019. The amendment Bill will make amendments to the Companies Act 2016 (CA 2016). I have since updated this article to take into account the Parliamentary debate of the amendment Bill.

I highlight seven of the more significant amendments. There will be welcome clarification of the effect of section 66 on the execution of what sort of documents, as well as the redemption of preference shares out of capital. But I can see issues relating to the appointment of receivers or receivers and managers after liquidation. There is a severe dilution of the ability to apply for judicial management.

#1: Section 66 to Only to Apply to Specific Types of Documents

I had earlier written about the possible uncertainty of validity of signed documents under section 66 of the CA 2016. Would all documents executed on behalf of the company require at least one director to sign that document? Under the CA 2016, the term document meant a document referred to under the Evidence Act. Continue reading

Federal Court Grants Anti-Arbitration Injunction to a Non-Party to the Arbitration

The Federal Court in its grounds of judgment dated 1 July 2019 reinstated the injunction of a non-party to an arbitration. The anti-arbitration injunction was made against the parties to an ongoing arbitration to restrain them from proceeding and continuing with the arbitration proceedings, pending the parallel Court proceedings.

The Federal Court ruled on the questions of law that sections 8 and 10 of the Arbitration Act 2005 (AA 2005) would not apply to a party litigant who is not a party to the arbitration agreement and/or arbitration proceedings. Section 8 of the AA 2005 essentially states that no court shall intervene in matters governed by the AA 2005. Section 10 of the AA 2005 allows for the court to stay court proceedings and refer parties to arbitration.

In this decision, the Federal Court allowed a non-party to the arbitration to resort to the Court’s inherent jurisdiction to grant an anti-arbitration injunction to restrain the arbitrating parties from proceeding with the arbitration. The test to be applied is the American Cyanamid-like test of a serious issue to be tried (or as applied in Malaysia via the Keet Gerald Francis test) instead of a higher threshold in the English High Court decision in J Jarvis v Blue Circle Dartfort Estates [2007[ EWHC 1262 (TCC).

Where there are parallel court proceedings involving some parties in an arbitration and non-parties to an arbitration, this Federal Court decision appears to favour giving primacy to the court proceedings and to allow an injunction or stay of the arbitration proceedings. Continue reading

Speaking in Kota Kinabalu on Winding Up of Companies on 20 June 2019

On 20 June 2019, I will be speaking at the Companies Commission of Malaysia Training Academy (COMTRAC) session on Cessation of Companies and Limited Liability Partnerships. This one-day seminar is held in Kota Kinabalu, Sabah. You can still sign up for the seminar, and with the registration fee at RM500 or discounted to RM400 for licensed secretarties, and for members of MAICSA, MIA, the Malaysian Bar, MACS, MICPA, Sabah Law Association and the Advocates Association of Sarawak.

My co-speaker is Puan Norhaslinda Salleh. She is the Head of Insolvency in the Registration Services Division, Companies Commission of Malaysia. Continue reading

Winding Up vs Arbitration: No to Stay but Court has Discretion to Dismiss the Winding Up

The Malaysian Courts continue to tackle the issue of the effect of an arbitration agreement on the litigant’s ability to present a winding up petition based on a debt. This is in the context of a purported debt arising from a contract containing the arbitration clause. There have been conflicting High Court decisions on this point, especially on the issue of whether the Court can stay the winding up pursuant to section 10 of the Arbitration Act 2005 (AA 2005).

The recent High Court decision in Awangsa Bina Sdn Bhd v Mayland Avenue Sdn Bhd (Grounds of Judgment dated 2 May 2019) decided that it would not stay the winding up proceedings under the AA 2005. Nonetheless, the Court agreed with the authorities from the UK, Singapore and Hong Kong to apply the test of whether there is a prima facie dispute of the debt. Since there was, the winding up petition was dismissed. The decision provides a useful summary of the cases in Malaysia and other jurisdictions. Continue reading

Asset Recovery Asia Conference 2019: How to Choose the Right Legal Route with Limited Information

On 14 May 2019, I spoke at the Asset Recovery Asia Conference in Singapore. It was organised by Knect365 as part of its Asset Recovery series. I thoroughly enjoyed attending the conference, hearing from other fraud and asset recovery specialists, and meeting new friends.

I shared a panel with other lawyers from different jurisdictions, an investigator and a litigation funder to share our perspectives. The session was on how victims of fraud have to make a decision early on, without all the facts, about which recovery route to go down – litigation or insolvency proceedings. These strategic decisions can have implications on the remainder of the case.  I set out below some of the views I shared on the panel session. Continue reading