Companies Act 2016

Case Update: A Shareholder Derivative Action Can Be Brought for Benefit of a Deadlocked Company

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The Federal Court in Perak Integrated Networks Services Sdn Bhd v Urban Domain Sdn Bhd & Ors (see the Federal Court Grounds of Judgment dated 16 April 2018) has ruled on the issue of  whether a common law derivative action can be initiated where the company is in a 50:50 deadlock.

The question of law before the Federal Court was:

Whether a derivative action may in law be brought for the benefit of a company, the management and control of which are deadlocked.

 

The Federal Court answered the question in the affirmative. The Federal Court has also set out the definitive test on wrongdoer control for the purposes of a common law derivative action. The possibility of initiating a just and equitable winding up petition based on the deadlock does not in itself prevent a shareholder from bringing a derivative action. Continue reading →

Compendium of Companies Act 2016 Cases: Part 1

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With the Companies Act 2016 in force for more than a year, I thought it is useful to set out a compendium of cases and transactions that have applied the Companies Act 2016 provisions.

As a summary, in terms of the reported cases, many of the cases relate to winding up based on the inability of the company to pay debts. This is under section 466 of the Companies Act 2016 (the old section 218 of the Companies Act 1965). Other cases also relate to other areas of winding up or shareholder disputes. I also highlight below examples of capital reduction and schemes of arrangement. Continue reading →

TML and Legal Logic Asia Talk: Post Implementation Challenges of the Companies Act 2016

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On 20 April 2018, I will be speaking at the Legal Logic Asia talk on The Companies Act 2016: Post Implementation Challenges, New Corporate Rescue Mechanism Rules 2018 & Malaysian Code of Corporate Governance.

My co-speaker, Kenneth Foo, and I designed the course contents and the programme should be very enriching for the audience. We will using practical examples and real-life case studies to flesh out the issues we have come across. You can access the registration form here and with an early bird rate of RM800 if you sign up by 13 April 2018.

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The Corporate Rescue Mechanism in Malaysia: CVA and Judicial Management

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By the gazetting of the notice P.U. (B) 106/2018 dated 27 February 2018, the corporate rescue mechanism under Division 8 Part III of the Companies Act 2016 has come into force on 1 March 2018. The corporate rescue mechanism allows for financially distressed companies to consider two options: (1) corporate voluntary arrangement and (2) judicial management.

I set out only some brief key features of these two mechanisms. Along with the coming into force of the corporate rescue mechanism provisions, the new Companies (Corporate Rescue Mechanism) Rules 2018 have also come into force on 1 March 2018. Continue reading →

Companies Act 2016: Absence of the Security for Costs Provision

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The Companies Act 1965 (CA 1965) contained section 351 which allowed for an application for security for costs. The rationale for that section 351 was as follows.

When a company litigates against a party, and if that action were to fail, the defending party could find itself prejudiced if the company did not have enough money to pay the legal costs to that party. Hence, section 351 of the CA 1965 stated that if it appears by credible testimony that there is reason to believe that the company cannot pay the costs of the defendant, then the court can order that the company pay security for those costs.

Unfortunately, section 351 of the CA 1965 was not carried forward under the Companies Act 2016 (CA 2016). It was a useful provision to safeguard the interests of the defendant. Nonetheless, there are still other possible reliefs that a defendant can take to possibly apply for security for costs against a company. Continue reading →

Changes in the Listing Requirements Post-Companies Act 2016

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On Thursday 8 February 2018, I will be speaking at a one-day seminar organised by the Securities Industry Development Corporation (SIDC). The SIDC is the training and development arm of the Securities Commission Malaysia.

The seminar is titled ‘Changes in the Listing Requirements Post-Companies Act 2016: What to Look Out For’. You can find out more information and also register at the SIDC website.

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