Book Review: Corporate Powers Accountability (Third Edition)

Loh Siew Cheang’s Corporate Powers Accountability (Third Edition) is a must-have for corporate litigators and corporate lawyers

Introduction

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.

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

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

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

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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Companies Act 2016: Absence of the Security for Costs Provision

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