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

Case Update: Federal Court decides whether punishable misconduct in employment law is distinguishable from criminal conduct

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

Misconduct is one of the reasons which would qualify as “just cause” for an employer to dismiss an employee.

However, it’s not straightforward to pin down an exact definition of what constitutes “misconduct”. Even in instances where actions can be broadly categorised as misconduct, there is often confusion as to whether —

  • a misconduct is serious enough to justify dismissal instead of a lighter sanction; and
  • the standards to be applied to misconduct in the context of employment law are the same as those in respect of criminal wrongdoing.

This potential for confusion was illustrated in a recent case dealing with an employee dismissal for misconduct which went from the Industrial Court (“IC”) through to the High Court (“HC”), Court of Appeal (“COA”), and was ultimately decided by the Federal Court (“FC”). The issues were fully considered in the recent grounds of judgment of the FC dated 8 January 2018 in Akira Sales & Services (M) Sdn Bhd v Nadiah Zee binti Abdullah and Another Appeal (Federal Court Civil Appeal Nos. 01-15-05/2016 and 01-16-05/2016).

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Case Update: Federal Court Decides on Extent of Directors’ Duties – Key Lessons for Directors

The Federal Court issued its grounds of judgment in the Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Berhad case. This is a significant decision explaining the scope of directors’ duties. It gives guidance on when a director acts in the best interest of the company and the discretion afforded to a director when the director makes a business judgment.

This case update will set out the brief background facts of the case and the legal principles that were decided by the Federal Court.  I also set out the key takeaways and points that directors should take note of. Continue reading