LOO BEE ENG v 1. ) WINNERS ALUMINIUM & GLASS SDN BHD 2. ) PAN KEE MUN 3. ) PHANG KA TING 4. ) LIM TECK SENG 5. ) LEE CHOON CHIN

Case Significance

Illustrates the winding-up grounds under sections 465(1)(f) and (h) of the Companies Act 2016 and the just and equitable jurisdiction where the relationship between the members of a two-shareholder company has broken down.

This High Court decision at Georgetown concerns a petition to wind up a company on the grounds of directors acting in their own interests and of just and equitable considerations, in a dispute between the only two shareholders. The petitioner sought to wind up the company under section 465(1)(f) of the Companies Act 2016, alleging that the company's directors had acted in the affairs of the company in their own interests rather than in the interests of the members as a whole, or in a manner appearing to be unfair or unjust to members, and under section 465(1)(h), that it was just and equitable that the company be wound up. The company had only two directors and two shareholders, the petitioner and one of the respondents, so that the complaint of conduct unfair to the members reduced to conduct unfair to the other shareholder. The court's task under the first ground was to consider whether, in the decisions made for the company, the directors had preferred their own interests over those of the members, or had acted in a manner appearing unfair and unjust to a member; under the second ground it had to consider the Ebrahimi-type just and equitable jurisdiction, derived from the House of Lords' decision in Ebrahimi v Westbourne Galleries Ltd, which allows winding up where the relationship of mutual confidence in a quasi-partnership company has broken down. Confining itself to the pertinent and cogent issues, the court found that the two directors had acted in the affairs of the company in their own respective interests instead of in the interest of the other shareholder, and in a manner appearing unfair and unjust to that shareholder. It further formed the opinion that it was just and equitable to wind up the company. On those findings the court allowed the amended petition and ordered the company to be wound up. The judgment is a useful illustration of the winding-up grounds under sections 465(1)(f) and (h) of the Companies Act 2016 and of the just and equitable jurisdiction where the relationship between the members of a two-shareholder company has broken down.