HR MUSIC WORLD SDN BHD v 1. ) EILEEN TAN EE LIN 2. ) BEH JENG KOOI

Case Significance

Confirms that a company struck off and dissolved under section 551(3) of the Companies Act 2016 lacks the legal capacity to maintain a suit, and that the resulting want of locus standi can be disposed of as a preliminary question of law under Order 14A.

This High Court decision in Kuala Lumpur concerns the effect of a company's dissolution on its standing to sue. The plaintiff was a private company that had brought a civil suit against two individuals sued as partners of a business, and the defendants had counterclaimed. The defendants applied, under Order 14A and Order 18 rule 19 of the Rules of Court 2012, to have a preliminary question of law determined without a full trial: whether the plaintiff had the necessary locus standi to continue and maintain the suit when its name had been struck off the register maintained by the Companies Commission of Malaysia. The court agreed to decide the question as formulated and answered it in the negative. It reasoned that, once a company's name is struck off and the striking off is published in the Gazette, the company is dissolved by operation of section 551(3) of the Companies Act 2016, and a dissolved company no longer exists as a legal person capable of prosecuting a suit. The plaintiff having been dissolved with effect from 5 May 2023, it could not maintain the action. The court accordingly struck out the amended statement of claim against the defendants, and, the main claim having fallen away, the counterclaim was struck out as well; the remaining prayer was treated as academic and the scheduled trial dates were vacated. Each party was ordered to bear its own costs. In reaching that result the court treated the want of legal capacity as going to the very existence of the plaintiff rather than as a curable irregularity, so that the suit could not simply be adjourned to allow the position to be regularised. The judgment is a clear application of the principle that a struck-off, dissolved company lacks the legal capacity to sue, and that the point can properly be disposed of as a preliminary question of law under Order 14A rather than left to trial.