SANDEEP SINGH GREWAL v 1. ) TAN ENG JOO 2. ) JIANG YIHONG 3. ) PAYSOLUTION TECHNOLOGIES SDN BHD

Case Significance

Illustrates the buy-out remedy under section 346 of the Companies Act 2016 for oppression and deadlock between equal shareholders: on finding oppressive conduct, the court ordered an independent valuation of the plaintiff's shares as at a pre-oppression point and directed the oppressing shareholder to purchase them at that value — a 'clean break' preserving the company.

This High Court decision at Kuala Lumpur (Commercial Division), delivered by Judge Atan Mustaffa Yussof Ahmad, concerns a shareholder's oppression action under section 346 of the Companies Act 2016 arising from a deadlock between equal shareholders of Paysolution Technologies Sdn Bhd. The plaintiff, one of two equal shareholders, complained that the affairs of the company had been conducted in a manner oppressive to him and unfairly discriminatory, in particular through the passing of resolutions without proper authority and the purported use of a casting vote in written resolutions in a manner said not to be valid under the company's constitution. The relief was sought under section 346 together with the just and equitable provisions of section 465, in a context where the relationship between the equal shareholders had broken down.

The court found that oppressive conduct had been established and fashioned a buy-out remedy to resolve the deadlock. Concluding that a clean break between the parties was the appropriate remedy — one that would preserve the company as a going concern while compensating the plaintiff for the dilution of his shareholder rights — the court ordered that an independent accountancy firm be appointed by the court to determine the fair and just value of the plaintiff's shares in the company as at a point before the oppressive conduct, taking into account the oppressive conduct and any assets or monies that had been disposed of, dissipated or removed from the company. Within fourteen days of that valuation, the first defendant was ordered to purchase the plaintiff's shares at the determined value and make full payment, and to take the necessary steps to remove the plaintiff as a director, with costs of RM15,000 payable by the first defendant to the plaintiff. The judgment is a useful illustration of the buy-out remedy under section 346 of the Companies Act 2016 as a means of resolving a deadlock between equal shareholders.