LEE BEE SUN v 1. ) SIEW SEOW KIM 2. ) MUCK HO WAN 3. ) SUPER RESOURCES & TRADING SDN. BHD

Case Significance

Confirms that a minority-oppression claim under section 346 of the Companies Act 2016, however broad the remedy, must rest on a properly pleaded and evidenced foundation for the rights said to have been disregarded, failing which it will be dismissed.

This High Court decision at Kuala Lumpur, in the Commercial Division, concerns a minority-oppression claim brought by originating summons under section 346 of the Companies Act 2016. The plaintiff, a shareholder of the company, alleged that the conduct of the first and second defendants had been oppressive to her, or had unlawfully disregarded her interests as a shareholder, in particular by removing her from management and denying her physical access to the company's premises. She contended that there had been a visible departure from the standards of fair dealing and a breakdown of the mutual trust and confidence among the shareholders, and she sought the remedies available under section 346.

The court accepted that section 346 provides a broad remedy where the affairs of a company are conducted, or a power is exercised, in a manner oppressive to a member or in disregard of a member's interests. But it emphasised that a plaintiff must first establish the rights said to have been disregarded, and the factual foundation for the claim, by proper pleading and supporting evidence. The plaintiff's difficulty was that she had not laid that foundation. She had not pleaded, in her originating summons or supported by her affidavits, the basis on which she claimed the rights she said had been oppressed, for example that she was entitled to remain a director and to enjoy management rights as a result of her membership or of an agreement among the shareholders.

The court held that it could not make the necessary link on the plaintiff's behalf or assume the existence of rights that had not been averred, and that it would be unfair and wrong to do so. The failure to plead and support the basis of the rights relied on was fatal to the claim. The court accordingly dismissed the plaintiff's minority-oppression claim with costs. The judgment is a useful reminder that a section 346 claim, however broad the remedy, must rest on a properly pleaded and evidenced foundation for the rights said to have been disregarded.