1. ) VICTOR WANG 2. ) WANG ZHENG v 1. ) MUHAMMAD FAIZ BIN MAMING 2. ) SARA NURASHEKEEN BINTI SUHAILI 3. ) ANDY CHEONG NAM LOONG 4. ) OOI YOU JING 5. ) CHOW CAPITAL VENTURE LPT 6. ) STUDIO TWENTY THREE SDN. BHD.

Case Significance

Confirms that the lawful removal of directors by ordinary resolution at a duly convened EGM is legitimate shareholder democracy, not oppression under Section 346 of the Companies Act 2016, which must not be used as a tactical weapon.

This High Court decision in the Commercial Division at Kuala Lumpur concerns a minority-oppression petition under Section 346 of the Companies Act 2016 arising from the removal of directors. The plaintiffs, shareholders of a company, brought an originating summons alleging that the other shareholders had conducted the company's affairs in a manner oppressive to them and had passed resolutions unfairly prejudicial to them, in particular by removing directors at an extraordinary general meeting, and they invited the court to treat the company as a quasi-partnership. The central questions were whether the removal of directors by a duly convened extraordinary general meeting amounted to oppression within the meaning of Section 346, and whether any exception to the general principle arose on a quasi-partnership footing. The court held that there was no oppression within the meaning of Section 346: the removal of directors by ordinary resolutions was a legitimate act of shareholder democracy, taken to protect the company from directors who had engaged in serious misconduct, and the quasi-partnership issue had not been fully argued. The court further accepted that the originating summons was abusive and a tactical manoeuvre, being a collateral attempt to reverse a validly convened and lawfully passed resolution: the plaintiffs had earlier failed to restrain the extraordinary general meeting in separate proceedings, and now sought to achieve by this action what they had failed to secure by injunction. Emphasising, with reference to Low Cheng Teik v Low Ean Nee, that the oppression remedy protects genuine minority shareholders and is not a device for disgruntled shareholders to undo lawful corporate actions or to cloak their own misconduct, the court dismissed the originating summons with costs fixed at RM5,000. The judgment is a useful reminder that a lawful removal of directors by resolution is not oppression and that Section 346 must not be used as a tactical weapon.