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Action
(Question 2)
In 2015, director sold the company’s asset to Glad Sdn Bhd. However, the
full purchase price for this sale is still not paid but no action has been
initiated. Directors said any legal action has already time-barred. However,
it is turn out that Glad Sdn Bhd is actually being controlled by the
director’s family.
Facts of
the case
Director said that the company has entered into an exclusive contract
with other producer. Therefore they rejected other manufacturers’
offer. However, Rina discovered that the exclusive contract has expired.
She suspects the new contract was diverted to Glad Sdn Bhd. At
general meeting, this decision was approved as an investment in glad
Sdn bhd. Rina did not receive the notice of meeting.
Rina want to sue them. However, the directors said that due to
defamation action, Rina is not acting in good faith. Advise Rina.
Facts of
the case
Section 347 CA
Held
The person applying must have his name
appear on the register of member but this
is a general rule not universal;
The petitioner had been deprived of
membership and this is the act complained
of so the respondent cannot rely on his
unconscionable conduct to deprive appellant
from having locus standi
Kitnasamy s/o Marudapan v Nagatheran s/o
Manogar [2000] 2 SLR 598
Held:
evidence indicated that he was a shareholder of
a company although his name did not appear in
the register of members. The omission of the
appellant’s name was due to respondent’s fault.
Respondents were estopped from denying that
the appellant was a shareholder and member
because they had issued the notice of the
general meeting to the appellant, a notice to
which he was not entitled to if he were not a
member of the company.
Swannson v Pratt [2002] 42 ACSR 313
(b) It appears prima facie to be in the best interest of the company that the application for leave to be granted
“GOOD FAITH AND
CLEAN HANDS”
Would indirectly
Substantial benefit from any
economic recovery by the
company as a
interest in result of the
the company proceedings
Contd.
Consequently, the court held that it was not prima facie in the best
interest of the company that leave should be granted
Tam Tak Chuen v Eden
Aesthetics Pte Ltd and
Another
Fraud on minority
a) Rina is not invited where approval to invest in Glad Sdn
Bhd
Sect 349 : Effect of Ratification
Thus, Rina has to send the notice in writing to the company secretary
who will send it to the other directors at least 30 days before she
commences the legal action. If the company responds to the notice
and will be commencing the legal action as requested, then no need
for Rina to make application for the leave of court. However, if the
company did not responds to her notice, she can makes an
application for the leave of court under Section 348 of Companies
Act 2016.
What are the
orders that can
be made by the
court?
Section 350 of the Companies Act 2016 stated that:
a) Authorizing the complainant or any other person to control the conduct of the
proceedings
b) Giving directions for the conduct of the proceedings.
c) For any person to provide assistance and information to the complainant, including
to allow inspection of the company’s book.
d) Requiring the company to pay reasonable legal fees and disbursements incurred by
the complainant
e) The cost of the complainant, the company or any other person for proceedings
taken under this section, including an order as to indemnity for costs.