DATO' AZIZAN ABD RAHMAN & ORS v. CONCRETE PARADE SDN BHD & ORS AND OTHER APPEALS
FEDERAL COURT, PUTRAJAYA
TENGKU MAIMUN TUAN MAT CJ
NALLINI PATHMANATHAN FCJ
RHODZARIAH BUJANG FCJ
[CIVIL APPEAL NOS: 02(f)-77-08-2022(W), 02(f)-80-08-2022(W), 02(f)-81-08-2022(W) & 02(f)-82-08-2022(W)]
26 MARCH 2024
[2024] CLJ JT (5)

Abstract - The balance between the pursuit of lawful entrepreneurial goals by management, by raising capital through the issuance of new shares, as against the pre-emptive rights of shareholders, is a legitimate concern in company law. The shareholders' fear of shares dilution and voting power, is to be weighed against the need to restructure and pursue growth in the interests of the company as a whole. Hence, in ensuring that a balance is struck between the competing interests of shareholders and directors in pursuing their business goals, s. 75(1)(a) of the Companies Act 2016 ('Act') prohibits the management of a company from exercising any power to allot shares in the company without the prior approval of the company in general meeting. Section 85 of the Act further safeguards shareholders' rights by providing pre-emption rights in relation to the issuance of new shares. These rights, however, are subject to the constitution of the company. In this respect, the content of the company's constitution is given recognition and acknowledgment, and it prevails over the statutory rights under s. 85(1) of the Act.

COMPANY LAW: Mergers and take overs - Underlying principles - Proposed allotment and issuance of new shares - Powers of directors in issuance of shares - Exemptions where issuance is part consideration for acquisition of asset - Pre-emptive rights - Whether statutorily provided - Whether subject to constitution of company - Whether constitution of company prevails over pre-emptive rights under statute - 'Subject to direction to the contrary by the company at general meeting' - Whether required prior approval at general meeting - Whether shareholders given sufficient notice - Whether approval obtained - Whether share buy-back transactions undertaken in good faith and in interest of company - Companies Act 2016, ss. 75(1), (2), 85(1), 223(1)(b)(i) & (ii)

COMPANY LAW: Oppression - Minority shareholders - Proposed allotment and issuance of new shares - Whether shareholders aware of pre-emptive rights - Whether share buy-back transactions undertaken in good faith and in interest of company - Whether undertaking of transaction without authorisation in company's articles of association amounted to illegality per se - Whether illegality could form basis for complaint of oppression - Whether minority shareholders suffered unfair prejudice - Whether non-compliance with s. 127 of Companies Act 2016 established - Whether oppression made out

STATUTORY INTERPRETATION: Construction of statute - Interpretation - Companies Act 2016, s. 223(1)(b)(i) & (ii) - Whether both limbs to be read disjunctively - Whether 'or' means 'alternatively', and cannot be construed to mean 'and' - Whether sufficient for either s. 223(1)(b)(i) or (b)(ii) to be adhered to - Purpose - Whether to ensure shareholders aware of, and approve any proposed corporate transaction that will materially affect company

WORDS AND PHRASES: 'subject to direction to the contrary by the company at general meeting' - Whether 'subject to direction' means subject to instruction or order or stipulation - Whether directors bound to ascertain and obtain approval of shareholders at general meeting for proposed issuance of shares - Companies Act 2016, s. 85(1)