Scene for ISSUE 2

Jo: I’m intended to require the majority shareholders to buyout my shares. Is it possible to
do so?

Lawyer 1(Nisa): Regarding this issue, it is best to look into Section 75(1) (a) and (d) of the
Companies Act 2016. This section has states that directors cannot hold power to allot shares
in the company, and to allot shares under the agreement or offer unless with resolution of
company to acquire its own share and the approval of the company’s resolution has been
obtained. But it has certain limitation based on section 76(1) of the Companies Act.

Lawyer 2(Mira): Looking at your situation, Mr.Jo, as the fourth director of Alpha Sdn Bhd,
you do not have a right to allot shares in the company and to allot shares under the
agreement or offer. However, there might be an exception if Mr.Jo wanted to do so. It is by
getting the approval from Alpha Sdn Bhd’s resolution. So perhaps you may have the right to
do so Mr.Jo.

Jo: I see, thank you for enlighten me.

Lawyer 2(Mira): But Mr.Jo, by looking at Section 76(1) of the Companies Act the approval
that you might get soon may be limited. Basically, the approval may be conditional or subject
to conditions imposed by Alpha Sdn Bhd through the resolution.

Lawyer 1(Nisa): We hope, we have provide you a good advice on this matter.

Jo: Ahh sure. What about the registration of transfer if I already got the approval from the
resolution

Lawyer 3 (Wen Teck ) : Mr.Jo, referring to section 106(1), it is mandatory for the company
to register the transferee’s name in the register of members within 30 days from the receipt
of the instrument of transfer unless the directors by using his voting powers to delay or
refuse the registration.

Under the former CA 1965, a private company such as Alpha Sdn Bhd is mandated to have
a constitution that contains a clause dealing with restriction on the rights of members to
transfer their shares. Coming to CA 2016, there is no such requirement to have a
constitution regarding the transfer of shares but it does requires a private company to have
restrictions on members transferring their shares under section 42(2). However, since the
requirement for a constitution is optional, the restriction need not to be stated in the
constitution and may be included in the shareholders’ agreement or in the terms of issue of
the shares when Jo purchase Alpha Sdn Bhd shares.
Mr Jo, you may use your pre-emption rights under section 85 of CA 2016, where a company
may require an existing shareholder to make an offer to other shareholders before the
shares can be sold to an outsider or a clause that requires the transfer to be approved by
the board. As a director, they may use company name and power to confer the board
regarding the discretion to register the transfer of the company’s shares. This discretion may
be absolute, where no reason needs to be given to certain conditions that must be complied
with by the member who wants to transfer his shares.

Lawyer 4 (Alwani): Hence, my substantial argument to advise Mr. Jo is that the constitution
cannot totally prohibit a shareholder’s right to transfer the shares. As there is only restriction
imposed on the CA 2016, but not prohibition.

In the condition that Lim, Amir and Bob refuse to register, it actually can be challenged on
the basis that the refusal was exercised for the wrong reason. This can be seen from Chan
Yock Cher & Chan Yock Kher v Chan Teong Peng, where the court held that the refusal was
wrongly exercised as there was in fact compliance with the articles. In this case, the articles
of association contained a pre-emption rights clause that allowed any member to transfer
any share to any member selected by him but restricted the transfer of shares to a non-
member so long as any member or any person selected by the directors as one whom it is
desirable in the interests of the company to admit to membership. The main point is that
member or director or any person nominated is willing to purchase the same at the fair
value.

JO: Can I transfer all of my shares in the company?

Lawyer 5 Nik: Well Mr. Jo. Based on your situation, we can refer to …

Section 105(1) of the Companies Act 2016, any shareholder or debenture holder may
transfer all or any of his shares or debentures in the company by a duly executed and
stamped instrument of transfer and have to lodge the transfer with the company.

Moreover according to the subsection 2 of the same provision where it stated that Section
105(1) of the Companies Act 2016 shall not apply to the shares or securities of the
companies that had been removed from the official list of stocks exchange as define in
Section 146 of the companies Act 2016.

So, Mr. Jo, in order for you to transfer all of your shares in the company, you have to duly
execute and stamped the instrument of transfer and have to lodge the transfer with the
company. If you fail to comply with this provision, the transfer of share will be invalid and
ineffective. Furthermore, applying to the subsection two of the same provision,the shares or
the debentures that will be transfer must not be removed from the official list of stock
exchange as define in Section 146 of the Companies Act, hence Jo have rights to transfer all
of the shares belong to him in the company

Jo: oh I see. So, what document do I actually need to make this transfer effective?
Lawyer 5 Nik: Alright Mr. JO… According to subsection 5 of the same provision, the
instrument of transfer that includes a written application for transmission of a share,
debenture, or other interest to a personal representative must be filled in by the transferor.
Hence, you will need to comply with the instrument of transfer together with the written
application for transmission. Thus, Form 32A must be filled in by Jo in order for the transfer
of shares to be effective.
Jo: Thank you Miss Nasyuha and Miss Alwani. Now, may I know if I can proceed to sell my
shares to the majority shareholders in the company according to the law?

Lawyer 6 (Dijah): Well, Mr. Jo the answer would be yes but there is a condition that comes
with it. According to Section 228(1)(a)and(b) provides that a company shall not enter or carry
into effect any arrangement or transaction where a director or substantial shareholder of the
company acquire or is to acquire shares or dispose of or is to dispose of shares to the
company unless under Section 228(2)(a) such arrangement or transaction received prior
approval by a resolution of the company. You can refer to the case of Tan Chee Hoe & Sdn
Bhd v Code Focus Sdn Bhd [2014] MLJU 197, where the Plaintiff claimed that the Defendant
had failed, refused and /or neglected to fulfill the conditions precedent to get the approval of
of the Defendant's shareholders in an EGM approving the sale of the shares to the Plaintiff.
The court held that the mandatory statutory provisions under section 132C of the Companies
Act 1965 (para materia with section 228 Companies Act 2016) must be complied with and
non-compliance or contravention of the requirement to receive approval from shareholders
renders the contract as void and invalid; and thus cannot be enforceable by law.

Thus, applying to your situation right now Mr.Jo, you could and allowed by law to require the
majority shareholders to buyout your share. However, prior to that, you must receive
approval from the company through special resolution where the shareholders, Lin, Amir and
Bob signify their agreement for you to dispose your share and subsequently will acquire or
buy the said shares on behalf of Alpha SB.

JO: Is it any possible remedies for the action done by my colleagues to me?
Lawyer 7 (Afrina): I refer to Section 346 (1) (a) & (b) of CA 2016 as already explained by
Ms Nadia earlier regarding the remedy. There is one case which quite similar to your
situation right now, Mr Jo. The case of Chew Sang Hai v Intan Kinabalu where the majority
shareholders have passed the resolution during the general meeting without his presence as
he was in overseas. In this case, the court held that the respondents who were the majority
shareholders in the 1st respondent company had advanced their own interests and had
abused their voting powers to the prejudice of the petitioner in disposing of the company’s
assets to CLDSB.

JO: Can I get any relief for that?

Lawyer 8 (Atiqah): The relief of the act of oppression is given in section 346 (2) (a)-(e) of
CA 2016. The court may:-

(1) direct or prohibit any act or cancel or vary any transaction or resolution;
(2) regulate the conduct of the affairs of the company in future;
(3) provide for the purchase of the shares or debentures of the company by other
members or holders of debentures of the company or by the company itself;
(4) in the case of a purchase of shares by the company provide for a reduction
accordingly of the company’s capital; or
(5) provide that the company be wound up.

Regarding your question, you would get the warranting relief under Section 346(2) of the
Companies Act 2016 as Lim, Amir and Bob acted oppressively or in disregard of your
interest. You can rely on the precedent in the case of Chew Sang Hai as explained by Ms
Afrina just now, where the judge orders against the respondents to revoke, set aside and
cancel all the resolution passed at the BOD meeting.

To conclude this issue, we believe that Mr.Jo may be able to require the majority
shareholder to buyout your shares if you fulfilled all requirements under the provisions that
has been discussed.