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             SUIT NO. D24-NCC-332-2010


HOLDINGS LTD                                …   PLAINTIFF


SDN BHD                                     …   DEFENDANT
(COMPANY NO. 286452-T)

             GROUNDS OF DECISION (ENC. 1)

KUALA LUMPUR                       IN CHAMBERS

Background Facts
     The Plaintiff and the Defendant are shareholders in a
company known as ACE Synergy Insurance Berhad (‘the
company’). The Plaintiff is the registered shareholder of 51%
and the Defendant 49% of the entire issued and paid up share
capital of the company. Pursuant to an Agreement dated 12th
August 2008 (as amended by a letter agreement dated 20th
August 2008) and the amended and restated shareholders
Agreement dated 1st January 2009 (as amended by a letter

agreement dated 20th August 2008 (hereinafter collectively
referred to as ‘ARSA’), entered into between the Plaintiff, the
Defendant and Advance Synergy Berhad (‘ASB’), the Plaintiff
was granted a call option to purchase the Defendant’s 49%
shareholding in the company (the Option Shares), subject to
the terms and conditions of a draft Sale and Purchase
Agreement set out in Schedule 1 of the ARSA. The parties
further agreed that the execution of the Sale and purchase
Agreement of the Option Shares and the proposed acquisition
and proposed disposal of the Option Shares are subject to the
prior approval of the Malaysian Minister of Finance under the
Insurance Act, 1996 (acting under the recommendation of Bank
Negara Malaysia- ‘BNM’) and the FIC.

     The Plaintiff exercised the call option on 4th February
2009 by having notice of the same served on the Defendant
under cover of a letter dated 10th February 2009 from its
solicitors. The Defendant failed/refused to execute the letter of
consent. By letter dated 20th March 2009, the Plaintiff informed
BNM of the Defendant’s failure to provide the letter of consent.
The Plaintiff was constrained to notify BNM to this effect as it
had on 10th February 2009, filed the application for MOF
approval and its application was incomplete without the
Defendant’s letter of consent. FIC approval ceased to be
necessary from an earlier date. The Plaintiff’s attempts to
advance its application for MOF approval failed to secure the
cooperation of the Defendant. This failure, in turn, meant that

BNM was unable to process the Plaintiff’s application under
sec. 67 of the Insurance Act.

     The Plaintiff filed an originating summons in suit number
D24-NCC-72-2009 seeking the following orders:

     a)    An order that the Defendant do forthwith give its
           written consent to BNM and/or the MOF in respect
           of the Plaintiff’s application for approval of the
           Minister of Finance (MOF Approval) under Section
           67 of the Insurance Ac t 1996 for the acquisition and
           disposal of its 49% interest in ACE Synergy
           Insurance Berhad;

     b)    Consequential Orders for the Defendant to:
                 i)    Provide documents/information;
                 ii)   Attend meetings with the approving
           In relation to the Application.

     Essentially the orders were to compel the Defendant in
this action to comply with the terms of the agreement to enable
the Defendant to obtain the approval of the MOF. The
Defendant resisted the prayers in the OS and took the position
that the inclusion of the option clause in the ARSA in itself
should have been preceded by a letter of approval in principle
from BNM. Counsel for the Defendant in the OS proceedings

contended that without the in principle letter of approval from
BNM, the option clause in the ARSA is illegal for contravention
of sec. 24 of the Contract Act.

      In the course of dealing with the objections raised by the
Defendant to the exercise of the option clause by the Plaintiff,
this Court wrote two judgments dated 5th April 2010 and 12th
May 2010 upholding the validity of the option clause and
required the Defendant to render all necessary assistance to
enable the Plaintiff to obtain the necessary approval from MOF
under sec. 67 of the Insurance Act 1996 for the acquisition and
disposal of the Defendant’s 49% interest in the company. I
understand from both Counsel, that the judgment of this Court
was the subject matter of an appeal to the Court of Appeal and
an application for leave to the Federal Court following the
dismissal of the appeal by the Court of Appeal. The application
for leave was also rejected by the Federal Court.

      Pursuant to the High Court Order dated 12th May 2010,
the Defendant provided its letter of consent to support the
Plaintiff’s application for MOF Approval. It is pertinent to note
that the Defendant had, in the letter of consent undertaken to
submit, in due course, the Defendant’s Board Resolution and
Shareholder’s Resolution approving the disposal of the Option
Shares to the Plaintiff in accordance with the terms of the Sale
and Purchase Agreement of the Option Shares and to execute,
deliver and perform the of Sale and Purchase Agreement for

the option shares and the transactions contemplated therein.
MOF Approval was obtained on 9th September 2010.

Defendant’s Obligations under the ARSA
      The Defendant agreed to do all things and execute all
agreements , instruments, transfer of documents, as, may be
necessary, to give full effect to the provisions of the Sale and
Purchase Agreement of the Option Shares, at all times, using
their best endeavors and acting in utmost good faith.

      The Defendant’s obligations post-MOF Approval under
the ARSA and / or the Sales and Purchase Agreement of the
Option Shares described as the ‘completion requirements’ in
schedule 1 to the Sale and Purchase agreement included the
      a)     Within 3 days following the Plaintiff’s acceptance of
             the MOF Approval, the Defendant and ASB shall
             deliver 3 sets of the Sale and Purchase Agreement
             of Option Shares, duly executed by the Defendant
             and ASB;

      b)     As soon as the Plaintiff exercises the Call Option,
             the Defendant shall convene a general meeting of
             its shareholders to pass a resolution approving the
             Sale and Purchase Agreement of Option Shares
             and the transactions contemplated therein;

c)   The Defendant was to deliver to the Plaintiff duly
     executed and valid forms of transfer of securities
     (Form 32A) in respect of the Option Shares and the
     original share certificates for the Option Shares;

d)   The Defendant was to deliver to the Plaintiff the duly
     completed    Form     PDS    6   stamping    proforma
     (adjudication forms) in relation to the transfer of the
     Option Shares, with Part II duly completed by the
     Company Secretary of ASB;

e)   The Defendant Shall deliver to the Plaintiff, as
     evidence of the authority of each person executing
     all the aforesaid document(s) in relation to the sale
     and purchase of the Option Shares on the
     Defendant’s behalf:

           i)    A certified true copy of the minutes of a
                 duly held meeting of the Board of
                 Directors of the Defendant approving a
                 resolution authorizing the execution by
                 the Defendant of the document; or

           ii)   A certified true copy of the power of
                 attorney conferring the said authority
                 upon each such person.

      The Defendant has refused / failed to perform the
aforesaid completion by declining to execute the Sale and
Purchase Agreement for the Option Shares. The Plaintiff filed
this originating summons to compel the Defendant inter alia to
convene a general meeting of its shareholders to pass the
resolution approving the sale and purchase agreement for the
option shares and other relief to compel the Defendant to
comply with the completion requirements. The Defendant in
resisting the Originating Summons filed a lengthy affidavit by its
managing director Mr. Wong Jin Hean dated 1st November
2010. Another affidavit on 26th November 2010. In the first
affidavit, the deponent repeats all the allegations contained in
affidavits affirmed on behalf of the Defendant when resisting
originating   summons     D24-NCC-72-2009.       Essentially,   the
contents of this Affidavit challenges the validity of the letter of
approval from BNM and whether this letter of approval meets
the requirement of Sec. 67 of the Insurance Act. Since I have
already dealt at length with these allegations in my earlier two
judgments, I do not propose to deal with them in this judgment.
The Defendant is clearly precluded from raising and relying on
these allegations under the principle of res judicata.

      In the second affidavit, the Defendant through the same
Mr. Wong June Hean, for the first time alleged that it is not
obliged to comply with the completion requirement because it is
a pre-requisite to it signing the agreement for the sale and
purchase of the option shares that ASB obtain the approval of

the Securities Commission. According to Paragraph 5.3.1 and
Paragraph 5.4 of the affidavit affirmed on 26th November 2010,
the deponent alleged that this requirement arises in the
following manner:

      a)    ASB adalah satu entity ‘public listed’;

      b)    Peruntukan ‘Capital Markets and Services Act 2007,

      c)    Garis panduan yang dikeluarkan oleh SS berkenaan
            ‘the offering of Equity and Equity Linked Securities’

      During the course of oral submission, Counsel for the
Defendant relied on this ground and the ground that ASB is not
a party to these proceedings as the basis to defeat the prayers
in the Plaintiff’s OS.

      In my judgment, there is no merit in either of the grounds.
As regards ASB not being a party to this OS, the choice of
parties is surely for the Plaintiff to decide. If the Defendant is of
the view that this summons is not properly constituted, it is up
to the Defendant to either apply to set aside the summons or for
ASB to apply to be made a party. In the absence of any such
application, this defence raised by the Defendant can only be
construed as designed to delay the just disposal of this
summons on its merits.

     As regards the second issue, the submission of Counsel
is that pursuant to Sec. 212 (2) (f) of the Capital Markets and
Services Act, ASB as a public listed company is obliged to
obtain the approval of the Securities Commission before it can
comply with any part of the completion requirements because
the completion by it would result ‘in a significant change in the
business direction or policy’ of ASB, a listed entity. With
respect, I am unable to comprehend this submission because
there is no evidence in any of the affidavits affirmed by the
Defendant that the business direction or policy of ASB will
change within the meaning prescribed in sub-sec. (f) by the
Defendant disposing its 49% stake in the company. Besides, in
my judgment, the best person to give evidence that the disposal
by the Defendant would have this effect on ASB would be a
representative of ASB and there is no affidavit affirmed by any
representative of ASB. The evidence of the deponent on behalf
of the Defendant merely explains that ASB will have to obtain
the approval of the Securities Commission without explaining
the basis for ASB being subject to sub-section (f).       In my
opinion, the mere disposal of the Defendant’s 49% stake in the
company does not attract the provisions of sub-section (f) as it
is conceivable that ASB by means of a merger, joint venture or
even by obtaining a new insurance license may continue with
its existing business direction or policy. In the absence of any
evidence of ASB’s business plans, there is no reason for this
Court to speculate on whether the sale of the 49% stake by the
Defendant would attract the provision of sub-sec. (f), insofar as
ASB is concerned. Counsel for the Defendant submitted that
this Court ought to draw this inference when there is no
foundation for this Court to do so.

      I view the defenses raised by the Defendant, as yet,
another attempt by it to frustrate the Plaintiff from securing the
Defendant’s 49% stake in the company in accordance with the
terms and conditions of the ARSA.

      Accordingly, I order in terms of prayers 1 to 6 of Enc. 1.
The Defendant are ordered to pay costs of RM 15,000 in
respect of Enc. 1 to the Plaintiff.

(Anantham Kasinather)
Mahkamah Tinggi Kuala Lumpur

Date of decision: 29th November 2010


Mr. N. Navarathnam
Ms. Wong Wye Wah
(Messrs Abdul Kadir & Co)                 ...   for the Plaintiff

Dato’ Harpal Singh
Mr. B.E. Teh
(Messrs A.J. Arifin Yeo & Harpal)         …     for the Defendant


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