Mismanagement in the company can be considered as an oppression according to the circumstances of the case. However, a grave mismanagement of the company can be classified as an oppression where there is a breach of the standard of care that should be implemented by a company. Among the examples of mismanagement in the company are the value of shares for shareholders being reduced and affected as a result of the misconduct of individuals who control the company, failure to pay dividends to shareholders, etc.
Shareholders are not given notice of the meeting.
You’re a shareholder in the company but the meeting is held without any notice being given to you. What can you do?
Pursuant to section 101 (2) of the Companies Act 2016, you have the right to obtain notice. If you are not given the notice, it can also be considered as an oppression to you as a shareholder. Get advice from a lawyer to know what you need to do!
Rights as a shareholder.
- The right to attend, participate and speak at a meeting;
- The right to vote on a show of hands on any resolution of the company;
- The right to one vote for each share on a poll on any resolution of the company;
- The right to an equal share in the distribution of the surplus assets of the company; or
- The right to an equal share in dividends authorized by the Board.
Conversion of the company’s status
How to convert your company’s status from an unlimited company to a limited company?
Section 40 (1) of the Companies Act 2016 states that a company with an unlimited status can convert to a limited company by passing a special resolution and shall lodge with the Registrar a notice for the conversion and specifying an appropriate alteration of its name.
Misuse of the company’s information?
How to bring an action if company directors or employees misuse company information?
You can file a claim under section 218 (1) (a) & (b) of the Companies Act 2016 which provides that a director or company officer shall not, without the consent or ratification of the general meeting, use company property and use information acquired by virtue of his position as a director or officer of the company.
Court Case: Lembaga Tabung Angkatan Tentera v Prime Utilities Bhd [2013] 7 MLJ 831: LAT v P Bhd [2013] 7 MLJ 831
The plaintiff is a minority shareholder in the Defendant company. The Plaintiff had written several letters to the defendant demanding to know what action it had taken to recover the balance of the sum of money it had handed to a foreign asset management company named Budi for investment purposes. The Defendant had given an amount of RM112 million but Budi had only returned RM4 million. Feeling dissatisfied, the Plaintiff filed a leave application to court to commence proceedings against Budi. Later, the Defendant filed a claim against Budi but failed. Budi was wound up and the Defendant failed to file any evidence of his debt in the winding up despite the Plaintiff’s request to do so.
The plaintiff filed the instant application for leave pursuant to ss 181A, 181B and 181E of the Companies Act 1965 (at that time) to commence a derivative action on the Defendant’s behalf against its former and current directors to account for the losses in the investment exercise with Budi. The Plaintiff stated that the directors were duty-bound to explain their actions.
The Court was satisfied with the Plaintiff’s case and allowed the Plaintiff’s application with costs.
Do you have a legal problem related to your company?
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