Company – Whether it was impracticable to call for a meeting and conduct a meeting.

Tamabina Sdn Bhd & Anor v Nakamichi Corporation Berhad [2016] 2 MLRA 649

• The respondent (“Nakamichi”) had purchased 51{17537d436ed2421b601d4e8347a4bca0113a3bc001127a695927b11585f47eb2} of shares in the 1st appellant (“Tamabina”).
• The 2nd appellant (Lai Yun Fung, “LYF”) was a Director and shareholder in Tamabina.
• Nakamichi had applied for an order that an extraordinary general meeting (“EGM”) in Tamabina to be called, held and conducted after its purchase of the majority shares in Tamabina.
• Among the items on the EGM’s agenda was the removal of one Lo Man Heng and LYF as Directors of Tamabina.
• The trial judge allowed Nakamichi’s application and found that “the court is satisfied that it is impractical to call a meeting in accordance with the articles and the CA [Companies Act 1965]”.
• In this appeal, the appellants submitted, inter alia, that Nakamichi had not shown any circum-stances that it was impractical to call for a meeting of Tamabina.
• Nakamichi contended that by being the majority shareholder in Tamabina, it had a right to call a meeting and exercise its voting power to remove Lo Man Heng and LYF as Tamabina’s Directors.
• Nakamichi further justified by stating that it had the right to call for an EGM because:
  a) the mismanagement of Tamabina had caused the company to run into debts and LYF and Lo Man Heng were unwilling or unable to deal with the debts; b) LYF and another Tamabina shareholder (one Lo Shwu Fen) had failed to attend the second EGM which was called by Lo Man Heng.

• In order for Nakamichi to show impracticality in calling for a meeting, it was necessary to show evidence of attempts to call and hold a meeting and that such attempts were futile.
• In this case, the lack of quorum (i.e. LSF and Lo Shwu Fen did not attend the second EGM called) was not sufficient evidence of impracticality of calling or holding a meeting.
• LYF had in her affidavit reasonably explained her absence from the second EGM, and had also explained why she considered the second EGM to be illegal.
• Therefore, the trial judge had erred in holding that it was impracticable to call for a meeting and that it was impracticable to conduct a meeting in accordance with the company’s articles or the CA.