In the recent decision of Bursa Malaysia Securities Berhad v Mohd Afrizan bin Husain (Appeal No.: 02(f)-39-07/2021(W)), the Federal Court had to consider five questions of law put forward by the Appellant (“Bursa Securities”). The questions of law concerned the interpretation of the Listing Requirements, which include the ACE Market Listing Requirements (“ACE LR”) and Main Market Listing Requirements (“Main LR”) (collectively “the Listing Requirements”), and the scope of the powers and/or duties of the liquidator of a listed corporation.
 
The five questions of law can be distilled into two overarching areas: 

In unanimously answering the questions of law in favour of Bursa Securities, the Federal Court found, in brief, that: 

Relevant facts
 
The Respondent, Mohd Afrizan bin Husain, is the former liquidator of Wintoni Group Berhad (“Wintoni”), appointed pursuant to a Kuala Lumpur High Court Order dated 17 August 2017 (“Winding-Up Order”). Wintoni was a listed corporation on the ACE Market of Bursa Securities at the material time.
 
Shortly after the Respondent’s appointment as liquidator of Wintoni, the Respondent issued a Letter of Undertaking (“LOU”) where the Respondent expressly undertook and agreed to comply with the ACE LR in consideration of Bursa Securities allowing the continued listing of Wintoni on the Official List. Compliance with the ACE LR includes, amongst others, the preparation of the relevant financial statements of Wintoni. During the material period, there were also ongoing legal challenges/ appeals being brought against the Winding-Up Order.
 
Premised on these facts, Wintoni was not de-listed by Bursa Securities.
 
Notwithstanding having issued the LOU and being the person responsible for the management of Wintoni, the Respondent failed to comply with the ACE LR by causing and permitting, either knowingly or where he had reasonable means of obtaining such knowledge, Wintoni to fail to announce its relevant financial statements at the material time. The Respondent also did not authorise Wintoni’s directors to take steps to ensure that Wintoni complied with its obligations under the ACE LR.
 
Consequently, the Respondent was publicly reprimanded by Bursa Securities due to the Respondent’s said breaches of the ACE LR. 
 
Being dissatisfied with Bursa Securities’ decision, the Respondent commenced judicial review proceedings seeking, amongst others, to quash Bursa Securities’ decision to publicly reprimand him for failing to comply with the ACE LR.
 
The High Court’s Decision
 
The High Court allowed the Respondent’s judicial review application and, amongst others, held that Bursa Securities’ decision to reprimand the Respondent was illegal and irrational on the following grounds:  

The Court of Appeal’s Decision
 
The Court of Appeal upheld the High Court’s decision but on different grounds. The Court of Appeal rendered its decision primarily on the ground that it was mandatory for Bursa Securities to immediately de-list Wintoni upon the winding-up order being granted against it. As far as the question of whether liquidators had powers and duties to comply with the CMSA and/or ACE LR was concerned, the Court of Appeal suggested, in passing, that in principle they accepted that a liquidator has to observe the requirements imposed on him by any written law including the CMSA and ACE LR (thereby disagreeing with the High Court). However, the Court of Appeal ultimately found that this would not affect its decision given that there would not have been a need for the Respondent to comply with the ACE LR had Wintoni been de-listed immediately upon the Winding-Up Order being granted.
 
The Federal Court’s Decision
 
At the Federal Court, Bursa Securities contended that as the Listing Requirements are a set of contractual terms with statutory force, the principles of contractual interpretation and statutory interpretation both ought to apply in interpreting the Listing Requirements. Therefore, the Listing Requirements ought to be read harmoniously, having taken into account the spirit, intention, and purpose of both the CMSA and the Listing Requirements. Such an interpretation would leave no doubt that there was no mandatory requirement imposed on Bursa Securities to immediately and summarily de-list Wintoni but instead allowed Bursa Securities to exercise its discretion to stay its hand in circumstances such as this where there were ongoing legal challenges/appeals to the Winding-Up Order. Bursa Securities further contended that as the liquidator is the controlling person of a corporation under liquidation, it is only the liquidator who is capable of undertaking to ensure compliance by the listed corporation with the Listing Requirements.  
 
In allowing Bursa Securities’ appeal, the crux of the Federal Court’s decision turned on the interpretation of the word ‘shall’ at Rule/paragraph 16.11(2) of the ACE LR/Main LR.
 
The Federal Court held that the relationship between a listed corporation, its directors, and/or Controlling Person (as defined in Rule/paragraph 2.22(1) of the ACE LR/Main LR) with Bursa Securities was both a statutory relationship and an independent contractual relationship. Therefore, in interpreting the Listing Requirements, the purpose and object of the Listing Requirements and the CMSA must be considered holistically and with a purposive interpretation given to it. Amongst others, what must be considered is Bursa Securities’ primary duty under Section 11 of the CMSA to ensure an orderly and fair market and to act in the public interest. Where any interests that it is required to serve under the law relating to corporations conflict with the interest of the public, then the latter prevails.
 
Consequently, the Federal Court held that the phrase “shall de-list” in Rule/paragraph 16.11(2) of the ACE LR/Main LR did not impose a mandatory obligation on Bursa Securities to de-list a listed corporation immediately upon a winding-up order being served against it. Instead, Bursa Securities retained the discretion to delay the de-listing of the listed corporation where to do so would be in the public interest.
 
Further and in any event, the Federal Court held that Rule 2.07/paragraph 2.06 of the ACE LR/Main LR is clear that Bursa Securities can waive and modify the Listing Requirements in accordance with its primary duty as set out in the CMSA to protect the interest of public investors.
 
With this background set on Bursa Securities’ powers, the Federal Court went on to hold that it is not open to individuals to choose to undertake their own interpretation of the provisions of the Listing Requirements and act on their own interpretation of the same. If this is allowed, there would be chaos in the capital market. Instead, the Federal Court held that the Respondent, being the controlling person of the listed corporation in liquidation, had an express duty to comply with and/or ensure compliance by the listed corporation with the ACE LR so long as the wound-up corporation remains listed.
 
Further, the Federal Court found that a director cannot act for the listed corporation without the consent or authorisation of the liquidator who is in control of the listed corporation in liquidation. As it is the duty of the person in control to provide disclosure of a listed corporation in liquidation, it is the responsibility of the liquidator to procure the necessary information or direct the directors to do so.
 
Comments
 
The Federal Court’s decision provides, for the first time by our apex court, clear pronouncements on the manner in which the Listing Requirements are to be interpreted. The Federal Court also acknowledged that so long as Bursa Securities’ actions in regulating the capital market are done in accordance with its primary duty of protecting the interest of the public pursuant to the CMSA, including where necessary to waive the Listing Requirements, the Court will not disturb the decision of Bursa Securities.
 
Further, the scope of the powers and/or duties of a liquidator in control of a listed corporation in liquidation is now settled. The Federal Court expressly held that a liquidator in control as aforesaid is required to not only comply with the prescribed duties in the Companies Act 2016 but has a statutory duty to comply with all written laws, including the Listing Requirements. This brings certainty to future listed corporations in liquidation on how to manage their affairs, especially where there are ongoing legal challenges/appeals to the winding-up order. 
 
Our Partners Khoo Guan Huat, Preetha Pillai and Nimalan Devaraja, and Senior Associate Ann Tiang Wen En appeared as counsel for Bursa Malaysia in the Federal Court.

Article by Nimalan Devaraja (Partner) and Ann Tiang Wen En (Senior Associate) of the Dispute Resolution Practice of Skrine.