High Court: One member may requisition a general meeting under section 311(3)(a) of the Companies Act 2016
10 January 2022
Among the issues raised in the case of Eka Noodle Berhad v Norhayati binti Tukiman  8 AMR 601 (‘Eka Noodle’) were the following:
- whether a single member holding at least 10% of shareholding in a company can validly requisition a meeting of members pursuant to section 311(3)(a) of the Companies Act 2016 (‘CA 2016’) which requires the directors of a company to call for a meeting of members once the company has received a requisition to do so from ‘members representing at least ten per centum of the paid up capital of the company carrying the right of voting’; and
- whether a proposed director’s written consent to be appointed as a director and declaration that he is not disqualified from acting as a director as required under Section 201 of CA 2016 (‘Consent’) must be delivered together with a notice of requisition which includes a proposed resolution for the appointment of directors.
The High Court in Eka Noodle held, inter alia, that notwithstanding the use of the word ‘members’ in section 311(3)(a) of CA 2016, one member holding at least 10% of a company’s paid up capital may convene a meeting of members, and that there is no requirement under section 201 of CA 2016 for the Consent to be delivered together with the notice of requisition.
The plaintiff is a public listed company in which the defendant holds 15.77% of the issued shares.
Pursuant to section 311(3) of CA 2016, the plaintiff received a notice of extraordinary general meeting issued by the defendant on 31 May 2021 (‘EGM Notice’) requesting the plaintiff to convene an extraordinary general meeting on 29 June 2021 (‘EGM’) for various purposes, including (a) the removal of all existing five directors and any other directors who are appointed by the plaintiff’s board of directors before the holding of the EGM; and (b) the appointment of three individuals named by the defendant as directors of the plaintiff.
The plaintiff applied to the High Court for inter alia:
- a declaration that the EGM Notice is invalid, null and void; and
- an order that the convening of the EGM by the defendant is invalid, null and void.
The parties’ contentions
The plaintiff contended that:
- the EGM Notice was issued by only a single member whereas section 311(3)(a) of CA 2016 expressly requires the said notice to be issued by more than one member due to the use of the expression ‘members’ and plurality must have been the intention of Parliament in that regard; and
- the EGM Notice did not contain or attach the Consent of the proposed new directors and is therefore in breach of section 201 of CA 2016.
The defendant contended that:
- the term ‘members’ in section 311 of CA 2016 includes the singular; and cited section 4(3) of the Interpretation Acts 1948 and 1967 (‘IA’) and the Court of Appeal’s decision in Kwan Hung Cheong & Anor v Zung Zang Trading Sdn Bhd  MLJ 773 (‘Zung Zang CA’) in support of her contention; and
- although section 201 of CA 2016 requires a proposed director to issue the Consent before he is appointed as a director, it did not require the Consent to be delivered together with the requisition notice and the Consent may be given any time, and in this case had been given before the resolutions are to be voted upon.
The decision of the High Court
The High Court accepted the defendant's contentions on both of the above-referred grounds and dismissed the plaintiff's application.
Whether the EGM Notice is valid
The learned Judicial Commissioner, Liza Chan Sow Keng, rejected the plaintiff's contention that plurality must have been the intention of Parliament by using the word ‘members’ in section 311(3)(a) of CA 2016, on the following grounds:
- one of the key changes in CA 2016 allows for the incorporation of a company with only one member; therefore the provisions of CA 2016 must be read harmoniously so as not to discriminate between companies with a single member and those with more than one member – if the plaintiff’s assertion is correct, it will mean that section 311(3)(a) does not apply to companies with a single shareholder;
- although section 311(3)(a) uses the word ‘members’, in interpreting this provision, the Court is entitled to resort to section 4(3) of the IA that ‘Words and expressions in the singular include the plural, and words and expression in the plural include the singular’;
- the Court of Appeal in Zung Zang CA applied section 4(3) of the IA in holding that the words ‘members’ and ‘requisitionists’ in section 144 of the Companies Act 1965 may be construed to refer to ‘member’ and ‘requisitionist’ in the singular in that section; and
- the Court of Appeal’s decision in Zung Zang CA has been upheld by the Federal Court in Zung Zang Trading Sdn Bhd v Kwan Hung Cheong & Anor  4 MLJ 86, where our apex court stated that, ‘Having regard to the terms of s. 144(1) of the Companies Act , KCHSB being the sole and only owner of Zung Zang and therefore its member holding "not less than one-tenth of the paid up capital" of Zung Zang, it is clear that KCHSB through PW1 as its corporate representative was vested with the authority to requisition the second EGM of Zung Zang.’
Whether the EGM Notice is in breach of section 201 of CA 2016
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The High Court accepted the defendant's contention that section 201 of CA 2016 does not stipulate that the Consent must be delivered together with the requisition notice. In this regard, an exhibit tendered by the defendant clearly showed that the Consent of the proposed new directors have been obtained in this case. Accordingly, the learned Judicial Commissioner was of the view that there is no breach of section 201 of CA 2016.
The decision of the High Court in Eka Noodle
is noteworthy in two respects. While the interpretation of the word ‘members’ to include ‘member’ follows the Court of Appeal’s decision in Zung Zang CA
, it appears to be the first reported decision on this issue under section 311(3)(a) of CA 2016. It is submitted that the same interpretation applies to the word ‘members
’ used in section 311(1) of CA 2016 which empowers members of a company to require the directors to convene a meeting of members of the company.
Second, Eka Noodle
also appears to be the first reported decision which clarifies that section 201 of CA 2016 does not require the consent and declaration of a proposed director to be delivered with the requisition notice.
While both issues may appear trite, this decision nevertheless contributes to the growing body of case law on CA 2016.
Case summary by Kok Chee Kheong (Partner) and Vanessa Ho Pei Wei (Associate) of the Corporate Practice of Skrine.