Company Land Transferred Under a Power of Attorney: Minority Shareholder’s Challenge Defeated in Its Filed Form

Case Background & Strategy

A challenge to transfers of company land in Malaysia must be brought by the proper party and in proper form, however serious the allegations. The Court of Appeal dismissed a minority shareholder’s appeal against our clients on procedural grounds in a dispute over three parcels of company land transferred under a power of attorney.

Case at a Glance

The Problem: Three Parcels of Company Land

Our clients were sued by a minority shareholder who challenged transfers of three parcels of company land, alleging misuse of a power of attorney originally granted for development purposes. The suit relied on fraud on the minority, but it had serious problems with its parties, its pleadings and its capacity to sue for the company.

Our Strategy: Requiring a Properly Constituted Claim

We concentrated on the requirements for a properly constituted company claim and on the need to distinguish allegations about company land from personal shareholder rights.

The Court of Appeal’s Decision

The Court of Appeal dismissed the shareholder’s appeal on procedural grounds, while correcting part of the lower court’s interpretation of fraud on the minority. It left open the possibility of fresh proceedings in proper form. There is no final ruling that the land transfers were valid or invalid.

The Law in Brief: Company Land, Powers of Attorney and Fraud on the Minority

A power of attorney authorises the attorney to act only within the terms of the power, and powers of attorney in Malaysia are governed by the Powers of Attorney Act 1949. If company land is dealt with beyond what the power allows, the wrong is done to the company, so the claim is the company’s to bring.

Fraud on the minority is a recognised exception that allows a minority shareholder to sue for the company where those in control use their power to benefit themselves at the company’s expense. Today, a shareholder suing on the company’s behalf generally needs the court’s leave under sections 347 and 348 of the Companies Act 2016, so getting the parties and the form of the claim right is essential.

Key Takeaways for Business Owners

• A claim over company land must be correctly pleaded and brought by the proper party.
• Allegations about company property are company claims, distinct from personal shareholder rights.
• Powers of attorney over company land should be limited in scope and monitored.
• A procedural defeat can still leave the door open to a properly constituted claim.

Frequently Asked Questions

Related NZSK case results: Family company property dispute; Forged board resolution and the bank’s charge.

Facing a dispute over company land in Malaysia? Book a consultation with NZSK so we can review your documents and advise on the available remedies and the right procedure. Learn more about our corporate litigation practice and our appellate advocacy work.

Messrs Ng, Zainurul, Seke & Khoo (NZSK) is a Malaysian law firm with offices in Mont Kiara, Kuala Lumpur and Puchong, Selangor. Partner Khoo Ai Theng, an Advocate & Solicitor of the High Court of Malaya since 2014, acts in corporate and commercial litigation, including shareholder, director and company disputes.