Director Excluded From an Online Hearing: Court of Appeal Restores His Right to Be Heard
Outcome
The Court of Appeal allowed our client’s appeal, set aside the adverse order made after he was excluded from the online hearing, and awarded RM20,000 in costs.
Case Background & Strategy
A director whose interests are affected by a derivative action leave application in Malaysia is entitled to proper notice and a fair hearing, including at an online hearing. The Court of Appeal allowed our client’s appeal after he was told to leave an online hearing without being heard, set aside the adverse order and awarded RM20,000 in costs.
Case at a Glance
| Court | Court of Appeal |
| Our client | A director affected by a derivative action leave application |
| Key issue | Whether an order could stand when the director had short notice and was excluded from the online hearing |
| Outcome | Appeal allowed; adverse ruling set aside; RM20,000 costs |
| Practice area | Corporate litigation and procedural fairness |
The Problem: Told to Leave the Online Hearing
Our client, a director, learned that another shareholder-director was seeking leave to defend their company through derivative proceedings connected to winding-up litigation. With only a few days’ notice, he joined the online hearing but was told to leave without being heard. The order that followed affected his position without giving him a fair chance to respond.
Our Strategy: Notice and the Right to Be Heard
We concentrated on the statutory notice requirement and the basic right to be heard before a court makes orders affecting a director’s interests. Neither had been satisfied.
The Court of Appeal’s Decision
The Court of Appeal allowed the director’s appeal, set aside the adverse ruling because notice and natural justice had not been properly observed, and awarded RM20,000 in costs. The substantive allegations were not decided.
The Law in Brief: Notice and Fairness at an Online Hearing
Section 347 of the Companies Act 2016 allows a complainant, with the court’s leave, to bring, intervene in or defend proceedings on behalf of a company. Section 348 requires 30 days’ written notice to the directors of the intention to apply for leave, so that those affected can respond before the court decides.
Natural justice requires that a person whose interests will be affected by an order is given a fair opportunity to be heard. Malaysian courts now routinely hear matters remotely, but the same rules of fairness apply to an online hearing as to a hearing in open court.
Key Takeaways for Business Owners
- A procedural victory can be decisive in company litigation.
- Statutory notice and a fair hearing are real protections, including at an online hearing.
- Directors served with a leave application should respond and attend promptly.
- An order made in breach of natural justice can be set aside on appeal.
Frequently Asked Questions
Must directors be notified of a derivative action leave application?
Yes. Section 348 of the Companies Act 2016 requires 30 days’ written notice to the directors of the intention to apply for leave.
What happens if an order is made without hearing me?
It may be set aside on appeal for breach of natural justice, as in this case.
Do the same fairness rules apply to an online hearing?
Yes. The right to be heard applies equally to an online hearing and to a hearing in open court.
Can a derivative action be used to defend a company?
Yes. Section 347 of the Companies Act 2016 allows a complainant, with leave, to bring, intervene in or defend proceedings on the company’s behalf.
What is natural justice?
A set of basic fairness rules, including the right to be heard before a decision is made against you and the right to a decision-maker who is not biased.
Related NZSK case results: Anton Piller order and a defective company claim; Missing audited accounts appeal.
Facing company proceedings that affect you as a director 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.
Khoo Ai Theng
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