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The Statutory Derivative Action in Malaysia: Comparison with an Australian Judicial Approach

  • Vivien CHEN (a1)

Abstract

This article examines the operation of the Malaysian statutory derivative action through an analysis of Malaysian judicial decisions from 2008 to 2015. It considers the extent to which the statutory derivative action has achieved its underlying objective of facilitating better shareholder access to redress. The analysis focuses on applications for leave to bring derivative actions for breaches of directors’ duties, considering the manner in which the courts have interpreted and applied the criteria for granting leave and the rate of success in obtaining leave. The findings are compared with an analysis of Australian statutory derivative actions and situated in a broader comparative context. The article considers the effectiveness of the Malaysian statutory derivative action in facilitating better shareholder access to redress and canvasses possible explanations for the Malaysian approach.

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Footnotes

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Lecturer, Department of Business Law and Taxation, Monash Business School, Monash University, Australia. The author would like to thank Professor Michelle Welsh and Professor Richard Mitchell for their invaluable input and encouragement in the writing of the material which forms the basis of this article. The author is also grateful to Professor Ian Ramsay from Melbourne Law School and anonymous reviewers for their helpful comments. This research is funded by the Australian Government’s Research Training Program Scholarship.

Footnotes

References

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1. Finance Committee, ‘Report on Corporate Governance’ (February 1999), 42. The Finance Committee was established in response to the perceived inadequacies in the regulatory framework highlighted during the Asian financial crisis.

2. (1843) 2 Hare 461, (1843) 67 ER 189 (Court of Chancery, England and Wales).

3. Minority shareholders also had a right to seek relief from oppression or disregard of their interests under s 181 of the Companies Act 1965. This right has been maintained by s 346 of the Companies Act 2016. Likewise, s 218(1)(f) and (i) of the Companies Act 1965 and s 465(1)(h) of the Companies Act 2016 provide for winding up under the just and equitable ground.

4. Self-dealing refers to the misappropriation of corporate property by directors, often for the personal benefit of one or more directors, to the detriment of the company and its shareholders.

5. Chong, Joseph KL, Chongs on Company Law of Malaysia (Eastern Press 1966); Philip Koh Tong Ngee, ‘Company Ownership Disclosure and Liabilities in Malaysia’ [1992] 2 MLJ li; Rachagan, Shanthy, ‘Controlling Shareholders and Corporate Governance in Malaysia: Would the Self-Enforcing Model Protect Minority Shareholders?’ (2007) 3 Corporate Governance Law Review 1, 37 .

6. [2010] 7 CLJ 808 (Court of Appeal, Malaysia).

7. [2002] NSWSC 583, (2002) 42 ACSR 313. This case was cited in Re Dynamic Industries Pty Ltd [2014] VSC 101.

8. The relevant literature is examined in Part VI below.

9. Corporate Law Reform Committee, ‘A Consultative Document: Members’ Rights and Remedies’ (Companies Commission of Malaysia 2007). Prior to this, the Finance Committee suggested that a statutory derivative action could ameliorate the inadequacies of the common law remedy: Finance Committee (n 1).

10. Corporate Law Reform Committee, ‘Members’ Rights and Remedies’ (n 9) 31; Choy, Choong Yeow and Balan, Sujata, ‘Charting the Course for Shareholders’ Recourse: Observations on the Malaysian Response’ (2011) 6 National Taiwan University Law Review 1, 57 .

11. ibid 32. While the CLRC made substantial reference to the Australian statutory derivative action, the CLRC also considered similar reforms in other common law countries.

12. ibid 44–46.

13. Companies Act 1965, s 181E. Under common law, a derivative action could not be brought if the breach could have been ratified by the company: Salim, Mohammad Rizal and Kaur, Deborah Gurdial, ‘The Statutory Derivative Action in Malaysia’ (2012) 24 Bond Law Review 125, 130 .

14. Corporate Law Reform Committee, ‘Members’ Rights and Remedies’ (n 9) 35.

15. Choong and Balan (n 10) 11; Salim and Kaur (n 13).

16. Choong and Balan (n 10) 12.

17. Companies Act 2016, s 347(3); ss 347 to 350 of the Companies Act 2016 provide for a statutory derivative action on similar grounds as set out in ss 181A to 181E of the Companies Act 1965.

18. In this study, applications for leave include applications in which plaintiffs sought the courts determination that they had the requisite locus standi to bring derivative actions under common law.

19. The judgments suggest that the applications for leave had not been fully considered at the time the cases were struck out.

20. The absence of wrongdoer control was cited in AIC Dotcom Sdn Bhd v MTex Corporation Sdn Bhd [2009] 1 LNS 118; Shamsul bin Saad v Tengku Dato Ibrahim Petra [2010] 1 LNS 959; Ho Hup Construction Company Bhd v Bukit Jalil Development Sdn Bhd [2012] 1 CLJ 649 (High Court of Malaya); Leow Yin Choon v Tang Fook Siong [2012] 1 LNS 780; Pioneer Haven Sdn Bhd v Ho Hup Construction Company Bhd [2012] 2 CLJ 169 (Court of Appeal, Malaysia); Suhaimi Ibrahim & Ors v Hi-Summit Construction Sdn Bhd [2014] 1 LNS 1770.

21. Shamsul bin Saad (n 20); Ho Hup Construction (n 20); Leow Yin Choon (n 20); See Hua Realty Bhd v KTS News Sdn Bhd [2012] 1 LNS 1119; Krishnasamy G B Vatchelu v Eng Ah Phoo @ Ng Ah Phoo [2013] 1 LNS 1160; Suhaimi Ibrahim (n 20).

22. Procedural defects were highlighted in AIC Dotcom (n 20); Lim Peak Suan Sdn Bhd v Sungei Bongkoh Estate Sdn Bhd [2009] 2 CLJ 719 (High Court of Malaya); Leow Yin Choon (n 20); Krishnasamy (n 21); Koh Jui Hiong v Ki Tak Sang [2014] 2 CLJ 401 (Federal Court, Malaysia); Li Chin Thee v Francis Chin [2014] 1 LNS 1330; Abdul Rahim Suleiman v Faridah Md Lazim [2015] 1 LNS 313.

23. Shamsul bin Saad (n 20) ; Ho Hup Construction (n 20); Leow Yin Choon (n 20); Suhaimi Ibrahim (n 20).

24. Lim Peak Suan (n 22); Celcom (n 6); Wong See Ming v Wong Tuck Wai [2011] 1 LNS 659; Lee Suan Ngee v On Network Sdn Bhd [2013] 1 LNS 506; Abdul Rahim Suleiman (n 22).

25. Celcom (n 6); Dato’ Daljit Singh a/l Gurdev Singh v Forefront Online Sdn Bhd [2010] 1 LNS 1631.

26. Ramakrishnan Rajeswari v Syarikat VK Kalyana Sundram Sdn Bhd [2015] 1 LNS 168.

27. Lim Cheong Chuan v Chan Kok Heng [2009] 1 LNS 1240.

28. Companies Act 1965, s 181E(1)(e).

29. Corporate Law Reform Committee, ‘Members’ Rights and Remedies’ (n 9) 31–32.

30. Companies Act 1965, s 181E(1).

31. ibid.

32. There were three unsuccessful cases from 1999 to 2006. These failed on grounds that there was no wrongdoer control and, accordingly, the plaintiffs’ claims did not fall within the exceptions to the rule in Foss v Harbottle. Among the three successful cases, two were found to have prima facie shown fraud on the minority, while the third case involved a company in liquidation.

33. The existing law impliedly allows common law derivative actions, although the statutory derivative action was meant to alleviate the challenges posed by the common law derivative action. The CLRC was of the view that the statutory derivative action should replace the common law derivative action: Corporate Law Reform Committee, ‘Members’ Rights and Remedies’ (n 9) 35. However, the 2007 amendments to the Companies Act 1965 did not abolish the common law derivative action as proposed by the CLRC. In Suhaimi Ibrahim (n 20), wrongdoer control was cited as a ground for refusing leave although the application for leave was premised on s 181A. The remaining five cases in which wrongdoer control was cited as a ground for refusing leave were decided based on common law principles.

34. Percentages have been rounded to the closest whole number.

35. AIC Dotcom (n 20); Kuan Pek Seng v Chin Foh Berhad [2009] 1 LNS 1427; Lee Kin Tong @ Lee King Hoon v Hoklian Holdings Berhad [2012] 1 LNS 804.

36. See Teow Guan v Yeoh Jin Hoe [2015] 8 CLJ 531 (High Court of Malaya); Kingdom Seekers Ventures Sdn Bhd v Chong Ket Pen [2015] 1 LNS 546.

37. There was insufficient information in six of the cases to determine whether the decisions were made on the basis of common law or statute.

38. Celcom (n 6).

39. During the period of the study, from 2008 to 2015, ss 181A and 181B of the Companies Act 1965 set out the conditions for the grant of leave to bring a derivative action. These conditions are replicated in s 348 of the Companies Act 2016. One significant difference is that the Companies Act 2016 abolishes the common law derivative action.

40. Companies Act 1965, s 181B and Companies Act 2016, s 348(2).

41. Swansson (n 7).

42. Celcom (n 6) [8].

43. ibid [16].

44. ibid [21]--[22]

45. ibid [29].

46. Lembaga Tabung Angkatan Tentera v Prime Utilities Bhd [2013] 8 CLJ 38 (High Court of Malaya); Ong Keng Huat v Fortune Frontier (M) Sdn Bhd [2015] 10 CLJ 599 (High Court of Malaya); Abdul Rahim Suleiman (n 22).

47. Lembaga Tabung Angkatan Tentera (n 46).

48. ibid [25].

49. ibid [28].

50. Celcom’s restrictive approach was cited and applied in Abdul Rahim Suleiman (n 22) and Lim Aik Chin v Hong Leong Bank Bhd [2015] 8 CLJ 755 (High Court of Malaya).

51. Abdul Rahim Suleiman (n 22).

52. Lee Suan Ngee (n 24)

53. Suhaimi Ibrahim (n 20); Abdul Rahim Suleiman (n 22) [68].

54. Suhaimi Ibrahim (n 20). The Court of Appeal affirmed the lower court’s decision to refuse leave. More details on the decision to refuse leave are set out in the judgment of the High Court of Malaya in Suhaimi Ibrahim v Hi-Summit Construction Sdn Bhd [2013] 1 LNS 203.

55. Dato’ Daljit Singh a/l Gurdev Singh (n 25); Suhaimi Ibrahim (n 54), affirmed in Suhaimi Ibrahim (n 20).

56. Nawawi JC stated: ‘[S]ince the purpose of s 181A is to protect the interest of the minority shareholders who have no control over the company’s decision-making organs, I am of the considered opinion that the threshold issue here is to ascertain whether the Plaintiffs are “genuinely aggrieved minority”’ (emphasis by the judge); and that unless they are the ‘genuinely aggrieved minority’ they have no right to the relief afforded by s 181A: Suhaimi Ibrahim (n 54) [38].

57. Further details on the principles of statutory interpretation in Malaysia are available in Ahmad, Sharifah Suhana, Malaysian Legal System (2nd edn, Malayan Law Journal 2007), the Interpretation Act 1948, and the Interpretation Act 1967.

58. Suhaimi Ibrahim (n 54) [37].

59. Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd [1995] 4 CLJ 551 (Court of Appeal, Malaysia).

60. Dato’ Daljit Singh a/l Gurdev Singh (n 25) [17].

61. Celcom (n 6).

62. Abdul Rahim Suleiman (n 22).

63. ibid [51]–[52].

64. Dato’ Daljit Singh a/l Gurdev Singh (n 25) [68].

65. Lim Aik Chin (n 50).

66. ibid [26].

67. ibid [33]–[35]

68. Foss (n 3); Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, [1982] 2 WLR 31; Tan Guan Eng v Ng Kweng Hee [1992] 1 MLJ 487 (High Court of Malaya); Abdul Rahim Bin Aki (n 59).

69. Shamsul bin Saad (n 20); Leow Yin Choon v Tang Fook Siong [2012] 1 LNS 780; Pioneer Haven (n 20); Kingdom Seekers Ventures Sdn Bhd v Dato’ Sri Chong Ket Pen [2015] 1 LNS 546; Ramakrishnan Rajeswari (n 26).

70. Krishnasamy G B Vatchelu (n 21).

71. Ramakrishnan Rajeswari (n 26).

72. Salim, Mohammad Rizal, ‘Whither the Common Law Derivative Action: A Malaysian Case Study’ (2016) 27 International Company and Commercial Law Review 14 .

73. Chong (n 5); Rachagan (n 5) 37.

74. Swansson (n 7).

75. Ramsay, Ian M and Saunders, Benjamin S, ‘Litigation by Shareholders and Directors: An Empirical Study of the Australian Statutory Derivative Action’ (2006) 6 Journal of Corporate Law Studies 397, 407408 .

76. The Australian Securities and Investments Commission (ASIC) is the regulator responsible for enforcement of breaches of company regulations including directors’ duties. Professor Welsh’s study of ASIC’s enforcement activities indicates that 78 criminal prosecutions and civil penalty proceedings alleging breaches of statutory directors’ duties were commenced from 2001 to 2006: Welsh, Michelle, ‘The Regulatory Dilemma: The Choice between Overlapping Criminal Sanctions and Civil Penalties for Contraventions of the Directors’ Duty Provisions’ (2009) 27 Company and Securities Law Journal 370 . Comino observes that proceedings were instituted against directors in a range of high profile cases: see Comino, Vicky, ‘The Challenge of Corporate Law Enforcement in Australia’ (2009) 23 Australian Journal of Corporate Law 233 . From 1 July 2008 to 30 June 2014, ASIC disqualified 394 directors: Helen Anderson, Ian Ramsay and Michelle Welsh, ‘Criminal, Civil and Administrative Penalties for White Collar Crime’ (Submission to the Senate Economic References Committee: Penalties for White Collar Crime, 24 March 2016), 8. By contrast, the regulator responsible for enforcement of directors’ duties in Malaysia, the Companies Commission of Malaysia, is limited to criminal proceedings. The author’s analysis of reports and media releases from the Companies Commission of Malaysia and judicial decisions indicates that substantially fewer enforcement proceedings have been instituted by Malaysian regulators for breaches of directors’ duties, and many of the proceedings were fairly recent.

77. Civil penalties were introduced into the Australian regulatory framework in response to the difficulties of criminal prosecutions. Nonetheless, the perceived advantage of civil rules of evidence and procedure is thought to have been weakened by the imposition of many procedural requirements by the courts: Welsh (n 76) 80.

78. Enforceable undertakings are given to ASIC to carry out or refrain from specific actions as an alternative to court proceedings. Following ASIC’s investigations that reveal breaches of directors’ duties, directors have at times undertaken not to take part in the management of companies for a number of years: Carol Taing, ‘A Report on Enforceable Undertakings Accepted by ASIC from 1998 to 2008’ (Research Report, Centre for Corporations Law and Securities Regulation, Melbourne Law School 2008), 36; Helen Bird et al, ‘An Empirical Analysis of the Use of Enforceable Undertakings by the Australian Securities and Investments Commission between 1 July 1998 and 31 December 2015’ (Working Paper No 106/2016, Centre for International Finance and Regulation, Melbourne Law School 2016), 2.

79. Where a company has been wound up and the liquidator lodges a report that directors may have breached duties to the company, ASIC may disqualify the director from managing corporations under s 206F of the Corporations Act 2001 (Cth).

80. The common law derivative action has been abolished in Australia: Corporations Act 2001 (Cth), s 236(3).

81. Re Gandangara Services Limited [2014] NSWSC 546; Re Akierman Holdings Pty Ltd [2015] NSWSC 1395.

82. Suh v Cho [2013] VSC 491; Australian Mortgage & Finance Company Pty Ltd as trustee of the Melnikoff Family Trust v Rome Euro Windows Pty Ltd as trustee of Rome Euro Windows Unit Trust [2014] NSWSC 996.

83. Swansson (n 7) [36]; South Johnstone Mill Ltd v Dennis and Scales [2007] FCA 1448, 163 FCR 343 [64].

84. ibid.

85. Re Imperium Projects Pty Ltd [2015] NSWSC 16 [11].

86. Swansson (n 7) [38].

87. Re Akierman Holdings Pty Ltd (n 81). In contrast, a history of the applicants’ allegations of dishonesty against the defendant, many of which were without substance, led to the court questioning whether the applicants lacked good faith in Jensen v RQYS Marina Ltd [2014] QSC 243. Nevertheless, the judge noted that a finding that the applicants were not acting in good faith was serious and as the application was dismissed on other grounds, it was unnecessary to conclude whether the requirement of good faith was met: Jensen v RQYS Marina Ltd [2014] QSC 243 [140].

88. Re Dynamic Industries (n 7) [95].

89. Swansson (n 7); Re Dynamic Industries (n 7) [96].

90. Re Gladstone Pacific Nickel Ltd [2011] NSWSC 1235, (2011) 86 ACSR 432, [2015] NSWSC 510.

91. Suh (n 82) [5]; Cooper v Myrtace Consulting Pty Ltd [2014] FCA 480 [29].

92. Jensen v RQYS Marina Ltd (n 87); Re Sundara Pty Ltd [2015] NSWSC 1694.

93. Cooper (n 91) .

94. In Australian Mortgage and Finance Company Pty Ltd, the proceedings were likely to be struck out, the applicant having failed to plead material facts. Consequently, the court refused leave as it was not satisfied that the proceedings would be in the best interest of the company: Australian Mortgage & Finance Company Pty Ltd (n 82).

95. [2014] NSWSC 260.

96. South Johnstone (n 83) [78].

97. Australian Broadcasting Corporation v O’Neill [2006] HCA 46, (2006) 227 CLR 57 [65]; Cooper (n 91) [35].

98. Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 (High Court of Australia); Australian Broadcasting Corporation (n 97).

99. Suh (n 81); Re Gandangara Services Limited (n 81) [29].

100. Corporations Act 2001 (Cth), s 237(2)(e)(i).

101. Suhaimi Ibrahim (n 20).

102. Australian Broadcasting Corporation v O’Neill (n 97) [65]; Cooper (n 91) [35].

103. Lee Suan Ngee (n 24).

104. Abdul Rahim Suleiman (n 22).

105. Celcom (n 6); Suhaimi Ibrahim (n 20); Abdul Rahim Suleiman (n 22).

106. Swansson (n 7).

107. Celcom (n 6).

108. Swansson (n 7) [38].

109. Power v Ekstein [2010] NSWSC 137; Swansson (n 7); Borczyk v Van Rooy [2014] VSC 101.

110. (n 109).

111. Re Imperium Projects Pty Ltd [2015] NSWSC 16 [11].

112. Borczyk v Van Rooy [2014] VSC 101.

113. Dato’ Daljit Singh a/l Gurdev Singh (n 25).

114. ibid [18].

115. [2008] SASC 90. This case was not included in the forty-five cases discussed in Part IV as a breach of directors’ duties was not alleged.

116. Celcom (n 6) [8].

117. Suh (n 82) [35] citing Pottie v Dunkley [2011] NSWSC 166 [58].

118. Suh (n 82) [42]–[43].

119. Shamsul bin Saad (n 20); Ho Hup Construction (n 20); Leow Yin Choon (n 20); Suhaimi Ibrahim (n 20).

120. Re Gandangara Services Limited (n 81).

121. Re Dynamic Industries (n 7).

122. McLaughlin v Dungowan Manly Pty Lt [2010] NSWSC 187.

123. Re Wan Ze Property Development (Aust) Pty Ltd [2012] NSWSC 722 [12].

124. ibid; Suh (n 81); Australian Mortgage & Finance Company Pty Ltd (n 82).

125. Lim Aik Chin (n 50).

126. Corporations Act 2001 (Cth), s 237(2)(e)(ii).

127. Suh (n 81).

128. Re Gandangara Services Limited (n 81) [29].

129. Abdul Rahim Suleiman (n 22). This is discussed in more detail in Part III above.

130. Lim Aik Chin (n 50).

131. Koh Jui Hiong (n 22).

132. The emphasis on technicalities is also seen in several cases in which the decisions whether to grant leave to bring derivative actions were made under common law. For example, in Krishnasamy (n 21), the application was dismissed on the ground that the plaintiff had brought the proceedings in his own name without indicating that he was bringing the action in a representative capacity. It was clear from the pleadings that the proceedings were intended to be a derivative action for the benefit of the company. However, this was held to be insufficient to cure the defect in the procedural requirements. Likewise, in Lim Peak Suan (n 22), failure to show in the title that the action was brought in a representative capacity contributed to the decision not to grant leave. Nevertheless, in this case, there was also a lack of evidence and arguably no cause of action. These were likely to have been more determinative of the outcome than the procedural requirements.

133. Power (n 109); Suh (n 82); Australian Mortgage & Finance Company Pty Ltd (n 82).

134. Lim Aik Chin (n 50) [26].

135. S 247A of the Corporations Act 2001 (Cth) provides that the courts may only make the orders if satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose. S 181E(1)(c) of the Companies Act 1965 does not specify any particular criteria for the granting of orders of inspection, stating broadly that ‘the Court may make such orders as it thinks appropriate’.

136. Ng Hoy Keong v Chua Choon Yang [2011] 4 CLJ 545 (High Court of Malaya).

137. Smartec Capital Pty Ltd v Centro Properties Ltd [2011] NSWSC 495; London City Equities Ltd v Penrice Soda Holdings Ltd [2011] FCA 674.

138. Re Style Ltd; Merim Pty Ltd v Style Ltd [2009] FCA 314.

139. Hanks v Admiralty Resources NL [2011] FCA 891.

140. Pistor, Katharina and Wellons, Philip A, The Role of Law and Legal Institutions in Asian Economic Development 1960-1995 (OUP 1999) 238 .

141. Siems, Mathias M, Convergence in Shareholder Law (CUP 2008) 226227 ; Kraakman, Reinier et al, The Anatomy of Corporate Law: A Comparative and Functional Approach (3rd edn, OUP 2017) 102 , 164; Siems, Mathias, ‘Convergence in Corporate Governance: A Leximetric Approach’ (2010) 35 Journal of Corporation Law 729, 751752 .

142. Kraakman et al (n 141) 25.

143. Puchniak, Dan W, ‘The Derivative Action in Asia: A Complex Reality’ (2012) 9 Berkeley Business Law Journal 1, 12 .

144. Kraakman et al (n 141) 25.

145. ibid.

146. Bebchuk, Lucian Arye and Roe, Mark J, ‘A Theory of Path Dependence in Corporate Ownership and Governance’ (1999) 52 Stanford Law Review 127 .

147. Coffee, John C, ‘The Political Economy of Dodd-Frank: Why Financial Reform Tends to be Frustrated and Systemic Risk Perpetuated’ (2012) 97 Cornell Law Review 1019 .

148. Kraakman et al (n 141) 25.

149. Harding, Andrew, ‘Global Doctrine and Local Knowledge: Law in South East Asia’ (2002) 51 International and Comparative Law Quarterly 35, 5153 .

150. Milhaupt, Curtis J and Pistor, Katharina, Law and Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World (University of Chicago Press 2008) 201 . Gillespie and Nicholson similarly emphasize the centrality of human agency in the interpretation and enforcement of legal transplants: Gillespie, John and Nicholson, Pip, ‘Taking the Interpretation of Legal Transfers Seriously: The Challenge for Law and Development’ in John Gillespie and Pip Nicholson (eds), Law and Development and the Global Discourses of Legal Transfers (CUP 2012) 1 .

151. Milhaupt and Pistor (n 150) 193.

152. Harding describes the Malaysian government’s involvement in business or ‘Malaysia Incorporated’ observing its emphasis on development policies and broad administrative discretion, while limiting judicial review and dissent: Harding, Andrew, The Constitution of Malaysia: A Contextual Analysis (Hart Publishing 2012) 66 . In examining corporate insolvency across six Asian countries, Kamarul and Tomasic highlight the prevalence of a different concept of the rule of law. In contrast with Western ideas of the rule of law, they found a common tendency for ‘law to legitimise the dominance of the state’, and a judiciary that was either ‘subjected to direct executive control’ or ‘severely constrained in its operations by political and administrative factors’; Kamarul, Bahrin and Tomasic, Roman, ‘The Rule of Law and Corporate Insolvency in Six Asian Legal Systems’ in Kanishka Jayasuriya (ed), Law, Capitalism and Power in Asia (Routledge 1999) 128 , 131–32.

153. This is based on a study (yet to be published) by Professor Gomez on state ownership of the 100 largest companies listed on Bursa Malaysia, the results of which were cited in media reports; ‘Who Controls Corporate Malaysia’ The Edge (28 July 2016) <http://www.ideas.org.my/the-edge-who-controls-corporate-malaysia/> accessed 14 August 2017. Australian corporate ownership structures are described as being in an ‘intermediate position between dispersed ownership and concentrated ownership countries’: Chen, Vivien, Ramsay, Ian and Welsh, Michelle, ‘Corporate Law Reform in Australia: An Analysis of the Influence of Ownership Structures and Corporate Failure’ (2016) 44 Australian Business Law Review 18, 21 . The study examined three significant corporate law reforms and observed that ‘shareholder empowerment was a means of facilitating accountability’ in corporate regulation which was increasingly recognized as having ramifications for the public. This, in turn, was attributed to an increase in share ownership and compulsory superannuation, leading to an inextricable link between ‘the fortunes of Australian companies and overall community wellbeing’: Chen, Ramsay and Welsh, ibid, 32–33.

154. Zhuang, Juzhong et al, Corporate Governance and Finance in East Asia: A Study of Indonesia, Republic of Korea, Malaysia, Philippines and Thailand, vol 1 (Asian Development Bank 2000) 24 .

155. Abdul Wahab, Effiezal A, How, Janice CY and Verhoeven, Peter, ‘The Impact of the Malaysian Code on Corporate Governance: Compliance, Institutional Investors and Stock Performance’ (2007) 3 Journal of Contemporary Accounting and Economics 106 .

156. Khazanah Nasional, ‘Frequently Asked Questions – Government-linked companies’ (Khazanah Nasional Berhad 2015) <www.khazanah.com.my/FAQ> accessed 8 March 2017.

157. Wahab, How and Verhoeven (n 155) 110.

158. These were the Employees Provident Fund, Lembaga Tabung Haji (Pilgrim Fund), Lembaga Tabung Angkatan Tentera (Armed Forces Fund), Permodalan Nasional Berhad and National Social Security Organization of Malaysia: Khazanah Nasional (n 151).

159. These include government-linked institutional investors: Gomez, Edmund Terence and Sundaram, Jomo K, Malaysia’s Political Economy: Politics, Patronage and Profits (CUP 1997); Fraser, Donald R, Zhang, Hao and Derashid, Chek, ‘Capital Structure and Political Patronage: The Case of Malaysia’ (2006) 30 Journal of Banking and Finance Law and Practice 1291 ; Brown, Rajeswary Ampalavanar, The Rise of the Corporate Economy in Southeast Asia (Routledge 2006).

160. Corporate Law Reform Committee, Review of the Companies Act 1965 – Final Report (Companies Commission of Malaysia, 2007), 10.

161. For instance, Lee and Campbell observe that in Australia, judicial independence from the executive and legislative branches of government is sustained by the courts’ development of a strict doctrine of separation of judicial power; HP Lee and Campbell, Enid, The Australia Judiciary (2nd edn, CUP 2013) 75 .

162. Jayasuriya, Kanishka, ‘Corporatism and Judicial Independence within Statist Legal Institutions in East Asia’ in Kanishka Jayasuriya (ed), Law, Capitalism and Power in Asia (Routledge 1999) 147 , 161.

163. Clarke, Donald C and Howson, Nicholas H, ‘Pathway to Minority Shareholder Protection: Derivative Actions in the People’s Republic of China’ in Dan W Puchniak, Harald Baum and Michael Ewing-Chow (eds), The Derivative Action in Asia: A Comparative and Functional Approach (CUP 2012) 243

, 247.

164. Harding (n 152) 223; Similar observations are made in Teik, Khoo Boo, ‘Between Law and Politics: The Malaysian Judiciary Since Independence’ in Kanishka Jayasuriya (ed), Law, Capitalism and Power in Asia: The Rule of Law and Legal Institutions (Routledge 1999) 174 .

165. Harding, Andrew and Whiting, Amanda, ‘“Custodian of Civil Liberties and Justice in Malaysia”: The Malaysian Bar and the Moderate State’ in Terence C Halliday, Lucien Karpik and Malcolm M Feeley (eds), Fates of Political Liberalism in the British Post-Colony (CUP 2012) 247 , 275.

* Lecturer, Department of Business Law and Taxation, Monash Business School, Monash University, Australia. The author would like to thank Professor Michelle Welsh and Professor Richard Mitchell for their invaluable input and encouragement in the writing of the material which forms the basis of this article. The author is also grateful to Professor Ian Ramsay from Melbourne Law School and anonymous reviewers for their helpful comments. This research is funded by the Australian Government’s Research Training Program Scholarship.

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