CORPORATE LAW – PIERCING THE CORPORATE VEIL – PLAIN ERROR OF MIXED LAW AND FACTS – APPELLATE INTERVENTION WARRANTED
In Capital City Property Sdn Bhd v Teh Swee Neo & Anor [2026] MLJU 540, the Court of Appeal set aside a High Court ruling that had pierced the corporate veil of a developer company and held it liable for unpaid rent owed by a related tenant company. The Court reaffirmed that companies within a corporate group retain separate legal personality, and that veil piercing is permissible only in exceptional circumstances such as actual or equitable fraud. Common directors, shared addresses, or corporate control were held insufficient to impose liability. As the tenancy agreements were entered into solely with the tenant company and no fraud was proven, the developer could not be made responsible for the tenant’s unpaid rent.
BREACH OF FIDUCIARY DUTY – UK SUPREME COURT SHUTS DOWN ‘WHAT IF’ DEFENCE IN FIDUCIARY BREACH: NO PROFIT MEANS NO EXCUSE
In Rukhadze & Ors v Recovery Partners GP Ltd and Anor [2025] 1 Lloyd’s Rep 329, the UK Supreme Court reaffirmed the uncompromising “no profit” rule for fiduciaries. The Court held that a fiduciary who profits from their position must account for those gains – regardless of good faith, intent, or hypothetical outcomes. The appellants’ argument that they would have earned the profit even without a breach was firmly rejected. The decision emphasises that loyalty, not speculation, is the standard, and reaffirms equity’s strict stance on conflicts of interest.
EMPLOYMENT LAW – IS DIRECTOR A DIRECTOR OR EMPLOYEE? UNPACKING DUAL ROLES IN EMPLOYMENT LAW
The Court of Appeal clarified the dual roles of directors as both shareholders and employees, affirming that executive directors can qualify as “workmen” under the Industrial Relations Act 1967. The decision emphasizes that removal as a director does not equate to lawful dismissal as an employee unless due process is followed. This case highlights the importance of distinguishing shareholder rights from employment protections, ensuring companies navigate such disputes with clarity and fairness.
EMPLOYMENT LAW – IS DIRECTOR A DIRECTOR OR EMPLOYEE? UNPACKING DUAL ROLES IN EMPLOYMENT LAW
The Court of Appeal clarified the dual roles of directors as both shareholders and employees, affirming that executive directors can qualify as “workmen” under the Industrial Relations Act 1967. The decision emphasizes that removal as a director does not equate to lawful dismissal as an employee unless due process is followed. This case highlights the importance of distinguishing shareholder rights from employment protections, ensuring companies navigate such disputes with clarity and fairness.
COMPANIES ACT – OPPRESSION – DRAWING THE LINE: FEDERAL COURT DEFINES OPPRESSION VS. CORPORATE HARMS
In a decisive ruling, the Federal Court clarified the boundaries between personal shareholder oppression and corporate harm, overturning the Court of Appeal’s findings. The Court held that claims tied to the wrongful transfer of trademarks belonged to the company, not the individual shareholder, reaffirming that corporate harm must be addressed through a derivative action rather than an oppression claim.
COMPANIES LAW – WHEN DIRECTORS BETRAY: COURT CONDEMNS BREACH OF TRUST AND CORPORATE MISCONDUCT
In a stark reminder of the consequences of corporate betrayal, the court found that the directors had systematically dismantled their own company to benefit a competing entity they controlled. By breaching their fiduciary duties, conspiring to harm the business, and unjustly enriching themselves, the defendants were held accountable through significant compensatory and exemplary damages, reaffirming the critical importance of trust and integrity in corporate governance.
WINDING-UP – OFFICIAL RECEIVER AND LIQUIDATOR (“ORL”)
In cases of compulsory winding up, the court would appoint a liquidator under s.478 of the Companies Act 2016 (“CA 2016”) to expeditiously recover and realise the assets of the wound-up company for the distribution of dividends to creditors and administer any outstanding matters involving………..
COMPLIANCE AND CONSEQUENCES UNDER SECTION 348 OF THE COMPANIES ACT 2016
This legal update addresses the critical importance of complying with procedural requirements under Section 348 of the Companies Act 2016 in statutory derivative actions. It highlights the consequences of failing to provide mandatory notice and the necessity of naming alleged wrongdoer directors in the leave application, which could result in the Leave Order being set aside.
BREACH OF CONTRACT, EQUITY AND FIDUCIARY DUTY – DISCLOSURE OF CONFIDENTIAL INFORMATION
Often business owners find themselves vulnerable when dealing with employees who had turned rogue and took confidential information from the company. What are the legal protection against these employees?
COMPANY LAW – FRAUD BY DIRECTORS
Can I sue the directors personally for fraud?
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