REPRESENTING the MINORITY

IN WINDING UP PROCEEDINGS -
MALAYSIAN PRACTICE NOTES (PART ONE)

wish4m.zahir

There’s nothing much which can be done if the Petitioner is the majority shareholder who has applied for the company to be wound up, save for challenging it in Court. And take the instance where the minority wants the same thing i.e. that the company be wound up and both parties may go home at the end of the day with their share.

Meanwhile, what if the minority shareholder wants your assurance that his rights would not be infringed in the process? Of course we can always file our Notice of Intention to Appear as a Supporting Petitioner, in support of the Petition; so that we become parties to the proceedings, giving us the first avenues to K.I.V. (keep in view) the situation.

Again, what if the majority wants to appoint a private Liquidator? According to the law, an application to appoint a private liquidator would be given precedence over the appointment of the Official Receiver. Section 227(1) of the Companies Act 1965 says that if an approved liquidator other than the Official Receiver is not appointed to be the liquidator of the company the Official Receiver shall by virtue of his office become the provisional liquidator and shall continue to act as such until he or another person becomes liquidator and is capable of acting as such. This effectually means that the private liquidator would be given preference over the Official Receiver any day.

It has to be taken into consideration that if the private liquidator is appointed by the majority, it may pose some problems to you especially if the winding up was first initiated on part of the majority, as a result of some irreconcilable disputes between the majority and the minority. Practically there would be accusations from both sides of mismanagement or lack of the ‘best interests of the company’ at heart and subsequently, the appointed private liquidator would really make your client’s life miserable, questioning every move he made, investigating every penny he spent, in vain of course.

Moreover, the appointed liquidator may favor the Petitioner’s representations over the assets of the company over yours, especially over the part which remains the product of verbal negotiations and mutual trust dealings. It may even be something as simple as buying a photocopy machine for your office. While you have earlier agreed in terms that your client buys it and will later be reimbursed by your company. This, save for the specifics, happens all the time. Of course as there are no supporting documents, so it’s always open to abuse.

Therefore, how do we protect our client’s interests? At the very least, ensure that his voice is heard and hand in place on the proper forums. The shortest answer to this would be to challenge the Majority’s application for a private liquidator and to apply to the Court, for one of your own. But can your application be approved over the majority’s, because, they are still the majority. There is nothing in the Companies Act 1965 which talks of the specific subject matter. Only section even remotely touching on the matter is section 227 which we all know only talks of the principle that a private liquidator is to be given priority in appointment over the Official Receiver.

On the same note, rule 31(1) of the Winding up Rules 1972, it says that; when filing the petition the petitioner shall nominate in writing an approved liquidator who is entitled to be appointed as liquidator if an order for the winding-up of the company is made by the Court. In other words, your side will certainly not be in priority.

Nonetheless, in application of rule 46 of the Winding up Rules, it shows that once a petition is set and before the appointment of a private liquidator, the Court will have to take into consideration the Creditors' recommendations. These recommendations are to be the product of the meeting of the creditors, and in some cases, the majority may even be one person. However, after all of this is considered and all of this heard, the Court has to hear the Official Receiver on the matter AND any contributory or creditor. This is where your client, and in effect your competence to formulate an argument comes in because this rule establishes that even if he Petitioner does nominate his own private Liquidator, the final decision of the Court in appointing one will be after considering the appeals from other 'contributories' as well.

Sadly, there is no case law which even remotely talks of this dilemma.

The only other remedy would be to wait until we can allege any form of unfairness or any unwarranted steps taken on part of their liquidator. This was the case in the recent case of Abric Project Management Sdn Bhd v. Palmshine Plaza Sdn Bhd (Veteran Winding up expert Ong Ban Chai was representing the Petitioner) where a contributory applied for an order removing the appointed liquidator owing to certain discrepancies in his action such as selling off a piece of land undervalued or below the market rate. In short, the test is whether removal pursuant to section 232 of the Companies Act 1965 is in the 'best interests of the liquidation'.

Response to Article published in ‘The Hindu’, 30 January 2009

Terrorism is amongst one of the most heinous of crimes we know today, apart from other acts such as human trafficking, slave trade, genocide and modern piracy. These atrocities, more often than not, attract a wave of public empathy and emotion, which in effect, drive how numerous institutions in our legal system respond.

The article in the “The Hindu”, published in India on 30 January 2009, talks of how the Mumbai Magistrate Court Bar Association of India has passed a resolution which declared that none of its members would defend Mohamed Ajmal Amir Iman, the sole survivor of among those involved in the Mumbai bombing which took place in November of last year. The Author V. Venkatesan, quite rightly, outlines several provisions in the Indian Constitution and Code of Criminal Procedure which demands such right to be afforded to this individual, irrespective of the charge against him. With reference to four prominent lawyers, the article also talks of how the charges are indefensible in nature, owing to the large number of casualties and eye witnesses to the crime, and of course, the public outcry which followed later.

During the course of an interview on Federal News Radio, Cully Stimson, Deputy Assistant Secretary for Detainee Affairs from the American Department of Defense named 13 law firms, whose attorneys have clients in Guantánamo and urged thier corporate clients to take their business elsewhere. "You know what, it's shocking," he told his audience. "I think, quite honestly, when corporate CEOs see that those firms are representing the very terrorists who hit their bottom line back in 2001, those CEOs are going to make those law firms choose between representing terrorists or representing reputable firms." He then said the law firms’ efforts might be funded by "monies from who knows where." This is the stigma which surrounds these accuseds today.

In more recent times, there has been a departure from noble notions of civil liberty and justice by a large number of countries in response to the growing threat of global terrorism. The United States, whose Constitution or the Declaration of Independence was founded on the basis of equality and freedom, passed the Patriots Act which gives the government the power to defy all privacy laws, and arrest and detain without trial. Similar case is seen in Malaysia who passed the ISA and the ESCAR to curb the threat of communist insurgents. Most positivists would argue that, since such laws are passed legitimately by the legislature, it is to be honored. This view maybe justified with reservations, as legislatures understand an administrations’ efforts towards making the nation a safer place, especially in the face of such threat. However, in India this is not the case; there is no ISA or Patriots Act equivalent in India which deny the accused the right to legal representation; but rather, there is the derisory resolution of the Mumbai Bar.

Coming back to our case, over and beyond the Bar resolution, the Author also outlines several lawyers who are reluctant to act as defense counsel solely due to the stigma the charge attracts. The case is especially true in countries like the Maldives which is very small in size compared to most countries on the world atlas. There odious crimes such as murder and rape occur very seldom, sometimes years apart and attract scandalous status almost immediately. The smaller the country, the more pressure such crimes brings to criminal defense lawyers in the form of public emotion against them. However, it has to be remembered that lawyers are well beyond the stature of a layman. His sole duty should lie to justice and justice alone. In that respect, lawyers should be duty bound to [at the very least] ensure that those on trial are afforded an adequate defense.

Defense does NOT mean getting the person acquitted. This has to be emphasized. The notions of affording a person to defend himself are to make certain that his side of the story is heard before a verdict is delivered. His side of the story includes his mental state of mind, mens rea and any subsequent procedural matter such as evidence is dealt so justly. One may think that this is injustice and the person may go squat free on grounds of mere technicality. And who is at the bottom of all of it? Of course the defense lawyers!

This is the very sacred foundation on which any democratic country’s justice system is built upon. One of the first things we learn in law school is that “it is better to acquit a 100 guilty people, than to convict even ONE innocent person”. This alone should warrant any self respecting lawyer’s consideration. And to the whole Mumbai bar has condemned it.

In America, two military lawyers (JAG) assigned to defend alleged terrorists imprisoned at Guantanamo have won awards saluting "their commitment to ensuring that due process of law is provided to those charged with criminal offenses.” The December awards drew no press notice. The following in an excerpt from the acceptance speech given by Navy Lt. Cmdr. Charles Swift.

“…How we treat and try those that we consider enemies is perhaps the greatest reflection of our values. Our nation was founded on the basic principle that all are equal under the law. That principle has, under the weight of labels, anger, and fear, gotten lost in Guantanamo. In Guantanamo, we have so lost sight of our values to the point that a man may be convicted and sentenced to death based on evidence obtained through coercion without the opportunity to confront his accuser’ or even known the evidence against him. And if by some unlikely turn of events, the accused is acquitted he may still spend the rest of his life in jail.”

The Rev. Martin Luther King Jr. once wrote, "Injustice anywhere is a threat to justice everywhere." We have to ask ourselves, what if the government arrested YOU on unfounded terrorism charges? What if your lawyer was afraid to zealously defend you (as required by the model rules)? What if your lawyer was so afraid, he wouldn't even tell you that he wasn't able to zealously defend you? The Author rightfully points that our case that the case maybe “indefensible in view of the brutal massacre of innocent civilians in full public gaze. But issues of guilt” are to be determined by a Court of Law and NO-ONE ELSE. This “fear among the lawyers has brought disrepute to the Indian legal tradition”, and I concur!

Changing Morality... whether we like it or not!

by wish4m zahir

At first there might seem no distinction between law and morality. There are passages in ancient Greek writers, for example, which seem to suggest that the good person is the one who will do what is lawful. It is the lawgivers, in these early societies, who determine what is right and wrong. However, today this is not the case. But even if some morality is outside the scope of Law, could Law's domain be a subset of the Moral? That is, should we only ever outlaw immoral acts, and never morally permissible ones? Or to take the argument further conversely, should law in effect, be a factor which influences morality?
Morality is affected by numerous factors. It is obvious that our society is becoming more and more violent, dishonest, crude, selfish and superficial. If you disagree, read the newspaper. And then go to the library archives and read one from 40 years ago. To illustrate, think about this quote from Peter Kreeft (the statistics are American, but the point is universal):
"A modern Rip Van Winkle falling asleep in 1955 and waking up in 1995 would simply not believe his ears when he heard the statistics of our decay. Which moralist, complaining of the 10-percent divorce rate then, foresaw the 50-percent divorce rate now? Who foresaw a 500-percent increase in violent crime and a 5000-percent increase in teenage crime? When Black society was being declared beyond repair because of a 30-percent illegitimacy rate, who thought that by 1995 white society would equal it, while the rate would climb to nearly 80-percent among Blacks? Who would have thought even ten years ago that Russian public schools would be showing films about Jesus and American schools would be outlawing them? If the next forty years continue the movement of the last forty, does anyone have the slightest hope for the survival of anything resembling civilization? What would another 5000-percent increase in teenage violent crime mean? Or another tripling of the illegitimacy rate? Or another administration that would be to the Clinton what the Clinton was to the Eisenhower? Just extend the line, follow the road, and you will see the cliff."
SOCIETAL and LIFESTYLE CHANGES
In the late 60s, people find homosexuality to be morally objectionable, so they don't want homosexuals to be treated equally, especially in the US. Today, we call it ‘bigotry’. D. J. Heasman writes in the July 1977 issue of Political Quarterly:
The demands with which we are now confronted are not merely more extreme but different in kind from what they were. The reforms of the 1960s, in distinguishing between conduct that is immoral and conduct that is against the law, established that in the area under discussion it is a private matter whether in private one behaves morally or immorally; the law had nothing from then on to say. As has been said, for many liberal-minded people, that was it; another bit of progress to be chalked up, another milestone along the road leading away from intolerance. [...] In the 1960s the argument was that it does not follow that because something is immoral it should therefore be illegal; so it became legal. Thereafter, the argument was: if it is not illegal, who are you or anyone else to say that it is immoral? Now the argument is that since such statements can only be personal opinions, and bigoted ones at that, the law should be changed to prevent people from acting on them.
Laws largely favored these ‘minority groups’ so much so that any form of discrimination nowadays based on lifestyle choice, race, color, disabilities results in a hefty lawsuit possibly ending in millions. In Bowers v. Hardwick, decided in 1986, the Supreme Court of the US upheld the constitutionality of the Georgia sodomy statute, which criminalized oral or anal sex engaged in by any two individuals, regardless of the individuals' gender or sexual orientation. But the sad thing is that what was taboo then is now taboo to even brand.
There are even debates as to legalize prostitution in America and one state: Nevada has already done this. The argument is that Sex workers face systematic discrimination throughout the world and are therefore at risk of a variety of abuses. These include police extortion and arbitrary detention, and other violations of their human and labor rights, which in some cases even amount to slavery, especially resulting from debt bondage or child servitude. The common call is to regulate the trade and such abuses would stop. What they suggest is that legalizing prostitution will reduce human trafficking, female exploitation and their basic human rights, and even generate state revenue. They recommend that all national legislation which, in intent or in practice, results in the placing of sex workers outside the scope of the rule of law, should be repealed. The redefinition of prostitution as sex work is proposed as a preliminary condition for the enjoyment by sex workers of their full human and labor rights.
This is directly linked to law affecting morality. We were so obsessed with implementing freedom laws that we forgot what was then considered as basic morality. Some call it democracy; others call it the perversion of democracy.
DEMOCRACY and the WINDS OF POLITICAL CHANGE
A century or so ago, America was the big brother to any small nation which dreams of implementing a more democratic society. America USED TO BE the protector of the free and civilized world. Notions of democracy and liberty were very foundations on which the American declaration of independence was signed. But today, the Patriots Act of 2006 allows the US government to tap private phone lines and encroach viciously on people’s privacy and freedom, all in the name of the ‘war on terror’. They can’t be blamed totally, they are just submitting to the ‘winds of change’, to borrow lyrics from the Scorpions loosely.
This means that what was morally wrong about a decade or two ago, especially within the American community is now bordering on acceptable given the right circumstances. What influenced this change? The international scenario, the emergence of the ‘terrorism’, September eleven etc etc.
MONEY
US President Hopefuls pledge that during their presidency, they will finance hydrogen fuel research when the irony is that their campaign is fundamentally funded by big oil companies. What they, in effect would do, would be to prolong this research long enough that their term in office expires and the oil companies profit for another five to ten years and meanwhile, the public are left wondering in amazement when the TV shows an advertisement about a car that produces clean air while you drive. “The idea is absurd?”
Money has been a long standing factor which influences are large aspect of our lives and it is only fair that it gets to spread its ominous wings over morality. Today, it has come to a stance where big money determines what is moral.
CONCLUSION
Morality is a challenging subject these days. It is not that most people would disagree that society needs some standards of morality, it is rather a problem of agreeing what those standards should be. Even religion is divided and confused on the subject, as is much of secular society. Meanwhile, as debate and discourse continue, moral standards are certainly changing.