In every merger and acquisition (“M&A”) or transactional exercise, conditions precedent (“CPs”) act as critical checkpoints to ensure the business and the entity are in an acceptable state before completion. They help allocate risk and set expectations.

It is important to understand CPs and negotiate them well, as they directly affect deal certainty and timelines.

CPs aren’t just formalities. They safeguard the transaction and ensure that the buyer gets the business they expect.

To be effective, CPs should always be:

1. Clear: Leaves no room for multiple interpretations.
2. Achievable: To be negotiated within a realistic timeframe.
3. Necessary: Focusing only on conditions that materially impact the buyer’s risk.

In Essence:

Disclaimer: The content of this article is intended for general informational purposes only and does not constitute formal legal advice.

Our Corporate team regularly advises local and international corporations on mergers and acquisitions (M&A), cross-border transactions, joint ventures, and corporate restructuring. We also provide comprehensive support for shareholders’ agreements and general commercial advisory to help businesses navigate the Malaysian regulatory landscape.

For legal assistance or further inquiries regarding your corporate matters, please feel free to contact us.

Brief Background Facts

• The Parties:
  • TSH and LPK are the founders and directors of Kalysta Sdn Bhd (“Appellants”), an online weight-loss supplement marketing company in Malaysia. NZX (“Respondent”) served as a high-ranking General Agent of Kalysta Sdn Bhd, managing a subgroup of over 400 sales representatives.
• The Dispute:
  • Following internal company investigations into the Respondent’s alleged involvement with a separate commercial entity and an unauthorised marketing incident, the Appellants terminated the Respondent’s agency relationship on 26.6.2021. The Appellants also pursued a counterclaim for the return of performance bonuses and account access.
• The Impugned Publications:
  • Over a compressed period of eight days between 16.7.2021 and 24.7.2021, the Appellants published a series of seven statements (“Impugned Statements”). These publications were disseminated within closed online networks, such as WeChat and Instagram group chats, where the Respondent was described in terms including “compulsive liar” and “manipulative leader”.[4]

High Court (“HC”) Decision

• The HC found that each of the Impugned Statements bore defamatory meanings and adopted a segmented approach in assessing damages, treating each Impugned Statement as giving rise to separate liability by reference to their respective publications made on different occasions[5].
  • The HC awarded separate blocks of general and aggravated damages against each Appellant for the respective Impugned Statements, culminating in a cumulative liability of RM600,000.00.
• Pertinently, having found the Impugned Statements to be defamatory, the HC further ordered the Appellants to tender an apology to the Respondent based on the language and contents proposed by her.[6]
• Dissatisfied, the Appellants appealed against the HC’s decision to the CA.

Decisions & Key Findings

The CA affirmed the HC’s decision that the Impugned Statements were defamatory of the Respondent and rejected the pleaded defences. However, the CA set aside the HC’s order for an apology to be issued[7] and reduced the quantum of damages awarded.

(1) Court’s Jurisdiction to Compel an Apology as a Remedy

• The Main Judgment essentially held that the Court has no jurisdiction to order the publication of an apology under the law.

• On the other hand, the Supporting Judgment, while concurring that no apology should be ordered on the facts, contemplated the possibility that the Court may, in appropriate cases, exercises its inherent jurisdiction to order corrective non-monetary remedies[13].

(2) Assessment of Damages: Cases of Successive Publications

Separately, the CA also reduced the quantum of damages, adopting a global assessment and holding that the Impugned Statements formed part of a continuous course of conduct and should not be assessed in a fragmented or duplicative manner.

• Continuous Course of Defamation[19]: Although each defamatory publication constitutes a separate cause of action, the CA held that the seven Impugned Statements should not be treated in a fragmented manner. Published within a compressed timeframe and arising from the same underlying allegations, they formed part of a coherent narrative. A global assessment of damages, therefore, better reflected the cumulative nature of the reputational harm and avoided artificial fragmentation, duplicative compensation and mechanical multiplication of awards.
• Absence of Proven Substantial Harm[20]: While defamation is actionable per se, the CA found no clear evidence of financial loss or significant reputational impact. Having regard to comparable authorities, the CA accordingly considered a global award of RM 100,000.00 to be fair, reasonable and proportionate in the circumstances.

Conclusion

The decision is significant for clarifying the limits of remedial relief in Malaysian defamation law.

The Main Judgment reaffirmed that a compelled apology is not a permissible post-trial remedy and that the Court’s jurisdiction must be grounded in recognised heads of relief.

The Supporting Judgment, meanwhile, highlights the possibility that corrective non-monetary remedies may be available in appropriate cases, particularly where reputational harm arises within closed online networks.

Our Dispute Resolution practice specialises in high-stakes civil, commercial and corporate disputes, including shareholders’ disputes, breach of contract, and debt recovery. We have experience representing clients at all levels of the Malaysian Courts, providing strategic and commercially sensible solutions to complex legal challenges.

If you require advice or representation in a legal dispute, please reach out to our team via our contact page.

Disclaimer: The content of this article is intended for general informational purposes only and does not constitute formal legal advice. Please refer to the Grounds of Judgment in the Federal Court Civil Appeal No. 02(f)-9-03/2025(W).

If you found this article useful, please feel free to download the PDF document in the link here.

Berkshire Hathaway has announced its proposed acquisition of Taylor Morrison Home Corporation, one of the largest homebuilders in the United States, in an all-cash transaction valued at approximately US$8.5 billion. The deal marks the first major acquisition under Berkshire’s new Chief Executive Officer, Greg Abel, and reflects Berkshire’s continued commitment to the US housing market.

Beyond expanding Berkshire’s housing portfolio, the transaction is expected to complement its existing housing and building products businesses. Notably, Berkshire has indicated in its announcement that it intends to eventually unify its site-built homebuilding operations into a combined platform, signalling a strategic move towards greater scale and operational integration in the sector.

Taken together, this deal demonstrates how strategic acquisitions can be deployed to strengthen market position during cyclical downturns, while highlighting the role of long-term capital in driving consolidation within mature industries.

Our Corporate team regularly advises local and international corporations on mergers and acquisitions (M&A), cross-border transactions, joint ventures, and corporate restructuring. We also provide comprehensive support for shareholders’ agreements and general commercial advisory to help businesses navigate the Malaysian regulatory landscape.

For legal assistance or further inquiries regarding your corporate matters, please feel free to contact us.

Continuing from Part 1, let’s uncover more hidden liabilities that Buyers should watch out for in an M&A transaction.

Key Areas to Uncover:

The above list is not exhaustive – the scope and depth of liabilities vary based on the target’s business, structure and industry.

A detailed and transaction-specific due diligence is therefore crucial to uncover hidden liabilities and shield the value of a buyer’s investment.

In Essence:

Disclaimer: The content of this article is intended for general informational purposes only and does not constitute formal legal advice.

Our Corporate team regularly advises local and international corporations on mergers and acquisitions (M&A), cross-border transactions, joint ventures, and corporate restructuring. We also provide comprehensive support for shareholders’ agreements and general commercial advisory to help businesses navigate the Malaysian regulatory landscape.

For legal assistance or further inquiries regarding your corporate matters, please feel free to contact us.

Background

The dispute arose out of a joint venture (“JV”) for an integrated commercial development in Kuala Lumpur known as the “Imbi Project”.

• The Appellant, ISM Sendirian Berhad (“ISM”), owned by Dato’ Ray Cheah (“Dato Ray”) and his wife, held a 30% minority equity stake in five JV companies incorporated to acquire 11 parcels of land for the project.[2]The remaining 70% majority stake was held by the 6^th Respondent, MPHB Capital Berhad (“MPHB”).
• The five JV companies (1^st – 5^th Respondents) were structured as single-purpose vehicles, intended solely for land acquisition for the project rather than ongoing commercial operations[3].
• Although a draft shareholders’ agreement was prepared, it was never executed. The parties proceeded on the mutual understanding that they were bound by an oral agreement.[4]

The dispute concerned funding obligations[5]:

• ISM contended that the funding was split into cash and loan components, limiting its obligation to 30% of the cash portion (approximately 9% of the total acquisition costs).
• MPHB countered that funding obligations must strictly follow a 30:70 equity-based contribution across the board.

Following this disagreement, ISM commenced proceedings under s.181 of the CA 1965[6] alleging, amongst others, minority oppression, including funding demands, dilution via rights issues, and the imposition of interest on shareholder advances.

MPHB counterclaimed, amongst others, seeking a judicial declaration that the JV arrangement had been lawfully terminated by reason of ISM’s alleged breach of funding obligations, alongside claims for interest and opportunity costs[7].

High Court (“HC”) & Court of Appeal (“CA”) Decision

The HC found in ISM’s favour on three out of the five grounds. The remaining two grounds were dismissed, and no appeal was pursued against those findings. [8]

The CA reversed this decision, holding that the core dispute concerned the oral shareholders’ agreement between ISM and MPHB. As it did not relate to the “affairs of the company”, it was a private matter falling outside the statutory scope of s.181 of the CA 1965. [9]

Leave Questions at FC

The FC essentially granted leave on two questions [10]: –

Decisions & Key Findings

The FC dismissed both of the Appellant’s appeals and found no appealable error warranting appellate intervention.

(1) The Scope of Jet-Tech & “Affairs of the Company”

The FC undertook a close examination of Jet-Tech, in particular, on paragraph 37.

• The FC reaffirmed that a claim under s.181 of the CA 1965 requires that the conduct complained of must relate to the “affairs of the company”. In doing so, it clarified that Jet-Tech does not establish a blanket prohibition against oppression claims founded on breaches of shareholders’ agreements, and that paragraph 37 must be read in its factual context.

“[70] … there is no express pronouncement or indication in paragraph 37 or any part of the grounds of judgment that any breach of the shareholders’ agreement is not actionable under section 181 of the CA 1965”.

• The critical inquiry is whether the conduct complained of, in substance, relates to the affairs of the company.
• The phrase “affairs of the company” is broad and encompasses, amongst others, capital structure, dividend policy, voting rights, and generally “all matters which may come before the board for consideration”.[11] However, this broad formulation does not extend to purely inter se disputes between shareholders.
• The FC drew a clear distinction: “the company’s affairs cannot be equated with those of its shareholders”. Private arrangements remain a matter for private law remedies, if any[12].
• Applying these principles, the FC held that the principle of law in paragraph 37 of Jet-Tech is correct and its application is inherently fact-sensitive. Accordingly, Question 2 was answered in the affirmative. [13]
• On the facts, the five JV companies were passive special purpose vehicles with limited operational activity, incorporated solely for land acquisition, with no substantive business operations. The FC agreed with the CA that, in light of the nature of the JV companies as passive holding vehicles, the dispute did not concern the “affairs of the company”.[14]
• In these circumstances, the FC held that the requirement of conduct relating to the “affairs of the company” was not satisfied and the oppression claim under section 181 could not be sustained.[15]

(2) Establishing a Quasi-Partnership

The FC rejected the Appellant’s alternative argument that the JV amounted to a “quasi-partnership” capable of invoking equitable standards of fairness.

• A quasi-partnership requires a foundation of personal relationship, mutual trust, and confidence, typically arising from prior or long-standing dealings.[16]

• On the facts, ISM and MPHB had no prior dealings or business transactions, and their dealings in relation to the JV were limited and commercial in nature[17].

• The JV was negotiated and structured as an arm’s length transaction between business entities, where MPHB treated it purely as a standard commercial investment proposal.

• Accordingly, the factual threshold for a quasi-partnership was not met, and equitable considerations were not engaged.[18]

Key Takeaways

Conclusion

The FC’s decision confirms that paragraph 37 in Jet-Tech should not be read as establishing a categorical exclusion of minority oppression claims simply because the dispute concerns a shareholders’ agreement.

The critical inquiry remains whether, in substance, the impugned conduct relates to the “affairs of the company” under s.181 of the CA 1965, in which case shareholders’ agreement matters could still be the subject matter of a claim under s.181.

Ultimately, the ruling turns on characterisation: whether the alleged wrong implicates the “affairs of the company” or remains a private dispute between shareholders.

Our Dispute Resolution practice specialises in high-stakes civil, commercial and corporate disputes, including shareholders’ disputes, breach of contract, and debt recovery. We have experience representing clients at all levels of the Malaysian Courts, providing strategic and commercially sensible solutions to complex legal challenges.

If you require advice or representation in a legal dispute, please reach out to our team via our contact page.

Disclaimer: The content of this article is intended for general informational purposes only and does not constitute formal legal advice. Please refer to the Grounds of Judgment in the Federal Court Civil Appeal No. 02(f)-9-03/2025(W).

If you found this article useful, please feel free to download the PDF document in the link here.

When assessing a potential acquisition, don’t stop at the balance sheet. Corporate liabilities extend far beyond bank borrowings – they can hide in contracts, compliance gaps or forgotten obligations.

In Part 1 of Corporate Liabilities – More than Just Loans, discover the key areas every Buyer should uncover through due diligence.

Key Areas to Uncover:

The above list is not exhaustive – the scope and depth of liabilities vary based on the target’s business, structure and industry.

A detailed and transaction-specific due diligence is therefore crucial to uncover hidden liabilities and shield the value of a buyer’s investment.

In Essence:

Disclaimer: The content of this article is intended for general informational purposes only and does not constitute formal legal advice.

Our Corporate team regularly advises local and international corporations on mergers and acquisitions (M&A), cross-border transactions, joint ventures, and corporate restructuring. We also provide comprehensive support for shareholders’ agreements and general commercial advisory to help businesses navigate the Malaysian regulatory landscape.

For legal assistance or further inquiries regarding your corporate matters, please feel free to contact us.