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.

A recent matter handled by our Dispute Resolution team was featured in the news following a decision of the Court of Appeal.

We represented the first and second Respondents in an appeal where the Appellant sought, amongst others, a retrial of a civil suit on the basis that his previous trial counsel had been “flagrantly incompetent“.

On 13.5.2026, the Court of Appeal unanimously dismissed the appeal. The Court held, amongst others, that the high threshold required to establish “flagrant incompetence” had not been met and that there was no basis to attribute blame to the trial counsel.

The Court of Appeal further ordered the Appellant to pay RM 90,000 in costs to the Respondents.

The matter was handled by our Nicholas Yap and Amanda Yap.

An Overview: Quorum Requirements and Deadlock

In our recent article, Nicholas Yap examined how quorum requirements may, in certain circumstances, contribute to a shareholder deadlock under the Companies Act 2016.

This overview highlights:

• how deliberate non-attendance may prevent meetings from proceeding;
• the legal consequences of the absence of quorum;
• the Court’s power to intervene under section 314 of the Companies Act 2016, where it is impracticable to convene a meeting; and
• the use of written resolutions as a practical alternative for private companies.

The visual summary is intended to provide a concise snapshot of the key legal issues and practical considerations arising from quorum-related deadlock.

If you missed the full article, please read it here: Shareholder Dispute Briefs | When Quorum Requirements Are Used to Create Deadlock

The Estée Lauder Companies Inc is reportedly exploring strategic M&A opportunities involving Puig, the Spanish beauty and fashion group, as part of its broader portfolio optimisation and growth strategy. While details of a full acquisition remain speculative, Estée Lauder has recently acquired a stake in luxury skincare brand 111SKIN, which is backed by Puig – signalling potential alignment between the two groups in the premium beauty segment.

From a strategic standpoint, this potential transaction would reflect a broader trend in the global beauty industry, where established industry players are pursuing partnerships and acquisitions to strengthen their presence in luxury and niche segments. A combination of Estée Lauder’s global distribution capabilities with Puig’s strong brand portfolio could create a more diversified and competitive player in the industry.

These developments highlight the increasing role of strategic investments and minority stakes as precursors to larger M&A deals, while underscoring the execution and integration considerations in cross-border consumer deals.

LDD helps buyers identify risks that may affect valuation, deal structure, and in some cases, the decision to proceed with the transaction.

Here’s what buyers typically prioritise – and why it matters for both sides.

1. Ownership & Corporate Records

• Whether the seller truly owns the shares/assets being sold?
• Are corporate secretarial records complete, updated, and accurate?
• Any missing paperwork that may attract a penalty from any relevant authorities?
• Buyers often rely on clean and consistent records to assess risk.

2. Contractual & Commercial Obligations

• Buyers typically look into key customer and supplier contracts.
• Any contracts requiring approval for a change of control?
• Vague termination provisions and unfavourable terms in contracts may be seen as red flags.
• Contracts with revenue concentration are especially scrutinised.

3. Compliance & Regulatory Issues

• Whether the target company possesses valid licences, permits, and sector-specific approvals.
• Any past or ongoing breaches of law, enforcement actions or investigations by relevant authorities?
• Buyers are concerned as compliance gaps can impact business operations post-completion.

4. Liabilities

• Does the target company take out any loans or provide guarantees?
• Any past or ongoing disputes (e.g. litigation cases, employment / industrial disputes)?
• Buyers want visibility into the potential liabilities and exposures so they do not inherit “unknown” surprises.

Smooth and organised LDD equates to a smoother negotiation process.

The more prepared the seller/target company is, the shorter the journey to signing and completion of the transaction.

In Malaysia, a members’ meeting serves as the primary forum for decision-making by shareholders and the exercise of their rights.

Generally, a member is entitled to request that a members’ meeting be held, subject to compliance with the requirements under the Companies Act 2016 (“CA 2016”) and the company’s constitution.

These members’ meetings are vital because there are matters of utmost significance that often require sanction or approval from the members under, amongst others, the CA 2016. For example, under Section 223(1)(b) CA 2016, the disposal of a substantial portion of the company’s property is not to be carried into effect unless the disposal has been approved by the members.

Quorum Requirements: The Potential Abuse

Pursuant to S.328(1) – (2) CA 2016, the default requisite quorum for a members’ meeting is two members (save for a single-member company), unless otherwise provided in the company’s constitution.

In a scenario where there are only two members, a deadlock may occur when one of the two members deliberately refuses to attend the meeting, thereby resulting in the lack of the requisite quorum for the meeting to convene.

This will give rise to a decision-making deadlock.

Pursuant to S.328(4) – (5) CA 2016, without the requisite quorum, no business shall be transacted, and the meeting shall be either dissolved or adjourned.

What happens if a resolution is passed without the requisite quorum? 

The Federal Court affirmed the Court of Appeal’s decision to validate the share issuances, but did so on a different basis – relying on the specific statutory provisions under S.63 and/or S.355 CA 1965.

In Malaysia, it has been held by the Courts[1] that a meeting convened without the requisite quorum would be a nullity, rendering any resolution passed in the said meeting to be invalid.

Without the requisite quorum to convene the meeting, this may jeopardise the company’s operation due to the inability to pass a resolution to, amongst others:

• approve directors’ remuneration;
• appoint the company’s auditor;
• approve the company’s annual audited financial statements;
• reappoint the directors who are retiring.

What is designed as a procedural safeguard, if misused, may be deployed by a minority member as an instrument of obstruction capable of paralysing the company’s operations.

Judicial Intervention: The “Impracticability” Test

In such a scenario, an aggrieved shareholder cannot be left without recourse.

Under S.314 CA 2016, the Court may order a meeting to be called in any manner that the Court thinks fit, including a direction that the presence of a single member shall be deemed to constitute a sufficient quorum. (See: S.314(2) & (4) CA 2016).

That said, such a remedy is not available as of right. The Court generally expects the members to first exhaust the internal mechanisms under the CA 2016.

Judicial intervention under S.314 CA 2016 will typically only be invoked where it is impracticable to convene or conduct a meeting in the usual manner (See: S.314(1) CA 2016).

This raises the critical question: what amounts to “impracticable”?

It has been held that impracticability is not narrowly confined. It will “cover a potentially wide range of factual situations, including but not limited to a case where the members have deliberately failed to attend a general meeting so that a proper quorum cannot be constituted…”[2]

Quorum provisions, after all, are not intended to operate as a veto mechanism in the hands of a minority where a deadlock exists.

In Tamabina Sdn Bhd & Anor v Nakamichi Corporation Berhad [2016] 10 CLJ 148, the Malaysian Court of Appeal held that:-

“[22]… to show impracticability it is necessary to show evidence of attempts or efforts to call and hold a meeting and such attempts or effort have been futile. The reason for the futility in calling or holding a meeting must be attributed to some circumstances that make it almost impossible to hold the meeting. These circumstances could be due to a deadlock situation, an intentional un-cooperative attitude of the directors, a persistent effort to derail the meeting or deliberate non-attendance at meeting after a proper and valid notice had been issued so as to force the meeting to be called off for want of quorum. The categories of such reasons are never closed.”

Lee Yee Wuen v Kien Yiap Trading [2020] 1 LNS 236

• The Court affirmed that a minority cannot use the quorum provisions as a ‘veto’ to deny the majority’s rights.

Abdul Halim bin Mutaref v ALM Autoserve Sdn Bhd & Anor [2023] MLJU 2358

• The Court intervened where a shareholder’s acknowledged “deliberate refusal to attend the meeting” resulted in a lack of quorum, thereby creating an impasse.

Golden Crescent v PDC Associates [2025] CLJU 915

• Judicial intervention was warranted as the Court found strong evidence of a genuine deadlock arising from a member’s “systemic non-attendance at properly noticed meetings”.

Unilever and McCormick & Company (“McCormick“) have announced an agreement to combine Unilever Foods business with McCormick, in a transaction valuing the business at approximately US$44.8 billion. The proposed transaction will see Unilever and its shareholders receive a majority equity stake in the combined entity, forming a global flavour-focused company with significant scale across retail and food service channels.

Structurally, the transaction is expected to be implemented through a Reverse Morris Trust arrangement, enabling a tax-free separation of Unilever Foods business for US federal income tax purposes while combining it with McCormick’s existing operations. This reflects a growing trend of strategic carve-outs and business separations in large-scale M&A, particularly where conglomerates seek to enhance portfolio focus in a tax-efficient manner.

Taken together, the proposed combination highlights how complex deal structuring and tax considerations remain central to executing large-scale transactions.

A recent matter handled by our Dispute Resolution team was featured across several Malaysian news outlets.

We represented the Prime Minister, YAB Dato’ Seri Anwar Ibrahim, in successfully striking out proceedings brought by P. Waytha Moorthy (“Plaintiff”) regarding the Prime Minister’s appointment and his position as the Member of Parliament for Tambun.

In allowing our striking out application on 18.3.2026, the Kuala Lumpur High Court found, amongst others, that the Plaintiff’s suit was frivolous, vexatious, disclosed no reasonable cause of action, and constituted an abuse of the court process. While the High Court has delivered its decision, the matter remains subject to a potential appeal by the Plaintiff.

The matter was handled by Ranjit Singh (Ranjit Singh & Yeoh), together with our Daniel Albert, and Nicholas Yap (Daniel & Wong).