Dispute amongst directors does not entitle claim in minority oppression

Section 181 of the Companies Act allows any minority shareholder who alleges oppression in the conduct of the affairs of the company by the majority shareholder(s) to petition for the winding-up of the company.

Many times, the deterioration of the relationship starts with a removal of the minority shareholder as a director of the company.

In Dato Ting Check Sii v Datuk Hj Mohamad Tufail Mahmud & Ors, the petitioner who was removed as a managing director sued for minority oppression.

The Court held that a member of the company must show that the conduct of the majority shareholders have seriously diminished or jeopardised the value of his shareholding before he can succeed in a s181 petition. In other words, the shareholder must have suffered damage in his capacity as a shareholder.

Damage suffered in his other capacities (including in his capacity as a director) does not entitle him to a claim in oppression.

Of course, the reality is that once a member is removed from directorship, he loses access to much of the company's operations and management decisions, as a result of which he may be hard-pressed to show wrongdoing. It's a tough obstacle to overcome, but that may be necessarily so due to the drastic measures available to a Court of law, to effectively over-ride majority rule, if oppression is proven.

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