Folin & Brothers Sdn Bhd (in liquidation) & Ors v Folin Food Processing Sdn Bhd & Ors – [2011]

Companies and Corporations — Liquidation — Liquidators — Rights of liquidators — Right to obtain information and documents relating to company’s assets

Companies and Corporations — Winding up — Disposition of property — Valuation of company’s assets — Manner of valuation — Whether valuation properly carried out—Whether valuation independent and reflected fair value of property—Whether company assets undervalued—Whether expert’s decision can be challenged for fraud, collusion, partiality, lack of independence

The joint liquidators (‘appellants’) were the liquidators of the first appellant (‘Folin Brothers’). Folin Brothers was the majority shareholder holding 1,000,002 shares in the first respondent (‘Folin Food’). The minority shareholders all held one share each in Folin Food. A dispute arose between the joint liquidators and the minority shareholders, resulting in the minority shareholders filing a 181 petition against the joint liquidators. The minority shareholders offered to purchase the shares held by Folin Brothers in Folin Food for the sum of RM7,136,680. Though the joint liquidators declined the offer, they agreed however, to appoint an independent valuer to ascertain the fair value of the shares of Folin Food to which the minority shareholders agreed. They also agreed that the said independent valuer was to be paid from the
proceeds of the sale. On 4 June 2000, the joint liquidators and Folin Food entered into a consent order with the minority shareholders which provided that: (i) Ernst & Young was to be appointed as an expert to value the shares of Folin Food; and (ii) that upon ascertainment of a fair price of the shares of Folin Food, a sale and purchase agreement was to be entered into between the relevant parties within 30 days. The third respondent (Wong Sin Fan) however had on 8 April 2009, ie even before the consent order was entered into, appointed First Pacific Valuers Property Consultants Sdn Bhd (‘First Pacific Valuers’) to conduct the valuation of the property without obtaining the approval of the Board of Folin Food. The fees paid to First Pacific Valuer were paid byWong Sin Fan. The valuation was carried out by First Pacific Valuer as directed by Wong and Ernst & Young prepared their report based on that valuation.