Mandatory Take-Over Offer Dispute: High Court Dismisses Judicial Review Against SC Malaysia

By Messrs Lui Bhullar

Case Summary: Empire Holdings Ltd v Securities Commission – Judicial Review of Mandatory Take-Over Offer Dismissed

Introduction

In the recent High Court decision of Empire Holdings Ltd v Securities Commission Malaysia & Ors, the Court dismissed Empire Holdings’ application for judicial review against the Securities Commission (SC). The judicial review challenged the SC’s decision to not take further enforcement action regarding Empire's complaint over an alleged undervalued Mandatory Take-Over Offer (MTO) by MAA Group Berhad (MAAG) involving the shares of Turiya Berhad.

This case provides valuable insights into the scope of judicial review against the Securities Commission, the principles guiding the issuance of mandamus orders, and the judiciary’s deference to statutory regulators’ investigatory discretion in the Malaysian capital markets.

Key Facts

• Applicant: Empire Holdings Ltd, a Seychelles-incorporated entity with a business address in Malaysia.

• Respondents: Securities Commission (SC), MAA Group Berhad (MAAG), and Turiya Berhad.

• Empire alleged that its shares in Turiya were wrongfully sold at an undervalue by its lender to MAAG.

• Following MAAG’s acquisition of a controlling stake in Turiya, a Mandatory Take-Over Offer was issued at RM0.18 per share.

• Empire claimed that the offer price was unlawful and sought an order of mandamus compelling the SC to re-investigate its complaints under the Capital Markets and Services Act 2007 (CMSA) and Securities Commission Malaysia Act 1993 (SCMA).

Legal Issues Considered

1. Is the SC’s investigation subject to judicial review?

The Court held that:

• The SC’s investigatory process, carried out pursuant to statutory powers under the CMSA, is not generally amenable to judicial review.

• Allowing judicial review of regulatory investigations would impede the SC’s statutory mandate and operational confidentiality under Section 148 SCMA.

2. Was the SC’s decision unlawful, irrational, or procedurally improper?

The Court found:

• The SC acted lawfully and rationally.

• There was no procedural impropriety, as Empire was afforded multiple opportunities to present evidence.

• The SC reviewed trading data over a 14-month period and requested additional information from relevant parties.

• Empire’s allegations (including a supposed RM0.40 offer) were unsupported and dismissed in a related civil suit (Suit 295).

3. Is the Applicant entitled to an order of mandamus?

The Court reiterated that for mandamus to be granted under Section 44 of the Specific Relief Act 1950, the applicant must show:

• A clear legal right;

• That the Respondent has a ministerial duty to act (i.e., without discretion);

• That no other legal remedy exists.

Empire failed to meet these criteria. The SC had already investigated and reached a finding that Empire’s complaint was unsubstantiated.

Significance of the Case

This case reinforces the legal principle that:

• Regulators like the SC exercise discretion in enforcement matters. Courts will only intervene where a decision is illegal, irrational, or procedurally improper.

• The threshold for judicial review of decisions involving complex capital market investigations remains high.

• Litigants cannot use judicial review as a backdoor appeal when dissatisfied with regulatory or civil outcomes. Contact Us for Legal Assistance in Capital Markets

  
  

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