(1) Notwithstanding anything in the memorandum or articles of association of the company, the directors shall not carry into effect any arrangement or transaction for—
(a) the acquisition of an undertaking or property of a substantial value; or
(b) the disposal of a substantial portion of the company's undertaking or property,
unless the arrangement or transaction has been approved by the company in a general meeting.
[Subs. Act A1299:s.10]
(1A) For the purpose of subsection (1), in the case of a company where all or any of its shares are listed for quotation on the official list of a Stock Exchange as defined in the Securities Industry Act 1983, the term 'substantial value' or 'substantial portion' shall mean the same value prescribed by the provisions in the listing requirements of the Exchange—
(a) which relates to acquisitions or disposals by a company or its subsidiaries to which such provision applies; and
(b) which would require the approval of shareholders at a general meeting in accordance with the provisions of such listing requirements.
(1B) In the case of any company other than a company to which subsection (1A) is applicable, an undertaking or property shall be considered to be of a substantial value and a portion of the company's undertaking or property shall be considered to be a substantial portion if—
(a) its value exceeds twenty-five per centum of the total assets of the company;
(b) the net profits (after deducting all charges except taxation and excluding extraordinary items) attributed to it amounts to more than twenty-five per centum of the total net profit of the company; or
(c) its value exceeds twenty-five per centum of the issued share capital of the company,
whichever is the highest.
[Ins. Act A1299:s.10]
(2) The Court may, on the application of any member of the company, restrain the directors from entering into a transaction in contravention of subsection (1).
(3) Where an arrangement or transaction is carried into effect in contravention of subsection (1), the arrangement or transaction shall be void except in favour of any person dealing with the company for valuable consideration and without actual notice of the contravention.
[(3) Subs. Act A1299:s10]
(4) This section shall not apply to proposals for disposing of the whole or substantially the whole of the company's undertaking or property made by a receiver and manager of any part of the undertaking or property of the company appointed under a power contained in any instrument or by a Court or a liquidator of a company appointed in a voluntary winding up.
[Am. Act A1299:s.10]
(5) Any director who contravenes the provision of this section shall be guilty of an offence against this Act.
Penalty: Imprisonment for five years or thirty thousand ringgit or both.
(6) In this section, "director" includes the chief executive officer, the chief operating officer, the chief financial controller or any other person primarily responsible for the operations or financial management of a company, by whatever name called.
[(6) Ins. Act A1299:s.10]