Many Malaysian companies start with two people and an even split. Business partners. A husband and wife. Two brothers, or a parent who set it up so the business could pass on. At the time, nobody thought the split would matter.
Then something breaks. A separation, a falling out, or one side moves overseas and the emails stop being answered. A director resigns and nobody replaces them. The accounts are late, then later. One shareholder keeps paying the company’s bills out of their own pocket.
The company still exists. It still owns things. But nothing can be decided.
Why a 50/50 company gets stuck
With two equal shareholders, neither side can outvote the other. If one of them has also resigned as director, there is often no one left who can act without the other’s signature. The property cannot be sold. The loan cannot be restructured. The company cannot even be closed voluntarily, because that also needs the shareholders to agree.
That is a deadlock. It is not a disagreement. It is a company that can no longer act.
The just and equitable ground
Section 465(1)(h) of the Companies Act 2016 allows the court to wind up a company if “the Court is of the opinion that it is just and equitable that the company be wound up”.
The categories are not closed. As the High Court put it in Chong Kok Ming,1 “There is no pigeonhole approach to the categories of ‘just and equitable’.”
In a small company, two grounds usually come together: a deadlock in management, and a breakdown of the mutual trust and confidence the company was built on. In Tai Hean Leng,2 there were two directors and two shareholders, each holding one share. The High Court found that “They just cannot get on with each other”, and wound the company up on both grounds.
When it is a family company
The company is a separate legal person. Whatever happens between its shareholders, it still has its assets, its debts and its duty to file accounts, whether or not they are speaking. Where its property is charged to secure a loan in the shareholders’ own names, the bank still expects both of them to pay.
The courts have recognised that the just and equitable ground applies with particular force here. In Tai Hean Leng, the court said that mutual trust and confidence “is generally the bedrock of family companies”. It adopted the Singapore observation in Tang Choon Keng Realty3 that the relationship between members of a family company “is even more personal” than between partners.
Not every company owned by relatives qualifies. The question is whether the family interest is “fundamental to the purpose of the company”.4 A company a couple set up to run their shared business usually is. A company that simply happens to have two related shareholders may not be.
You do not have to prove who is to blame
This is where most people get it wrong. They expect the petition to become a trial of who caused the breakdown, or who ruined the marriage.
It usually does not. In Tai Hean Leng, the court said that unless it is very clear on the undisputed facts that the petitioner is wholly to blame, the court “should not and could not decide who is more to blame”. The same judgment cited the Australian decision in Re Dalkeith Investments,5 where a divorce had destroyed the trust between the shareholders, and the judge said it was “no part of my function to attempt to analyze or apportion the reasons for the animosity”.
The question is whether the two of you can still run the company together. Often the answer is in the other side’s own affidavit. A reply full of allegations against the petitioner tends to prove the breakdown it is trying to deny.
What the other side usually argues
A petition like this is often opposed, and the objections tend to repeat.
“The petition is filed for an ulterior motive.” A petition can be dismissed if it is brought in bad faith or for a collateral purpose.6 But the allegation has to be made out. In Tai Hean Leng, it was not.
“There are other remedies.” The same court held that the fact there might be alternative remedies does not stop it from winding up a company where it is just to do so.
“The petitioner mismanaged the company.” Perhaps. But an allegation with no document behind it does not go far. It is usually treated as a bare assertion, and given little weight.
“I need more time to find a buyer.” In Chan Kong Hong,7 the High Court held that this was “not a valid ground to oppose the Petition”.
If you live overseas
The reasoning will be familiar if you are used to English, Singapore or Australian law. In Tai Hean Leng, the court drew on decisions from England, Singapore, Australia and Canada, starting with In re Yenidje Tobacco Company:8 two equal shareholders who would not speak to each other, and a company that was wound up because of it.
Most of it can be done without coming back. A winding-up petition is decided on affidavit evidence, with counsel arguing it at the hearing. In most cases the petitioner does not need to be in court. The affidavit verifying the petition can be affirmed where you live, before the appropriate officer. The advertisement in the newspapers and the Gazette is handled here.
Before you file
Put a proposal to the other shareholder in writing. A sale of the property at market value, a buy-out, or an agreed voluntary winding up. Give a reasonable time to respond, and say what you will do if there is no answer.
If they agree, you may not need the court. If they do not reply, the letter becomes part of your evidence. Keep it about the company. A short letter with the position and one proposal will carry more weight later than a long one about everything else.
Winding up does not destroy the asset
A winding-up order does not take away anyone’s share. A liquidator is appointed, whether the Director General of Insolvency or a private liquidator, sells what the company owns, pays what it owes, and distributes the balance to the shareholders. In Tai Hean Leng, the court noted that the winding up “would not deprive” the other shareholder of her share in the company. Neither side has to agree with the other on price or timing any more, and nobody has to fly back to sign the sale.
If the shares are also in issue in divorce or estate proceedings, that is a separate question, to raise with whoever is advising on that side.
A deadlock does not ease with time. Where the shareholders cannot resolve it between themselves, legal proceedings may be needed to break it.
If you are a shareholder in a company that has reached this point and would like to talk it through, you can contact us using the details on this page.
Ang Jia Hern, Partner, Ang & Lim Partnership
Notes
- Chong Kok Ming & Anor v CJ Stainless Steel Sdn Bhd [2019] 1 LNS 1779 (High Court). ↩
- Tai Hean Leng @ Tek Hean Leng v New Future Capital Sdn Bhd [2018] 1 LNS 1647 (High Court). ↩
- Tang Choon Keng Realty (Pte) Ltd v Tang Wee Cheng [1991] 2 SLR(R) 1 (Singapore). ↩
- Tai Hean Leng, n 2 above, at [37]. ↩
- Re Dalkeith Investments Pty Ltd [1984] 9 ACLR 247 (Australia). ↩
- Tai Hean Leng, n 2 above, at [65]. ↩
- Chan Kong Hong v Pan Rewards Sdn Bhd & Anor [2022] 1 LNS 645 (High Court). ↩
- In re Yenidje Tobacco Company, Limited [1916] 2 Ch 426 (England). ↩
This article is for general information only. It is not legal advice and does not create a solicitor-client relationship. It was written on 30 September 2026, may not reflect later changes, and may not apply to your circumstances. Do not act, or refrain from acting, on it without advice on your own situation. We accept no liability for any loss arising from reliance on it. See the Disclaimer.