Court Assistance In Enforcement Of Administrative Decisions

A case commentary on Bursa Malaysia Securities Berhad v Tengku Dato’ Kamal Ibni Sultan Sir Abu Bakar & 3 Others by Ong Doen Xian


On 28 December 2010, the High Court allowed an application by Bursa Securities Malaysia Berhad (“Bursa”) pursuant to Section 360 of the Capital Markets and Services Act 2007 (“CMSA”) to enforce penalties imposed on the Defendants by Bursa’s Listing Committee.

This article discusses the events that took place and examines the judgment of the High Court.




Cepatwawasan Group Berhad (“Company”) is a company listed on the Main Board of Bursa. The Defendants were directors of the Company at the material time until they were removed on or around 6 August 2004.

Shortly before their removal, the Defendants caused Prolific Yield Sdn Bhd, a wholly-owned subsidiary of the Company, to make payments totalling RM13 million to a company called Opti Temasek Sdn Bhd, and another RM3 million to one Sheikh Abdul Rahim, who was the driver of the 1st Defendant. These payments were in breach of the financial assistance provisions in Bursa’s Listing Requirements.

Bursa issued show cause letters to the Defendants but did not receive any response from them. The Listing Committee proceeded to determine the matter and found that the Defendants had breached the Listing Requirements. Bursa then imposed various penalties on the Defendants inter alia to pay fines to Bursa and to rectify the breaches of the Listing Requirements by repaying to the Company the RM16 million that had been wrongly paid out to Opti Temasek Sdn Bhd and Sheikh Abdul Rahim within a stipulated timeframe.

The Defendants’ appeal (conducted with the Defendants’ and their counsel in attendance) to Bursa's Appeals Committee against the findings and penalties imposed by the Listing Committee was dismissed.



As the Defendants failed to remedy the breaches committed by them, Bursa filed an application to Court under Sections 360(1)(c)(i), 360(J) and 360(K) of the CMSA to seek orders and directions which mirrored the penalties imposed by the Listing Committee on the Defendants.

The Defendants opposed Bursa's application primarily on 3 grounds. Firstly, that Section 360 does not permit Bursa to enforce administrative reprimands or actions decided upon by its regulatory committees. The Defendants submitted that Bursa must bring fresh judicial proceedings against them and prove that they had in fact breached the Listing Requirements.

Secondly, the Defendants contended that the Securities Commission ("SC") was the sole party entitled to commence the proceedings. Thirdly, they submitted that Bursa's application ought to have been made under the repealed securities legislation as the alleged breaches of the Listing Requirements had been committed while that legislation subsisted.

The Defendants also contended that there was an issue of double recovery as a consent judgment had been entered into between the Company and the Defendants (and 14 others) in separate legal proceedings whereby the defendants therein had agreed to pay the sum of RM3 million to the Company in full and final settlement of the claimed sum of RM16 million.



The High Court allowed Bursa’s application and granted orders in the terms sought.

His Lordship, Dato’ Abdul Aziz bin Abdul Rahim J, citing the decision of the Court of Appeal in Bursa Malaysia Securities v Gan Boon Aun [2009] 4 MLJ 695, 704, 719, recognised that the role of Bursa under Section 11 of the CMSA is to regulate the securities market, safeguard public interest and protect investors and that Bursa also has a duty to ensure an orderly and fair market in respect of securities and to act in public interest to ensure protection of investors.

The Judge held that the Court has the power under Section 360(1)(c) of the CMSA to grant orders sought by Bursa once it "appeared" to the Court that a person has contravened a relevant requirement. His Lordship referred to Bursa Securities Malaysia Berhad v Azimudin bin Ab Ghani (an unreported decision) where Zabariah Mohd Yusof JC held that the plaintiff could satisfy the requirements of the sub-section by showing, via affidavits, that the defendants have been found by the Listing Committee to have breached the Listing Requirements and that fines had been imposed.

His Lordship also referred to Capital Market Laws of Malaysia where the learned author, Shanti Geoffrey, opined that "Section 360 of the CMSA ... may also be relied upon by the stock exchange as well as an aggrieved person where there is contravention of a relevant requirement."


Defendants' First Ground

According to the learned Judge, the scheme of things under the CMSA does not contemplate, as contended by the Defendants, that Bursa must first commence an action in a court of law against the Defendants and therein produce evidence to prove that the Defendants are guilty of the breach of the relevant requirements, and only thereafter apply to the Court under section 360(1)(c) for the necessary orders to enforce any penalty imposed on the wrongdoers.

The Court was satisfied that the Listing Committee has the necessary jurisdiction to conduct its own investigations to satisfy itself whether the Defendants had committed the breach and on being so satisfied, to impose any necessary penalty or reprimand.

The Court further held that if the Defendants failed to comply with any directives or orders of the Listing Committee (after having exhausted the in-house appeal process), the SC or Bursa may apply under Section 360 for the necessary order to enforce compliance.

His Lordship further opined that when making such application, it is mandatory for the plaintiff to produce by way of affidavit evidence (which was done in this case) the material facts on which the Listing Committee had found the Defendants to be guilty of the breach of the relevant requirements and the penalty or reprimand imposed.

The Court then has to form an opinion, based on the affidavit evidence, whether there was sufficient basis for the Listing Committee to come to such findings as it did. If the Court is satisfied in that regard, then it would appear that the Defendants have committed the breach of the relevant requirements. If it appears so to the Court and the Court is satisfied on the evidence, then the orders may be made.

The Judge was satisfied that the findings of the Listing Committee in the present case were justified by the evidence presented to them.

In this regard, the Court also rejected the Defendant's argument that the word "appears" in the expression "appears to the Court" which is repeated several times in Section 360 of the CMSA implied that the High Court had to make a finding of fact based on witness testimony brought before the Court.

As the word "appears" was not defined in the CMSA, Abdul Aziz J drew on case authorities which interpreted the corresponding expression in Section 24 of the Indian Evidence Act 1872 and Section 24 of the Malaysian Evidence Act 1950, the provisions of which are identical and relate to the admissibility of a confession made by an accused.

In Pyarelal Bhargava v State of Rajasthan AIR 1963 1094, the Supreme Court of India held that the word "appears" in Section 24 of the Indian Evidence Act means 'seems' and imports a lesser degree of probability. The Supreme Court in the same case added that "the standard of a prudent man is not completely displaced, but the stringent rule of proof is relaxed."

In relation to the corresponding provision of the Malaysian Evidence Act, Sharma J in Public Prosecutor v Law Say Seck & Ors [1971] 1 MLJ 199 took the view that "it is left entirely to the court to form its own opinion as to whether an inducement, threat or promise held out in any particular case was sufficient to lead the person to suppose that he would gain an advantage of a temporal nature."

Having regard to the above authorities, the learned Judge held that the word "appears" in Section 360(1)(c) of the CMSA indicated a state of mind of the Court as to the affidavit evidence presented before it in order to be satisfied as to whether there had been a breach of the relevant requirements or of a provision of the CMSA and that the breach had been committed by the Defendants.


Defendants' Second Ground

Abdul Aziz J rejected the Defendants' second contention that only the SC could commence proceedings. The Court agreed with the Plaintiff's submission that Section 354 of the CMSA deals with an entirely different matter and was not relevant to the present case. That section applies where the SC imposes penalties whereas Section 360 applies when Bursa imposes the penalties.

His Lordship held that upon reading Section 360 with Section 11 of the CMSA, it is clear that it is the function of the SC and Bursa to promote a healthy and fair capital market and to ensure adequate protection of the public investors by instilling public confidence in the market. Towards this end, both the SC and Bursa are clothed with the necessary powers and authority to regulate and discipline market players and to come down hard on any person who breaches the relevant requirements (including the Listing Requirements) or the provisions of the CMSA which could affect the confidence of the public and players in the market.


Defendants' Third Ground

The Defendants' breaches of the Listing Requirements were committed at the time when the Securities Industries Act 1983 ("SIA") was in force. Similarly, proceedings were taken and penalties imposed by Bursa on the Defendants in 2005, before the SIA was repealed and replaced by the CMSA in 2007.

As the SIA has already been repealed by the time Bursa filed the proceedings in Court against the Defendants, the Judge said that it is common sense that Bursa could not file the action under that legislation.

According to the learned Judge, Section 390(1) of the CMSA preserves Bursa’s right to take action against any person who is liable to be prosecuted or punished for offences or breaches committed under the repealed legislation. More importantly, Section 381(3) of the CMSA provides that all decisions, directions or notifications made, given or done under the repealed legislation are deemed to have been made, given or done under or in accordance with the corresponding provisions of the CMSA.

His Lordship concluded that by virtue of Sections 381(3) and 390 of the CMSA, the action taken by Bursa and its decision to impose penalties survived the repeal of the SIA as if they had been made or imposed under the CMSA.

Accordingly, the Judge was of the view that the Defendants' third contention was misconceived.



The Court held that double recovery was not in issue as the proceedings taken by Bursa were distinct from those taken by the Company. Bursa was seeking to enforce an administrative decision against the Defendants whereas the Company was seeking to recover monies that belonged to it in its civil action against the Defendants (and 14 others).

In any event, Bursa had amended its prayers to take into account the consent judgment entered into such that it only sought an order for the return of RM13 million by the Defendants to the Company.



The High Court’s decision affirms the functions of Bursa, its regulatory committees and in-house mechanism for taking action against market participants who breach the Listing Requirements.

It also recognises that Bursa has the jurisdiction to conduct its own investigations and to determine for itself whether or not alleged breaches had in fact been committed; and upon being satisfied that the breaches had occurred, to impose the necessary penalties or reprimands.

The judgment is also significant as the Court has affirmed that it will not treat an application by Bursa under Section 360 of the CMSA as a full scale trial but rather, will limit its role to reviewing whether, based on affidavit evidence, there was sufficient basis for the Listing Committee to come to the decision which it did.



The Defendants have filed an appeal against the decision of the High Court.


ONG DOEN XIAN ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )



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