Family firm dispute: Brothers ordered to buy over siblings' shares

Mr Thio Keng Poon, the former chairman, managing director and director of Malaysia Dairy Industries, seen in March 2009.
Mr Thio Keng Poon, the former chairman, managing director and director of Malaysia Dairy Industries, seen in March 2009. PHOTO: ST FILE

Two brothers who are majority shareholders of the firm behind the Marigold and Vitagen brands have been ordered to buy over the shares belonging to their three siblings.

This was after the High Court agreed with the three plaintiffs that the duo had acted oppressively against the minority shareholders.

The long-running family tussle had its roots nearly a decade ago, in 2008, when Malaysia Dairy Industries (MDI) founder Thio Keng Poon sued his six children and wife for pushing him out of the firm.

The 86-year-old was ousted for making double claims on travel expenses amounting to about $45,000; his explanation was that he had travelled with a female companion. After winning his appeal to be reinstated, he was ousted again.

In 2013, his children Wendy, 58, Michael, 56, and Serene, 55, sued their brothers, Ernest, 58, and Patrick, 52, claiming they had abused their control of the firms.

They also sued their mother, Madam Kwik Poh Leng, 85, for allegedly supporting the pair's "personal vendetta" against their father using company resources.

In a written judgment published yesterday, Justice Judith Prakash said "it is obvious that the relationships have unravelled irretrievably" and it would not be right for the three siblings to remain tied up in the company. She dismissed the claims against Madam Kwik.

The trio raised a slew of allegations against Ernest and Patrick, who are respectively the managing director and deputy managing director of MDI, but the judge concluded that only some of them amounted to minority oppression.

This included how they persecuted their father for double claiming travel expenses. MDI had hired an accounting firm to further review his expense claims from various family companies.

Justice Prakash said that while directors should take action to recover company funds that have been wrongly paid out, she questioned whether such action was "taken to extremes because it was motivated by personal anger..."

In particular, the judge found that the pair had an "ulterior purpose" in using MDI to investigate Mr Thio's claims from a Hong Kong company. She said they incurred more costs by engaging lawyers to send letters of demand to Mr Thio even though Serene had offered to pay $250,000 for him. "Their use of MDI for the purposes of their vendetta was, therefore, commercially unfair vis-a-vis the other shareholders including the plaintiffs."

The judge also pointed to the pair's conduct in selectively using a consultant's report to justify increasing their remuneration while slashing Michael's, and cutting benefits for Michael and Serene.

In a statement, the plaintiffs said they welcomed the judgment.

The buyout price will be determined by an independent valuer. In 2011, auditors appointed by the plaintiffs valued MDI at $1.2 billion.

A version of this article appeared in the print edition of The Straits Times on July 19, 2017, with the headline 'Family firm dispute: Brothers ordered to buy over siblings' shares'. Print Edition | Subscribe