In addition to retaining its equity interests Detik Ria is expected to receive all benefits from the 49% stake including dividends, if any, and the dispute may be resolved further in the High Court, the apex court ruled.
RM2.7 Billion Dividends - Detik Ria had submitted in court that the dividends paid in the period under review amounted to RM2.72 billion, and hence Detik Ria should be given 49% of that sum or RM1.3 billion. The exact sum is being disputed.
Sri Han Suria is 50.99% owned by Prudential Corp and 49% by Detik Ria, while the remaining 0.01% is held by PCA IP Services Ltd. A check on Companies Commission of Malaysia shows that Detik Ria is jointly owned by 10 entities, each holding a 10% stake. They are: Berjaya Capital Bhd (a 100%-owned unit of Berjaya Corp Bhd (KL:BJCORP) as at Oct 2, 2023), Ekuiti Spektrum Sdn Bhd, Seahouse Capital Sdn Bhd, Antara Merdeka Sdn Bhd, Pentas Sentral Sdn Bhd, Arah Juara Sdn Bhd, Cangkat Selasih Sdn Bhd, Persada Majestik Sdn Bhd, Serata Setia Sdn Bhd, and Gabungan Majestik Sdn Bhd.
Court Decision 2020 - When the matter first entered court in 2019, Detik Ria was at the time equally owned by Tan Sri Abdul Rahim Din and Tunku Datuk Seri Shahabuddin Tunku Besar Burhanuddin. The High Court in its decision in 2020, upheld by the Court of Appeal in 2022, ruled that there was nothing wrong in the enforcement of two put and call options agreements entered into by Prudential Assurance and Detik Ria, which would have allowed the disputed 49% stake to be passed to Prudential Corp.
However, the Federal Court, in a unanimous decision, ruled that section 67 of the now-repealed Insurance Act 1996 was breached, when two put and call agreements entered into by the companies in 2002 and 2009 were carried out without the finance minister's approval.
Bank Negara Malaysia Approval - The court below erred in its decision that recognised the agreements despite such agreements being carried out without the minister's approval under Section 67 of the Insurance Act 1996. It erred in relying on the approval from Bank Negara Malaysia (BNM).
Prudential Corp and Prudential Assurance are required to return any benefits receiveds under the two agreements, which includes the dividends paid out from Sri Han Suria. Detik Ria was directed to return a sum in excess of RM109.205 million, being the part payments for its 49% stake in Sri Han Suria, with 5% interest running from September 2019.
Prudential Corp and Prudential Assurance was directed to pay costs of RM200,000.
Minister’s Approval - Section 67 of the Insurance Act requires acquisitions or disposals of shares in a licensee company above 5% to obtain the approval of the finance minister. The approval of the minister was not obtained in 2018 for the acquisition. Approval from the minister has to be gained before the disposal of the stake. Here, it is agreed that only BNM gave approval to complete the acquisition of the options shares in June 2019 and not the minister.
This resulted in the agreement to be void, and hence Detik Ria was right to rescind it. The company had subsequently filed a counterclaim when the two Prudential companies filed the suit.
They said that their clients had made the application to BNM to complete the acquisition of Detik Ria’s 49% stake in Sri Han Suria in 2018 in accordance with the Financial Services Act 2013, and had accordingly obtained the approval from the central bank in June 2019.
It was only in 2018 that BNM with the approval of the Ministry of Finance had agreed to put forward the two options to fulfil the divestment requirements, namely either a disposal of shares in excess of 70% to domestic investors directly or via an initial public offering, or by cash contribution to a special insurance development trust fund.
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