MSWG Weekly Newsletter 21 December 2018 (English)
21.12.2018
MESSAGE FROM THE CEO
Enhancing Minority Rights – Two Recent Events
Landmark Court Decision Protecting Minorities
Have you ever dealt with a stronger party when signing an agreement where you felt that some ‘exclusion clauses’ imposed upon you were unfair but had no choice because the stronger party adopts a ‘take it or leave it’ stance? You felt that there was unequal bargaining position as you were merely a minority. And, anyway, those clauses have become ‘industry practice’. Such clauses are referred to as ‘unfair contract terms’ and a recent Federal Court decision has stated that such clauses are not valid. On the facts of the case, the Federal Court decided that commercial banks cannot rely on exclusion clauses in agreements to stop their clients from suing for negligence. Judge Datuk Seri Balia Yusof Wahi noted that customers are (sometimes) made to accept the contract as prepared by the other party. The judge further stated that, “It is patent unfairness and injustice to the plaintiff”.
When trading in the stock market, minority shareholders often sign on pre-drafted agreements and documents with several exclusion clauses, on a ‘take it or leave it’ basis. Some of the agreements that they sign include the opening of the Share Trading Account, opening of the CDS account and, if you indulge in Margin Trading, the Share Margin Trading account, and a whole host of other agreements and documents depending on what activities that you want to carry out.