Section 223. Approval of company required for disposal by directors of company’s undertaking or pro~

(1) Notwithstanding anything in the constitution, the directors shall not enter or carry into effect any arrangement or transaction for—

(a) the acquisition of an undertaking or property of a substantial value; or

(b) the disposal of a substantial portion of the company’s undertaking or property;

unless—

(A) the entering into the arrangement or transaction is made subject to the approval of the company by way of a resolution; or

(B) the carrying into effect of the arrangement or transaction has been approved by the company by way of a resolution.

(2) For the purposes of subsection (1)—

(a) the term “undertaking or property” includes the whole or substantially the whole of the rights, including developmental rights, benefits or control in the undertaking or property;

(b) in the case of a company where all or any of its shares are quoted on a stock exchange, or its subsidiary, the term “substantial value” or “substantial portion” shall mean the same value prescribed in the listing requirements of the stock exchange where approval of the shareholders at a general meeting is required;

(c) in the case of an unlisted subsidiary whose holding company is a listed company, the directors of such holding company shall procure the shareholders’ approval of the holding company in a general meeting for the arrangement or transaction by the unlisted subsidiary in addition to the shareholders’ approval of the unlisted subsidiary in a general meeting procured by the directors of the unlisted subsidiary.

(3) In the case of any company other than a company to which subsection (2) applies, an undertaking or property shall be considered to be of a substantial value and a portion of the company’s undertaking or property shall be considered to be a substantial portion if—

(a) its value exceeds twenty-five per centum of the total assets of the company;

(b) the net profits, after deducting all charges except taxation and excluding extraordinary items, attributed to it amounts to more than twenty-five per centum of the total net profit of the company; or

(c) its value exceeds twenty-five per centum of the issued share capital of the company,

whichever is the highest.

(4) The Court may, on the application of any member of the company, restrain the directors from entering into or carrying into effect an arrangement or transaction which is in contravention of subsection (1).

(5) An arrangement or transaction which is in contravention of subsection (1) shall be void except in favour of any person dealing with the company for valuable consideration and without actual notice of the contravention.

(6) This section shall not apply to proposals for disposing of the whole or substantially the whole of the company’s undertaking or property made by a receiver or receiver and manager of any part of the undertaking or property of the company appointed under a power contained in any instrument or by a Court or a liquidator of a company appointed in a voluntary winding up.

(7) Any director who contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.