Sued personally over a share sale. Is the director liable?

A share sale breaks down, and a company director is sued personally. Does negotiating or signing the share sale agreement on the company’s behalf make the director personally liable?

Court: High Court, Kuala Lumpur | Decision: 25 June 2026

Case: Noordin Ahmad & Anor v Syed Nasir Hussin Syed Peer & Anor and Another Case [2026] MLRHU 2857

In this case, Messrs. Koo Jia Hung represented Syed Nasir Hussin Syed Peer, the individual first defendant. Following a full trial, the High Court dismissed the plaintiffs’ claim, which included RM2,079,476.50 in special damages.

A central issue in the defence was straightforward: who actually purchased the shares, and in what capacity did the director sign the agreement?

What was the share sale dispute about?

The dispute arose from the sale of 225,000 shares, representing 90% of a company. The seller and the company brought proceedings alleging that a share sale agreement had been made with Nasir personally. They sought to undo the transaction and obtain injunctions and damages.

However, the executed share sale agreement identified Lautan Variasi Sdn Bhd as the purchaser. Nasir had signed for and on behalf of Lautan as its director.

That distinction became central to his defence.

The signed agreement identified the company as purchaser

The plaintiffs relied on a draft agreement naming Nasir “or his nominees”. The court found that the actual signed agreement was between the seller and Lautan. The draft could not displace the agreement the parties had ultimately signed.

The supporting documents reinforced this position. The seller had initialled the agreement’s pages and signed a resolution transferring the shares to Lautan. The lawyer who prepared the agreement also confirmed that Lautan was the purchaser.

Although Nasir was Lautan’s director and principal shareholder, that did not make him the purchaser personally. The court recognised that Lautan had a legal identity separate from its directors and shareholders.

Nasir had signed in his capacity as a director, expressly for and on behalf of Lautan. He was not personally bound by the share sale agreement and could not be liable for breaching a contract to which he was not a party.

The claim had to identify the correct contracting party

The plaintiffs sought a declaration cancelling an alleged agreement with Nasir. But the court found that no such personal agreement had been established.

This was not a minor error. Identifying the correct contracting party went to the foundation of the claim. A general request for further relief could not repair that defect after trial.

The termination notice was also addressed to Nasir personally, although Lautan was the purchaser. The court further found that the contractual requirement to give Lautan 30 days’ written notice to remedy a breach had not been followed.

For parties seeking to terminate a share sale agreement, both the identity of the contracting party and the agreed termination procedure matter.

Alleging a personal duty was not enough

The plaintiffs also relied on alleged fiduciary duties — duties arising from a relationship of trust and responsibility.

The court found that Nasir was not the seller’s trustee, agent or partner, and had not undertaken to act in the seller’s interests. His position as a director did not, by itself, create a personal fiduciary duty to that shareholder.

Nasir had also served as a director of the acquired company for a limited period. The court distinguished duties owed to that company from duties allegedly owed to the seller personally.

It also examined the evidence concerning the management of the company’s affairs and rejected the allegations of mismanagement on the evidence before it.

The distinction was important: a claimant must establish the particular duty owed by the individual and how that duty was breached.

The claimed losses still had to be proved

The plaintiffs claimed RM2,079,476.50 in special damages. The court found that the claimed items were unsupported by receipts, invoices, payment records or the relevant agreements and project documents.

Putting a figure in a claim does not establish that the loss occurred or that the defendant is responsible for it. Both responsibility and the amount claimed require proof.

The court dismissed the plaintiffs’ claim. Separately, it granted Lautan relief concerning ownership and transfer of the shares, but dismissed Lautan’s conspiracy counterclaim. Those were distinct claims with different outcomes.

What should directors take away from this decision?

A director’s involvement in a share sale does not automatically make the corporate purchaser’s obligations his personal obligations. Equally, signing for a company is not blanket protection against every possible personal claim.

The starting point is the basis on which the director is being sued. The signed agreement, signature wording, company resolutions, correspondence and evidence of the director’s actual role should be examined together.

Directors signing a share sale agreement on behalf of a company should ensure that the purchaser is clearly identified and that their representative capacity is accurately recorded. If a personal claim follows, the defence must address both the contractual documents and any separate allegations made against the individual.

In defending Nasir, the distinction between the individual director and the corporate purchaser was central. The decision illustrates why personal liability must be established against the director on the facts and legal duties applicable to him. It cannot simply be assumed because he negotiated or signed the company’s share sale agreement.

Messrs. Koo Jia Hung represented the first defendant, Syed Nasir Hussin Syed Peer.

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