Fashion Valet deal required board approval for dividends, court told

Fashion Valet Sdn Bhd's shareholders' agreement stipulates that board approval is necessary before the company can declare dividends, a fact outlined in a recent court hearing. Corporate lawyer Anne Wong, who assisted in drafting the agreement in March 2018, testified that a majority of directors, including those appointed by Pulau Tiga Ventures Sdn Bhd, a Khazanah Nasional Bhd subsidiary, must approve dividend declarations.

Wong emphasized that the Companies Act 2016 mandates that companies cannot pay dividends without profits. The same witness statement revealed that Fashion Valet was barred from extending loans or credit facilities to its directors, shareholders, related entities, or other parties without board approval, as stipulated in Clause 7.5.1(ii)(d) of the agreement.

The court was informed that the company must submit a quarterly and annual summary of investment fund utilization to the board, though it is not required to disclose its overall operational expenditure. Vivy Yusof and Fadzarudin Shah Anuar, the founders of Fashion Valet, are jointly charged with criminal breach of trust involving investment funds from Khazanah Nasional Bhd and Permodalan Nasional Bhd.

They are accused of authorizing an RM8 million payment to 30 Maple Sdn Bhd without board approval, an act punishable by up to 20 years' imprisonment, caning, and a fine under Section 409 of the Penal Code. They also face an alternative charge of dishonestly misappropriating RM8 million in investment funds, which carries a penalty of between six months and five years' imprisonment, whipping, and a fine under Section 403 of the Penal Code. The trial, presided over by judge Rosli Ahmad, is ongoing.