Specific Performance Successfully Obtained For The Exercise Of Put Option Amounting To RM19.2 Million

Our Partners, Idza Hajar Ahmad Idzam and Ridhwan Rosnan together with their Associates, Muhammad Hibri Nazim and Aiesyah Mustafa from Zul Rafique & Partners' Litigation Dispute Resolution Practice Group successfully secured an arbitration award of RM19,298,423.45 in favour of a statutory body mainly involved in investment projects ("Claimant") for the exercise of a Put Option pursuant to a Share Sale Agreement ("SSA") against an investment holding company ("Respondent").

The SSA entered between the Claimant and Respondent agreed inter alia, for the Claimant to purchase 15.28% of the Respondent's shares in a railway engineering company ("Company") and that a Put Option may be exercised by the Claimant in the event that the Company fails to achieve its targeted PAT by the end of 2015 and 2016.

Two (2) years after the acquisition of the shares, the Claimant exercised its Put Option by demanding the Respondent to repurchase the shares for the amount of RM21,298,423.45 as it was discovered that the Company did not achieve its targeted PAT. The Respondent acknowledged this and proceeded to pay RM2,000,000.00 as an initial payment for the Put Option exercise. However, the Respondent did not fulfil its obligations by making the remaining payments of the shares.
In April 2022, the Claimant commenced arbitration proceedings to claim for, among others, the remaining amount payable under the Put Option amounting to RM19,298,423.45. The Respondent on the other hand counterclaimed for the sum of RM2,000,000.00 as it was argued that such payment was made purely on a good faith basis and does not relate to the exercise of Put Option. The primary point of contention was determining whether the Put Option notice was regularly exercised and whether the counterclaim was valid.

The Tribunal in its Final Award dated 11.8.2023 allowed the Claimant's claim by making a declaration of specific performance directing the Respondent to pay the sum of RM19,298,423.45 being the remaining amount payable under the Put Option. The counterclaim was dismissed by the Tribunal.