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Unformatted text preview: CONFIDENTIAL LWIJUL 2017ILAW485 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : CORPORATE LAW COURSE CODE : LAW485 EXAMINATION : JULY2017 TIME : 3HOURS INSTRUCTIONS TO CANDIDATES 1. This question paper consists of seven (7) questions. 2. Answer any four (4) of the questions in the Answer Booklet. Start each answer on a new page. 3. Do not bring any material into the examination room unless permission is given by the invigilator. 4. Please check to make sure that this examination pack consists of : i) the Question Paper ii) an Answer Booklet — provided by the Faculty 5. Answer ALL questions in English. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 5 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 2 LWIJUL 2017/LAW485 QUESTION 1 a) It was not until the famous case of Salomon v Salomon & Co Ltd. [1897] AC 22 that the full implication of the concept of separate legal entity was recognised. With the aid of the above case, explain the concept of separate legal entity of a company. (10 marks) Leha, Mira and Zura ran a catering business. In January 2017, they formed a private company, LMZ Sdn. Bhd. The three of them became the only shareholders and directors of the company. In April 2017, Leha and Mira were killed in a road accident. After their death, Zura carried on with the business alone. The business suffered losses. In order to overcome the financial difficulties, Zura, in December 2017, borrowed 1 million from Ace Bank. Todate, LMZ Sdn. Bhd. has failed to settle the claims from Ace Bank. Advise Ace Bank as to whether they can successfully sue Zura personally for the money. (15 marks) QUESTION 2 a) b) Explain how a company may alter its Articles of Association. (10 marks) The Board of Directors of Syarikat ABC Bhd. has passed a resolution to alter the company’s Articles of Association. The alteration: i) empowers the company to give loans to anyone who subscribes to the company’s shares; ii) empowers only directors to sell their shares to outsiders. Discuss the validity of the alterations. (15 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 3 LW/JUL 2017ILAW485 QUESTION 3 a) With reference to the Companies Act 1965, explain the required qualification for a company director. (5 marks) b) Mala and Mila, along with 5 others, are directors and shareholders of Mengerlip Cahaya Bhd (MCB), a company which manufactures uniforms. Mala and Mila negotiated with Ten Million Co. (TMC) for a contract of supplying uniforms for TMC’s factory workers. TMC asked for the total cost of orders for the uniforms to be reduced and in return, they would grant MCB other contracts to supply uniforms to another two subsidiary companies of TMC. Without informing other directors and shareholders, Mala and Mila decided to set up a partnership, Stitches Sdn Bhd ($88) to supply uniforms for factories and companies. Mala and Mila managed to persuade the directors of TMC to give the contracts to 888 instead of MOS. The contracts to supply uniforms to TMC’s subsidiaries are worth RM1million. A few months later, other directors of MCB discovered what Mala and Mila had done. MCB intends to bring an action against Mala and Mila. Advise MCB. (20 marks) QUESTION 4 Asus and Oppo hold 20% of the shares in Henfon Sdn Bhd. Samsun and Norkia , who are directors of the company, hold the remaining 80% of the shares. Asus and Oppo alleged that Samsun and Norkia have managed the company as if it was their own without regard to the interest of the minority shareholders. Dividends were not declared for the past seven years even though the company made considerable profits. Instead, a huge portion of the profits were used to pay exorbitant fees to the directors. It was further alleged that Samsung and Nokia have caused the company to sell its land at Samarahan for only RM300,000 to Apple, the sister of Samsun, when its actual value is RM2 million. Asus and Oppo discovered recently that the company has made a bad investment when the board purchased a land located near a slum clearance programme in Sejingkat for the price of RM5.5 million. The land was owned by Nokia's brother Alcatel. Complaints were made to the directors regarding the above matters, but the complaints have gone unheeded. Advise Asus and Oppo whether they can bring an action against Samsun and Norkia in the name of the company and further, seek a remedy on their own behalf in the above situations. (25 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 4 LW/JUL 2017ILAW485 QUESTION 5 In the context of company meetings: a) distinguish an Annual General Meeting from an Extraordinary General Meeting; (8 marks) b) explain the requirements as to a quorum under the Companies Act 1965; and (9 marks) 0) define a proxy. State the rights of a proxy available under the Companies Act 1965. (8 marks) ‘ QUESTION 6 a) What is meant by the crystallization process? (5 marks) b) MariMara Sdn Bhd (MMSB) had issued debentures to three creditors namely Man, Min and Mud. Consider the following situations: i) Man, a first creditor lent a sum of RM50,000 to MMSB and a security in the form of a fixed charge was created in his favour. The charge however was not registered. ii) Min has advanced to MMSB a loan worth RM250,000. A security in the form of a floating charge was created over all the MMSB’s assets inclusive of the one which a fixed charge in favour of Min was created. A document creating the abovesaid charge contained a clause amongst others which prohibits MMSB from creating a charge ranking in pari passu with or in priority with this charge. This charge was registered. iii) Mud, a third creditor lent a sum of RM50,000 to MMSB and a security in the form of a fixed charge was created over the same assets of which previous charges were created before. This charge was registered. Discuss the priority of repayment to the respective creditors when the asset of MMSB is insufficient to settle all of its debts during the process of liquidation. (20 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 5 LW/JUL 2017/LAW485 QUESTION 7 a) State the grounds for the winding up of a company by the court. (10 marks) b) A compulsory winding up or winding up by the court takes place when an application is made to the court to have the company wound up on the grounds stated under section 218(1) of the Companies Act 1965. The court will exercise its discretion whether to order a company to be wound up or not. One of the grounds stated under the section is the “just and equitable ground". With reference to relevant cases, explain what constitutes "just and equitable”. (15 marks) END OF QUESTION PAPER © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL ...
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  • Spring '18
  • Corporation, Floating charge, Cipta Universiti Teknologi, Hak Cipta Universiti, Hak Cipta Universiti Teknologi MARA

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