CONFIDENTIAL

LW/APR 2010/LAW485

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: CORPORATE LAW : LAW485 : APRIL 2010 : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. 2. 3. 4.

This question paper consists of seven (7) questions. Answer FOUR (4) questions in the Answer Booklet. Start each answer on a new page. Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of: (i) the Question Paper (ii) an Answer Booklet - provided by the Faculty

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 4 printed pages
Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL
QUESTION 1

LW/APR 2010/LAW485

The principle of separate legal personality of companies as expounded in Salomons case operates as a screen or veil between the company and its members as well as directors. The principles protects members and directors from liability for acts done in the name of the company. It can however be circumvented in specific circumstances recognised by law. With reference to Companies Act 1965 and case law, discuss the above statement. (100 marks)

QUESTION 2 By virtue of section 33 of the Companies Act 1965, the memorandum and articles of association which form the constitution of the company have contractual effect between the company and each member as well as between one member and another member. a) With the aid of case law explain the above statement. (60 marks) b) Consider whether a third party may enforce rights granted to it under the articles against the company. (40 marks)

QUESTION 3 Discuss the following issues: a) Juara Bhd for many years carried on a travel agency business which constituted its sole object. The directors then proposed to diversify the companys activities to a business of used car dealership. Advise the company as to the procedures that must be followed in order to make the proposal effective. (50 marks) Consider the legal consequence if Juara Bhd proceeds with the business of used car dealership without altering its MOA? What would be the legal effect of the contract made by Juara Bhd with the third party under the above situation? (50 marks)

b)

QUESTION 4 a) Explain the circumstances under the Companies Act 1965 in which a director may be disqualified. (40 marks)

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

LW/APR 2010/LAW485

b)

Zek, a managing director of Seri Nilam Sdn Bhd has arranged for the company to be taken over at an undervalue by a new company controlled by him. During the process of take over negotiations, he did not disclose material information concerning his potential profits to the shareholders and had misled the shareholders as to the true value of the companys assets. Advise Seri Nilam Sdn Bhd on the legal consequence of Zek's action. (60 marks)

QUESTION 5 a) Explain the types of action that can be taken by shareholders of a company against controllers of a company for wrongs committed by them against the company and other shareholders. (20 marks) b) Salleh and his wife, Mimi, and Rahman are three shareholders of XYZ Sdn Bhd. Salleh and Mimi, who were the directors, between them held two thirds of the shares of the company. Salleh and Mimi in a directors meeting resolved the following matters: a) b) c) to issue additional shares to themselves at par. to employ Mimi as an executive director under a service contract which provided a large termination payment. to establish a superannuation fund for Mimi.

Rahman, being dissatisfied with the above resolutions, wishes to challenge them in court. Consider what legal remedies are available to Rahman. (80 marks) QUESTION 6 a) Describe the characteristics of a floating charge. What are the advantages and disadvantages of the floating charge as a form of security? (30 marks) In February 2009, Sri Setia Bhd issued to Ceria Bank a debenture secured by a floating charge on all of its assets and undertakings in order to secure a loan of RM100,000. The charge was duly registered and contained a clause prohibiting Sri Setia Bhd from creating any further charges ranking in priority or pari passu with it. Six months later, Sri Setia Bhd created a fixed charge over its office premises in favour of Triple B Bank and the charge was also registered. A few months after the creation of the charge to Triple B Bank, Sri Setia Bhd borrowed a further RM50,000 from G-Mart Bhd secured by an unregistered charge on its property. Sri Setia Bhd is now in financial difficulties and has to be put into liquidation. Discuss the position of the above creditors in relation to the priority and effectiveness of the above charges. (70 marks)

b)

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

LW/APR 2010/LAW485

a) b)

Describe the procedures under which a company is to be put into compulsory liquidation. (50 marks) With reference to decided cases, discuss three circumstances under which a company may be wound up on the just and equitable ground. (50 marks)

END OF QUESTION PAPER

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL