KOLEJ TUNKU ABDUL RAHMAN SCHOOL OF BUSINESS STUDIES ACADEMIC YEAR 2008/2009 JANUARY/FEBRUARY EXAMINATION ABBL3144 CORPORATE LAW

& GOVERNANCE DATE: DIPLOMA IN BUSINESS STUDIES (ACCOUNTING) TIME:

Instructions to Candidates: The examination paper is divided into TWO (2) SECTIONS. SECTION A is COMPULSORY and carries 40 marks. Candidates should attempt THREE (3) questions from SECTION B and each question carries 20 marks. You should allow yourself approximately 70 minutes to answer the questions in Section A and 35 minutes for each of the questions in Section B. Begin each question on a new page.

This question paper consists of 6 questions on 4 printed pages.

2 ABBL3144 CORPORATE LAW AND GOVERNANCE

SECTION A: Answer ALL questions (40 marks). Question 1 (a) (b) Explain any TWO (2) advantages of forming an exempt private company. (4 marks) State any FOUR (4) matters that must be stated in the companys memorandum of association according to section 18 of the Companies Act 1965. (4 marks) Explain the differences between an ordinary resolution and a special resolution. (4 marks) (d) (e) Briefly explain the procedure to convert a private limited company to a public limited company. (4 marks) Who is a substantial shareholder? State the THREE (3) situations when a substantial shareholder needs to disclose to the company? (4 marks) State FOUR (4) main duties of an auditor. (4 marks) (g) The term corporate governance has no global standard definition and could be described in many ways. Identify and state TWO (2) definitions for corporate governance. (4 marks) A company has various interested parties known as stakeholders. State FOUR (4) stakeholders. (4 marks) (i) (j) What is money laundering? State the Two (2) main sections that deal with money laundering. (4 marks) List any FOUR (4) grounds under S218 Companies Act 1965 when a company can be compulsorily wound up. (4 marks) [Total: 40 marks]

(c)

(f)

(h)

This question paper consists of 6 questions on 4 printed pages.

3 ABBL3144 CORPORATE LAW AND GOVERNANCE SECTION B: Answer THREE (3) questions only (60 marks) Question 2 Kancil Bhd is a company which is involved in the import of luxury cars for sale in Malaysia. Tiara, Saga, Kenari and Myvi are the directors of the company. The articles of association of the company are in the form of Table A Fourth Schedule of the Companies Act 1965. (a) The directors in Kancil Bhd wish to expand their business and plan to sell luxury motorcycles in the future. Before they can expand their business, their lawyer has advised them that they need to change their object clause. Advise the directors on the procedure to change their object clause in order to add the new business into the companys memorandum of association. (10 marks) If the directors choose not to change their object clause to add the new business and proceed to sell luxury motorcycles, this will lead to ultra vires problem. Advise the directors on the different positions of ultra vires in company law. (10 marks) [Total: 20 marks]

(b)

Question 3 (a) Knight Bhd is a public listed company which is involved in a variety of activities. The companys share prices on the Bursa Malaysia have fallen substantially because of the weak market sentiment. Advise the directors whether they can make the company purchase its own shares to stabilise the share prices. (10 marks) (b) Knight Bhd plans to issue more shares to the public, advice Knight Bhd on the differences between ordinary shares and preference shares. (10 marks) [Total: 20 marks]

Question 4 (a) Mary and Jane plan to start a business selling imported chocolates. At the moment they are still unsure whether to form a limited company or a partnership. Make a comparison between a limited company and a partnership for Mary and Jane. (10 marks) Nick and Nicky are directors of N & N Sdn Bhd. They are of the presumption that they will never be personally liable for the debts and liabilities of their company because of the separate legal entity concept. Advise Nick and Nicky when they can be liable for the debts and liabilities of the company. Discuss THREE (3) statutory exceptions and TWO (2) judicial exceptions. (10 marks) [Total: 20 marks] This question paper consists of 6 questions on 4 printed pages.

(b)

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Question 5 Maju Sdn Bhd is a small private company with 5 shareholders, Jacky, Julia, Peter, Fred and Cindy. They are also the directors of the company. The main object of the company is to sell musical instruments. They need your help to look into the following matters: (a) Peter needs RM500,000 in order to finance his daughters education overseas. Peter plans to obtain a loan from Maju Sdn Bhd. Can Peter do so? (6 marks) Cindy will be retiring after serving as a director in Maju Sdn Bhd for 12 years. The company plans to give her RM150,000 as an ex-gratia payment in appreciation of her service. Can the company do so? (5 marks) The company plans to appoint James to replace Cindy. James has just celebrated his birthday last week and he is 72 years old. Can Maju Sdn Bhd appoint James as a director? (4 marks) Maju Sdn Bhd had borrowed RM5 million from Kaya Finance Bhd and it would like to create a floating charge to secure this loan. Briefly inform Maju Sdn Bhd FIVE (5) circumstances when a floating charge would crystallise. (5 marks) [Total: 20 marks] Question 6 (a) It is generally recognised that well-governed companies would attract the confidence of potential investors and uphold the reputation of the company with customers and the public in general. There are several concepts that apply to sound corporate governance. Identify and discuss FOUR (4) of these concepts. (10 marks) (b) (c) Discuss the TWO (2) main types of board structures. (5 marks) Briefly explain what is fraudulent trading and state the relevant section. (5 marks) [Total: 20 marks]

(b)

(c)

(d)

This question paper consists of 6 questions on 4 printed pages.