Beruflich Dokumente
Kultur Dokumente
1.
i.
Sole Proprietorship
Use own to resources to provide skill, labor, capital, and other resources to
run the business
Unlimited liabilities
ii.
Partnership
Exist when two or more persons pool their skills, labor, capital and other
resources together to form a business jointly
iii.
Company
2.
i.
ii.
o Case: Foss V Harbottle (1843), principles of Proper plaintiff and majority rule
o Case: Royal British Bank V Turquand (1855), principle of indoor management rule
iii.
In certain situations, the law of England and several acts of England not
though not passed as an act in Malaysia are applicable in Malaysia
3.
What are the comparison between company, partnership and sole
proprietorship?
Company
Partnership
Sole Proprietorship
a.
Definition
1 man business
b.
Formation
Under CA 1965
Easier,
no formalities,
No agreement necessary,
c.
Registration
d.
Special Law
No special Act
e.
Separate entity
No separate entity
f.
Agency
g.
Transferability of shares
h.
Management
Managed by BOD
i.
Number of members
Pub- no limit
Priv.-max 50
Min 2 Max 20
Single person
j.
Liability of members
Limited
Unlimited
Unlimited
k.
No provision subjected
l.
m.
Dissolution
Formal WU&L
Informal-Agree.
Informal-own
1.
a.
S4(1)
S18(1)(c)
Required to state in its memorandum of Association the amount of its share capital
and its division into shares of a fixed amount, limited liability of members also must
be stated
S22(3)
Requires limited company to have the word Berhad as part of and at the end of its
name
b.
S4(1)
A Company formed on the principle of having the liability of its members limited by
the memorandum to respective amount that the members undertake to contribute
to the property of the company in the event of its being wound up.
c.
S214(4)
A member of such a company is liable to pay the amount, if any unpaid on any
shares held by him or her, in addition to meeting her or his guaranteed undertaking
to contribute a specified amount in the event the co. is wound up
d.
Unlimited company
S4(1)
A company formed on the principle of having no limit placed on the liability of its
members
2.
What are the differences and characteristics of private and public companies?
i) Private Company
- S4(1)
- S26
- S15
o Limit to 50 members, joint holder of shares counted as one person and any
employees who are members or past employees who continue to remain member
are not counted
o Prohibit any invitation or offer to public to deposit money with the company for
fixed periods or payable at call, whether bearing or not interest
- Therefore if a company does not impose on itself the restrictions and prohibitions
of S15, it must be a public company
S4(1)
- All companies listed on the Malaysia Stock Exchange are public company but not
all public company are listed
- Therefore if a company does not impose on itself the restrictions and prohibitions
of S15, it must be a public company
3.
Which sections allows conversion of public to a private company and vice
versa?
- S26(1)
- S26(2)
- S26(3)
- S26(4)
A conversion of a company pursuant to subsection (1) or (2) shall not affect the
identity of the co or any rights or obligations of the co or render defective any legal
proceedings by or against the co.
4.
c) Controls more than half of the issued share capital of the subsidiaries
5.
Which section state about the ultimate holding company and wholly owned
subsidiary?
a.
a.
c.
6.
a.
c.
7.
a.
A company, corporation, society, association, or other body incorporated
outside Malaysia
b.
An incorporated society, association or other body which under the law of its
place of origin may sue and be sued, or hold property in the name of the secretary
or other officer of the body of or association duly appointed for that purpose and
which does not have its head office or principal place of business in Malaysia
1.
A certificate that should be issued where the pre-registration procedures have been
complied with (Sec 16(4))
2.
It serve as conclusive evidence that a company has been duly registered from the
date mentioned in the certificate (Sec 361)
3.
a.
b.
Date of registration
4.
The law shall regard the company to be of a body corporate (Sec 16(5))
5.
- A company has a legal personality of its own apart from the person who forms it.
- The law treat the company and the members as separate legal persons
- In fact, it must sue on its own behalf according to what rights it has and duties
owed to it
- In this case two shareholders brought an action against the companys directors.
They alleged that the property of the company has been misused.
- Held: The injury complained was an injury to the company. In law, the company
and its members were not the same. Therefore the members cannot maintain such
suit. It was for the company to sue and not the members
- In other words, the company is the proper plaintiff to initiate actions in respect of
wrongs done to it
- Thus, the proper organ to commence the action on behalf of the company is BOD
- A single director or officer of the company cannot sue on the companys behalf
unless specifically authorized to do so.
- The company had 2 directors who were also the only shareholders, a husband and
wife. Both died in a traffic accident. One infant child survived.
- A company can own property in its name. Although the members have shares in
the company, the company is held or owned by the company
- In this case Macaura owned an estate and then sold all the timber on the estate to
a company, he and his nominees owned all the shares of the company, he insured
the timber that he sold to the company under his own name. The insurance policy
was not transferred into the companys name. The timber destroyed in a fire,
Macaura claimed the insurance but the insurance company refused to pay.
- Held: When Macaura sold the timber to the company, he gave up his interest in it
and the company had become owner of it.
Common seal
- The company must use the common seal in any dealing with anybody to make it
binding on the company
- Power to control and to manage the company mainly vested on the BOD
6.
The principle of a corporation being a separate legal person from its members (ie.
shareholders).
7.
What are the statutory exceptions to the separate legal entity principle?
I.
Section 121(2)(c) when the name of the co does not appear in
instrument issued by behalf of the company
If the company fails to honor such documents then the person who signs will
be liable.
II.
Section 303 (3) and 304(2)- when debts contracted at the time the co has
no ability of repayment
When debts are contracted, the officer must really find about the ability of
the company to repay debts
III.
IV.
Where dividends are paid even though there are no available profits out of
which to pay them, then directors who declared the dividend will be liable to the
creditors of the company
V.
Section 48(4) minimum subscription is not received within 4 months of
the issue of prospectus
VI.
8.
What are the judicial exceptions to the separate legal entity principles?
- In Malaysia, the court will lift the corporate veil when the justice of the case so
requires
- Malaysian courts have in the past lifted the corporate veil in several
circumstances such as fraud, agency, and where corporations within the group
essentially one
o Incorporation is often used as a device to circumvent the law or to hide the true
state of affairs from the court
o Some people might use the corporate form as a means to exploit loopholes in the
law
o In such situation, the court will not be blinded to reality, notwithstanding the
technical separateness of the company and its members
o Shaw and Jackson held 4,500 shares each and Trelby held the balance 1000
shares out of total of 10,000 shares. Shaw and Jackson wanted to buy over Trelbys
shares. To effect this, they incorporated a company called Jackson and Shaw
(Holdings) Ltd., which made an offer to purchase all the Bungle shares.Shaw and
Jackson accepted this offer but Trelby declined. Jackson and Shaw Holdings then
purported to use section 209 (equivalent Malaysian section 180) of the UK
Companies Act 1948 to acquire Trelbys shares.
o Held: The court of appeal declined to allow Jackson and Shaw Holding to take
advantage of this section to buy Trelbys shares.
- Group Of Companies
o Case: Hotel Jaya Puri Sdn Bhd V National Union Bar & Restaurant Workers
o Jaya Puri Chinese Garden Restaurant Sdn Bhd was closed down and workers were
retrenched. This company was wholly owned subsidiary of Hotel Jaya Puri Bhd
whose premises the restaurant was situated. The Union claimed that the actual
employer was the hotel and the hotel was still in business. Therefore the workers
could not have been said to have being retrenched on the closure of a business.The
industrial court allowed this and made order of compensation against the hotel. The
hotel appeal to the High Court.
o Held: Although technically the restaurant and the hotel were separate legal
entities, in reality, the companies were functionally as one.
o The court ignored the separate identities of the restaurant and the Hotel and
treated them as one single entity.
1.
a.
MOA
- It sets out the essential details of the companys existence and governs the
fundamental basis on which the company operates.
- It defines the essential components of the structure of the company, partly for
the information of those who do business with it
- It sets out liability of its members and also defines objects and powers of the
company
b.
AOA
2.
S16(4)&(5) A company acquire legal status of a body corporate when its MOA
registered
3.
S18(1) Requires the MOA of every company to be printed and divided into
numbered paragraphs and dated and content to be put in
a.
Main Provisions
i.
ii.
iii.
iv.
v.
Liability of members
subscribers
vi.
company pursuance to the MOA
b.
First Director
S16(7)- The Registrar must not register a MOA/AOA unless it contain the
names of at least 2 persons who are to be the first directors of the company
c.
First Secretary
However, if the first secretary is not named, the Act does not expressly
provide that the Registrar should not register the MOA/AOA
S11(8)- It is suggested that the Registrar may request that the MOA/AOA be
appropriately amended and resubmitted
4.
- S18 (1b) Requires the objects clause of a company to be stated in the MOA
- Object clause determine whether the company has acted ultra vires and
rendering the act as void ab intio
5.
- It gives protection to the subscribers who learn it purposes to which their money
can be applied
- It gives protection persons who deal with the company whereby they can infer
the companys capacity and power
- It is also for the benefit of those who might become members and the outside
public, particularly the creditors to know what its permitted range of enterprise
6.
- So long as the objects are lawful, the act is not concerned with the purpose of the
company and there is no restriction as to the purpose
7.
- However, the fact that a MOA is a commercial document does not prevent the
court to construe it strictly because a MOA is an instrument which is relied on by
third parties
8.
- In the event of conflict between AOA and MOA, the provision of MOA shall prevail
because it is a dominant document
9.
- When the substratum of the company is gone and the main purpose has
become impossible, a winding up order may be granted under just and equitable
grounds
- The function of the object clause is to identify the activities in which the company
may engaged
- Anything outside the objects and powers of the company is ultra vires
a.
b.
Dependent Objects
c.
Powers
14. What are the powers of company under Section 19 of Company Act 1965?
a.
b.
war
c.
In the case of company with Berhad, the powers mentioned in Third
Schedules unless expressly excluded by MOA or AOA
d.
In the case of company without Berhad, Third Schedule Power shall not
apply unless expressly included by MOA or AOA
Such act is referred to as being ultra vires, that is beyond the power of the
company
In the past, the doctrine of ultra vires was strictly applied to protect the
interest of the shareholders and creditors
The doctrine of ultra vires was extended very broadly in the case of Re Jon
Beauforte (London) Ltd
The supplier of the coke then sought to enforce payment and he failed because the
contract was ultra vires.
Held: Supplier cannot enforce contract because he had constructive notice that
such an activity was outside the companys object.
a.
Interpretation of objects
- Sometimes, company may extend their object clause by inserting a clause that
says:
The objects set out should not be restrictively construed and that each of
paragraphs should be regarded as conferring a separate and independent object
b.
- The effect of such an objects clause is that company has the capacity to engage
in any other business as long as it is not illegal and general meeting of members
honestly believes that there is a connection with its existing businesses and it is
advantageous to the company
- The company was a housing developer and the MOA contained independent
object clause related to house development. It also have a dependent objects
clause which allow the company to carry on any other trade so long as it is
advantageous and in connection with the business of the company.
- Held: This dependent object allows the company to contract to introduce another
company to a source of finance.
c.
Section 20
- The effect is that if certain transaction is valid, the fact that the company did not
have the capacity to enter into it is immaterial
a.
Proceedings by any member or holder of floating charge to restrain the co
from doing any act, conveyance or transfer of property to or by the co.
b.
Proceedings by the co. or member of the company against the present or
former officer of the co. and
c.
d.
- S28(5) This application may be made by holders of not less than 10% of the
companys issued capital
- When such application is made, the alteration does not have nay effect unless
confirmed by the court
- S31
Subject to the act and the companys MOA, a company may by special resolution
alter or add to is AOA
- S31(1)
Any alteration or addition to the articles is valid as if originally contained in the AOA
- S31(2)
Provision in the MOA may restrict the ability of the co. to alter the AOA by imposing
further requirements in addition to a special resolution.
a.
- Constituted by the AOA is contract between a member and every other member
- Each member will observe all the provision of the MOA & AOA
- It also means that if one member is not observing these, another member has a
right to make him observe it
- A member may enforce his rights to have the provisions of the MOA & AOA
observed by injunction
- This action may be brought directly and the company does not have to be joined
as a party
The AOA required every director to be a shareholder and provided that if a member
intended to transfer his shares, he should inform the directors who would take the
said shares equally between them at fair value. The directors refused to purchase
the plaintiffs shares.
Held: It was held that there was a contract between P and the defendants
constituted by the AOA as they were all members and therefore they have to
purchase the shares
A companys AOA provided that if holders of 7/10 of issued capital requested the
company to transfer to them any particular shares held by others, then the
company is bound to do it. One shareholder held 250,000 shares out of total
300,000 shares. He asked the company to transfer Wongs share i.e. he served a
requisite to buy out Wongs shares. Wong objected to this and went to court to get
an order restraining the company from transferring his shares.
Held: Wong has to sell the shares because AOA is a contract between the members
and therefore, this is a matter of contractual obligations and the plaintiffs has to do
the obligations he had undertaken
b.
- The outsiders i.e. non members will not get any rights contained in the MOA &
AOA
- MBB was the lessor of the land on which Raffles Hotel was built. It was provided
in the hotels AOA that the lessor has a right to appoint a director of the company.
MBB appointed itself as director. The company went to get this appointment
declared invalid.
Held: The appointment was invalid because MBB was not a member and therefore
AOA could not constitute a contract between a company and an outsider and
therefore it did not confer on MBB any enforceable right even if it is provided in the
AOA
c.
- E.g. shareholder is bound to pay the amount outstanding on his shares when
requested to do so by the company
- If the shareholder/member breaches i.e. goes against any provision, then the AOA
are enforceable by the company against its members.
The companys AOA included a clause to the effect that all disputes between the
company and its members were to be referred to arbitration. A member brought
court proceeding against the company.
The court proceeding was stayed as this was against the AOA, which provided for
arbitration.
A company is also bound by the AOA and must not deny members those right given
to them in the MOA & AOA.
A company AOA provided that certain types of contracts could be entered into by
the company only if both Salmon & Axtens agree to it. Salmon did not agree to
purchase certain properties of the company and approved the purchase by passing
a resolution (this was possible because Axten was majority shareholder). Salmon
sued for restraining the company from acting on the resolution.
Held: The resolution was invalid because it was against the AOA
The company AOA was prepared by Eley and it was provided that he would be the
solicitor of the company. The company ceased to employ him as its solicitor and he
sued for breach of the provisions in the AOA.
Held: The resolution was invalid because it was against the AOA.
- Other case Pender V Lushington and Salmon V Quin & Axtens Ltd
1.
- S122 A co. must have at least 2 directors, both of them must be residence of
Malaysia
- No comprehensive definition of director but the term director include any person
occupying the position of director by whatever name called
- S4(1)
2.
a.
Non-executive director
b.
- Who is in addition to their function of attending board meeting (as full members)
- but also work, usually full-time, in the management of the company as employee
3.
- S122(3) & S123(1) First 2 directors must be appointed and named in MOA &
AOA
- It must include particulars of the first directors and their signed consent to act as
such
- S129 appointment & reappointment for director at age 70years old or older
4.
- S122(1) Director must have his principal or only place of residence within
Malaysia
- S125(1)-An undischarged bankrupt may not (except with the leave of the court
which he was adjudicated bankrupt) be a director of or otherwise concerned in the
management of any company. The person may not be a director or promoter or is in
any way whether directly or indirectly concerned or takes part in the management
of a corporation.
- S123&124- No rule of law that a director must also a member of a company but
the AOA may impose such a requirement.
- S129- Age qualification, (a) not over 70 , (b) the office shall become vacant at the
conclusion of AGM commencing next after he attains the age of 70 years & (c) 14
days notice specifics his age, and member noticed at the AGM and appointment and
reappointment need of members vote to pass a resolution about it
5.
- S28- For public companies, general meeting may by ordinary resolution remove a
director before the expiration of his or her period in office notwithstanding the
provision of the articles of any other agreement between the director and the
company
- The office of director then becomes vacant on the passing of the resolution
- This is not the case where the director was appointed to represent the interest of
a particular class or shareholder or debenture holder. In such case, the resolution to
remove the director does not take effect until a successor has been appointed
- S123(2)&(3)- special notice to the director within 28 days must be given for him
or her to defense himself both by written representation and by addressing the
meeting before a vote is taken
The companys AOA provided that a director might be removed. The AOA also
provided that 7 days notice to be given of any general meeting. The P wanted to
removed all the directors of the company. 3 days before the meeting, the first P sent
notice to the company of a resolution to remove the directors. At the meeting, the P
were purportedly elected as directors after the D had been removed. The D refused
to relinquish office, and the P brought an action.
Held: Trial judge held that P were not properly appointed as the 28 days notice
required before the old directors could be removed under section 128 had not been
given.
High Court Held: Section 128 was not mandatory. The power to remove directors
under that section co-existed with any power contained in the AOA. Therefore 28
days notice is not necessary, the removal could be affected in accordance with the
AOA. However on the facts the proper notice required under the AOA had not been
given either, so removed as director and consequently the P was not properly
appointed as director of the company
- Table A, Article 69 and most AOA of private companies do provide for the removal
of directors by ordinary resolution and the position is deemed to have been vacated
in certain situation such as absence without leave for 6 months, failure to declare
his interest in contract entered into by the company
- If the AOA does not provide for the removal of a director of private companies, a
special resolution would first be necessary to alter the AOA to provide the necessary
authority
- If not the members could wait until he retires via rotation clause in the AOA and
not reappointed him at that time
6.
S133- A Company shall not make a loan to a director of the company and vice
versa.
S6- Deemed to be related to the company, or enter any guarantee or provide any
security in connection with a loan made to such a director by any other person.
7.
a.
Fiduciary Duties
b.
c.
Statutory duties
8.
a.
Duty to exercise power in good faith and in the interest of the company
The directors occupy a fiduciary position and must therefore exercise their
power in good faith and in the interest of the company as a whole
to act honestly refers to acting bona fide in the interest of the company in the
performance of the functions attaching to the office of director.
they must exercise their discretion bona fide in what they consider and not what
the court may consider to be in the interest of the company, and not for any
collateral purpose.
executor put claim for the widows pension. The liquidator of the company rejected
the claim.
Held: Liquidator was right to do so. When the directors of the company agreed to
make the contract they were not considering the interest of the company ie Roith
considered the interest of his wife. .
The directors of Asiatics, had administered that company and several others of
which they were directors as a group.
They had caused Asiatic to pay money to Australian Sound (another company within
a group), for the sole reason that Australian Sound needed the money.
There was no security and no promise to pay interest nor was there any
considerations for the payment. The directors had also used Asiatics fund to pay
the employees of the group companies
Held: Majority of Court of Australia held that the payments were made in breach of
the directors duties. They were had to be liable to pay to the company the amount
that had been lost.
b.
- Directors should not enter into engagement in which there is possibility that the
directors personal interest could conflict with those of the company which they
were bound to protect
On an action brought by shareholders to the Privy Council that it was held that it
was a breach of trust on the part of the director and that the benefit of the contract
belonged to the company and they were bound to account to the company for it.
- Case: Avel Consultant Sdn Bhd v Mohd Zain Yusof & Ors
Avel Consultant Sdn Bhd (Avel) is a subsidiary of Elmex Consultant Sdn Bhd (Elmex).
The first and second R were directors of both Elmex and Avel whilst the 3rd R was a
director of Elmex only. Both Avel and Elmex were appointed as consultant of Sistem
Televisyen Malaysia Bhd, a subsidiary of the Fleet Group, in respect of an
engineering project known as Channel 3 @ TV3. A term of the said appointment was
that in the event of the resignation of any key personal involved in Channel 3
project, the A were required to inform the Fleet Group of such fact, so that it could
decide what to do next. Subsequently the 3Rs formed a firm called Perunding AJZ
with the object of carrying on business of consultant engineers. It began to canvass
for work and even approached established clients of Avel and Elmex for the purpose
of obtaining work. Even before Perunding AJZ was registered, the first R as
managing director of Avel was informed STMB that the 3 of the key personnel of
Avel on the Channel 3 project were resigning. However, at that time none of the said
3 personnel had given resignation letter. Then Avels engagement as consultant
engineer was terminated and Perunding AJZ was appointed instead to carry on with
the Channel 3 Project. Avel and Elmex then sued the R for breach of fiduciary duties.
The learned judge dismiss the application, hence this appeal.
c.
- This would occur if he misapplies the companys assets or he uses the powers he
is delegated for the wrong purpose
Held: Buckley J held that the directors responsible for making the payment were
liable in respect of it on the grounds of misapplication of the companys fund. This
was so even though he found that the directors concerned had acted honestly, out
of ignorance of law.
Dixon J said: Directors of a company are fiduciary agents, and a power conferred
upon them cannot be exercised in order to obtain some private advantage or for
any purpose foreign to the power.
This case is concerned the issue of shares by the directors of a company (Miller).
The A (Howard Smith) and the R (Ampol) were both trying to take control of Millers.
The directors of Millers considered that it would be in the best interest of the
company to be taken over by Howard Miller. However, Howard Smiths takeover bid
could not succeed as Ampol controlled shares in Millers to block the bid.
Accordingly, the directors of Miller issued new shares to Howard Smith which diluted
Ampols holding to the point where it could not no longer block the takeover. The
directors of Millers had the power to issue shares if Millers needs money. However it
transpired that the reason for the issue of the shares was not raise money, but
assist Howard Smith and stymie Ampol. In acting as they did, the directors of Millers
were trying to advance the interest of the company. They honestly thought that it
would be in the interest of the company for the Howard Smith bid to succeed.
Held: Privy Council held that they had misused their powers and nullified the issue
of the shares. According to Lord Wilberforce, the directors power was a fiduciary
one. The exercise of such a power, though formally valid, could be attacked on the
ground that it was not exercised for the purpose for which it was granted. The
power to issue shares was for the purpose of raising money for the company. It has
been used to forestall a takeover bid. This was an abuse of the power even though
the directors had not acted to further their self-interest.
9.
a.
The company may sue for damages or for the return of specific property
b.
The company may claim any secret profit that the director made.
c.
The exercisable of the power which in breach of directors duties may be
declared to be invalid
10. What duties included under duties of still, care and diligence?
The rule is that the director not have to possess any skill for the job and the
fact that he is unskillful is not a breach of contract
The director is under duty to exercise the power using the level of skill he has
If he uses less than the level of skill that he has, he is in breach of this duty
A director need not exhibit in the performance of his duties a greater degree than
may be reasonably be expected from a person of his knowledge and experience.
A director owes duty of care to the company of which he is auditor and the
standard is that of reasonable care in that he must take care in the affairs of the
company as he would reasonably take in his own affairs
.such reasonable care must be measured by the care an ordinary man might be
expected to take in the same circumstances on his own behalf.
The company runs a gaming club without license. This was an offence under the
custom and exercise act 1952. Huckerby was a director of the company and she
was charged with the offence on that basis that offence committed by the company
was attributable to her neglect. The evidence showed that although she was a
director, she knew little of the business and the running of the business was left to
her co-director and the manager of the company.
Held: The magistrate convicted Huckerby on the principle that as director, she
should have exercised some control over the co-director and the manager.
High Court Held: Court quashed the conviction and stated that there was no general
principle that each director has to exercise some degree of control over the
companys business. It was proper for the director to leave the matters to another
director or to an official of the company. As long as there was no reason to distrust
the delegates, a director was entitled to believe what they say. However, once there
is a reason for suspicion, a director who trusts a delegate does so at his own risk.
S132 (1) .use reasonable diligence in the discharge of the duties of his
office.
Director are bound to use reasonable diligence having regard to their position,
though probably an ordinary director, who only attends at the board meeting
occasionally, cannot be expected to devote as much time and attention to the
business as the sole managing partner of an ordinary partnership, but they are
bound to use their fair and reasonable diligence in the management of companys
affairs and to act honestly.
11. What sections related to duty of skill, care and diligence new amendments?
a.
Section 132(1A)
b.
Section 132(1B)
c.
Section 132(1C)
d.
Section 132(1D)
e.
Section 132(1F)
f.
Section 132(1G)
a.
Section 132C
b.
Section 132D
c.
Section 142
d.
Section 144
e.
Section 154
f.
g.
Section 156
Section 167
h.
Section 169
i.
Section 170
j.
Section 167A
k.
Section 131B
1.
- First auditors are appointed by the directors within three months of the
incorporation
- In the event of death of any auditor, director may filled the office but it is not
compulsory to do so ie the remaining auditors may continue to act until their term
of office expires
- S9(6) of CA 1965
o Such an appoint operates as an appointment of all the partners of the firm at the
time as auditors of the company
2.
3.
(i)
(ii)
(iii)
He is:
a.
b.
c.
(iv)
He is responsible for or he is a partner, employee, or employer of a person
responsible for the making of the register of members or the register of debenture
holders of the company
4.
- S172(14) - An auditor may resign if he is not the sole auditor of the company or
at a general meeting of a company
The company must send a copy of the notice of nomination to the person
nominated and to all members at least 7 days before the AGM.
5.
S174(4)&(5)
o Entitlement to require from any officer of the company and any auditor of a
related company or of any subsidiaries, such information and explanation as he
desires for the purpose of carrying out his duties
S174(7)
o The entitlement to attend any general meeting of any company and to speak on
any part of the business of that meeting that concern him in his capacity as auditor
o Rights to receive all notices of any other communication relating to any general
meeting in which a member entitled to receive
6.
a.
b.
c.
d.
Duty to be independent
e.
7.
Any failure to do that may lead the auditor liable in an action for the tort of
negligent
It was held that a firm of accountant was not liable to outsider investor who had
relied on a negligently prepared report. This was because there was no contract
between the accountants and outsider and they were under no duty of care.
8.
a.
b.
c.
Must be a member of prescribed body or is licensed by the registrar of
companies
9.
Every company shall have one or more secretaries, each of whom shall be a
natural person of full age. With effect 10th September 1992, NO PERSON shall act
as a company secretary to a company unless:
a.
He is member of
The first form 49 required to be filed with Registrar of Companies within one
month from the date of incorporation.
The particulars of the first secretary shall be entered into the register book.
The position of the vacant secretary must not be left unfilled for more than
one month
CHAPTER 7: MEETINGS
1.
a.
Statutory Meeting
S142 CA 1965 Not less than one month and not more than 3 months to do
statutory meeting from business commencement date
Its purpose to receive and consider the statutory reports of the company
together with auditors report
a.
b.
c.
Be forwarded to every member of the company at least 7 days before the day
on which Statutory Meeting is to be held
d.
Be lodged with registrar of companies at least 7 days before the date of
statutory meeting
b.
Mandatory for every type of company or for that matter any formal
organization under its relevant legislation to convene and hold a general meeting in
each calendar year as its AGM.
S143 to
The AGM of every type of company under the C.A. is required under
AGM
(S143(2)
a.
b.
Receive and consider the audited accounts together with the reports of the
c.
d.
c.
Subject to the Articles, EGM of members may be convened at anytime for the
transaction of business which requires attention before the next AGM
d.
Members of voting right may at any time lodge a resolution requiring the D to
convene an EGM for the purposes stated in the requisition
2.
- A meeting of a company other than for the passing of a special resolution shall be
called by notice in writing of not less than 14 days or such longer period as it
provided in the articles of association
- The notice is to be given to every member and the auditor of the company, if
listed notice also given to Bursa Malaysia
3.
a.
Quorum
Case: United Investment & Finance Ltd V Tee Ching Yong & Ors
Held: The Singapore High Court granted a declaration that the meeting was invalid.
The court held that the procedural irregularity in the meeting caused by substantial
injustice to the plaintiff and could not be validated.
Case: Tan Guang Eng V BH Low Holdings Sdn Bhd & Ors
The HC construed the relevant articles to mean that a quorum was required only at
the time when the meeting proceeded business, ie the continued meeting with the
presence of only bolder of a valid proxy was a valid meeting. Therefore the
resolution passed was a valid resolution.
b.
Chairman
Chairman duties
a.
b.
preserve order
c.
c.
Voting
The power to vote is not a fiduciary power and a shareholder owes no duty to
anybody as to how he or she will exercise their vote.
Case: Bin Hee Heng V Management Corp Strata Title No 647 was held that
the term show of hands included a voice vote
d.
Proxies
S149(2)- A member are entitled to appoint one or two proxies who need not
be members
e.
Motions
It is common for the Chairman to ask for a seconder to gauge whether or not
there is support for the motion
If there is no seconder, it may imply that there is no support for the motion
and the chairman usually proceeds to the next business
f.
Resolution
a.
b.
c.
d.
e.
Presence of a quorum
a.
b.
g.
Minutes
The minutes that have been signed and entered in the record are conclusive
evidence that a meeting has been duly held and convened that all appointments of
officers shall be deemed to be valid and that all proceedings were duly conducted
The minutes book shall be kept at the registered office and any member
could inspect them without charge.
CHAPTER 8: SHARES
1.
What is share?
- S4(1) of CA 1965
Shares in the share capital of a corporation and includes stock except where a
distinction between stock and shares is expressed or implied
2.
- S98 of CA 1965
3.
a.
b.
d.
e.
Various right of members is given by CA, MOA & AOA in term of shares.
f.
4.
a.
- S18(1) Required all companies except unlimited state in MOA amount of share
capital.
b.
- For example, 100 authorized capital of which 50 RM1 share have been issued
c.
- A company may issue share and not receive the full par value immediately
5.
a.
Ordinary shares
b.
Preference Shares
- S4 Of CA1965
It is a share which does not entitle the holder thereof to vote at general meeting or
to participate beyond a specified amount in any distributions, whether by way of
dividend or redemption in a winding up or otherwise
- Will paid out in assets before the common stockholders after debt holders in
winding up
c.
Redeemable shares
- Are those shares that carry a right by the company to buyback the shares
6.
7.
What section described about the power of the company to alter its share
capital?
S62 of CA 1965
A company may alter its authorized capital in general meeting by the creation of
new shares or consolidated or divide all or any of its shares capital into shares of
larger amount
S62(1)(C) of CA 1965
Fully paid up shares may also be converted into stock. Stock unlike shares, it does
not exist as discrete unit but as fund
S99(1) of CA 1965
8.
Share Certificate
a. It is a prima facie evidence that the person named in the certificate is the
owner of the share in question (S100)
c.
d. Name of the company, its address, name of the holder, statement of shares paid
up appear in the certificate
Share Warrants
9.
Result in the transferee becoming member of the company after the name is
entered in the register of members
- Yes
- Most of AOA of Private Company gives the power to refuse the transfers of
shares. This is because S15 of the act requires that there should be some kind of
restrictions on transferability of shares in a private company
- S105(1) of CA 1965
- S105(2) of CA 1965
The company and every officers in default commit an offence, it may also result in
the right to deny registration of to the transferee. (Case RE Swale Dale Cleaners Ltd
(1968))
Smiths father owned 400 units of shares died in an event. Smith want to sought to
be registered as member of the company as an executor to his father assets. The D
refused to register except Smith transfer unless 200 units of the shares sold to
certain director at a stated price, in which case they would register a transfer of the
remaining shares.
Held: The D only act bona fide on the interest of the company as seen by the court.
The applicant failed to show that D act mala fide or bad faith. The D has right to
refuse new membership.
- In this case the director refused to register new member who oppose the
company policy and interest.
- Held: The D had properly exercised his discretion which is for the best interest of
the company. It is not wise to have such member who oppose the policy of the
company.
In this case the Court of Appeal of Malaya held that a sale of shares without
complying with AOA restricting the right of transfer was void.
- Khoo obtained a share certificate and executed transfer from the plaintiffs by
fraud.
- After discovered, the the plaintiff claimed the return of share certificate from D.
- D attempted to register himself as the owner of the shares but failed. D resisted
the plaintiffs claim on the ground that he had bought the shares from Khoo in good
faith for value.
- Held: The court found that D had obtained the shares from Khoo is payment of a
gambling debt. He accordingly held that D was not a bona fide purchaser without
notice. D was ordered to return the shares to the plaintiff.
CHAPTER 9: DEBENTURES
1.
2.
a.
Registered Debenture
A debenture which is registered in the name of the holder in the company book.
Bearer Debenture
A negotiable instrument and its little therefore can be transferred only by deliver it
to the transferee. The does not register the name of holder
b.
But when the asset or property of the company is charged to the debenture
holder, it is secured debenture and its holder is the secured creditor.
c.
Redeemable Debenture
A redeemable debenture is where the principle money is repaid to the holder at the
end of a specified period.
Perpetual Debenture
3.
What are the difference between share/shareholder and debenture/debenture
holder?
DEBENTURE/DEBENTURE HOLDER
Is a member of a company
Is an external creditor
Dividend on share can only be paid if the co has profit and cannot be paid out of
capital
Interest on debenture can be paid regardless whether from profit available or paid
out from capital
A company can repay the debenture in accordance with the term of the issue.
4.
What is charge?
a.
b.
Floating charge
It is a charge that does not attach to any fixed asset, until it is crystallized.
5.
The company arranged an overdraft with a bank, secured by a charge over their
stock in trade given in two letters of lien. The co went into liquidation and the bank
claimed to be a secured creditor under the letters of lien.
Held: It was a floating charge because the essence of the whole transaction was
that the stock might be sold and replaced and there was no schedule or inventory of
the goods charged
The holder of a floating charge has no legal or equitable interest in the specific
assets of the company while the charge is floating. This means that the borrowing
company is free to deal with the assets subject to the charge in the ordinary course
of business.
6.
a.
Liquidation
b.
Appointment
7.
Fixed Charges
Floating Charges
Uncertain until the company fails, what assets will form the security
- Applicable to current asset, which may be easier to realize than fixed assets
subject to fixed asset. Ex: easier to sell stock compared to empty factory.
8.
a.
b.
c.
In liquidation, although the holder of a floating charge is secured creditor,
certain preferred creditors have priority in a winding up (S292(4) & S191(1)
d.
S294 Of CA 1965
9.
S108(1)&(2) Of CA 1965
Where a charge is created it need to be registered within 30 days after the date of
creation without prejudice to any contract or obligation for repayment if not it will
become void against liquidator and creditor of the company and when a charge
becomes void the money secured thereby shall immediately become payable.
S109(1) Of CA 1965
The effect of failure to register the charge is that the charge, but no debt secured,
becomes void against the liquidator or any creditor of the company, the company is
liable to a default fine.
S114 Of CA 1965
The court may sanction registration after the expiration of the 30days if an
acceptable explanation (the grounds are to be specified) is given.
It will fact do so even where the explanation is mere oversight but not where the
omission was a deliberate act of concealment
1.
a.
Compulsory Winding Up
b. Voluntary Winding
2.
(1)
(a) The company has by special resolution resolved that it be wound up by the Court
(b) The company has defaulted in lodging the statutory report or in holding the
statutory meeting
(c) The company does not commence business within a year from its incorporation
or suspends its business for a whole year
(f) The Directors have acted in their own interests rather than in the interests of the
members as a whole, or in any other manner whatsoever which appears to be unfair
or unjust to other member.
3.
What are two things that must be shown before the court make a winding up
order on a petition?
Two things to be shown before the court will make a winding up order on a petition
are:
a.
b.
That one of the grounds set out in the Acts as justifying a winding up has been
made out.
4.
A company is deemed to be unable to pay its debt if any one of the following
circumstances is shown to exist:
a.
The petitioner has delivered to the company at its registered office, a written
demand for payment of all debt owing to him of at least RM500 and within the
ensuing three weeks, the company has neither paid the debt nor given security for
the payment
b.
A judgment has been obtained against the company for the debt and an
attempt to obtain payment out of the companys assets remain unsatisfied, or
c.
The court is satisfied that the company is unable to pay its debt.
5.
Who are the parties who can apply for winding up of an company?
Section 27(1) of CA 1965 provides that the following persons may petition for the
winding up of a company:
a.
b.
c.
A contributor or any person who is the personal representative of a deceased
contributory or the trustee in bankruptcy or the Official Assignee of the estate of a
bankrupt contributory.
d.
The liquidator
e.
The minister pursuant to section 205 or on the ground specified in section
218(1)(d)
f.
g.
6.
- It includes the present members and certain past members of the company
- It has been held that a holder of fully paid up share is a contributory and entitled
to present a petition.
a.
b.
The shares allocated to the contributor, or have been held by him and
registered in his name at least 6 months during the 18 months before the
presentation of the petition or have devolved on him through the death or
bankruptcy of a former holder.
7.
What are three types of application that commonly used for winding up?
a.
Section 217(1)(a)
Allows the company to apply to have itself compulsorily wound up. The general
meeting is the appropriate organ to determine that the company be wound up.
In some circumstances, the members may desire to place the company into
liquidation as quickly as possible.
b.
Section 218(1)(e)
Usually the vast majority of applications for compulsory winding up are presented
by creditors on the grounds, i.e. the company is unable to pay its debt
S217(1)(b)
It was held that a person who is owed a debt by the company, which is still
unpaid at the date of the application for winding up is a creditor
c.
b.
S214 (1)
Past members may also be liable to contribute to the assets of a company if they
were members within one year of the commencement of winding up and the
present members are unable to satisfy the full extent of their liabilities.
E.g. past member ceased to be a member for 1 or more years before the
commencement of the winding up (a) till (g)
S215
8.
a.
b.
A stay of any execution of a judgment against the company and of any legal
proceeding in which it is either plaintiff or defendant.
c.
A standstill on any disposition of assets or transfer of shares (unless approved
by the court) from the date of commencement of liquidation S226.
9.
a.
Ordinary resolution
It passed when the articles provide that the company is to be wound up when a
specified purpose has been achieved or a specified period has elapsed.
b.
Special Resolution
It requires no ground for winding up and is used in any other case such as a solvent
liquidation.
a.
b.
6 comments:
Raimbek Iskendirov said...
Man, I have no idea who are you, but thanx u a lot, because I have midtearm exam
after 2 hours and it's open book)
Wish you only good thinks, thanx.
25 September 2012 at 21:21
- Aiman, UiTM.
31 March 2013 at 12:31
bb dino said...
-khadijah
29 May 2013 at 09:40
thank you very much for your help... this subject is killing me... but with ur notes...
maybe i'll be able to be in the DL :)
15 December 2013 at 11:22
timo kaseh la bona. den kono buek presentation pasal meeting ngan loans. pueh
mencari kek tenet baru jumpo blog ni.
23 September 2014 at 23:47