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LW/JAN 2012/LAW485

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: CORPORATE LAW : LAW485 : JANUARY 2012 : 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
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QUESTION 1

LW/JAN 2012/LAW485

a) b)

With reference to relevant case law, discuss what is meant by veil of incorporation. (40 marks)

Discuss any three (3) advantages and three (3) disadvantages of the incorporation of a company. (60 marks) QUESTION 2 Explain the restrictions on the power of a company to alter its articles of association. (50 marks) The sole object of DLima Sdn Bhd is to carry on the business of selling, hiring and supplying materials required for the printing business. In order to wider the scope of its business, the board of directors decided that the company should also go into the actual business of printing. The company has accepted a contract for the printing and publishing of books for school children. This was, however, done without altering the memorandum of association. In addition, D'Lima Sdn Bhd has also entered into negotiation to buy printing machines for the business.

a) b)

Advise DLima Sdn Bhd as to the legality of the above acts. Also advise the members of DLima Sdn Bhd as to their rights in relation to the above matter under the Companies Act 1965. (50 marks) QUESTION 3

a)

With reference to the Companies Act 1965, explain any three (3) circumstances in which a person may be disqualified from being appointed or acting as a director. (30 marks)

b)

Nusa Jaya Sdn Bhd is a construction company managed by three directors, namely Noah, Sara and Jay. The company decided to bid for a highway construction project from the State Government and has delegated the task to Noah. At the same time, Noah was approached by his cousin, Kay, who was seeking help from him to obtain the same project. Kay promised to pay Noah 15 percent of the value of the project if it goes to him. The project was finally awarded to Kay after Noah used all information that he acquired from his office of director. Noah then received the amount promised and kept it to himself. Sara has recently accepted an appointment as a Chief Executive Officer of one company whose business is similar to the business of Nusa Jaya Sdn Bhd. Nusa Jaya Sdn Bhd has just discovered the above facts and seeks your advice as to its rights against Noah and Sara under the Companies Act 1965. Advise Nusa Jaya Sdn Bhd. (70 marks)

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LW/JAN 2012/LAW485

QUESTION 4 Zuhai is an auditor of Seri Cemerlang Sdn Bhd. While carrying out some audit work on the companys account, he discovered some irregularity with the company's cheques and invoices. Zuhai then sought explanation from the officer in charge of preparing the documents. The officer concerned told Zuhai that there were some errors on the cheques and invoices but the matter should not be taken seriously. When Zuhai asked further, the officer refused to cooperate. Zuhai then proceeded with her work and detected more errors and irregularities in the companys accounting documents. Zuhai was of the opinion that the matter was very serious and she suspected that the irregularities were done by a few of the company's officers at the upper level of management. Zuhai however, refused to disclose the matter in the report and decided to verify the account as true and fair for fear that her contract will not be renewed by the company in future if she does so. Based on the above scenario, discuss the duties and liabilities of Zuhai as an auditor of Seri Cemerlang Sdn Bhd. (100 marks)

QUESTION 5 Zuri is a director of BinaHarta Sdn Bhd who holds 10% of the companys shares. The other 90% of the shares is held in equal proportions by two other directors namely Zek and Zaidi. At a company meeting, the following resolutions were passed despite vehement objections by Zuri:

i) ii) iii)

A resolution to divert a contract which was initially awarded to BinaHarta Sdn Bhd to its subsidiary company. The members of this subsidiary company are Zek and Zaidi. A resolution to discontinue legal proceedings against Mutiara Enterprise for breach of agreement with BinaHarta Sdn Bhd. A resolution to ratify the negligent act of Zaidi in selling a piece of land belonging to BinaHarta Sdn Bhd below the market price.

Advise Zuri whether he may institute an action personally against the directors for the breach of their duties or alternatively institute an action in the name of the company against them. (100 marks)

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QUESTION 6

LW/JAN 2012/LAW485

a)

Chitty, a secretary of Mahawangsa Bhd has forged the signature of the company's directors and later has caused a share certificate to be issued to him. Chitty then asked a loan from Chu Ai and used the share certificate as a security for such loan. Chui Ai, who believed that Chitty was the owner of the shares based on the particulars which appeared on the certificate, granted him a loan of RM20.000. Upon discovery of the fact that the share certificate was never issued to Chitty, Chu Ai wishes to claim -damages from Mahawangsa Bhd on the grounds that the loss suffered , by him was due to his reliance on the share certificate issued by the company. Advise Chu Ai as to whether he is likely to succeed. (40 marks)

b)

Based on statutory provisions and case law, discuss the rules in relation to payment of dividends. (60 marks)

QUESTION 7

a)

Explain the ways in which and procedures by which a company may be wound up as provided by the Companies Act 1965. (60 marks) State the effects of the commencement of the winding up on the creditors, the company and the employees. (40 marks)

b)

END OF QUESTION PAPER

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