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SEPTEMBER EXAMINATION
YEAR TWO
Instructions to candidates:
1. The only reference material that may be used in answering this examination is an
unmarked copy of Companies Act 1965.
Choose any TWO (2) questions out of THREE (3) questions. Each question carries
30 marks.
5. You are reminded to where possible support your answers with relevant statutory
provisions and case-laws.
6. Where the candidate answers more than the required number of questions, only the
first two (2) answers written under Section B in the answer booklet will be marked.
The rest of the answers/part-answers shall be struck out and ignored.
Q1 (a) Describe the exceptions where a company may give financial assistance for
the acquisition of its own shares. (8 marks)
(d) Examine the rule in Foss v Harbottle (1843) 2 Hare 461. (8 marks)
Q1. Ah Wan, Wathy and Yasir are the directors of Carrera Sdn Bhd (“Carrera”), a private
limited company. The company’s Articles of Association is in the form of Table A of
the Companies Act 1965. The business of the company is to manufacture electric
cables. Each of them holds 5% of the company’s share capital. The remaining 85% of
the shares is held by Ah Yau who is a shareholder and not a director. Answer the
following separate and independent questions:
(a) Six months ago, the Board of Directors decided to purchase a piece of land at
Bandar Lapan as the area is considered a prime area for business. However, at
a Board of Directors meeting yesterday, the directors decided not to go ahead
with the purchase. Ah Yau is dissatisfied as he wants the Company to
purchase the land.
(b) “Eta Bhd (“Eta”) is a public limited company, which is well known in the
South-East Asia region. They wish to enter into a contract with “Carrera” for
the supply of electric cables. The Board of Directors of “Carrera” had a
meeting to decide on the matter. They decided that the Company will not go
ahead with the transaction. However, Yasir has entered into a contract in his
personal capacity with “Eta” unknown to Ah Wan and Wathy. He made a
huge profit out of the contract. Ah Wan and Wathy seek your advice whether
Yasir has breached his duties as a director. (15 marks)
[Total: 30 marks]
Q2. Amin, Ah Moi and Asha are the directors of Matrix Sdn Bhd (“Matrix”). Amin and
Ah Moi each, holds 45% of “Matrix” paid up share capital. Recently, the Company
received a lucrative contract from Nedrix Sdn Bhd (“Nedrix”). However, the Board of
Directors of “Matrix” passed a resolution approving the giving of the contract to Jati
Sdn Bhd (“Jati”). Rahul who holds 10% shares in “Matrix” has now discovered that
the directors of “Jati” are Amin and Ah Moi. He also found out that both Amin and
Ah Moi own all the shares in “Jati”. Rahul wishes to bring an action against the
directors.
Advise Rahul whether he can succeed in bringing the action. [Total: 30 marks]
Section B (Continued)
Q3. Hyper-Style Sdn Bhd is a dress-making company. The company has ten (10)
members. The company was formed on 1st January 2005. The company’s Articles of
Association is in the form of Table A of the Companies Act 1965 except with the
following clause,
Article 47 – The quorum for company meeting is five members personally present.
The Board of Directors seeks your legal advice on the following events.
(a) The company held its first annual general meeting (AGM) on 1st June 2006.
Zaisha, one of the shareholders claims the meeting is not valid. (6 Marks)
(b) A notice for the first AGM was sent to all members except Ah Yong, who is a
preference shareholder, since it was felt that preference shareholders have no
right to vote at general meeting. Ah Yong claims that the meeting is not valid.
(6 Marks)
(c) The first AGM was attended by eight (8) members personally. The meeting
commenced at 0900 hours. One hour later, Chairperson proceeded to pass a
resolution to increase the Company’s authorized share capital. At that time,
there were only four members at the meeting since the others have left.
Viknesh, who is one of the four shareholders claims that the resolution is
invalid since there was no quorum. (6 Marks)
(d) This first AGM was chaired by Ujang who is also the Chairman of the Board
of Directors. Ah Toi who is one of the members, claims that the proper person
to chair the AGM is a member; not the Chairman of the Board of Directors.
(6 Marks)
(e) Sheila is an ordinary shareholder in the Company, who could not attend this
first AGM. She requested her good friend, Rosman to attend the meeting on
her behalf. Rosman attended the meeting. However, he was not allowed to
voice any opinion as he was not a member. Further, during the passing of the
resolution, he was not allowed to exercise any voting rights. Rosman claims
the company could not do so. (6 Marks)
[Total: 30 Marks]