BCO 3624 COMPANY LAW II Trimester 2, 2012/2013

Prepared by: Crystal Kuek

1
Tutorial Questions

Securities Commission and Stock Market

1. The information obtained frominvestigations often open up opportunities for the
prosecution, and ultimate conviction, of delinquent officers and of improper conduct within
the company thereby enhancing public confidence in the market place.

~ Low Chee Keong, Revisiting The Regulatory
Framework of Capital Markets in Malaysia [2001] 4 MLJ
ccxli

Discuss the power of investigation of the Securities Commission of Malaysia and comment
on the statement above.

2. The investigating officers of the Securities Commission (SC) rushed to Syarikat Kaki Tipu
Bhd after suspecting the company of having violated some of the provisions of the Capital
Markets and Services Act 2007. Their investigations at the company were however futile
since the relevant documents could not be found. Encik Kaki Bohong, a director of the
company, told the investigating officers that the documents were with Encik Kaki Mangsa,
also a director of the company. Encik Kaki Bohong further told the Investigating Officers
that Encik Kaki Mangsa was on a business trip overseas for a week. The investigating
officers issued an order requiring Encik Kaki Mangsa or any body in possession of the
relevant documents to appear before them together with the documents. Upon returning
from overseas, Encik Kaki Mangsa hurried to the SC but denied having possession of the
documents. On the contrary, Encik Kaki Mangsa believed that he saw the documents being
handed over to Encik Kaki Pakat by Encik Kaki Bohong. Encik Kaki Pakat was suspected
of having destroyed the documents when he became aware of investigation by the SC.

Advise the SC on the actions that may be taken against Syarikat Kaki Tipu Bhd and other
parties.

3. Explain the following prohibited market practice:

(a) short selling.
(b) false trading and market rigging.
(c) making or disseminating false or misleading statements.

4. Andy is the Managing Director of Ringgit Bhd (Ringgit) whose shares are listed on the
Bursa Malaysia Securities Berhad. During the Velentine dinner with his fianc, Linda, he
said to her:Ive got a good news for you. Buy as many shares in Ringgit as you can now.
Dont ask me why; just do it. The following weeks, Linda bought 100,000 Ringgits shares
in the stock market. Two weeks later, Ringgit made an announcement on the successful
bidding for Nusajaya development project in Johor. Ringgits share price rises by 200%.
She made a handsome profit.

Has there been any illegal trading? Discuss with reference to the relevant statutory
provisions and case law.

(3
rd
Trimester Final Exam for BCO3024, 2006/2007)

5. State and explain the defences available for insider trading offences.