Nur Haziqah Binti Amizan (2016838)

Question 1

a(i) whether the new agreement entered by EFF Foods with Green Farms Bhd
(GFB) is contrary to the object clause of the company?

● EFF Foods Sdn Bhd was a company involved in catering services and it is
mentioned in Article 1A in their constitution that the company (EFF Foods Sdn
Bhd) is to be involved in the food catering business. Later, EFF Foods Sdn
bhd entered into a new agreement with Green Farms Bhd (GFB) to manage a
multi-storey tomato production farm in Genting Highland. Some Shareholders
objected to the agreement as EFF Foods Sdn Bhd cannot be involved in such
business.

● Section 35 (2) stated that if a company decides to put the object clause in
their constitution, the company shall be restricted from carrying on any
business or activity that is not within the object clause.
● In the case of AG v Great Eastern Railway, the court held that the power to
hire locomotives and rolling stock can be implied by the objects clause to
include ‘construct and run’ certain railway.

● Hence, applying to the current case, EFF Foods have included the object
clause in their constitution in which the company is to be involved in the food
catering business and tomato production is different from the catering
services therefore the new agreement entered by EFF Foods sdn Bhd with
GFB is not within the object clause of the company.

a(ii) whether the act of the board of directors appointed Chang as company
secretary to replace Lim is inconsistent with Article 3A of the company
constitution?

● Section 291(1) of Companies Act stated that an ordinary resolution of the

members of a company means a resolution passed by a simple majority of
more than half of who are entitled to vote and do vote in person or by proxy at
a meeting of members or who are entitled to vote on a written resolution

● Section 291(2) - ordinary resolution by show of hands by simple majority by a

members representing a simple majority of members who present at the
meeting

● Section 291(3) - any matter that may be passed in the ordinary resolution may
be passed in special resolution
 ● In the present case, the Board of Directors and the majority decide to appoint
Chang to replace Lim (current company secretary). It is stated by virtue of
Article 291 of the companies act that a company may pass an ordinary
resolution to remove Lim as majority of the members decide to remove Lim
and replace him with Chang. Therefore, it is between the shareholders and
the directors of the company which it will be binding if Lim is the member of
the company. In this case, Lim is not a member of a company. Company may
appoint Chang as company secretary through ordinary resolution passed at a
meeting of the members of the company by simple majority vote.

b) whether EFF Foods Sdn Bhd can alter Article 1A of their constitution?

● It is mentioned in Article 2A of the company that the provision of Article 1A

cannot be altered or be amended. However, according to section 36(1) of
Companies Act 2016, a company having a constitution may, by a special
resolution, alter or amend its constitution unless the constitution itself prohibits
the alteration or amendment.

● Section 37 of the Act also enables the Court to alter or amend the constitution
of the company if the court is satisfied that it is not practicable to alter or
amend the constitution in accordance with the procedure in this Act.

● Since it is mentioned in their company constitution that Article 1A cannot be

altered or be amended, hence, Article 1A cannot be altered or amended as
there is prohibition stated in Article 2A of the company constitution.