July 2023 (SET B)

4. Karim Sdn. Bhd. (the company) created a floating charge (duly registered) in April 2022
with of Rahmah Bank for a loan of RM 250,000 over all of its realty estate assets. The
charge prohibited the company from creating any other charge. In September 2022, the
company borrowed RM 200,000 from Murah Bank and execute a fixed charge over the
company's office premises in Murah Bank favour's. The charge was duly registered with
the Companies Commission. Karim Bhd. then went into liquidation in October 2023. Both
Rahmah Bank and Murah Bank claimed that they have the priority over the company's
office premises.

Advise the parties.

The issue is whether between Rahamah Bank and Murah Bank , which one of the
parties will have the priority over the company office premises ?

Referring to the Section 2 “charge” includes a mortgage and any agreement to give or
execute a charge or mortgage whether upon demand or otherwise. A borrowing company can
grant a fixed or floating charge as security to it's creditors. A company which has given a floating
charge may grant a later fixed charge because this is regarded as being within the ordinary
course of the company business. In such case, the later fixed charge ranks ahead of the floating
charge , as long as it was given before the floating charge crystallised. Based on the case R IN
Right of British Columbia v. Federal Business Development Bank , in this Canadian case the
bank had a charge over the company's entire property expressed as a fixed and specific
mortgage and charge. Another term allowed the company to continue making sales from stock
in the ordinary course of business until notified in writing by the bank to stop doing so. The court
held said the charge was created as a floating not a fixed charge.

Based on the law and case law above , Rahmah Bank have the priority over the
company office premises because based on the loan between Karim Sdn Bhd and Rahmah
Bank in April 2022 it was prohibited the company from creating any charge but Karim Sdn Bhd
had borrowed some money from Murah Bank in Sept 2022. There is a breach in a term of
floating charges agreement which has crystallised.

The conclusion is Rahmah Bank have the priority over the company office premises.

5. Daim is a shareholder in Era Sdn. Bhd., a private company limited by shares (the company).
He has sold his shares to his friend, Liam.

However, the director of the company, Mamat has refuse to register the transfer, based on
power vested to him under the company's constitution.
Daim felt dissatisfied with the action of Mamat as he thinks that Mamat has no power to
refuse the registration of transfer and Mamat also has no reasonable reason to do so.

Advise Daim.

The issue is whether Daim can sales his shares to his friend ?

According to Section 106(1) , a company shall enter or cause to be entered the name of
transferee in the register of members as shareholders within 30 days from the receipt of the
instrument of transfer under section 105(1) unless a) this Act or the constitution expressly
permits the directors to refuse or delay registration for the reason stayed. b) The directors
passed a resolution to refuse or delay the registration of the transfer within 30 days from the
receipt of the instrument of transfer and c) the notice of the resolution and in the case of a public
company including the reason referred to in (b) is sent to the transferor and to the transferee
within 7 days of the resolution being passed.

Referring to the law above , Daim need to agreed with the decision that has been made
by Mamat even he refuse to register the transfer based on power vested to him under the
company's constitution.

The conclusions is Daim cannot sell his shares to his friend.

July 2023 (SET A)

1. Nurul wants to establish a company. Before the company complete its establishment, Nurul
made a contract with supplier for the company's stationaries amounted RM 15,000 (the
contract). After the establishment of the company, it has accepted the contract. However, when
the supplier wants to collect the payment, the company refused to pay. The company
contended that Nurul is the one who is responsible for the payment as she is the person
responsible for the contract.

Advise Nurul.

The issue is whether Nurul are responsible for the payment ? ✓

According to Section 65(1) , A contract or transaction that purports to be made by or on

behalf of a company at a time when the company has not been formed has effect as a contract
or transaction made with the person purporting to act for the company or as agent for it, and he
is personally liable on the contract or transaction accordingly . Section 65(2) it may be ratified
by the company after its incorporation and the company shall be bound by the contract or
transaction . Referring to the case Cosmic Insurance Corpn. Ltd. v. Khoo Chiang Poh 1981 ,
the facts is respondent sued the appellants for breaching a contract of service as a managing
director for life unless he resigned , died or committed an offense under the Companies Act
(CA) or was prohibited from becoming a director under CA of any offenses . It was argued that
the contract was a pre-incorporation contract and ratified by the board of directors . The court
held is the company had ratified the pre-incorporation contract . The company had committed
an offence when they terminated the respondent .

Based on law and case law above , Nurul are liable for the payment made because she
made a contract before the company been formed.

Nurul are responsible for the payment. ✓

2.Adi and All are the only shareholders and directors in a company named Dino Sdn. Bhd. (the
company). One day, the company has been sued by another company and the company
lost the case. The court ordered the company to pay the damages. However, the company
does not have enough money to pay the damages. The other company then wants to take
action against Adi and Ali personally in order to claim the remaining balance of the damages.

Advise Adi and Ali.

The issue is whether Adi and Ali are liable with the balance of the damages ? ✓

According to Companies Act , there are separated legal entity between company and
the individual. ✓

Referring to the law above , Adi and Ali are not liable with the balance of the damages
because it is separate legal entity. ✓

The conclusion is Adi and Ali are not liable with the balance of the damages. ✓

3.Alia is one of the shareholders in Nilam Sdn. Bhd., a private company limited by shares (the
company). The company's constitution states that members of the company cannot sell
their shares to their siblings without approval from the company. In June 2023, Alia has
sold her shares to her sister, Anna.

Advise the company,

The issue is whether company can take legal action against Alia ? ✓

According to Company Act 2016 , members are binding with company constitution. If
company have company constitution, company must follow the constitution. ✓
 Company can take legal action against Alia because she breach the company
constitution that stated that members of the company cannot sell their share to their siblings
without approval from the company.

Company can take legal action against Alia. ✓

4. Multi Bhd. (the company) is a public company limited by shares. The company wishes to
rearrange its share capital. As a consideration, the company wants to buy back their shares.

Advise the company.

The issue is whether the company can buy back their shares ? ✓

According to Section 127(1) , permitted a public company with a share to purchase its
own shares listed on the stock exchange is authorized by its constitution. ✓ Procedures lf share
buy back under Section 127(2) , it must be solvent both before and after the purchase , it must
be listed on the stock exchange and purchase must be in good faith and in the interest of the
company. ✓ According to Section 127(3) allows a company to purchase its own shares
otherwise than through the Stock Exchange if the purchase is permitted under the relevant rules
of the stock exchange and is made in accordance with such requirements as may be
determined by the stock exchange. ✓

Based on the law above, the company can buy back their share ✓ but need to follow the
procedures

The conclusion is Multi Bhd can buy back their share. ✓

5. Zorro is a preference shareholder of Baiduri Sdn. Bhd., a private company limited by

shares (the company). One day, the company passed a special resolution to cancel the
preference shares. Zorro and other preference shareholders dissatisfied with the special
resolution.

Advise Zorro and the other preference shareholders if they can protect their rights from the
variation passed by the company.

The issue is whether Zorro and the other preference shareholders can protect their rights
from the variation passed by the company.✓

Based on the law , it stated that a variation of classic rights is alteration in the position of
shareholders with regard to those rights or duties which they have of their shares. Based on
Section 93(1) , if the rights attached to shares in any class of shares in a company are varied ,
the shareholders representing at least 10 per centum of the total voting rights in the class may
apply to the court to have the variation disallowed. ✓ Based on Section 93(2) , an application
under subsection (1) a) Shall be made within 30 days from the date on which the variation is
made and b) may be made on behalf of the shareholders by any shareholders appointed in
writing by all shareholders in that class. ✓ According to Section 93(3) , the court shall upon
hearing the application made under subsection (1), make the following order a) if the court is
satisfied that the variation would unfairly prejudice the shareholders represented by the
applicants, disallow the variation or b) if the court is satisfied that the variation would not unfairly
prejudice the shareholders , confirm the variation. ✓

Based on the law above , Zorro and the other preference shareholders can protect their
rights from the variation passed by the company with bring the case to the court.

The conclusion is Zorro and the other preference shareholders can protect their right
from the variation passed by the company. ✓

November 2022

Oriental Sdn. Bhd. (the company) is a private company limited by shares. The company has
obtained loan from Popular Bank (the bank) amounting to RM 300,000. The company has
charged its assets to the bank as security for the loan including its land and all of the
company's assets as fixed charge.Subsequently, the company has disposed of the assets
that have been charged without approval from the bank.The bank is unsure on the charge
made by the company.

Based on the above facts, advise the bank.

The issue is whether the bank can take legal action against charge made by Oriental
Sdn Bhd? ×

The issue is whether the charge is floating or fixed charge ?

Referring to the Section 2 “charge” includes a mortgage and any agreement to give or
execute a charge or mortgage whether upon demand or otherwise. ✓ A borrowing company
can grant a fixed or floating charge as security to it's creditors. ✓ A fixed charge attaches to a
specific property owned by the borrower. ✓ Due to nature of fixed charge, the company is
unable to dispose of the charged assets without the lenders consent. Example cases that can
relate is Siebe Gorman & Co Ltd v. Barclays Bank Ltd. ✓

Based on the law above, the bank can take legal action against charge made by Oriental
Sdn Bhd because the company has disposed the assets without approval from the bank. x
Based on the law above , the charge is actually a floating charge because the assets is a class
of assets not specific.

The conclusion is the bank can take legal action against charge made by Oriental Sdn
Bhd. x
The conclusion is the charge is floating charge.

Push for Final Exam

Q1. The issue is whether the company can alleges Iman because has breached his duty as
an agent.

According to Companies Act 2016 , Promoters have the general duty to exercise
reasonable skill and care. In Erlanger v. New Sombrero Phosphate Co. 1978 that promoter had
a fiduciary relation to the company they were creating. The Fiduciary duties includes a promoter
must account for any benefits obtained through acting as a promoter; promoters must not put
themselves in a position where their own interests conflict with those of the company; a
promoter must provide full information on their transactions and account for all monies etc.
arising from them. The promoter must make proper disclosure of any personal advantage to
existing and prospective company members or to an independent board of directors. Referring
to the case law Erlanger v. New Sombrero Phosphate Company , the promoters had bought an
island for £55,000 and later sold it to a company they formed, for a price of £110,000. No
disclosure had been made as to the profit they were making. The court held said that the
company was entitled to rescind the contract of sale.

Based on law and case law above , the company can alleges Iman because has
breached his duty as an agent because the company has found out the commission accepted
by Iman.

The conclusion is the company can alleges Iman because has breached his duty as an
agent.

Q2. The issue is whether the company shall be liable to pay the demand.

According to the Companies Act 2016, Section 65(1) A contract or transaction that
purports to be made by or on behalf of a company at a time when the company has not been
formed has effect as a contract or transaction made with the person purporting to act for the
company or as agent for it, and he is personally liable on the contract or transaction accordingly.
Section 65(2) a contract or transaction referred to in that subsection may be ratified by the
company after its incorporation and the company shall be bound by the contract or transaction
as if the company had been in existence at the date of the contract or transaction and had been
a party to the contract or transaction. Referring to the case law , Cosmic Insurance Corpn. Ltd v
Khoo Chiang Poh, the respondent sued the appellant for reaching a contract of service as a
managing director for life unless he resigned, died or committed an offense under Companies
Act or was prohibited from becoming a director under CA of any offenses. It was argued that the
contract was a pre - incorporation contract and ratified by the boards of the directors. Court held
stated that the company had ratified the pre-incorporation contract. The company had
committed an offence when they terminated the respondent.

Referring to the law above , Adham will be responsible for the contract because after the
company was incorporated the company did not accept the contract.

The conclusion is company did not liable to pay the demand.

Q3. The issue is whether Susan can referred to regulations under Companies Act 2016 in
regards to propose the company’s name.

According to Section 27(1) of Companies Act 2016 , a person to apply to the Registrar
of Companies (ROC) to confirm the availability of the proposed company name. Based on
section 27(5), ROC may reserve the name for a periods of 30 days from the date of lodgement
of the application together with the prescript fee if he is satisfied that the proposed name is not
undesirable or is a name of a kind that the minister has directed the ROC not to accept for
registration. Referring to Section 26(1) , the name can be approved if it is not a) undesirable or
unacceptable; b) identical to an existing company, corporation or business; c) identical to a
name that is being reserved under the 2016 Act or d) a name that the minister has directed the
ROC not to accept for registration. Section 26(2) & (3) stated that where the ROC determines
that a name is undesirable, unacceptable or identical to an existing company, corporation or
business or a name that is being reserved, he shall them publish in the Gazette any directions
to the effect. Based on section 14 (1) once the name is approved and reserved by the
Registrar,the applicant,whether one or more persons to lodge an application for incorporation
with the ROC.

Based on the law above Susan can refer the regulations under the Companies Act 2016
in regard to propose the company names if she is unsure with the regulations.

The conclusion is Susan can refer the regulations under the Companies Act 2016 in
regard to propose the company's name.

Q4.
The issue is whether Korra and the board of the directors of the company will be able to
sue Tarlok.

According to Section 20 of Companies Act 2016, a body corporate shall have a legal
personality separate from that of it's members and continue in existence until it is removed from
the register. Section 21 stated that a company shall be capable of exercising all the function of
an incorporated company and have the full capacity to carry on or undertake any business or
activity including to sue and be sued. Based on case law Foss v Harbottlec , two minority
shareholders in the Victoria Park Company alleged that property of the company had been
misapplied by the five company directors. Court held dismissed the claim and held that when a
company is wronged by its directors it is only the company that has standing to sue.

Applying to the law above Tarlok, the director, is alleged to have stolen money from the
company. This is a clear breach of his fiduciary duties. Korra, as a member of the company, is
indirectly affected by this breach. However, she does not have the legal standing to sue Tarlok
directly but the other BOD can sue Tarlok.

In the conclusion, the BOD can sue Tarlok while Korra cannot sue Tarlok.

Q5. The issue is whether Ali can proceed with the constitution made by him.

According to Section 38(1) of Companies Act 2016, as an exception two section 31

dispensing with the requirement for a constitution, a company limited by guarantee (CLBG) is
still required to have a constitution. Referring to Section 38(2) the constitution shall be signed by
those person intending to incorporate the company and lodged with the ROC during the
company incorporation. Section 38(3), the constitution include the following a) a clause stating
the status of company being a CLBG; b) the objects of the company; c) the capacity,rights,
powers of privilege of the company; d) the numbers of member with which the company
proposed to be Incorporated; e) matter which are required to be included in the constitution as
stipulated by the 2016 Act; and f) any other methods which the company wishes to include in
the constitution. Based on Section 38(4) and (5) therefore any provisions in the constitution
which have the effects of creating a shared capital or give a person a right to dividend shall be
void. Section 38(6) stated that once the constitution has been launched with the ROC, it shall
become binding on the company and it's members.

Based on law above , Ali should void any provisions in the constitution that a member of
the company is to be limited for 60 members only , create a share capital or give a person a
right to dividend.

The conclusion is Ali cannot proceed with the constitution made by him.

Q6.
The issue is whether Ali and Abu can take part in Bazar Ramadan to sell foods and
drinks ?

According to Companies Act 2016, ultra vires means “beyond the power” , “lack of
power” or “out of scope”. Ultra vires is where a company exceeds it's object and acts outside it's
capacity. Based on case law Asbury Railway Carriage & Iron v. Riche , the company has
entered into a contract that exceed it's objects. Court held that contract was void.

Referring to the law and case law above , Ali and Abu cannot take part in Bazar
Ramadan to sell foods and drinks because it exceed it's object which is manufacturing food
products only.

The conclusion is Ali and Abu cannot take part in Bazar Ramadan to sell foods and
drinks .

LAST PUSH FOR FINAL (CHAPTER 6)

Q1. Ali Bhd., a public company wants to know the procedure to invite public to buy the
company shares. Advise the company.

The issue is whether Ali Bhd can invite public to buy the company shares ? ✓

Referring to Section 232 (1) of the Capital Markets and Services Act 2007 (CMSA) , ✓
a person shall not issue , ✓offer for subscription or purchase , ✓ make an invitation to
subscribe for or purchase securities ✓or in the case of an initial listing of securities , make an
application for quotation of the securities on a stock market of a stock exchange unless ✓; a) a
prospectus in relation to the securities has been registered by the Commission Under section
233 ✓and (b) the prospectus complies with the requirements or provision of this Act . ✓

Based on law above , Ali Bhd can invite public to buy the company share because public
company cannot sell their shares .✓

The conclusion is Ali Bhd can invite public to buy the company shares unless they ……. .
✓

Q2. Adi Sdn. Bhd. have two types of shareholders. All the shareholders in that type of
shareholders want to know their rights.

Advise them.

The issue is whether all the shareholders can refer to Companies Act 2016 to know their
rights as shareholders . Contoh issue lain: the issue is whether the two types of shareholders
has same rights

According to Companies Act 2016, there are two classes of shares which are ordinary
shares and preference shares. ✓ If no differences between shares are expressed then all
shares with the same rights known as ordinary shares . ✓ Under Section 71 of the Companies
Act 2016 , ✓ a share in a company , other than preference shares, confers on the holder ; a)
The right to vote on a show of hands on any resolution of the company ; ✓ b) the right to vote
on a show of hands on any resolution of the company ✓ and c) the right to an equal share in
the distribution of the surplus assets of the company . ✓ According to Section 2(1) of CA 2016 ,
✓ preference share is a share a share by whatever name called , which does not entitle the
holder to the right to vote on a resolution or to any right to participate beyond a specified amount
in any distribution whether by way of dividend, or on redemption, in a winding up, or otherwise .
✓

Based on the law above , all the shareholders can refer to Companies Act 2016 to know
their right as shareholders because every classes of shares have their own right as
shareholders . ✓
Based on the law above , the two classes of shares have a different right as shareholders.

The conclusion is , all the shareholders can refer to CA 2016 to know their rights as
shareholders . ✓
The conclusion is , the two classes of shares have a different right as shareholders.

Q3. Adilah Sdn Bhd wants to add its share capital from RM500,000 to RM1,000,000. Advise
them on how to expand their capital.

The issue is whether Adillah Sdn Bhd can expand their capital from RM500,000 to
RM1,000,000 .

According to Section 84(1) of CA 2016 , ✓ enables a company to alter its share capital
by passing a special resolution unless otherwise provided by the constitution . ✓ + sikit ayat
Based on Section 75(1) of CA 2016 , the directors of a company are prohibited from exercising
their power to allot shares in the company unless shareholders prior approval by way of
resolution has been obtained . The creation and issuing shares of new shares , by a company .
New shares can be issued to either new or existing shareholders . Directors exercise the
delegated powers to allot shares . ×

Based on the law above , Adillah Sdn Bhd can expand their capital from RM500,000 to
RM1,000,000 but the company need to pass the special resolut000 75% . ✓

The conclusion is Adillah Sdn Bhd can expand their capital from RM500,000 to
RM1,000,000 . ✓

Q4. Laila Sdn. Bhd. wants to alter its shareholders rights, however they are not sure on the
procedure. Advise the company
 The issue is whether the company can follow the procedure based on Companies Act
2016 to alter its shareholders rights . ✓

Referring to the Companies Act 2016 , a variation of class rights is an alteration in the
position of shareholders with regard to those rights or duties which they have of their shares.
Whereby can be varied by using a strict procedure . According to Section 91(1) of CA 2016 , the
rights attached to shares in a class of shares in a company be varied only a) in accordance with
the constitution for the variation of those rights ; or b) if there are no such provisions , with the
consent of shareholders in that class given in accordance with this section. Section 91(2) of CA
2016 , for the purpose of (1)(b) , the consent of shareholders in that class given in accordance
with this section shall be ; a) a written consent representing not less than 75% of the total voting
rights of the shareholders in the class or b) a special resolution passed by shareholders in the
class sanctioning the variation . Section 92(1) of CA 2016 , if the rights attached to shares in
any class of shares in a company are varied , the company shall give written notice of the
variation to each shareholder in that class within fourteen days from the date on which the
variation is made . ✓

*if constitution tetapkan 60% while akta 75% , follow constitution. if constitution tak state brp so
follow akta.

Based on law above , the company can follow the procedure based on Companies Act
2016 which is prepared a written consent representing 75% of the total voting rights and passed
a special resolution to alter its shareholders rights . ✓

The conclusion is the company can follow the procedure based on Companies Act 2016
to alter its shareholders rights . ✓

Q5. Oriental Sdn. Bhd. (the company) is a private company limited by shares. The company has
obtained loan from Popular Bank (the bank) amounting to RM 300,000. The company has
charged its assets to the bank as security for the loan including its land and all of the
company's assets as fixed charge.Subsequently, the company has disposed of the assets
that have been charged without approval from the bank.The bank is unsure on the charge
made by the company.

Based on the above facts, advise the bank.

The issue is whether the charge is floating or fixed charge ? ✓

Referring to the Section 2 of CA 2016 , “charge” includes a mortgage and any

agreement to give or execute a charge or mortgage whether upon demand or otherwise . A
charge over the assets of a company gives a creditor (called the ‘chargee’) a prior claim over
other creditors to payment of their debt out of these assets . A borrowing company can grant a
fixed or floating charge as security to it's creditors . ✓A fixed charge attaches to a specific
property owned by the borrower . ✓ Due to nature of fixed charges , the company is unable to
dispose of the charged assets without the lenders consent . ✓A floating has been defined , in
Re Yorkshire Woolcombers Association Ltd. 1903 , as a) A charge on a class of assets of a
company , present and future ✓ b) which class is , in the ordinary course of the company’s
business , changing from time to time and c) until the holders enforce the charge , the company
may carry on business and deal with the assets charged .
+ case study - R in Right British

Based on the law above , the charge is actually a floating charge because the assets is
a class of assets not specific assets . ✓

The conclusion is the charge is floating charge . ✓

Q6. Furios Sdn. Bhd. (the company) is a private company limited by shares. The company
has obtained a loan amounting to RM 300,000 from Genius Bank (the bank) whereby the
company has created floating charge with the bank. Unfortunately, the company’s
secretary forgot to register the charge.

Advise the company whether the charge is valid and the consequences for non registration of
the charge.

The issue is whether the charge is valid and the consequences for non registration of the
charge . ✓

According to the Section 352(1) of CA 2016 , ✓ to be valid and enforceable , charges

must be registered within 30 days of creation by the Registrar . ✓ The company is responsible
for registering the charge but the charge may also be registered by a result of application by
another person interested in the charge . Based on Section 352(2) of CA 2016 , ✓if a company
contravenes with subsection (1) the charge shall be void against the liquidator and any creditor
of the company , so far as any security on the company’s property or undertaking is conferred .
✓Section 352(3) of CA 2016C ✓, stated that nothing in subsection (2) shall prejudice any
contract or obligation for the repayment of the money secured by a charge and when a charge
becomes void under this section , the money secured shall immediately become payable . ✓

Based on law above , the charge is void because the company secretary forgot to
register the charge ✓and the consequences for non registration of the charge is the loan is still
valid and immediately become payable . ✓

The conclusion is the charge is void ✓and the consequences is loan is still valid and
immediately become payable . ✓
IMPORTANT !!!

Tak ingat case

i. In relevant case,......
ii. In case,....
iii. In a case,....
iv. In a decided case,....

Mark :

i. Issue (2m)
ii. Law (12m) - 6 relevant points | Section (min 2 points ; section number & explanation)
iii. Application (4m)
iv. Conclusion (2m)

TENGOK SOALAN SOALAN YANG PERNAH KITA BUAT (FINAL PUSH)