april 2010

CONFIDENTIAL LW/APR 2010/LAW361/580

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE

COURSE CODE

EXAMINATION

TIME

LAW OF ASSOCIATIONS II / LAW OF ASSOCIATION II

LAW361/580

APRIL 2010

3 HOURS

INSTRUCTIONS TO CANDIDATES

This question paper consists of three (3) parts : PART A (5 Questions) PART B (2 Questions) PART C (1 Question)

Answer ALL questions from PART A, PART B and PART C in the Answer Booklet. Start each answer on a new page.

Candidates are strongly advised to allocate not more than 60 minutes for answering questions in PART A.

Do not bring any material into the examination room unless permission is given by the invigilator.

Candidates are allowed to bring in a copy of the Companies Act 1965 and the Companies (Amendment) Act 2007 (unannotated).

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 © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

CONFIDENTIAL 2 LW/APR 2010/LAW361/580

PART A

QUESTION 1

The articles of JJ Sdn Bhd (the company) provided that if no quorum was present at a meeting, the meeting would be adjourned to the following week and the members present would constitute a quorum. A recent extraordinary general meeting of the company was adjourned for lack of quorum. Two members attended the adjourned meeting. However, one of the members had no right to attend and to vote. Nevertheless a special resolution was passed.

Advise the company as to the validity of the meeting and the resolution passed. (6 marks)

QUESTION 2

Best Sdn Bhd (the company) has an authorised capital of RM5 million divided into five million shares of RM1,00 each. The company wishes to issue shares up to the full extent of the authorised capital.

Advise the company and explain the meaning of authorised capital. (6 marks)

QUESTION 3

Big Bank lends money to Basri. Basri gets. Gah Bhd to give security for the loan which is used by Basri to buy shares in Gah Bhd. Basri defaults in the repayment of the loan to Big Bank.

Advise Big Bank whether it can enforce the security given by Gah Bhd. (6 marks)

QUESTION 4

Mr. Deman, a smooth talker is an undischarged bankrupt. Not knowing this fact, Asure Bhd appointed him as a director to the company's board.

Discuss the validity of the appointment of Mr. Deman. (6 marks)

QUESTION 5

Explain the meaning of the 'proper plaintiff' rule in the case of Foss v Harbottle (1843)67 ER 189.

(6 marks)

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL


PARTB

QUESTION 1

a) Sam holds five shares out one hundred in a company. Sam's shares carries five votes and each of the remaining shares carries one vote. A resolution was passed by the company to increase the voting power of the remaining shares to five votes per share. Sam is not happy with this situation and seeks your advice to nullify the resolution.

Advise Sam. (10 marks)

b) Tony stole Murphy's share certificate and transferred the shares to Bernie, a bona fide purchaser, by forging Murphy's signature on the transfer form. Bernie was registered as a shareholder and received a new share certificate from the company. He later sold the shares to Cathy, but Tony's fraud was discovered and the company refused to register Cathy.

What is the legal position of Murphy, Bernie and Cathy? (10 marks)

QUESTION 2

The fact that a company goes into receivership does not inevitably lead to its demise. Receivership differs from liquidation in this respect.

In view of the above statement, compare and contrast the process of receivership from liquidation. Illustrate your answer with the relevant statutory provisions and decided cases.

(20 marks)



PARTC

QUESTION 1

Mick and Merle are the directors of Two MM Sdn Bhd (the company). The company specialises in importing and selling luxury cars. Both Mick and Merle are also the shareholders of the company and each holds 35 percent of the company's issued capital. The other shareholders are Remy, Martin and Cherrie, who each hold 10 percent of the issued capital.

The company has been performing very well and in the last five years has consistently made substantial profits. However, to date no dividends had been declared. Recently, Cherrie discovered that Mick and Merle have been squandering the funds of the company on matters not at all related to the well being of the company.

These include:

i) The purchase of a luxury yacht at the cost of RM1.5 million.

ii) The purchase of a holiday bungalow at Fraser's Hill at a cost of RM2 million.

iii) The granting of an interest free loan to Merle's sister, Marie, to the tune of RM1 million.

iv) The taking of unwarranted overseas trips under the guise of negotiating lucrative contracts on behalf of the company.

v) Making consistent withdrawals from the company's funds for their personal use.

When Remy, Martin and Cherrie (the minority shareholders) confronted Mick and Merle about the above transactions, they were told that it was within the powers of the directors to run the business of the company. They were further told that it was the prerogative of directors whether to recommend dividend or not and that they being minority shareholders have to accept the majority rule. Mick and Merle also indicated to them that according to the company's articles of association, they can be expelled if they caused trouble.

The minority shareholders seek your advice whether:

a) there have been any breaches of directors' duties, and

b) they can obtain any remedies under the Companies Act 1965.

Advise them. (30 marks)

END OF QUESTION PAPER


april 2010

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