LAW5201 (F) / Page 1 of 3

INTI INTERNATIONAL UNIVERSITY

BACHELOR OF ACCOUNTANCY (HONS)
FINAL EXAMINATION: AUGUST 2017 SESSION

Instruction: This paper consists of SIX (6) questions. Answer any FOUR (4) questions in the
answer booklet provided. All questions carry equal marks.

Question 1

Auto Sdn. Bhd. (“Auto”) was incorporated in February 2016 and have incorporated the changes
under the Companies Act 2016. The company specializes in all matters in relation to mechanical
auto problems and has a subsidiary company in Penang named Wheels Sdn. Bhd. (“Wheels”).
Joseph and his wife Lucia who are the first shareholders and directors of Auto do not interfere
with the management at Wheels. Three months ago several employees at Wheels sued the
subsidiary in court for the failure of providing proper safety equipment after several employees
were seriously injured at its workshop. A judgment order was obtained but the employees now
want to apply for the enforcement to be made against Auto; the parent company which has most
of the company assets.

With reference to the facts above, answer the following questions:

(a) Will the employees of the subsidiary company be able to successfully enforce the
judgment against Auto Sdn. Bhd.?
(15 marks)

(b) Assuming that your answer in (i) is an affirmative one (will be successful), advise Joseph
and Lucia if claims can be made against their personal assets as well.
(10 marks)

Question 2

Jacob intends to incorporate a private limited company and have hired Mona to assist him in the
incorporation of the company. Jacob informs Mona that as first shareholder of the company he
intends to name the business Jacobi Sdn. Bhd.

Prior to the incorporation of Jacobi, Mona had entered into a contract for the purchase of a
machine from Gadgets Sdn. Bhd. at RM50,000 on behalf of the company. As the company is in
need of a place of business, Mona had also sold a piece of land that she has inherited from her
family to the company at RM1.5 million which is RM500,000 more than its market value.

Jacobi was incorporated last month and during its first director’s board meeting, it was revealed
that Gadgets is claiming for the second payment for the machineries that were partially paid for
by Jacobi. The board of directors have also questioned the price of the piece of land purchased
by
the company
 LAW5201 (F) / Page 2 of 3

Answer the following questions:

(b) Explain the status of the pre incorporation contracts entered into between Mona and
Gadgets
(15 marks)

(c) Did Mona breach her duties as a company promoter?

(10 marks)

Question 3

Animations Sdn. Bhd. is a company that was incorporated in 2012. The company’s object
clauses provides that it only specializes in the design of animation cartoon characters for local
advertisements. Amelia and her husband Ricon are the sole shareholders, directors and are also
employed as animators of the company. Recently the company was approached by a local
production company for an animated film that is projected to be launched in 2020.

With reference to the facts above, answer the following questions:

(a) Explain the relevance of the doctrine of ultra vires.

(7 marks)

(b) Advise Animation Sdn. Bhd. if the company’s decision to produce an animated film will
be considered as ultra vires.
(10 marks)

(c) Advise Animations Sdn. Bhd. with reference to the provisions of the Companies Act 2016
how the company may be able to avoid being restricted by its own object clause.
(8 marks)

Question 4

“Following the changes in the Companies Act 2016, the articles of association now forms part
of the company’s constitution”

Discuss the relevance of the quotation above. Support your answer with the relevant cases and
sections.

(25
marks)
 LAW5201 (F) / Page 3 of 3

Question 5

Britney is the sole shareholder of Sushi B; a sushi restaurant in downtown Kuala Lumpur. The
business was managed by Mandy and Christina who are the directors of the company. The
recent slump in the food and beverage industry have caused a loss of profits for Sushi B. During
the board meeting Mandy had proposed to expand its business to incorporate the delivery
services of sushi to office premises.

This proposal received the support of Britney but was opposed by Christina who is of the
opinion that the freshness of the sushi will be compromised during delivery. To support her
proposal, Mandy has engaged the advise of senior marketing managers in the company and the
company’s auditors; all of whom are in support of the investment. Six months after the proposal
was approved, the project proved to be a failure. The company now has accumulated an
additional debt of RM15,000.

With regard to the facts above, answer the following:

(a) Explain the term “fiduciary” in the context of director’s duties.

(5 marks)

(b) Did Mandy breach her duties as director?

(15 marks)

(c) Assuming if Mandy did breach her duties as director, can Sushi B continue its operations
with Christina as the remaining sole director?
(5 marks)

Question 6

The directors of ABC Sdn. Bhd. seek your advise in the economic situation that the company is
currently facing. The company has been running at a loss but the directors do not want to
petition for a winding up as they are of the opinion that the company can still be salvaged.

Advise them on the following corporate rescue mechanism which may best suit the company

(a) Scheme of Arrangement.

(15 marks)

(b) Judicial Management.

(10 marks)

-THE END-
LAW5201 (F) / Page 4 of 3