Ques�on

Alpha and Omega Berhad are a company which is registered under the Companies Act 1965. The
company has as its sole object, the impor�ng, expor�ng and sale of all kinds of plas�c wares. Jabez
is its chief execu�ve officer. The ar�cles of the company provide among other things that Rebecca
shall be the legal officer of this company and every member shall have one vote per share in any
mee�ng.

a. The company wishes to extend its business to also include the impor�ng and expor�ng of
glass wares. Advise the company whether it could alter the company’s objects for the
purpose stated above.

b. Whether it will face any legal problem if it enters a contract with the Penang state
Government to build a third link linking the island of Penang to the mainland.

c. The company wants to appoint Zenes to be the legal officer of the company instead of
Rebecca.

Advise the company if it could do so.

Introduc�on

- The company named Alpha, Omega has an objects clause- to import and export, sale
all kinds of plas�c wares.
- The issues concerned are – the validity of an objects clause, the altera�on of the
company’s cons�tu�on and the posi�on of the legal officer (the enforcement of the
company’s cons�tu�on)
- Transi�onal provisions - s 619(3) CA 2016: for companies registered under CA 1965-
Any law policy that was passed under the old law, will remain valid. – Objects Clause
that was passed under the CA 1965- s�ll valid

a. The company wishes to extend its business to also include the impor�ng and expor�ng of
glass wares. Advise the company whether it could alter the company’s objects for the purpose
stated above.

- 1. By the company
- S 36 CA 2016: company may amend its cons�tu�on by passing a special resolu�on
(not less than 75%) unless the cons�tu�on prohibits any amendments.
- 2. By the Court
- S 37 CA 2016: where the court is sa�sfied that it is not prac�cable to amend the
cons�tu�on following the procedure stated under the Companies Act / cons�tu�on
itself. Applica�on for the order from the court needs to be made by a director or any
member.
- OTF, the act of altering the company’s cons�tu�on was to widen the companies’
ac�vi�es- business. This can be done via the above procedure.
- May argue that it is for the company’s long-term interest.

b. Whether it will face any legal problem if it enters into a contract with the Penang state
Government to build a third link linking the island of Penang to the mainland.

- This act will go against the company’s objects clause (null and void)
- Explain the concept of Objects Clause under English Law
- Ashbury Carriage and Iron Company Limited v Richie (1875) (HOL)- A breach of
objects clause will render transac�on null and void/ultra vires.
- AG v Great Eastern Railway HOL 1880- If the transac�on is “incidental” it will be a
valid transac�on.
- If the objects clause is dra�ed in wide terms- it can be a valid transac�on.
- HA Stephenson & Son Ltd v Gillander, Arbuthnot & CO (1931) 45 CLR 476; ‘to carry
on any other business whether manufacturing or otherwise as the company may
deem expedient.’
- Third Schedule, Clause 1.
- “To carry on any other business which may seem to the company capable of being
conveniently carried on in connection with its business or calculated directly or
indirectly to enhance the value of or render profitable any of the company’s property
or rights.”
- The CA 1965 was known to take on a wide/liberal interpreta�on of the objects
clause.
- Common law: to determine whether the company has acted ultra vires which
renders an act void ab ini�o.
- Modern approach: liberal interpreta�on
- Sec�on 39 CA 2016
- No person shall be deemed to have no�ce or knowledge of the contents of the
cons�tu�on or any other document rela�ng to a company, due to the fact—
(i)that the cons�tu�on or document has been registered by the Registrar, or
Companies.
(ii) that it is available for inspec�on at the registered office of the company, with
the excep�on of documents rela�ng to instrument of charges.
- OTF, if the company enters into a contract with the Penang state government, to
build a third link. Then it is s�ll a valid transac�on under S 39 CA 2016.
- The CA 2016 does not prescribe the consequences of a transac�on outside the
company’s objects clause. Thus, the consequences of an ultra vires transac�on are
uncertain.
- Drawing from the provisions in the Act, specifically s21 and 39, it is submited that a
third party dealing with a company can assume that the company has full capacity to
carry on or undertake any business or ac�vity. (S 21 – provides that a company is a
body corporate and may sue/be sued, acquire property, to do any act which it may do
or enter into a transac�on)
- This is because s39 provides that the doctrine of construc�ve no�ce applies only to
documents rela�ng to instrument of charges. No person shall be deemed to have
no�ce or knowledge of the contents of the cons�tu�on, or any document (other than
charges) related to the company which has been registered by the ROC or which is
available for inspec�on at the company’s registered office.
- Thus, a third party dealing with a company can rely on s21 and 39 and assume that
the transac�on in ques�on is within the capacity of the company, for the company
has full capacity to carry on or undertake any business or ac�vi�es.

c)The company wants to appoint Zenes to be the legal officer of the company instead of
Rebecca.

- OTF, the company cons�tu�on provides that Rebecca shall be the company’s legal
officer.
- S 33 (1) CA 2016: The cons�tu�on shall bind the: -
o the company
o Its directors and
o Its members
- As if the cons�tu�on has been signed and sealed by each member and contained
covenants on the part of each member to observe all the provisions of the
cons�tu�on.
- Appointment of legal officer
- Eley v Posi�ve Govt Security Life Assurance (1875) – the company’s ar�cle states Mr
Eley should be the company’s solicitor. When the company ceased to employ him –
he sued to enforce the ar�cle – he failed – statutory contract is deemed contract only
as between the company and its members.
- Members of the company may seek to enforce the company’s cons�tu�on, but it can
only be enforced by members of the company and not by outsiders.
- Rebecca will need someone to enforce the company’s cons�tu�on on her behalf as
the facts are silent if she is a member of the company.