CONFIDENTIAL LWIFEB 2023/LAW580 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE LAW OF ASSOCIATION II COURSE CODE LAW580 EXAMINATION FEBRUARY 2023 TIME : 3HOURS 15 MINUTES INSTRUCTIONS TO CANDIDATES 1 This question paper consists of two (2) parts PART A (3 Questions) PART B (1 Question) 2, ‘Answer ALL questions in the Answer Booklet. Start each answer on a new page. 3 Candidates are allowed to bring in the following statutes (unannotated): i) Companies Act 2016 li) Capital Market and Services Act 2007 (Act 671 4 Do not bring any material into the examination room unless permission is given by the invigitator. 5 Please check to make sure that this examination pack consists of: i) the Question Paper li) a four—page Appendix 1 iil) an Answer Booklet — provided by the Faculty 6 Answer ALL questions in English. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. This examination paper consists of 3 printed pages (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 2 LWIFEB 2023/LAW580 PARTA QUESTION 1 The Companies Act 2016 provides for judicial management and corporate voluntary arrangement as a corporate rescue mechanism to assist companies that are facing financial difficulties. Explain the features of these mechanisms to assist the companies in distress. (20 marks) QUESTION 2 With reference to statutory provisions and decided cases, discuss the scope of giving financial assistance and purchase by a company of its own shares. (20 marks) QUESTION 3 Mamu is a company secretary of Megah Teguh Sdn Bhd (‘the company’). He had forged the signature of Amma, one of the shareholders of the company and caused the share certificate to be issued in Mamu's name. He wanted to borrow money from Bank Merah Bhd (‘the bank’) and used the share certificate as security for the loan. The bank believed that Mamu is the ‘owner of the shares and granted him RM50,000 as a loan. ‘A few months later, Amma realised that her name was no longer in the company's Register of Members. Based on statutory provisions and decided cases, advise the relevant parties as to their likelihood of success to initiate the necessary action(s). (20 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 3 LWIFEB 2023/LAW580 PARTB QUESTION 1 a) b) ‘Abu and Otto hold 20% of the shares in Henfon Sdn Bhd ("the company”). Sudin and Nobita who are the directors of the company, hold the remaining 80% of the shares. Abu and Otto alleged that Sudin and Nobita have managed the company without giving regard to the interest of the minority shareholders. Dividends were not declared for the past seven (7) years, even though the company had made considerable profits. Instead, a massive portion of the profits was used to pay exorbitant fees to the directors. It was further alleged that Sudin and Nobita have caused the company to sell its land at Samarahan for only RM300,000 to Kristy, the sister of Sudin. The actual market value is RMS million Abu and Otto recently discovered that the company have invested in cryptocurrency. However, due to uncertain global economic situation, the investment took a plunge and the company suffered huge financial losses. The company's board did not have the necessary knowledge in that type of investment and did not consult any expert on the matter. With reference to the Companies Act 2016 and decided cases, advise Abu and Otto whether they can bring an action against Sudin and Nobita in the name of the company. They also wish to seek a remedy on their own behalf. (20 marks) “Its the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably careful, cautious auditor would use. What is reasonable skil, care and caution must depend on the particular circumstances of each case. An auditor is not bound to be a detective, or, as was said to approach his work with suspicion, or with a forgone conclusion that there is something wrong. He is a watchdog, not a bloodhound. He is justified in believing tried servants of the company in whom confidence is placed by the company. He is entitled to assume that they are honest and rely upon their representations, provided he takes reasonable care.” Lord Justice Lopes in Re Kingston Cotton Mill (1896) 2 Ch. 279 With reference to the above excerpts, critically discuss the scope of duty as an auditor in guarding the interest of shareholders of a company. (20 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA. CONFIDENTIAL,CONFIDENTIAL APPENDIX 1(1) LWIFEB 2023/L AW580 CASE LIST A A Akman & Son (Fla) Inc v Chipman [1988] 45 DLR (4) 481 Aas v Benham [1981] 2 Ch 244 ‘Abdul Rahim Bin Aki @ Mohd Haki v. Krubong Industrial Park (Melaka) Sdn. Bhd. & 5 Ors [1995] 4 CLU 55 ‘Adams v Cape Industries PLC [1990] Ch 433 Alagappa Chettiar v Coliseum Café [1962] MLJ 111 Ammonia Soda Co Ltd v Chamberlain [1918] 1 Ch 266 Annie Yeo v Senanayake [1963] MLJ 43 Avel Consultants Sdn Bhd v Mohd Zain [1995] 2. CLJ 11 B Badeley v Consolidated Bank [1888] 38 ChD 238, Bagel v Miller [1903] 2 KB 212 Bahia & San Francisco Railway Co (1868) LR 3 QB 584 Barnes v Young [1898] 1Ch 414 Belmont Finance Corp Ltd V Williams Furniture Ltd (No 2) [1980] 1 All ER 393, Bentley v Craven [1853] 18 Bear 75 Bevan v Webb [1901] 2 Ch 59 Bair v Bromley [1847] 2 Ph 354 Blyth v Fladgate [1891] 1 Ch. 337 Borland’s Trustee v Steel Bros & Co. Ltd [1901] 1 Ch 279 Briggs & Co, Re [1906] 95 LT 61 Bugle Press Ltd [1960] 3 All ER 791 c Caparo Industries PLC v Dickman & Ors [1990] 1 All ER 568 Carmichael v Evans [1904] 1 Ch 486 Carter v Whalley (1830) 1B & Ad 11 Chan King Yue v Lee & Wong [1962] 28 MLJ 379 Cheeseman v Price [1865] 35 Beav 142 Chung Khiaw Bank Ltd v. Hote! Rasa Sayang Sdn Bhd & Anor. [1990] 1 MLJ 356 Commissioner of Inland Revenue v Lebus [1946] 1 All ER 476 Court v Berlin [1897] 2 B 397 Cox v Coulson [1916] 2 KB 177 Crawshay v Maule (1818) 1 Swan 495 Credit Development Pte Ltd v IMO Pte Ltd [1993] 2 SLR 370 Customs & Excise Commissioner v Lord Fisher (1981) 2 All ER 262 Cutts v Holland [1965] Tas SR 69 D Dancker v Porter [1862] 1 WW (E) 313 Datuk Syed Kechik bin Syed Mohamed & Anor v The Board of. Trustees of the Sabah Foundation & Ors [1999] 1 MLJ 257 Daimler Co v Continental Tyre and Rubber Co [1916] 2 AC 307 Davis v Davis [1894] 1 Ch 393, (© Hak Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL APPENDIX 1(2) LWIFEB 2023/LAW580 = Ebrahimi v Westboume Galleries Ltd [1973] AC 360 Essel v Hayward [1860] 30 Beav 158 Estate Realities Ltd v Wignall [1992] 2 NZLR 615 Estmanco (Kilner House) Ltd v Greater London Council [1982] 1 WLR 2 F Featherstonhaugh v Fenwick [1810] 17 Ves 298 Floydd v Cheny [1970] Ch 602 Foss v Harbottle (1843) 67 ER 189 Fox v Clifton [1830] 6 Bing 766 French v Styring (1857) NS 357 G Garrett v Hooper [1973] Crim LR 61 Gee Hoe Chan Trading Co Pte Ltd [1991] 1 MLJ 137 Gibson v Tyree (1900) 20 NZLR 278 Gluckstein v Barnes [1900] AC 240 Goh Hool Yin v See Geok Heoh & Anor [1994] 1 MLJ 337 Greenhalgh v Ardene Cinemas Ltd [1951] Ch 286 H Hely-Hutchinson v Brayhead Ltd & Anor [1968]1 QB 549 Hock Hin Chan v Ng Kee Woo [1966] 1 MLJ 223 Hotel Jaya Puri Bhd v Hotel, Bar & Restaurant Workers [1980[ 1 MLJ 109 Howard v Patent Ivory (1888) 38 Ch D 156 Hup Aik Tin Mining Co v Kam Hoy Trading [1969] 1 MLJ 93 J Jacobs v Morris [1902] 1 Ch 816 Jackson v Midland Bank [1967] Lloyd's Rep 68 Jaya Medical Consultant Sdn Bhd v Island & Peninsular Bhd [1994] 1 AMR 381, [1994] 1 MLJ 520 Johore Para Rubber Co Ltd v Registrar of Companies Malayan Union [1948] MLJ 135 kK Keith Spicer Lid v Mansell [1970] 1 All ER 462 Kelapa Sawit (Teluk Anson) Sdn Bhd v Yeoh Kim Leng & Ors [1991] 1 MLJ 301 Kendall v Hamilton [1897] 4 App Cas 504 Keow Seng & Company v Trustees of Leong San Tong Kho Kongsi (Penang) Registered [1983] 2 MLJ 103 Kesar singh v Sepang Omnibus Co Ltd (1964) MLJ 122 Khoo Yoke Wah & Ors v Lee Choo Yam Holdings Sdn Bhd & Ors [1991] 1 MLJ Kong Thai Sawmill (Miri) Sdn Bhd, Re [1978] 2 MLJ 227 Koperasi Rakyat Bhd v Harta Empat Sdn Bhd [2000] 3 MLJ 81 © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL APPENDIX 1(3) LWIFEB 2023/LAW580 L Lagunas Nitrate Co Ltd v Lagunas Syndicate [1899] 2 Ch 392 Lee v Lee's Air Farming Ltd [1961] AC 12 Levy v Abercorries Slate and Slab Co (1887) 37 Ch D 260 Lim Kar Bee v Duofortis Properties (M) Sdn Bhd [1992] 3 CLJ 1667 Lim Phin Khian v Kho Su Ming [1996] 1 CLJ 529 Loch v John Blackwood Ltd [1924] AC 783 Lynch v Stiff [1943] 68 CLR 428 M Macaura v Northen Assurance Co Ltd [1925] AC 619 Malayan Banking Berhad v Lim Chee Leng & Anor [1985] 1 MLJ 214 Marra Development Ltd v BW Rofe (1977) 3 ACLR 185 Mercantile Credit Co Ltd v Garrod [1962] 3 All ER 1103 Michael Sim Hang Chuang v Syarikat Sri Puspa & Ors [2000] 6 MLJ 189 Miles v Clarke [1953] 1 All ER 779 Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch 258 N National Commercial Banking Co Ltd v Batty [1986] 160 CLR 251 National Westminster Bank v Spectrum Plus Ltd [2005] NB Menon v Abdullah Kutty [1974] 2 MLJ 159 Nowell v Nowell (1869) LR Eq 538 ° ‘Ong Keng Huat v Hongkong United Co Ltd & Anor [1961] MLJ 36 Ong Kian Loo v Hock Wah Trading Co & Ors [1990] 1 MLJ 315 Osman bin Haji Mohamed v Chan Kang Swi (1924) 4 FMSLR 292 P Pamaron Holdings Sdn Bhd v Ganda Holdings Bhd [1998] 3 MLJ 346 Panorama Developments (Guilford) Ltd v Fidelis Furiishing Fabrics Ltd [1971] 2 QB 711 Pearce v Foster [1886] 17 QBD 536 Pender v Lushington (1877) 6 Ch D 70 Percival v Wright [1902] 2 Ch 401 Petra Perdana Bhd v Tengku Dato’ Ibrahim Petra Tengku Indra Petra & Ors [2015] 8 CLJ 856 Peyton v Mindham [1972] 1 WLR 8 Philips Singapore Pte Ltd v Hang Jong Kwang & Anor [1989] 1 SLR 453 Piercy v Maciow Brothers (1909) 11 GLR 647 Polikinghorne v Holland [1934] 51 CLR 143 Precision Dripping Ltd v Precision Dripping Marketing Ltd [1985] 3 WLR 812 R Raffles Hotel Ltd v Malayan Banking Bhd (No 2) [1966] 1 MLJ 206 Re Smith and Fawcett Ltd. [1942] Ch 304 Re Yenidje Tobacco Co Ltd [1916] 2 Ch 426 Re Bahia and San Francisco Rail Co (1868) LR 3 QB 584 Regal (Hastings) Ltd v Gulliver. Regal (Hastings) Ltd v Gulliver [1942] UKHL 1 Ruben v Great Fingal Consolidated [1906] Ac 439 © Hek Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL APPENDIX 1(4) LWIFEB 2023/LAWS80 s Salomon v A Salomon & Co Ltd [1897] AC 22 Shim Fatt v Leila Road Bus Co (1957) SCR 3 Siew Inn Steamship Co Ex parte Ho Hong Bank Ltd, Re [1934] MLJ 180 Sivagami Achi v Ramanathan Chettiar & Anor [1959] MLJ 221 ‘Smith v Anderson [1880] 15 Ch D 247 ‘Snow v Milford [1868] 16 WR 654 Sterios Thomopulos & Anor v John Mandilas [1948] AC 12 Suasana Indah Sdn Bhd (@ members’ voluntary liquidation) v Ketua Pengarah Hasil Dalam Negeri [2006] 1 MLJ 539 Sukhinderjt Singh Muker v Arumugam Dewa Rajah [1998] 2 MLJ 117 T T Nallapiravy & Anor v Mahadevan & Anor [1978] 2 MLJ 119 Tan Mooi Liang v Lim Soon Seng & Ors [1974] 2 MLJ 60 Tan Sin Moh v Lebel Ltd [1988] 2 MLJ 52 Tan Teck Hee v Cheng Tian Peng (1916) 2 FMSLR 161 Tang Chok Ching v Wong Ik Tieng & Ors [1973] 2 MLJ 25 Tey Bok Choon v Tahansan Sdn Bhd [1987] 1 MLJ 433 Tay Guan Ho v Chin Huat Hin Co [1987] 2 MLJ 704 ‘Tendering Hundred Waterworks Co. v Jones [1903] 2 Ch 615 Trevor v Whitworth (1887) 12 App Cas 409 Twycross v Grant (1877) 2 CPD 469 u United Dominion Corporation Ltd v Brian Pty Ltd [1985] 157 CLR 1 United Malayan Banking Corp Bhd v Official Receiver and Liquidator of Soon Hup Seng Sdn Bhd [1986] 1 MLJ 75 v Varma v Oli Mohamed [1950] MLJ 80 w Wester National Bank of City of New York v Perez, Triana & Co [1891] 1 QB 304 White v Bristol Aeroplane Co [1951] Ch 65 Whitwell v Arthur [1865] 35 Beav 140, William Jacks & Co (Malaya) Ltd v Chan & Yong Trading Co [1964] MLJ 105 Wong Peng Yuen v Senanyake [1962] 28 MLJ 204 Wong Sang Giap & Ors v Wong Keng Giap & Ors [1999] 1 MLJ 551 Yenidje Tabacco Co Ltd, Re [1916] 2 Ch 426 @ Hak Cipta Universiti Teknologl MARA CONFIDENTIAL