Business And Company Law Question 2016 September

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MIAQE SEPTEMBER 2016

SECTION A QUESTION 1 (a)

Malaysian law is generally classified as written and unwritten law. Briefly describe any three sources under the classification stated above. (5 marks)

(b)

Under the Contracts Act, 1950, a person who is not of the age of majority may not have the capacity to enter into a valid contract. State three (3) situations whereby a contract entered into by a minor may be enforceable. (6 marks)

(c)

Under Malaysian law, Explanation 2 of Section 26 of the Contracts Act, 1950 provides that “consideration need not be adequate”. Explain the meaning of this expression with the support of relevant cases. (3 marks)

(d)

With reference to the Sale of Goods Act, 1957, explain the following: (i)

Implied warranty that the buyer shall have and enjoy quiet possession of the goods; (3 marks)

(ii) Implied condition that in a sale of goods by description, the goods must correspond with the description. (3 marks) (Total: 20 marks) QUESTION 2 (a)

What is meant by the term ‘agency’ and state the various types of contracts of agency recognized under the law. (5 marks)

(b)

Explain how an agency by estoppel can be created. (5 marks)

(c)

Dean engaged Martin to make a false statutory declaration claiming that Dato’ Man is a compulsive gambler as well as a womaniser. This is done purposely to destroy Dato’ Man’s reputation and is totally untrue. Such an act is defamatory in nature as well as an offence under the law. Dean agreed to pay Martin a large sum of money and will indemnify Martin against all consequences of the act. Acting upon this agreement, Martin made the statutory declaration. Dato’ Man successfully sued Martin for defamation and damages amounting to RM50,000 which Martin paid.

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Martin now, wants to recover from Dean the RM50,000, the payment promised to him and his legal expenses incurred in defending the suit. Advise Martin whether he may succeed. (7 marks) (d)

State three (3) exceptions to the general principle that an agent cannot delegate the authority given to him by his principal. (3 marks) (Total: 20 marks)

QUESTION 3 (a)

Adi and Zain were partners in a legal firm. During the course of their partnership, Adi and Zain had both agreed to purchase two cars, using the firm’s money. These cars were meant to facilitate the day to day running of the firm’s business. The cars were each registered under Adi and Zain’s names. Adi recently died and Zain decided to retire from the business. Adi’s son, acting for his estate, is now claiming that the car is a property of the partnership and requires Zain to return it. Explain whether Zain may keep the car. (6 marks)

(b)

Explain how a partnership may be considered to exist, even if there is no partnership agreement. (4 marks)

(c)

With reference to reported cases, lay down the elements necessary to establish professional negligence. (10 marks) (Total: 20 marks)

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SECTION B QUESTION 4 (a)

Sarah, Telvi and Mey intend to set up a company named STM Sdn. Bhd. They have come to you and seek your explanation on the following:

(i)

What are the characteristics of a company after a certificate of incorporation is issued; AND (5 marks)

(ii)

the main characteristics of an exempt private company. (3 marks)

(b)

Explain briefly how a company may alter its Articles of Association and state the restrictions on the alteration conferred by Companies Act 1965. (6 marks)

(c)

The Articles of Association of Apel Sdn. Bhd. states that all directors must acquire and hold at least 3,000 shares in the company, within six months of their appointment. On the company's last annual general meeting (5 months ago), Apel Sdn. Bhd. had appointed Faly as one of its directors. Lucas the managing director of Apel Sdn. Bhd. wishes to know whether Faly is disqualified to act as a director because he has not to date acquired the required number of shares. Advise Lucas. (6 marks) (Total : 20 marks)

QUESTION 5 (a)

Nagaria Sdn Bhd was incorporated in February 2014. The first annual general meeting (AGM) of the company was held in June 2016. Samy, Sam and Sally are members of Nagaria Sdn. Bhd. Samy and Sally attended the meeting but Sam did not attend as he did not receive notice of the meeting. The company claims that no notice was sent to Sam due to an accidental omission. Sally, a minority member of a company, is unhappy that the company had not sent her a copy of minutes of meeting. Nagaria Sdn. Bhd. had ignored three telephone calls that Sally had made to the company asking that a copy of the minutes be sent to her by post.

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Samy, Sally and Sam, seek your advice on the following:

(i)

Whether the company had breached the Companies Act 1965 in holding an AGM in 2016. (4 marks)

(ii)

Whether Sam can challenge the validity of the meeting on the ground that he did not receive notice of the meeting. (3 marks)

(iii)

Whether Sally is entitled to receive a free copy of the minutes. (3 marks)

(b)

In relation to company law:

(i)

Describe the nature of a floating charge as a form of security; AND (3 marks)

(ii)

explain the disadvantages of a floating charge as a form of security. (7 marks) (Total : 20 marks)

QUESTION 6 (a)

Pearise Sdn. Bhd. wishes to appoint one of its directors, Sim, as its company secretary. Sim holds a master’s degree in education administration from a local university, but has no previous experience as a company secretary.

Advise the company, with reference to the Companies Act 1965, as to: (i)

The qualifications required to become a company secretary; (3 marks)

(ii)

The disqualifications, of a company secretary; AND (3 marks)

(iii)

whether Sim is qualified to be appointed as the company secretary of Pearise Sdn. Bhd. (2 marks)

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MIAQE SEPTEMBER 2016

Explain the main advantages and disadvantages of carrying on business through the medium of a company limited by shares. (4 marks)

(c)

In relation to insolvency law and the Companies Act 1965: (i)

The Companies Act 1965 permits the court to provide for certain matters in any order to facilitate a reconstruction or amalgamation of companies. State any four (4) of those matters. (4 marks)

(ii)

Explain briefly the differences between a scheme of arrangement and a reconstruction of a company. (4 marks) (Total : 20 marks)

END OF QUESTION PAPER

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