Company Law

Question 1

Company limited by shares

Answer 1

Section 10(1) CA 2016

Question 2

2. Company limited by guarantee

Answer 2

Section 45(1) CA 2016

Question 3

3. Unlimited company

Answer 3

Section 10(4) CA 2016

Question 4

No company may be formed limited with guarantee and share capital.

Answer 4

Section 12 CA 2016

Question 5

Private companies have restrictions where only a maximum of ____ members can invest.

Answer 5

50

Question 6

A public company must have a minimum of _____ directors and a private company must have a minimum of____ director

Answer 6

2 , 1

Question 7

Private companies are not required by law to hold an AGM. True / False

Answer 7

True

Question 8

Public companies no need to hold an AGM. True/ False

Answer 8

False

Question 9

The 2 important documents of a company is:

Answer 9

MOA and AOA

Question 10

A company is specifically referred to as a __________.

Answer 10

legal person

Question 11

S 20 CA 2016 which provides that the company incorporated shall _______ and _______.

Answer 11

have a legal personality separate from that of its members and continue in existence until it is removed from the register.

Question 12

In Salomon v Salomon & Co Ltd the Court held _____

Answer 12

that the debts of the company were it is own and not those of the members.

Question 13

Section 21(1) CA 2016 there are five effects of incorporation:

Answer 13

i. liability of members is limited
ii. can enter into a contract
iii. can sue and be sued in its name
iv. gain the ability to own land or property
v. has a perpetual succession

Question 14

When the name of the co does not appear in any instrument issued on behalf of the company. If the company fails to honour cheques, then the person who signs will be liable.

Answer 14

Section 30 of CA 2016

Question 15

________________ when debts are contracted at the time the company cannot repay.

Answer 15

Section 539(3) of CA 2016

Question 16

______________ when the company is involved in fraudulent trading the Court will allow lifting the veil of incorporation.

Answer 16

Section 540(1) of CA 2016

Question 17

___________ when dividends are paid out of capital the Court will allow lifting the veil of incorporation.

Answer 17

Section 131 of CA 2016

Question 18

_________________ defines the word ‘director’ as officers of the company responsible to manage the company.

Answer 18

S 2 CA 2016

Question 19

________ is a person who directs or instructs the directors of a company to follow.

Answer 19

Shadow director

Question 20

A director who has management responsibilities.

Answer 20

Executive director

Question 21

A bankrupt cannot be a director.

Answer 21

S198 of CA 2016

Question 22

S 206 of CA 2016

Answer 22

Removal of director by way of ordinary resolution and to issue special notice within 28 days.

Question 23

Section 213 of the Companies Act 2016 provides that directors must:

Answer 23

• at all times exercise their powers for a proper purpose and in good faith in the best interest of the company; and
• exercise reasonable care, skill and diligence.
• Directors’ duties are owed to the company as a whole and are not owed to individual shareholders or other stakeholders such as employees and creditors. It is a company that decides whether or not to take action against a director for breach of duty and any damages or compensation received as a result are payable to the company.
• All director’s transactions with third parties, acting in good faith are deemed to be free of any limitations under the company’s constitution. If the transaction is with a connected person with the director, then the transaction is voidable by the company.

Question 24

________ the requirement of a person in a position to act in good faith and honesty on behalf of the company

Answer 24

Fiduciary Duties

Question 25

Duty to exercise power in good faith and in the interest of the company.

Answer 25

Re W & M Roith Ltd

Question 26

Duty to avoid conflict of interest

Answer 26

Cook & Deeks

Question 27

Duty to act for proper purposes

Answer 27

Re Duomatic Ltd

Question 28

Explain the rule on duties of skill, care and diligence

Answer 28

The rule is that the director does not have to possess any skill for the job and the fact that he is unskilled is not a breach of contract. The director is under the duty to exercise the power using the level of skill he has. If he uses less than the level of skill that he has, he is in breach of this duty.

Question 29

Section 214 CA 2016 provides ____________

Answer 29

as a director if he: * makes the business judgment for a proper purpose and in good faith; * does not have a material personal interest in the subject matter of the business judgment; * is informed about the subject matter of the business judgment to the extent that he reasonably believes to be appropriate under the circumstances; * reasonably believes that the business judgment is in the best interest of the company

Question 30

Remedies for breach of duties are ______

Answer 30

i. The company may sue for damages or the return of specific property ii. The company may claim any secret profit that the director made. iii. The exercisable of the power which in breach of the director’s duties may be declared to be invalid

Question 31

Shareholders rights are:

Answer 31

o The right to sell their shares, o The right to vote on the directors nominated by the board, o The right to nominate directors. o The right to dividends if they are declared, o The right to purchase new shares issued by the company, and o The right to what assets remain after a liquidation.

Question 32

In Malaysia, a company can either be wound up _________________

Answer 32

voluntarily or compulsorily

Question 33

Advantages of voluntary winding up –

Answer 33

o allows for fair distribution of the company’s assets among the shareholders. o removes a loss-making business from the industry. o allows for proper investigation to discover the cause of the company’s financial troubles. o identifies any wrongdoing. o holds those at fault accountable.

Question 34

______________ up takes place if a company cannot settle its debts.

Answer 34

Compulsory winding

Question 35

_____ are independent entities that are mandated to oversee the winding up of a company.

Answer 35

Liquidators