UNIVERSITY KUALA LUMPUR (BUSINESS SCHOOL)
BUSINESS LAW EIB 20303
CONTINUOUS ASSESSMENT
CLASS: ME10
Prepared by:
Name: Suhaib Bin Rabuan
ID : 62212322014
Prepared for:
Encik Mohd Zawawi Bin Awang Nik
Question 1
It depends on the specific circumstances of the partnership between Miang and
ComMolot. Under the Partnership Act 1961, a partner is jointly and severally liable for
all debts and obligations of the partnership incurred while they are a partner. This
means that if Keladi sues Miang and ComMolot for the incident, both Miang and
ComMolot could be held liable for Keladi's injuries.
However, the Act also states that a partner is not liable for the acts of the other partners
if they have not authorized or participated in them. Therefore, if Miang can prove that
they were not involved in the decision to use the loaded prop gun and had no
knowledge of it, they may not be held liable for Keladi's injuries.
Under the Partnership Act 1961, Section 14 provides that each partner is an agent of
the firm and of the other partners with respect to the business of the firm, and that the
act of a partner, including executing a deed on behalf of the firm or doing any other
act, to conduct the business of the firm of which he is a member in the usual manner,
binds the firm and the other partners unless the partner so acting has no authority in
fact to act for the firm in the matter in question and the person with whom he is acting
has knowledge of the fact that he has no such authority.
This implies that Miang and the other partners would be obligated by his conduct and
would be held responsible if ComMolot or another member of the touring company
acted in the regular course of the company's business and Keladi was unaware that
he lacked the necessary power.
In decided cases, it has been held that in a partnership, all partners are jointly and
severally liable for the debts and liabilities of the partnership. In this case, "Kadir Bux
v. Kader Bux & Co." in 1952. The case concerned a disagreement between business
partners about how to dissolve their partnership and divide the firm's assets. According
to the court's ruling, when a partnership dissolves, its assets must be gathered and
used to settle its debts, with any remaining funds, if any, being allocated to the partners
in line with the provisions of the partnership agreement. In addition, the court ruled that
in the absence of a partnership agreement, the assets of the business must be divided
among the partners in line with the terms of the Partnership Act, 1932. The court
further ruled that even if a partner has retired or is not actively involved in the firm's
business, he is still responsible for the actions of the other partners. This means that
partners are bound by the conduct of other partners who are conducting the firm's
business in the usual manner.
Another example case, of "R. R. Chari v. G. D. Birla" AIR 1944 Bombay 270. The case
featured a disagreement over the dissolution of the partnership and the allocation of
the firm's assets between a partner and the firm. The partner was not allowed to make
a claim for the dissolution of the partnership and for the partnership's accounts, the
court said, because the company had not been dissolved in accordance with the
partners' agreement. The court further held that unless there is a provision in the
partnership agreement that permits dissolution on a partner's demand or unless the
partnership is at will and one of the partners gives notice of his desire to dissolve it, a
partner does not have the right to demand dissolution of a partnership. The court also
ruled that without a specific provision in the partnership agreement or the dissolution
of the partnership, a partner is not entitled to separate accounts of the partnership.
In conclusion, whether Miang can be held liable for Keladi's injuries will depend on the
specific facts of the case and whether Miang had knowledge or control over the actions
of ComMolot that led to the incident.
Question 2
An organisation with a distinct legal identity from its members, such as a corporation
or firm, is referred to as a body corporate. A body corporate is defined as a corporation
or any other body corporate formed under any written law under Malaysia's 2016
Companies Act. The Act lays forth the guidelines for the creation, filing, administration,
and dissolution of corporations and other legal entities in Malaysia.
Section 3 of the Companies Act 2016 of Malaysia defines a company as a "body
corporate" and sets out the requirements for its incorporation. Specifically, it states
that a company is a separate legal entity from its members, and has the capacity to
sue and be sued in its own name, acquire and hold property, and enter into contracts.
Section 19 of the Companies Act 2016 of Malaysia sets out the requirements for the
registration of a company, including the submission of the articles of association and
memorandum of association. In addition to this, the section also provides that the
memorandum and articles of association shall be signed by the subscribers in the
presence of at least one witness who shall attest the signature of the subscribers and
the witness shall also sign the memorandum and articles of association.
This section also states that the Registrar shall register the company and issue a
certificate of incorporation if he is satisfied that all the requirements of the Act have
been complied with, and that the proposed name of the company is not identical with
or too nearly resembles the name of any other company or business name registered
under any written law.
Section 122 of the Companies Act 2016 of Malaysia sets out the rules for winding up
and dissolution of a company. Specifically, it states that a company may be wound up
voluntarily or by the court. A voluntary winding up occurs when the members of the
company pass a special resolution to wind up the company, and the company appoints
a liquidator to distribute its assets and settle its debts. A winding up by the court, on
the other hand, occurs when the court makes an order to wind up a company based
on certain grounds provided in the Act, such as when the company is unable to pay
its debts, or if the company has been carrying on business for a fraudulent or illegal
purpose. In this case, a liquidator is appointed by the court to take charge of the
company's assets and settle its debts.
In decided cases, Re Konsortium Transnasional Berhad [1994]. This case dealt with
the question of whether a company that had been placed under judicial management
could be wound up. The court held that the company could be wound up, as the
provisions of the Companies Act 1965 (the previous version of the Companies Act)
did not prevent it.
In another example cases, RHB Bank Bhd v. Tan Sri Dato' Seri Vincent Tan Chee
Yioun & Ors [2018]. This case dealt with the question of whether a company that had
been placed under judicial management could be wound up. The court held that the
company could not be wound up, as it was still a going concern and had not been
dissolved.
In the case of Maxis Communications Berhad v. Skrin Media Sdn Bhd & Ors [2018].
This case dealt with the question of whether a company was liable for the actions of
its directors. The court held that the company was not liable, as the directors had acted
outside of their authority and without the knowledge of the company.
In conclusion, a body corporate is a distinct legal entity established under the
Companies Act 2016 that is capable of entering into contracts, owning property, and
suing or being sued in its own name. It also has its own legal obligations and rights.
The Act allows for many company kinds, and the courts have frequently affirmed the
idea of a distinct legal entity. in cases such as Re Konsortium Transnasional Berhad
[1994], RHB Bank Bhd v. Tan Sri Dato' Seri Vincent Tan Chee Yioun & Ors [2018] and
Maxis Communications Berhad v. Skrin Media Sdn Bhd & Ors [2018].
Question 3
A) Winding up is the process of closing down a company's operations and
dissolving it as a legal entity. The process is typically initiated by the
shareholders of the company, but it can also be ordered by the court. In a
winding-up process, the company's assets are sold, its debts and liabilities are
settled, and any remaining assets are distributed among the shareholders. After
the winding-up process is complete, the company is dissolved and removed
from the register of companies.
There are two types of winding up, voluntary winding up and compulsory
winding up. A voluntary winding-up is initiated by the shareholders of the
company, who pass a special resolution to wind up the company. A compulsory
winding-up is ordered by the court, and typically occurs when the company is
unable to pay its debts or if the company has been carrying on business for a
fraudulent or illegal purpose.
Winding up of a company is a serious matter and it is the last resort for the
company, as it brings an end to the life of the company and all its assets and
liabilities need to be settled before the company is dissolved.
B) A firm is wound up when it is dissolved and its assets are divided amongst its
creditors and shareholders. The Companies Act 2016 governs the process of
winding up a business, which is normally started by the court, the firm's
shareholders, or its creditors.
A company's dissolution procedure may be divided into a number of steps. First
is Conducting the winding-up procedure. This can be done voluntarily by the
company's shareholders adopting a specific resolution or compelled by a court
order. Secondly, A liquidator will be appointed by the court after the winding-up
procedure has been started, and this person will be in charge of overseeing the
procedure. Thirdly is Asset collection and realisation. The liquidator's initial
responsibility is to collect and realise the company's assets, including real
estate, stock, and machinery. The revenues from the sale of these assets are
used to settle the company's obligations. Next is Investigation of the company's
affairs. In order to make sure that the assets are allocated equitably among the
creditors and shareholders, the liquidator will also conduct an investigation into
the company's affairs. This entails looking through the business' financial
records, looking into any shady transactions, and checking sure the business
hasn't been operating while it was bankrupt.
The next step is Debt repayment. The liquidator will settle the company's
obligations with secured creditors first, followed by preferential creditors, and
then unsecured creditors. Next step is Distribution of any remaining assets.
Any remaining assets are allocated among the company's shareholders, often
in accordance with their ownership stakes. For the last step is Dissolution of the
company. The corporation is dissolved and ceases to be a legal entity after all
of the assets have been dispersed and all obligations have been settled.
C) 1. Insolvency: The company is unable to pay its debts as they come due and is
unable to continue its operations. Insolvency refers to a financial state in which
a company is unable to pay its debts as they come due, and is unable to
continue its operations. This can occur for a variety of reasons, such as poor
financial management, economic downturns, or increased competition. In
cases of insolvency, a company may be forced to liquidate its assets or
restructure its debt in order to pay off creditors. In some cases, the company
may be able to continue operations under the protection of the court through a
bankruptcy proceeding.
2) Loss of business: The company is no longer able to generate sufficient
revenue to cover its expenses and maintain profitability. Loss of business refers
to a situation in which a company is no longer able to generate sufficient
revenue to cover its expenses and maintain profitability. This can occur for a
variety of reasons, such as changes in market conditions, increased
competition, or a decline in consumer demand for the company's products or
services. When a company experiences a loss of business, it may need to take
steps such as cutting costs, diversifying its product or service offerings, or
finding new markets in order to regain profitability. In some cases, a company
may be unable to recover and may have to shut down its operations.
3) Change in ownership: The company's ownership changes and the new
owner decides to discontinue the business. Change in ownership refers to a
situation in which the ownership of a company is transferred from one person
or group to another. This can happen through a variety of means such as a
sale, merger, or acquisition. When a change in ownership occurs, the new
owner may have different goals or plans for the company than the previous
owner. In some cases, the new owner may decide to discontinue the business
or make significant changes to its operations, which can result in the loss of
jobs, closure of certain units or business lines and changes in company culture.
This can have a major impact on the company's employees, customers, and
other stakeholders.
D) 1. Voluntary winding up: This is when the company's shareholders or directors
decide to voluntarily wind up the business.
Voluntary winding up, also known as voluntary liquidation, refers to the process
by which a company's shareholders or directors decide to voluntarily close the
business and liquidate its assets. This process is usually initiated when the
company is no longer able to continue operating, and it is deemed the best
course of action by the shareholders or directors. In a voluntary winding up, a
liquidator is appointed to oversee the sale of the company's assets and
distribution of the proceeds to the creditors and shareholders. Once the
liquidation process is complete, the company's legal existence will be dissolved.
Voluntary winding up can be done in two ways: Members voluntary winding up
(MVWU) and Creditors voluntary winding up (CVWU).
2) Compulsory winding up: This is when a court orders the winding up of the
company due to insolvency or non-compliance with legal requirements.
Compulsory winding up, also known as compulsory liquidation, refers to the
process by which a court orders the winding up of a company due to insolvency
or non-compliance with legal requirements. This process is initiated by a
creditor, a shareholder or the government through a petition to the court. The
court, after being satisfied with the grounds of the petition, will order the winding
up of the company and appoint an official liquidator to oversee the liquidation
process. The liquidator's primary responsibility is to collect and realize the
company's assets, and distribute the proceeds among the creditors according
to their respective priorities as per the law. Once the liquidation process is
complete, the company's legal existence will be dissolved. This type of winding
up is also known as court-supervised liquidation.
3) Members' voluntary winding up: This is a voluntary winding up process
initiated by the members of the company, where it is proposed that the company
will be able to pay its debts in full within 12 months after the commencement of
the winding up.
A members' voluntary winding up is a process where the members of a
company voluntarily decide to dissolve the company and wind up its affairs.
This type of winding up is usually initiated when the company is financially
sound and able to pay off its debts within 12 months of the winding up process
beginning. This is in contrast to a compulsory winding up, which is initiated by
creditors when a company is unable to pay its debts.
4) Creditors' voluntary winding up: This is a voluntary winding up process
initiated by the company's creditors, where the company is unable to pay its
debts as they become due.
Creditors' voluntary winding up is a type of liquidation process where a
company's creditors initiate the process because the company is unable to pay
its debts as they become due. This process is voluntary, meaning that the
company's management agrees to the liquidation and works with the creditors
to settle the company's outstanding debts. This process is typically used as a
last resort when other options for resolving the company's financial difficulties
have been exhausted.
5) Court-supervised winding up: This is when the court appoints an official
liquidator to oversee the winding up process and ensure that the company's
assets are distributed fairly among the creditors.
In court-supervised winding up, also known as compulsory liquidation, a court
appoints an official liquidator to oversee the process of dissolving a company
and distributing its assets among creditors. This type of winding up usually
happens when a company is insolvent and unable to pay its debts, or when
there are disputes among shareholders or directors. The official liquidator's role
is to take control of the company's assets, investigate its affairs, and ensure
that the assets are distributed in a fair and orderly manner among the creditors.
Question 4
Under the Malaysian Companies Act 2016, there are a number of corporate
rescue methods that may be utilised to prevent Mee Maggi Sdn. Bhd. from
declaring bankruptcy or liquidation.
1) Scheme of Arrangement: A scheme of arrangement is a legal process used
in the United Kingdom and some other countries to restructure a company's
debt or capital. It is a court-approved agreement between a company and
its creditors or shareholders that is used to compromise or alter the rights of
the creditors or shareholders. The process allows a company to avoid
liquidation or bankruptcy by coming to a formal agreement with its creditors
or shareholders to pay off debt over a period of time or to change the terms
of the company's capital structure. The scheme must be approved by the
court and a majority of the company's creditors or shareholders.
2) Voluntary Arrangement: A voluntary arrangement (VA) is a formal, legally
binding agreement between an individual (or a partnership) and their
creditors to pay off all or a portion of their debts over a set period of time. It
is a type of insolvency procedure in the United Kingdom, that allows
individuals to deal with their unsecured debts in a structured and controlled
manner. A VA is usually proposed by the individual themselves, but can also
be proposed by an insolvency practitioner on their behalf.
A VA is a way to avoid bankruptcy, it stops creditor's action, it allows the
individual to keep their assets, and it offers a more affordable way to pay off
debts. It requires the approval of at least 75% of the creditors by value. Once
approved, the individual makes regular payments to a supervisor, who
distributes the money among the creditors. After the agreed period, the
remaining debt is written off.
3) Corporate Debt Restructuring (CDR): Corporate Debt Restructuring (CDR)
is a process by which a company renegotiates the terms of its debt with its
creditors in order to improve its financial position and avoid default or
bankruptcy. The goal of CDR is to achieve a sustainable debt structure that
allows the company to continue its operations and meet its financial
obligations.
It looks that Mee Maggi Sdn. Bhd. is having financial issues as a result of
the failure of its cooling and air-conditioning equipment. Because the broken
system was an outdated model that couldn't be fixed. The new industrial
state-of-the-art system was priced at RM7,000,000.00 inclusive of
installations and was suitable for her factory. The installation procedure will
take four (4) weeks to complete before full functioning. The result has been
a loss of clients and income, and the business is now in danger of going out
of business.
In this case, the business may choose to restructure its obligations with its
creditors through a voluntary arrangement or a plan of arrangement. The
business can put up a proposal to restructure its obligations, such as a debt
reduction, a debt payment postponement, or a debt conversion into equity.
This would enable the business to go on while lowering its debt.
As an alternative, the business might restructure its debts using the CDR
framework and a facilitator. The facilitator would then put the plan into effect
when the firm and its creditors reached an agreement on how to restructure
the company's debts. This can make it easier for the business to run and
pay off its debt.
These are complex legal processes that require professional guidance and
legal expertise. It is advisable to consult with a lawyer or an insolvency
practitioner before proceeding with any of the above options. They will be
able to advise on the best course of action for the specific circumstances of
the case and guide the company or individual through the process. They will
also ensure that all legal requirements and procedures are met, and that the
rights of the creditors or shareholders are protected. It is important to have
a clear understanding of the process and the potential outcomes before
making any decisions.
