BBBL 2074 Business & Corporate Law Coursework 2
APPENDIX A: COVER PAGE
TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE
FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
ACADEMIC YEAR 2019/2020
BBBL 2074 BUSINESS & CORPORATE LAW
COURSEWORK 2
PROGRAMME: RAC – BACHELOR OF ACCOUNTING (HONOURS)
YEAR 2 SEMESTER 1
TUTORIAL GROUP No: 10
TUTOR: MR. CHONG WAI KUAN
WORD COUNT: 1209
No. Group Member’s Name Student ID No.
1 CHONG CHEE FENG 19WBR06981
2 LAI VIVIEN 19WBR07074
3 LIM JIA HUI 19WBR07142
4 TAN JUI PENG 19WBR07260
5 TING JIA WEI 19WBR07309
SUBMISSION DATE: 16 July 2019
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BBBL 2074 Business & Corporate Law Coursework 2
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BBBL 2074 Business & Corporate Law Coursework 2
APPENDIX B: PLAGIARISM STATEMENT
TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE
FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
ACADEMIC YEAR 2019/2020
BBBL 2074 BUSINESS & CORPORATE LAW
COURSEWORK 2
We, in the group and individually, confirm that the submitted works are all our own and are in
our own words.
Name Student ID No. Signature
1. CHONG CHEE FENG 19WBR06981
2. LAI VIVIEN 19WBR07074
3. LIM JIA HUI 19WBR07142
4. TAN JUI PENG 19WBR07260
5. TING JIA WEI 19WBR07309
Programme: RAC – BACHELOR OF ACCOUNTING
Year 2 Semester 1
Tutorial Group: 10
Date: 16 July 2019
TABLE OF CONTENT
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BBBL 2074 Business & Corporate Law Coursework 2
No Title Pages
1 Cover page – Appendix A 1
2 Turnitin Report 2
3 Plagiarism Statement – Appendix B 3
4 Table of Contents 4
5 Content
Question 1
(a) 5-6
(b) 6-7
(c) 7
Question 2
Chong Chee Feng 8
Lai Vivien 9
Lim Jia Hui 10
Tan Jui Peng 11
Ting Jia Wei 12
6 References 13
7 Group Members Evaluation Form – Appendix C
8 Marks Record – Appendix D
9 Assessment feedback – Appendix E
Question 1
(a) The company is concerned with the challenges it might faced if it converts to a
public limited company. Advice the company on any FIVE (5) possible
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BBBL 2074 Business & Corporate Law Coursework 2
challenges faces by a public limited company.
(10 marks)
The challenge that might face by a public limited company is the more requirements of legal
and regulatory in order to protect the shareholders. It is governed by various Companies Act,
rules and regulations. For instance, the company needs to have at least two company directors
and a qualified company secretary. The company will also need to follow the rules of the
market if the company’s shares are listed. Complying these additional rules will drain on
time, effort and cost (Korchak, 2016).
Besides, the challenge that might face is ownership and control issues. There is a possibility
that the owners and directors will lose control of the company’s direction. This is because it
is harder to control who is a shareholder of the company and who the directors accountable
to. If the shareholders hold more than 50% of shares of the company, there is a chance for the
shareholders to take over the ownership and eject the owner from the company. There is also
a possibility that the directors of the company will be eject when another directors can gather
enough supporter (Smith, 2019).
Next, the disadvantage of the public limited company is the higher level of transparency
required Detailed information in the public domain can be obtained from the Companies
House. The company need to submit a summary of the account, but they are unable to do so.
If they have a more complete account which means they have to disclose to the public about
the company affairs, performance and the information of the company. The transparency is
higher than other public companies. If disclosed to the public, which is allowing the
competitor to accurately know the financial statement of the company, how many profits and
loss the company is experiencing (Korchak, 2016).
Moreover, the disadvantages are the takeover. Since the transparency of the company is high,
the public can buy stocks and there is no limit. Therefore, if anyone has the intention to take
over the company, they may purchase a large number of stocks so they have the right to
speak on the board meeting. However, the company may take over by a group or an
individual after the company is listed. In the worst case, if the majority of shareholders
agreed to acquire the company it may become vulnerable to hostile takeovers. Since the share
freely transfers, the potential bidders can establish equity before starting a bid (Johnson,
2017).
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BBBL 2074 Business & Corporate Law Coursework 2
Last but not least, the startup cost of a public limited company is expensive. Public limited
company is very complexity, they need to incur a lot of costs to start up their business. For
example, they must hire staff, advisers, investment banks and securities lawyers. Other than
that, the minimum financial commitment of a public limited company is the highest. When
the company start to operate their business, the company must start with a nominal share
capital of at least £50000, at least 25% was paid. Which means at least £12500 must be
devoted to the business. However, the cost of formation of a company may also be higher,
especially the requirement of the company is complex than others (Korchak, 2016).
(b) Advise the company whether it can approve the loan to its director under the
Companies Act 2016. (10 Marks)
The issue above is whether Overtime Sdn. Bhd. can approve the loan to Peter who is director
under Companies Act 2016.
According to Section 224 Companies Act 2016, a company shall not make a loan, enter into
guarantee or provide any security to its director of a company which is a related company.
There are four exceptions under section 224. One of the exceptions is expenditure incurred
by him for the purposes of the company or to enable him to properly perform his duties. It is
possible for the company to provide funds to the directors to perform his duties as an officer
of the company. The next exception is the director is a full time employee and the loan is
given to enable him to purchase a home. Moreover, the exception is the loan is made
pursuant to a scheme for making loans to employees and the director is engaged in full time
employment with the company. The last exception is company is an exempt private
company.
A contravention of section 224 will result in the 3 circumstances. One of the circumstance is
the directors who authorized the loan will be liable to indemnify the company against any
loss arising from the contravention. The second circumstance is such directors will also be
guilty of an offence and will face a fine or imprisonment or both. The last circumstance is the
company nevertheless can recover the loan or the amount for which it becomes liable under
the guarantee as well as the security given.
By applying Section 224 Companies Act 2016, Overtime Sdn. Bhd. cannot approve the loan
worth RM 3,500,000 to its directors to purchase land. However, if Peter meets any one out of
three exceptions in Section 224, loan can be provided to the directors to purchase the land
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BBBL 2074 Business & Corporate Law Coursework 2
In conclusion, Overtime Sdn. Bhd. is not able to approve the loan for its directors to purchase
a piece of land in Pahang unless he is meets the requirement of Section 224.
(c) Advise the company whether it can purchase the land from Ben under the
Companies Act 2016. (10 Marks)
The issue here is whether the company is able to purchase the land from its director, Ben, to
expand its business.
Under section 221(1), any director who intend to propose a contract to its company has to
disclose his or her interest to the board of directors as soon as possible.
Under section 223(1)(a) of companies act 2016, a company is unable to acquire an asset or
property of a substantial value. In the companies act section 223(3), the substantial value is
defined as a value exceeds 25% of total assets of the company, a value exceeds 25% of net
profit of the company or a value that exceeds 25% of the issued share capital of the company,
whichever is the highest.
Furthermore, section 228(1) state that a director shall not dispose his or her non-cash assets
of requisite value to its company unless the transaction is made with the approval of
shareholders in the general meeting.
According to the section above, under section 221(1) if Ben who is also a director of
Overtime Sdn. Bhd. intend to offer a contract to its company, he has to disclose his interest to
the board of directors. Since it is Overtime Sdn. Bhd who wishes to purchase the land,
therefore the contract will not be voidable and Ben does not need to disclose his interest to
others director.
In order for the company to acquire the land from Ben, its must make sure that the cost of the
land which is amounting to RM 5200000 does not exceed the substantial value of the
company. This means that if Overtime Sdn. Bhd. purchase the land that had exceeds the
substantial value, it is void under Section 223 (5). Overtime Sdn. Bhd should value its
substantial value by applying Section 223(3) of Companies Act 2016.
Furthermore, unless with the approval from the shareholders in the general meeting,
Overtime Sdn. Bhd. is not able to enter into a contract with Ben if the land is of requisite
value of the company. In conclusion, in order for Overtime Sdn. Bhd to purchase the land
from Ben, it must not violate any of the above section.
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BBBL 2074 Business & Corporate Law Coursework 2
Name: Chong Chee Feng
ID Number: 19WBR06981
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BBBL 2074 Business & Corporate Law Coursework 2
Name: Lai Vivien
ID Number: 19WBR07074
Every director acts an important role in the company, a successful director must have
responsibility and liability while exercising in the company. Here some duties the director
must have in the company which is under section 213 (1), A director must exercise their
discretion bona fide. The duty to act bona fide is for the benefit of the company as a whole.
There is no breach if the director act was what they honestly believed to be in the interest of
the company and the director must exercise their power for a proper purpose. [Howard Smith
Ltd v Ampol Petroleum] A director who contravenes this section commits an offence. Next,
the director must have a duty of care and skill. Section 213 (2) states a director shall exercise
reasonable care, skill and diligence with the knowledge, skill and experience which may
reasonably be expected of a director having the same responsibilities and any additional
knowledge, skill and experience which the director on fact has. [Lim Weng Kee v PP] The
consequence of the breach of duty of this section is damages paid to the company for any loss
suffered by the company. In addition, under section 215 (1) states a director exercising his
duties may rely on information, professional or expert advice, opinions, reports or statements
made by any officer whom the director believes on reasonable grounds to be reliable and
competent on the matters concerned or other people that have the capacity to do so. (Aiman
Nariman Mohd. Sulaiman., 2015).
However, statutory duty to make disclose of interest in the contract under section 221
states that the director who whether directly or indirectly interested in the contracts or
proposed contracts with the company must disclose as soon as it is practicable his interest to
the broad of directors. If the director cannot do so, is commits an offence can be fined or
imprisonment or both. The transaction may be avoided or rescinded by the company. [Yeo
Geok Seng v PP] Last but not least, section 222 states that such a director mentioned in
section 221 shall be counted only to make the quorum at the broad of the meeting but the
director cannot participate discussion while the contract being considered and cannot vote on
the matter during the meeting. A contract entered into in contravention of this section shall be
voidable at the instance of the company except if it is in favour of any person dealing with
the company for valuable consideration and without notice of the contravention. A director
who contravenes this section commits an offence. [Aberdeen Railway Co v Blaikie] (Aiman
Nariman Mohd. Sulaiman., 2015).
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BBBL 2074 Business & Corporate Law Coursework 2
Name: Lim Jia Hui
ID number: 19WBR07142
The liability and responsibility of director is duty of care and skill. Section 213(2)
states a director shall exercise reasonable care, skill and diligence with the knowledge, skill
and experience which may reasonably be expected of a director having the same
responsibilities and any additional knowledge, skill and experience which the director in fact
has. [Daniels v AWA Ltd 1995]. A director who contravenes this section commits an offence
(Hanrahan, 2004). Under section 214, a director who makes a business judgement is deemed
to meet the requirements of the duty under subsection 213(2) and the equivalent duties under
common law and equity if the director makes the business judgement for a proper purpose
and good faith. The director does not have a material personal interest in the matter. The
director is informed about the matter to the extent the director reasonably believes to be
appropriate and reasonably believes the business judgement is in the best interest of the
company (Aiman Nariman Mohd. Sulaiman., 2015).
Directors owes the duty to act bona fide in the best interests of the company. Section
213(1) states a director shall exercise his powers in accordance with the CA, for a proper
purpose and in good faith in the best interest of the company. [Low Tien Sang & Sons
Holding Sdn Bhd & Ors v How Kem Chin & Ors 2000]. A director who contravenes this
section commits an offence. The company would be able to obtain an equitable compensation
when the company has suffered loss because of a breach of directors’ duties. Section 217
states a nominee director shall act in the best interest of the company and shall not
subordinate his duty to act in the best interest of the company to his nominator where there is
a conflict between his duty to the company and his duty to his nominator. [Oversea-Chinese
Banking Corp Ltd v Justlogin Pte Ltd 2004]. A director who contravenes this section
commits an offence (Aiman Nariman Mohd. Sulaiman., 2015).
Last but not least, duty of director is to make disclosure of interest in contract. Section
221 states that any director who is in any way whether directly or indirectly interested in
contracts or proposed contracts with the company must disclose as soon as it is practicable
his interest to the board of directors. [Dayco Products Singapore Pte Ltd v Ong Cheng Aik
2004]. Failure to do so is an offence and the director can be fined, jailed or both and the
transaction may be avoided or rescinded by the company. Breach of duty may be held to be
an offence under the CA. A breach may result in a fine, imprisonment or both. The director
can sue the director for breach of duty (Aiman Nariman Mohd. Sulaiman., 2015).
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BBBL 2074 Business & Corporate Law Coursework 2
Name: Tan Jui Peng
ID Number: 19WBR07260
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BBBL 2074 Business & Corporate Law Coursework 2
Name: Ting Jia Wei
ID Number: 19WBR07309
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BBBL 2074 Business & Corporate Law Coursework 2
References
Part I
Korchak, J. 2016, Advantages and disadvantages of a public limited company, Viewed 5 July
2019
<https://www.informdirect.co.uk/company-formation/public-limited-company-advantages-
disadvantages/>
Smith, R. 2019, Public Limited Company: Advantages and Disadvantages, Viewed 5 July
2019
<https://rsaccountancy.co.uk/setting-public-limited-company-advantages-disadvantages/>
Johnson, W. 2017, Disadvantages of a Public Limited Company, Viewed 5 July 2019
<https://bizfluent.com/list-6292165-disadvantages-public-limited-company.html>
Part II
Hanrahan, P. (2004). Commercial applications of company law in Singapore. Singapore:
CCH Asia.
Aiman Nariman Mohd. Sulaiman. (2015). Malaysia Company Law. Kuala Lumpur:
Commerce Clearing House (Malaysia) Sdn Bhd.
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BBBL 2074 Business & Corporate Law Coursework 2
APPENDIX C: EACH MEMBER’S CONTRIBUTION TO THIS ASSIGNMENT:
1st MEMBER’S CONTRIBUTION TO THIS ASSIGNMENT
My contribution to this assignment is in the following area / part:
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Total number of group meetings held for this assignment: 3
Number of group meetings I attended and participated: 3
Name: Chong Chee Feng signature ________________________
Group members’ evaluation to this member’s contribution:
to this member’s declaration above.
If any member disagrees, please give your reason or reasons below:
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Confirmed by the remaining members of the group:
Name: Signature
Lai Vivien
Lim Jia Hui
Tan Jui Peng
Ting Jia Wei
*Please read all instructions above.
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BBBL 2074 Business & Corporate Law Coursework 2
2 MEMBER’S CONTRIBUTION TO THIS ASSIGNMENT
nd
My contribution to this assignment is in the following area/part:
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Total number of group meetings held for this assignment: 3
Number of group meetings I attended and participated: 3
Name: Lai Vivien signature ________________________
Group members’ evaluation to this member’s contribution:
If any member disagrees, please give your reason or reasons below:
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Confirmed by the remaining members of the group:
Name: Signature
Chong Chee Feng
Lim Jia Hui
Tan Jui Peng
Ting Jia Wei
*Please read all instructions above.
My contribution to this assignment is in the following area/part:
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BBBL 2074 Business & Corporate Law Coursework 2
3rd MEMBER’S CONTRIBUTION TO THIS ASSIGNMENT
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Total number of group meetings held for this assignment: 3
Number of group meetings I attended and participated: 3
Name: Lim Jia Hui signature ________________________
Group members’ evaluation to this member’s contribution:
If any member disagrees, please give your reason or reasons below:
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Confirmed by the remaining members of the group:
Name: Signature
Chong Chee Feng
Lai Vivien
Tan Jui Peng
Ting Jia Wei
*Please read all instructions above.
My contribution to this assignment is in the following area/part:
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BBBL 2074 Business & Corporate Law Coursework 2
4th MEMBER’S CONTRIBUTION TO THIS ASSIGNMENT
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Total number of group meetings held for this assignment: ________
Number of group meetings I attended and participated: __________
Name: Tan Jui Peng signature ________________________
Group members’ evaluation to this member’s contribution:
If any member disagrees, please give your reason or reasons below:
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Confirmed by the remaining members of the group:
Name: Signature
Chong Chee Feng
Lai Vivien
Lim Jia Hui
Ting Jia Wei
*Please read all instructions above.
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BBBL 2074 Business & Corporate Law Coursework 2
5 MEMBER’S CONTRIBUTION TO THIS ASSIGNMENT
th
My contribution to this assignment is in the following area/part:
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Total number of group meetings held for this assignment: 3
Number of group meetings I attended and participated: 3
Name: Ting Jia Wei signature ________________________
Group members’ evaluation to this member’s contribution:
If any member disagrees, please give your reason or reasons below:
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Confirmed by the remaining members of the group:
Name: Signature
Chong Chee Feng
Lai Vivien
Lim Jia Hui
Ting Jia Wei
*Please read all instructions above.
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BBBL 2074 Business & Corporate Law Coursework 2
APPENDIX D: MARKS RECORD
TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE
FACULTY OF ACCOUNTANCY, FINANCE & BUSINESS
ACADEMIC YEAR 2019/2020
BBBL 2074 BUSINESS & CORPORATE LAW
COURSEWORK 2
The marking scheme format (which is attached below) should be included in each coursework with
the details of the student.
No. Name Student ID No.:
1 CHONG CHEE FENG 19WBR06981
2 LAI VIVIEN 19WBR07074
3 LIM JIA HUI 19WBR07142
4 TAN JUI PENG 19WBR07260
5 TING JIA WEI 19WBR07309
MARKS SCORED
No. Group Assessment Max Marks Marks Scored
1(a) 10
1(b) 10
1(c) 10
TOTAL 30
No. Individual Assessment Max Marks Marks Scored
2 10
CHONG CHEE FENG
LAI VIVIEN
LIM JIA HUI
TAN JUI PENG
TING JIA WEI
TOTAL 10
TOTAL Q1 & Q2 40
APPENDIX E: COURSEWORK FEEDBACK FORM FOR WRITTEN REPORT
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BBBL 2074 Business & Corporate Law Coursework 2
COURSE CODE/COURSE TITLE:
BBBL 2074 BUSINESS & CORPORATE LAW
NAME OF STUDENT (S): ID No:
1) CHONG CHEE FENG 19WBR06981
2) LAI VIVIEN 19WBR07074
3) LIM JIA HUI 19WBR07142
4) TAN JUI PENG 19WBR07260
5) TING JIA WEI 19WBR07309
PROGRAMME: RAC – BACHELOR OF ACCOUNTING (HONOURS)
YEAR OF STUDY: 2 SEMESTER: 1 ACADEMIC YEAR: 2018/2019
GROUP NO: 10
COURSEWORK NO: NATURE OF MARKS ALLOCATED:
COURSEWORK:
2
GROUP
Overall feedback (e.g. strengths, weaknesses, areas for improvement etc):
Student’s Date: Lecturer’s / Tutor’s Date:
Acknowledgement: Name and Signature:
Note: This form must be submitted together with the assessment grid/grading criteria used for the
coursework.
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