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Fundamentals Level Skills Module

Time allowed

Reading and planning: 15 minutes

Writing: 3 hours

ALL TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor.

During reading and planning time only the question paper may

be annotated. You must NOT write in your answer booklet until

instructed by the supervisor.

This question paper must not be removed from the examination hall.P

aperF4

(MY

S)

Corporate and

Business Law

(Malaysia)

Tuesday 2 December 2008

The Association of Chartered Certified Accountants

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ALL TEN questions are compulsory and MUST be attempted

1 In relation to the Malaysian legal system:

(a) Explain the structure of the court system. (8 marks)

(b) State TWO advantages of having a hierarchy of courts. (2 marks)

(10 marks)

2 In relation to employment law:

(a) Explain what constitutes constructive dismissal. (4 marks)

(b) State the remedies available to an employee who has been unjustifiably dismissed. (6 marks)

(10 marks)

3 Explain, and illustrate with examples, FIVE grounds on which a court may order the dissolution of a partnership

under the Partnership Act 1961.

(10 marks)

4 In relation to the law of contract, explain and distinguish the following terms of a contract:

(a) Conditions; (3 marks)

(b) Warranties; (3 marks)

(c) Innominate terms. (4 marks)

(10 marks)

5 In relation to company law:

(a) Explain and distinguish between a fixed charge and a floating charge. (4 marks)

(b) State FOUR DISADVANTAGES of a floating charge as a security to a lender. (6 marks)

(10 marks)

6 In the context of company law explain:

(a) how a director of a public company may be removed from office before the expiry of his term of office and

the protection afforded by the Companies Act 1965 to such a director; and (7 marks)

(b) whether your answer would differ if the director was a director of a private company. (3 marks)

(10 marks)

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7 (a) Explain what is meant by corporate governance. (4 marks)

(b) Part 1 of the Malaysian Code on Corporate Governance provides for broad principles of corporate governance.

State THREE principles stated in the Code, relevant to directors. (6 marks)

(10 marks)

8 Tanah Baru Sdn Bhd is a private limited company whose sole object is the manufacture of office furniture.

Recently, the board of directors decided to expand its business to venture into ostrich farming. Pursuant to this

decision the company purchased and obtained delivery of 2,000 ostriches from Ostry Sdn Bhd at a cost of

RM 1 million. They are contemplating purchasing another 2,000 ostriches in two months time.

Madeline, a member of Tanah Baru Sdn Bhd, is completely opposed to the idea of ostrich farming as it is outside the

scope of the objects of the company.

Required:

Advise Madeline on the following:

(a) whether the contract of Tanah Baru Bhd to purchase ostriches from Ostry Sdn Bhd can be challenged on the

ground that it is outside the objects clause of the company and she could have the transaction set aside;

(4 marks)

(b) whether she could successfully obtain an injunction against any party to prevent the contemplated purchase

of another 2,000 ostriches in two months time; and (3 marks)

(c) whether she could take legal action against any person to make that person compensate the company for

any loss resulting from the purchase of the ostriches. (3 marks)

(10 marks)

9 Arjun, Bongsu and Chan are the directors of Cahaya Sdn Bhd, a company dealing in the export of timber. Last month,

Arjun was sent to Japan on behalf of Cahaya Sdn Bhd to negotiate a contract with a Japanese company. Unfortunately

the negotiations were not successful, and it was made clear to Arjun that the Japanese company did not want to offer

any contract to Cahaya Sdn Bhd. Arjun reported this to the board of directors upon his return. Two weeks later he

resigned from the company and managed to secure the contract with the Japanese company in his own name. He

has made a very substantial profit from this contract.

Cahaya Sdn Bhd has now discovered this and wishes to sue Arjun for breach of fiduciary duty as a director and

recover the profit he has made.

Required:

Advise Cahaya Sdn Bhd on the legal position.

(10 marks)

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10 Last month, Oldo attended an antique exhibition, where he saw a rare rosewood rocking chair made in 1825. It was

in an excellent condition considering its age. He offered to buy the chair from its owner, Mr Kah Yu, for RM 5,000.

Mr Kah Yu agreed to that price and said that it would be delivered to Oldo at his home in one weeks time, when the

exhibition ended. Oldo offered to pay him a deposit of RM 500 but Kah Yu refused saying that a deposit was not

necessary and that the full purchase price could be paid upon delivery. However, Oldo did not hear from Kah Yu and

therefore last week he telephoned Kah Yu to enquire about the delay in delivery. Kah Yu replied that he had made a

mistake as to the true value of the rocking chair. He said that the market value of the chair was RM 50,000 and that

the price offered by Oldo was too low. Further, he had already sold and delivered the chair to another person, Poh

Tong, who had offered RM 55,000 for it.

Required:

Advise Oldo:

(a) whether Kah Yu can avoid liability for breach of the contract for the sale and purchase of the rocking chair

on the ground that the consideration was inadequate; and (5 marks)

(b) whether the court is likely to grant an order of specific performance in favour of Oldo, presuming that there

has been a breach of contract by Kah Yu. (5 marks)

(10 marks)

End of Question Paper

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