BWB 3013 / BAWB 3013

CLASS EXERCISE TWO: CONSTITUTIONS OF COMPANY

Ace Venture Bhd is a construction company. Dom, Ben and Lisa are its directors. Dom holds 20% of the shares in Ace Venture. The remaining shares in the company are held by Ben and Lisa. Dom is appointed as the anaging Director of the company for ten years under a separate !ritten agreement. The company"s emorandum of Association states that its sole ob#ect is to operate a construction business. $ts Articles of Association contains the follo!ing clause% The company shall not borrow any sum exceeding RM500,000.00 without the prior approval of a general meeting of its members. Three months ago, Ben and Lisa decided to embar& on manufacturing food products as a ne! business 'enture. Dom ho!e'er did not agree !ith this proposal. They !ould also li&e to appoint Lisa"s nephe!, Vincent as the ne! D to replace Dom !ho has been in that position for fi'e years. To ma&e the change possible, they proposed an alteration of the Articles to the effect that a director cannot hold office for more than fi'e consecuti'e years. $n another set of transaction, Ace Venture Bhd also obtained a loan of ( ).* million from Ban& (a#ah Bhd in order to finance one of its pro#ects. Ace Venture Bhd did not get the appro'al of a general meeting of its members before obtaining the loan. To date, Ace Venture Bhd has not paid for the instalments due on the loan !hich is no! three months in arrears. Ban& (a#ah Bhd has made demands for the payment of the loan. (e+uired% ). Ad'ise Dom !hether he can ob#ect to the change in the company"s ob#ect from construction to food manufacturing and !hether he can ta&e any action against the proposed alteration of the articles !ith regards to his directorship.

2.

Ad'ise Ace Venture !hether they can a'oid paying the loan to Ban& (a#ah on account of the procedural irregularities. (20 MARKS)

SEPTEMBER 2013

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