Issue 6: Obtain Approval for Five-year Term Loan of RM900,000 and as security a charge

on property known as Lot 1234, Bukit Pinang.

Homeland Sdn Bhd plans to make a five-year term loan of RM900,000 upon term and conditions
as stipulated in the letter of offer by Mayban Sdn Bhd dated 2 September 2010 and as security a
charge on property known as Lot 1234, Bukit Pinang will be created. The purpose of the loan is to
enable the company to purchase a shop lot at a purchase price of RM1,000,000.

As stated in Paragraph of Third Schedule and Section 19(1) of the Companies Act, the
company has power to borrow money and to give security for the loan by creating a mortgage or
charge over its property unless Memorandum and Articles prohibited. The company has power to
borrow or raise or secure the payment of money in such manner as the company may think fit and
to secure the same or the repayment of performance of any debt, liability, contract, guarantee or
other engagement incurred or to be entered into by the company in any way and in particular by
the issue of debentures perpetual or otherwise, charged upon all or any of the company’s property
(both present and future), including its uncalled capital; and to purchase, redeem, or pay off any
such securities.

While according to Article 74 under Fourth Schedule of the Companies Act 1965 stated
that the Article of Association give directors the authority to exercise all the powers of the
company to borrow money and to mortgage or charge its undertaking, property and uncalled
capital, or any part thereof, and to issue debentures and other securities whether outright or as
security for any debt, liability, or obligation of the company or of any third party.

The company may borrow the money from commercial finance providers such as
overdraft, bank loan, resolving credit facilities and others or by issuing of debt securities such as
debentures, loan stock or bonds. One of the types of debentures is mortgage debentures where
secured on the property by either in the form of be a fixed charge or a floating charge or
combination of both:

1. Floating charges

- Equitable mortgage on some or all of the company's present and future company
such as receivables. It will be “crystallised”. For future property, the charge only
 will effective when the property is acquired by the company. Thus, the company is
allowed to deal with the property so charged in the ordinary course of business
without any prior consent of the holder of the charge. It will become a fixed charge
when the security is enforceable on the occurrence of a certain event (winding up).

2. Fixed charges

- Mortgage of one or more specific property of the company like a legal or an

equitable mortgage on a particular factory or a piece of land. The company is
prevented from dealing freely with the property without the prior agreement of the
holder of the charge.

3. Both floating and fixed charges

Issue 7: Recommend “blanket approval” of the members for issuance of new shares
pursuant to Section 132D of the Companies Act.

According to Section 132D of the Companies Act 1965 provides that notwithstanding anything
contained in the company’s Memorandum or Articles of Association, the power to issue shares is
vested in the shareholders of the company. The directors shall not exercise the power to issue any
shares unless prior approval of the shareholders in General Meeting has been given to the
directors. The approval may conditional or unconditional as to the wishes of the shareholders as
stated in Section 132D (2) of the Companies Act 1965 where approval for the purposes of this
section may be confined to a particular exercise of that power or may apply to the exercise of that
power generally; and any such approval may be unconditional or subject to conditions.

The authority given by the shareholders can be general or specific. It is a general authority
where the directors are given authority to issue shares up to an amount and subject to such terms
and conditions which the directors think are fit. Whereas the authority is said to be specific where
the shareholders have given approval to the directors to issue shares subject to such conditions
which are deemed fit by the shareholders. This is known as “blanket approval” for issuance of
shares pursuant to Section 132D of the Companies Act 1965. This approval is valid until the next
Annual General Meeting or until the last date the company is to hold its next Annual General
Meeting, whichever is the earlier. The resolution of shareholders in General Meeting giving the
approval must be lodged From 11 with CCM within one month after resolution passed (Section
132D (5) of the Companies Act 1965).

The Companies Act 1965 was amended in 1996 to allow the directors to issue new shares
without having to first obtaining the approval of the shareholders provided the following
conditions are fulfilled. Firstly, the shares are issued as consideration or part consideration for the
acquisition of shares or assets by the company. Second, the shareholders were notified of the
directors’ intention at least 14 days before the issuance.

Issue 9: Remuneration Package for Executive Directors.

Directors are not servant of the company but managers/controllers/agent of the company. They
have no rights to remuneration for their services unless it is provided in the articles. According to
Article 70 of Table A under Fourth Schedule, the remuneration of the directors shall from time to
time be determined by the company in general meeting. That remuneration shall be deemed to
accrue from day to day. The directors may also be paid all travelling, hotel, and other expenses
properly incurred by them in attending and returning from meetings of the directors or any
committee of the directors or general meetings of the company in connection with the business of
the company. The companies are required to disclose separately as an item in their financial
statements the directors’ fees paid for that financial year.

Further stressed must be taken under Section 136(1) of the Companies Act 1965 where it
prohibits a company from paying a director his remuneration free of income tax or otherwise
calculated by reference to or varying with the amount of his income tax or rate of income tax. In
other words, the remuneration shall not be tax free. An executive director will also receive a
salary from the company for his position as an employee of the company. His salary does not
require the shareholders’ sanction.

The purpose to revise the remuneration package for executive directors is to ensure that
the company’s executive directors are fairly rewarded for their individual contributions to the
company’s overall performance. The issues will be discussed specifically below:
 Firstly is about salary. The proposed revision of the executive director’s salary is to
increase the amount of salary from RM33,000 to RM45,000 per month. In our opinion, we think
that we should not rise up the salary because it is better to use the money to reinvest back to the
company to gain future growth. In case the executive directors have a better performance of that
particular year, we think that we should give some awarded for their performance such as bonus.
But if the directors agree to do so, it can be done because it does not violate with any rules or
regulations.

Second, the term of employment of executive director’s that will be proposed to change to
not defined is suitable. It is because as the directors of Homeland Sdn. Bhd. considered that their
executive directors are still capable and possess many experiences towards the company’s
industry and may contribute their precious knowledge towards the company for longer period.
Thus, we think that the change that will be made is appropriate.

Third is about the bonus. They also propose to increase the executive directors’ bonus
from 3 months to 6 months. However, we think that 4 months bonus is reasonable but it may be
increased in the future depends on the performance of the company and also individual
performance itself.

Fourth is in term of the company’s car. They proposed to change the company’s car for
executive directors to be new Mercedes Benz S320 or BMW 740iL. Mercedes Benz S320 is more
suitable because it will mold good impression towards the company when the executive directors
meet the customers outside.

Fifthly, the leave passage will be revised to once per year and not to exceed RM33,000 to
leave passage for once per year and not to exceed RM45,000 is suitable because as we know the
cost of living now is increasing high when travelling in local or overseas. Thus, we think that it
may appropriate to make the changes.

Finally is about the director proposed to buy a life insurance coverage not less than 30
times monthly salary with beneficiary to be nominated. We think that the proposed will attract
and retain the capable executive directors in order to motivate them and win their commitment in
enhancing the performance of the company. Besides, now life insurance is very important
especially for the employees of the company. Thus, we think that it is a good idea to make a
change on that matter.

Issue 10: Issue of Changing the Regulation in Article of Association

The issues that was proposed by Chairman is to consider the changing of Regulation 90 of the
company’s Article of Association so that the board resolution in writing signed by majority
directors can be valid even Homeland Sdn Bhd has decided to adopt Table A of Fourth Schedule
of the Companies Act 1965. The Regulation 90 states that:

‘A resolution in writing, signed by all of the directors for the time being entitled to
receive notice of a meeting of the directors, shall be as valid and effectual as it had
been passed at a meeting of the directors duly convened and held. Any such
resolution may consist of several documents in like form, each sign by one or more
directors.’

According to the Regulation 90 above had stated that a board resolution in writing
should be signed by all of the directors and shall be valid. But, the Chairman of Homeland
Sdn Bhd was proposed to consider to change that statement into a board resolution in
writing should be signed by majority of the directors and can be valid.

Subject to the Companies Act 1965 and to any conditions in its memorandum, a
company may by special resolution alter or add to its articles (Section 31(1) of the
Companies Act 1965). According to Section 31(2) of the Companies Act 1965 also states
that, any alteration or addition so made in the articles shall subject to this Act, on and from
the date of the special resolution or such later date as is specified in the resolution, be as
valid as if originally contained therein and be subject in like manner to alteration by special
resolution. Thus, the alteration in the company’s Articles of Association can be done by the
company but must be comply with the procedure laid down in the Act and the company’s
Memorandum. Further, steps may be taken to substitute the existing Articles with the new
set of Articles.
 In the board meeting they will discuss, decide and make recommendation to amend
the article according to the procedures. The procedures for the alteration of the Articles of
Association are the board of directors passes a resolution to convene an extraordinary
general meeting (“EGM”) to deliberate and pass a special resolution to alter the company’s
articles. Notice of the EGM is given to all members and persons entitled to attend at least
21 days before the date of meeting. At the EGM, a special resolution is passed to alter the
company’s Articles if at least 75% of the members present vote in favour of the resolution.

According to Section 31(1) of the Companies Act 1965, the alteration of the
Articles becomes effective from the date of the special resolution or such later date as is
specified in the resolution. However, it is important for the special resolution to be lodged
with the CCM. Form 11 (Notice of Resolution) together with a copy of the resolution are to
be lodged within 1 month from the date of the resolution.