Jaykay, Loohart and Kitkat are the three directors and equal shareholders of Bagus Bhd ("the

company") a well-established company in Penang.

The company, a shoe manufacturer, has unlimited objects but the articles in the constitution

limit the power of a director to enter into contracts in excess of RM50,000. Recently Kitkat

placed an order with a leather supplier for RM100,000 to take advantage of a significant

discount being offered for bulk purchase. The leather was delivered last week. As part of the

special offer Kitkat personally received a RM2,000 cheque which he gave to charity.

Three months ago Bagus Bhd was unable to manufacture a large specialist order from one of

its regular customers. To ensure the customer was not let down, Jaykay arranged for the work

to be done by Besta Bhd. Jaykay has also sourced for the company a much needed industrial

leather press from Jentera Bhd for RM30,000 and this was delivered last week. Kim holds a

25% shareholding in both Besta Bhd and Jentera Bhd.

Within the last year Loohart arranged for an agent to source an alternative insurance provider

for the company, and prepare the relevant documentation. As he was so busy, he signed the

insurance forms without reading them. Unfortunately the company has just experienced a

serious fire resulting in the destruction of share valued at RM150,000. The insurance company

has refused to pay the claim as the documentation submitted by the company contained

inaccurate information. Loohart accepts that the insurance claim is invalid and, as a result, the

company has now gone into voluntary liquidation.

Advise Jaykay,Loohart and Kitkat if they are likely to have any personal liabilities once the

liquidator becomes aware of the above facts.