Mr Muhksin is a breadmaker. He has started making breads from home, assisted by his wife Amanda and his children, Ahmad in bread production and Harun as delivery kid. He has registered his business under a sole-proprietorship as it is a very small business and caters only to customers around the neighborhoods within two to three miles radius from his house. As the business operates for several years, Mr Mukhsin and family begin to serve customers from outside the neighborhoods and the business has gotten busier. Mr Mukhsin then starts hiring a few employees for the delivery jobs since his two children are now focusing on the production.

Mr Mukhsin realized that he has to set-up a company since the business has gained a lot of profit and he also wants to grow bigger and become well-known in the country. He then incorporated his business under the name Mukhsin Amanda & Sons Sdn Bhd. His breadmaking business is then bought by Mukhsin Amanda & Sons Sdn Bhd for RM150,000 and in consideration, Mukhsin holds 50,000 shares, while Amanda holds 30,000 shares and his children hold 10,000 shares respectively. Since RM50,000 is not paid for, the company issues debentures for the remaining amount. He is now the shareholder and the director of the company. He also appointed himself working as a delivery man especially when they receive large orders from big companies.

The popularity of bread making industry has resulted in so many competitors entering the market within 3 years of Mukhsin Amanda & Sons' incorporation. Though the company owns a lot of assets, the company is in need of more funds to work on the proposal of product innovation to sustain in the market as the customers are now slowly switching to other competitors. Mukhsin Amanda & Sons then seek RM50,000 from Bustamam Co., a creditor. Mukhsin's unsecured debenture is then assigned to Bustamam Co. The company tries to survive, however, in the end the business fails with nothing left but debt. Bustamam Co. wants to sue Mukhsin since he is the owner of the company and claim their security from Mukhsin. DISCUSS:

a) What is the issue ? (4 Marks)

b) What is the rules ?(3 Marks)

c) With the situation ... how to apply the rules (3 Marks)

d) Conclusion.