Note: This is under the Malaysian Law: Squid Manufacturing Sdn. Bhd. is a company incorporated in January
Question:
Note: This is under the Malaysian Law:
Squid Manufacturing Sdn. Bhd. is a company incorporated in January 2015 with a sole
object clause of supplying sports equipment and material in Malaysia. The company is
based in Johor Bahru. Datuk Jung Jae and his wife, Datin Ho Yeon, are the majority
shareholders of the company holding more than 70% of the issued share capital of the
company. They also act as the executive directors of the company with the assistance
of another two directors, Hae Soo and Ali.
In September 2020, Datin Ho Yeon plans to build a house for her parents in Kota
Tinggi. In her Facebook account, she posted the following announcement;
" I am looking for a residential lot of land in Kota Tinggi. Do
contact me directly or drop me the contact number of your
trusted agent so we can discuss further..."
One of her former colleagues, Miss Mi-Nyeo suggested her land at Kampung Marble,
Kota Tinggi which she inherits from her parents. She agreed to sell her land at the price
of RM460,000 based on the current market value. The parties signed a contract for the
transaction with a deposit of RM260,000 in October 2020. Subsequently, Miss Mi-
Nyeo found out that the price of the land has increased aggressively when the
government proposes a new development project in the area. She decides not to proceed
with the sale of the land. She was prepared to pay for the damages for breach of contract
but not to give up the land. Since the transfer of the title has not yet been done, Miss
Mi-Nyeo surreptitiously forms a company called The Miracle Mi Sdn. Bhd. and sold
the land to the company. Now that the land has been sold to the company, advise Datin
Ho Yeon on whether she can take a legal action against Miss Mi-Nyeo and reclaim the
land in Kampung Marble.
When the government continues to impose the Movement Control Order, Ali suggested
for the company to focus on selling their products in online marketplace. According to
him, the company's profit may increase up until 1.5% per month. The suggestion was
supported with his research and survey conducted for the past few months via social
media platforms. After receiving approval from the general meeting, Hae Soo
volunteered himself to assist in finding a supplier. The company then enter into a
contract to purchase sports apparel from Tan Sri Il-Nam amounting to RM1.2 million
in November 2020. However, no disclosure was made to the board of directors or the
general meeting on the fact that Tan Sri Il-Nam is Hae Soo's uncle. He also fails to
disclose that he receives 10% commission when the contract was signed. The company
made a huge increase of profit for two months after selling their products in marketplace
as suggested.
Despite the struggle faced by the company, the other directors continue to lavishly
spend the company's money for their personal use. A purchase of a yacht was made by
Datuk Jung Jae and his wife by using the company's money and name in January 2021
claiming that the purchase was necessary to attract more investors. Both Hae Soo and
Ali were not informed of the transaction. The Board then continue to approve a
purchase of Mercedes AMG A35 for each director. Ali was against the idea but was
outvoted during the meeting and immediately resigns after the incident.
The company's financial status continues to decline in the middle of 2021 and unable
to pay its debts to the creditors. The company is now in a winding up process and a
liquidator has been appointed for such purpose. Advise the liquidator on whether the
directors of Squid Manufacturing Sdn. Bhd. have committed any breaches of their
duties to the company under company law.
Required: There are 2 issues in the passage please highlight them with adding to that the answer should be like this format:
- Issue
- Law
- Application
- Conclusion