Question
Pearl Bhd is a wholly owned subsidiary of Hisbiscus Bhd. The directors of Pearl are also the directors of Hibiscus. Previously, Pearl owned Pandan Sdn
Pearl Bhd is a wholly owned subsidiary of Hisbiscus Bhd. The directors of Pearl are also the directors of Hibiscus. Previously, Pearl owned Pandan Sdn Bhd, an oil & gas company. However, in 2016 Pearl sold all its shares in Pandan to Serai Bhd (so that Pandan became a subsidiary of Serai). It was a term of the sale contract between Pearl and Serai that Pearl would not engage in oil-drilling for five years.
In Dec 2017, Pearl held a board meeting, at which its directors decided to recommence oil & gas business.
Since Pandan was acquired by Serai, Pandans safety record has deteriorated sharply. There have been several leaks at Pandans oil & gas facilities. These accidents have resulted from Pandans negligence, and they have injured both employees of, and neighbours of, Pandan. Pandan is on the verge of insolvency.
Advise Serai whether:
a) it can take any action against Pearl for breach of the 2016 contract; (15 marks) b) it could be held liable in respect of the accidents caused to the employees and neighbours. (15marks)
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