Question 1 and Question 2 are attached in attachment kindly refer to it.

Question 3

DDIE and ADA each holds 2000 preference shares in Sunshine Sdn Bhd (the company). They are the only preference shareholders in the company. The Article of Association of the company stated that preference shareholders have a right to a fixed dividend of 12% per annum. Last month the company convened a meeting of the ordinary shareholders and passed a special resolution altering the Article of Association to the effect that preference shareholder shall only have a right to fixed dividend of 8% per annum. EDDIE and ADA were later informed by the company that henceforth they would only be entitled to a fixed dividend of 8% per annum.

EDDIE and ADA are unhappy with the alteration and seek for your advice as to whether they can challenge the validity of the decision of the company.

(MALAYSIA) COMPANY LAW REFER TO COMPANIES ACT 1965 PLEASE ANSWER ANY TWO (2) QUESTIONS Question 1 Is the doctrine of \"Separate Legal Entity\" still relevant today? Support your answer with relevant cases and legal arguments. Question 2 Happy Sdn. Bhd. was incorporated in January 2015. The company specialises in the manufacturing of plastic bottles as reflected in its Memorandum of Association. Adam and Jimmy are both directors and shareholders of Happy Sdn. Bhd. Prior to its incorporation, Happy Sdn. Bhd.'s promoter Marion entered into a contract for raw material supplies and other machineries with Suppliers 4U Sdn. Bhd in December 2014. With reference to relevant cases and provisions of the Companies Act 1965, advise Happy Sdn. Bhd. on the following issues which had arisen: i) The status of the contract entered into by Marion prior to its incorporation. ii) The Board of Directors through the passing of a resolution has decided to expand the company's business toward the trading of soft drinks; a collaboration with Grape Rocks Sdn. Bhd. Delores, one of its debenture holders objected to the decision. Question 3 EDDIE and ADA each holds 2000 preference shares in Sunshine Sdn Bhd (the company). They are the only preference shareholders in the company. The Article of Association of the company stated that preference shareholders have a right to a fixed dividend of 12% per annum. Last month the company convened a meeting of the ordinary shareholders and passed a special resolution altering the Article of Association to the effect that preference shareholder shall only have a right to fixed dividend of 8% per annum. EDDIE and ADA were later informed by the company that henceforth they would only be entitled to a fixed dividend of 8% per annum. EDDIE and ADA are unhappy with the alteration and seek for your advice as to whether they can challenge the validity of the decision of the company. Is the doctrine of \"Separate Legal Entity\" still relevant today? Support your answer with relevant cases and legal arguments Definition of separate legal entity In the course of delivering his judgment in the Salomon's case , Lord Halsbury stated that once a company is incorporated ,it must be treated like any other independent person with the rights and liabilities appropriate to itself. This means that the company is an independent person ,has rights and obligations of the subscribers to its memorandum and the other persons who will join it later. This is fundamental attribute of corporate personality which is given practical effects in the following ways which is still relevant in todays life 1.limited liabilty The fact that a registered company is a different altogether from subscribers to its memorandum and its other members means that the company's debts are not the debts of its members. If the company has borrowed money, it and it alone is under an obligation to repay the loan. This is illustrated by the case of Salomon v Salomon& Co Ltd(3),in which it was held that Salomon as a member was not under an obligation to repay the company's debts. the above is still relevant and applicable today 2.Perpetual succession Perpetual means ,inter alia, applicable ,valid, forever or for indefinite time, while succession means following in order. When used in relation to registered companies the phrase perpetual succession denotes a process whereby a company's membership changes in a definite order prescribed by the company's articles and goes on for the an indefinite period of time until the company's liquidation. The above legal entity is still applicable toady 3.owning of property A registered company, has a person ,has power to own movable and immovable property .It can actually do so if it can afford to buy them ,or receives them as a gift .It is important to note the company's property does not belong to the members, either individually or as a group. It belongs to the company alone. This rule has been explained by the English courts in the numerous cases among which Macaura v Nothern Assurance Co(4) may be referred as an example. The above is still applicable in today's society where the company's property is not the property of members of the company. 4.Capacity to contract As a legal person ,a registered company has a capacity to contractual relationships in the furtherance of the its objectives. In addition ,it's empowered to hire and fire .It was held in Lee's Air Farming Company Limited ,where Mr Lee formed a company with capital of 3,000 shares of $3 each. Mr Lee held 2,999 of the shares ,the other share was held by a solicitor on his behalf. Mr Lee was the governing director and the company chief pilot. He died in a crash while working for the company .Mrs Lee sued for compensation under the Workman's Compensation Act and she was entitled to corporation. The same still applies to todays world 5.Common seal The companies Act has a common seal to authenticate its transactions which is the same case in the modern society of companies 6.Sue and be sued. Because the company is in law a different person altogether from its members ,it follows that a wrong to or by the company does not legaly constitute a wrong to ,or, by company's members. Consequently (a) A member or members cannot institute legal proceedings to the redress wrong to the company. The company as the injured party is ,generally speaking, the proper plaintiff. This is illustrated by the facts of and decisions in Foss v Harbottle (b) A member cannot be sued to redress a wrong by the company. This is illustrated by Salomon v Salomon $Co Ltd(3) in which it was held that Salomon was not liable for the company's debts. quiz 3 Advise to EDDIE and ADA The best advise to both of them is that they are not in a position to challenge the validity of the decision of the company.This is because both of them hold only preferences share of the company which do not have voting rights compared to th ordinary shareholders who have voting rights in the company. quiz 2 part a The status of contract entered by Marion is called a pre incorporation contract A pre incorporation contract is an agreement that is entered into usually by a promoter or promoters on behalf of the company at a time when the company's formation has not been completed by its registration. As a general rule ,a re-incorporation contract is generally unenforceable .Few cases have been contested in English courts regarding the effect of such agreement .The following rules were enunciated by the judges in the course of deciding the said cases. 1.Before incorporation a company has no legal existence it can't contract or have agents, held in Kelner v Baxler 2.At common law ,a contract purporting to have been entered into by or with a non-existent person is void. For a contact to exist there must be at least two parties. 3.At common law ,a company can't after its incorporation ratify a pre incorporation contract ,this is because it could not have entered into the contract before it was formed. It was held in Price v Kelsal part b A director is a person appointed by the shareholders of a company to run the day to day business of the company. The directors are responsible for the management of the company's business activities a director is entitled to the different duties which may include 1) The duty of care and skill 2) The fiduciary duties In the above case, the director exercised a fiduciary duty in the passing of the resolution to expand the company's business toward the trading of soft, . the director has no legal right to expand the business of a company nor can they pass a resolution to do so unless such right is exercised to them by shareholders of the company. The one debenture holder who rejected the exercise by the board of directors is equivalent to bar the board of directors from exercising such right and therefore the expansion of the company's business is void and null quiz 2 part a The status of contract entered by Marion is called a pre incorporation contract A pre incorporation contract is an agreement that is entered into usually by a promoter or promoters on behalf of the company at a time when the company's formation has not been completed by its registration. As a general rule ,a re-incorporation contract is generally unenforceable .Few cases have been contested in English courts regarding the effect of such agreement .The following rules were enunciated by the judges in the course of deciding the said cases. 1.Before incorporation a company has no legal existence it can't contract or have agents, held in Kelner v Baxler 2.At common law ,a contract purporting to have been entered into by or with a non-existent person is void. For a contact to exist there must be at least two parties. 3.At common law ,a company can't after its incorporation ratify a pre incorporation contract ,this is because it could not have entered into the contract before it was formed. It was held in Price v Kelsal part b A director is a person appointed by the shareholders of a company to run the day to day business of the company. The directors are responsible for the management of the company's business activities a director is entitled to the different duties which may include 1) The duty of care and skill 2) The fiduciary duties In the above case, the director exercised a fiduciary duty in the passing of the resolution to expand the company's business toward the trading of soft drinks, . In this case the board of directors are the same person as shareholders of the company and therefore have a legal authority to pass a resolution regarding the expansion of a business. Being shareholders of the company gives them a voting right to pass a resolution. The efforts by one of the debenture holders to restrict the expansion of the business are described as null and void. .For a resolution to be passed a certain number of shareholders must authorize