QUESTION 2

Ali and his wife, Alicia, are directors of Iris Sdn Bhd, a company dealing in the sale and repair of personal computers and computer programmes. Each of them holds 25% of the company's issued shares. The other shareholders are Rama and Geetha, each also holding 25% of the issued shares.

Rama and Geetha have discovered that Ali and Alicia have been squandering the funds of the company. The company made a profit of RM20 million last year. Of this amount RM1.5 million was used up by Ali and Alicia in entertainment expenses purportedly on behalf of the company. They bought a Rolls Royce at the cost of RM1.5 million in the name of the company. A donation of RM2 million was made to the MATA Old Folks Home. Alicia's mother is a resident of that home where she is well taken care of. The company has bought a piece of land from Aaron, Ali's cousin, for RM5 million. The true value of the property is only RM1 million. Ali and Alicia received a gift of RM500,000 from Aaron in appreciation of their kindness.

Advise Rama and Geetha on the following:

a) Have the directors breached any duties to the company and any provision of the Companies Act 2016?

b) What are the legal actions that can be taken against Ali and Alicia for the loss arising from the breach of their duties?

(20 Marks)