Question 2 Racer Sdn Bhd is a company incorporated in Malaysia pursuant to the Companies Act 2016. The Constitution of the company has described that the company's issued shares on 19 May 2017 are divided into 2 different classes of shares. The Company directors, Andy and Ali own 80% of shares which are ordinary shares at the issued price of RM1 per share. The remaining 20% are fully paid-up preference shares owned by Joy. Joy is a distant relative of Andy, and she is keen to invest/own shares in the company. The Constitution of the company complies with the requirements of the Companies Act 2016 for stipulations on preference shares and among the relevant clauses are the following: Constitution, Classes of Shares, the Articles are- 1. The shares are divided into ordinary shares and preference shares. 2. Preference shares shall be entitled to a cumulative dividend rate of 10% of the price per issued share, per annum before any dividends are paid on ordinary shares. 3. The redemption of the preference shares by the company shall be 5 years after the date of issue. 4. The variation of any rights attached to the preference shares shall be in accordance with the Companies Act 2016. Answer these separate situations below. Question 2(a) Unknown to Joy, the directors call a general meeting of the company and pass a special resolution as follows: Article 2 of the Constitution be varied by reducing the dividend from a cumulative of 10% to 4% per share per annum for the preference shares. Advise Joy of her rights and whether Article 2 can be amended? (15 marks) Question 2(b) The Company has the option to redeem the preference shares upon maturity. The company was not making a profit 4 years ago but since 19 May 2021, the company is solvent and making good profits. Joy is keen to push the company to redeem the preference shares. Discuss the legal steps necessary for the redemption of preference shares pursuant to the Companies Act 2016. (10 marks) (Total: 25 marks) Question 2 Racer Sdn Bhd is a company incorporated in Malaysia pursuant to the Companies Act 2016. The Constitution of the company has described that the company's issued shares on 19 May 2017 are divided into 2 different classes of shares. The Company directors, Andy and Ali own 80% of shares which are ordinary shares at the issued price of RM1 per share. The remaining 20% are fully paid-up preference shares owned by Joy. Joy is a distant relative of Andy, and she is keen to invest/own shares in the company. The Constitution of the company complies with the requirements of the Companies Act 2016 for stipulations on preference shares and among the relevant clauses are the following: Constitution, Classes of Shares, the Articles are- 1. The shares are divided into ordinary shares and preference shares. 2. Preference shares shall be entitled to a cumulative dividend rate of 10% of the price per issued share, per annum before any dividends are paid on ordinary shares. 3. The redemption of the preference shares by the company shall be 5 years after the date of issue. 4. The variation of any rights attached to the preference shares shall be in accordance with the Companies Act 2016. Answer these separate situations below. Question 2(a) Unknown to Joy, the directors call a general meeting of the company and pass a special resolution as follows: Article 2 of the Constitution be varied by reducing the dividend from a cumulative of 10% to 4% per share per annum for the preference shares. Advise Joy of her rights and whether Article 2 can be amended? (15 marks) Question 2(b) The Company has the option to redeem the preference shares upon maturity. The company was not making a profit 4 years ago but since 19 May 2021, the company is solvent and making good profits. Joy is keen to push the company to redeem the preference shares. Discuss the legal steps necessary for the redemption of preference shares pursuant to the Companies Act 2016. (10 marks) (Total: 25 marks)
