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Case Study Company Law A private limited company, Gemstones Put Lid, is engaged in the business of importing and supplying jewelry as wholesalers to local market. Ali, Ahmed, Sara, Faisal and Amir are the directors of the company. The company decided that the market is becoming more competitive so they need to expand their business. To achieve their target they obtained 4 million rupees loan for the local bank. They spent all the money to increase their business. All the directors of the company did not attend the meetings of the company, Ali and Ahmed are the only ones who participate in the meetings actively. At this time Ali contacted with another retailer of jewelry company, Saad who was looking for a reliable supplier. But he doesn't want to deal with Gemstones PVt Ltd because he doesn't like the managing director Ahmed. Ali did not want to miss this great opportunity so he set up his own business and entered into a contract with Saad without telling other directors of the company. All other members were unaware about this deal. After six months Ali resigned from the director's post because the company became insolvent and could not pay interest on its loans. Important points: 1. The company became insolvent due to expansion and was unable to pay the interest on its loans. 2. Saad was a potential customer of Gemstones Pvt Ltd. Consider the following: 1. Point out the concepts under Company Law underlying the case study. 2. Ali's course of conduct in the light of Company Law aspect. 3. Other director's liability arising in connection with the loan incurred. Could they avoid the liability under any circumstance? 4. Is Ali liable even though he has resigned from the post of the director? 5. Te legal sanding of Ali's own company running alongside Gemstones Pvt Ltd.Use ILAC format to answer the questions Question 1: what is Member remeces {1G marks}: [chapter 1? of Understanding Company Law] Question 1 what is Director's duties (EC! marks}: {chapter 13 of Understanding Company Law} ME}:r duties 5130, 5131, 513; 5133, 5134 and 55336- o'Ft'l're Corporaticms Act 'r'bu will be ashed to advise ASIC have there been breaches of the Corporations Act in the above circumsta nces. 'rbu must look at that for each ofthe five directors {2 executive directors and three non executive crectors}. The compan}:r is in nancial difcultytha't is related in terms howthe directors should be responding to that. wl'ietherthe major response to represent the breach or not. Nominate Type of breach Discuss the provision that has been bread'red. Question 3: Corporate Contracting [10 marks}: Can the bank enforce the mortgage contract against the company"? Section 13 ofthe Corporations act in instances where a Director has misrepresented a cosignatory. Question 4: (A) If you have been hired as company law expert to make immediate changes in the companyr law. Point out and describe any three (3) major changes, which you will suggest bringing change in law to promote business activities. (Maximum 400 words} (5 Marks} [B] Mismanagement is a severe issue in almost all types of companies. Discuss any three major situations when its existence is formally recognized under company law. Examine a real time example of any company which termed as mismanagement and curbed by law. (Maximum 400 words) (5 Marks} Question 3 What are the differences between right issues and bonus issues? Your answer should include the advantages and disadvantages of both right issues and bonus issues. [8 marks] Question 4 The Companies Act 2016 repealed the Companies Act 1965 and changed the landscape of company law in Malaysia. The Companies Act 2016 reformed almost all aspects of company law in Malaysia. Required: By referring to the Companies Act 2016, insert the correct sections in column (A) for each description in column B. LU
