Squid Manufacturing Sdn. Bhd. is a company incorporated in January 2015 with a sole

object clause of supplying sports equipment and material in Malaysia. The company is

based in Johor Bahru. Datuk Jung Jae and his wife, Datin Ho Yeon, are the majority

shareholders of the company holding more than 70% of the issued share capital of the

company. They also act as the executive directors of the company with the assistance

of another two directors, Hae Soo and Ali.

In September 2020, Datin Ho Yeon plans to build a house for her parents in Kota

Tinggi. In her Facebook account, she posted the following announcement;

" I am looking for a residential lot of land in Kota Tinggi. Do

contact me directly or drop me the contact number of your

trusted agent so we can discuss further..."

One of her former colleagues, Miss Mi-Nyeo suggested her land at Kampung Marble,

Kota Tinggi which she inherits from her parents. She agreed to sell her land at the price

of RM460,000 based on the current market value. The parties signed a contract for the

transaction with a deposit of RM260,000 in October 2020. Subsequently, Miss Mi-

Nyeo found out that the price of the land has increased aggressively when the

government proposes a new development project in the area. She decides not to proceed

with the sale of the land. She was prepared to pay for the damages for breach of contract

but not to give up the land. Since the transfer of the title has not yet been done, Miss

Mi-Nyeo surreptitiously forms a company called The Miracle Mi Sdn. Bhd. and sold

the land to the company. Now that the land has been sold to the company, advise Datin

Ho Yeon on whether she can take a legal action against Miss Mi-Nyeo and reclaim the

land in Kampung Marble.

When the government continues to impose the Movement Control Order, Ali suggested

for the company to focus on selling their products in online marketplace. According to

him, the company's profit may increase up until 1.5% per month. The suggestion was

supported with his research and survey conducted for the past few months via social

media platforms. After receiving approval from the general meeting, Hae Soo

volunteered himself to assist in finding a supplier. The company then enter into a

contract to purchase sports apparel from Tan Sri Il-Nam amounting to RM1.2 million

in November 2020. However, no disclosure was made to the board of directors or the

general meeting on the fact that Tan Sri Il-Nam is Hae Soo's uncle. He also fails to

disclose that he receives 10% commission when the contract was signed. The company

made a huge increase of profit for two months after selling their products in marketplace

as suggested.

Despite the struggle faced by the company, the other directors continue to lavishly

spend the company's money for their personal use. A purchase of a yacht was made by

Datuk Jung Jae and his wife by using the company's money and name in January 2021

claiming that the purchase was necessary to attract more investors. Both Hae Soo and

Ali were not informed of the transaction. The Board then continue to approve a

purchase of Mercedes AMG A35 for each director. Ali was against the idea but was

outvoted during the meeting and immediately resigns after the incident.

The company's financial status continues to decline in the middle of 2021 and unable

to pay its debts to the creditors. The company is now in a winding up process and a

liquidator has been appointed for such purpose. Advise the liquidator on whether the

directors of Squid Manufacturing Sdn. Bhd. have committed any breaches of their

duties to the company under company law.

Required: There are 2 issues in the passage please highlight them with adding to that the answer should be like this format:

Note: The answer does not have to be long.

• Issue

• Law

• Application

• Conclusion