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Presentation/PPT
27/08/2022
Syarikat Healthy Skrulls
Sdn
Bhd (Skrulls
)
runs a wholesale business in healthcare
services and pharmaceutical products.
It has five (5) directors:
Talos,
Fury, Maria
,
Monica
and
Ronan
. Except for Ronan, all directors are also shareholders. There are six (6) other
shareholders in Skrulls. Talos is the Non
–
executive Chairman. Monica and Ronan are
executive directors. The Company Secretary of Skrulls is
Carol
Danvers
. Today,
4
May
2020
, Carol receives three long emails from
Talos
:
(a)
The
first email
reads:
Ronan
was our C
hief Executive Officer (CEO) from July 201
8
until his resignation
as a director
in
January
20
20
.
He was not a shareholder in
Skrulls.
In
October
2019,
Ronan instructed
Skrull
s to
release a sum of RM50,000/
–
to
his bank account. When Skrulls finance department asked Ronan, he told them t
hat
the payment was to assist
him
to purchase shares in Skrulls. D
uring the last Annual
General Meeti
ng in September 201
9
, members had given approval for a general issue
of any shares within the financial year
2019
–
2020
.
Yet, o
ur company has no plans to
issue any new shares. We also do not have any employee share scheme to provide
money for the purchase of
any shares for the benefit of employees and directors. Till
today, no new shares has been allotted to Ronan and he has not returned the said sum.
We the
B
oard of Directors (BOD) were
not notified
of this transaction. Will the
shareholders think that we ar
e to be blamed for this incident? All along, we did not
really require Ronan to consult us over important transactions. He is a top talent in the
healthcare and pharmaceutical industry, and we trust his decisions all along. Now, we
hear that
there may hav
e been several breaches of the
Companies Act 2016
pertaining
to the release of this sum of money, with dire consequences. Please advise if any of
us the directors have incurred any liability and advise us as to what steps we can take
from here.
(b)
Th
e
second email
reads:
In
November
2019, before his resignation, Ronan instructed
Skrulls to release a sum of RM100,000/
–
to a client company,
Syarikat
Starforce
Supplements Sdn Bhd
. This transaction was descr
ibed as a loan from Skrulls to
Starforce
. Skru
lls and
Starforce
do not hold any shares in each other, and
Starforce
is
also not a person connected to any of our directors and shareholders. We the
B
oard of
Directors (BOD) were
not notified
of this transac
tion. We are concerned that
Starforce
may eventually be unable to pay us back t
he RM100,000/
–
. Can we make
Starforce
s shareholders sign an agreement to pay up the RM100,000/
–
? Since
Starforce
has four (4) shareholders there, each of them should pay RM25,000/
–
to our
Company. I hear that a
creditor company can take security of a debtor companys
assets, in the form of charges. What are the differences between these charges? Which
charge we shou
ld opt for?
One more thing, if Starforce is unable to pay back this debt,
is it easy for us to wind
up Starforce? Please advise us on issues
regarding
undue
preferences and validity of floating charges. Even if Starforce were to create a floating
charge in our favour, will the charge be val
id? Will we face threats from
other
creditors, e.g.
execution
c
reditor
s
? Also, as a secured creditor, what are our options in
a liquidation?
This
assessment
paper consist
s
of
7
questions on
6
printed pages.
(c)
The
third email
reads:
Skrulls has a wholly
–
owned subsidiary,
Syarikat
Kree
Industries
Sdn
Bhd
(Kree
).
Lawson,
Korath,
Minn
–
Erva
and
Yon
–
Rogg
are
Kree
s directors.
Kr
ee
s constitution provide
s
that
a director c
an
be removed by
either special resolution or ordinary resolution.
In
J
anuary
20
20
,
Skrulls board of
directors passed a resolution to
authorize
Skrulls corporate representative,
Keller
, to
take
the necessary
steps to
seek the removal of
Yon
–
Rogg
, to be replaced by
Coulson
.
So, on 15
–
1
–
2020, Keller signed a
requisition
pursuant to
Section 311
Companies Act
2016
, to requisition for a meeting of members to pass a
resolution to remove
Yon
–
Rogg.
Lawson
, the Execut
ive Chairman,
then convened a
Board meeting
in order to
discuss whether to convene
a meeting of members pursuant to this requisition
.
The
Board meeting was to be held on 25
–
1
–
2020. However, since Minn
–
Erva
and
Yon
–
Rogg
were unable to
attend
the Board meet
ing on
that particular date
, Lawson
then
cancelled the meeting. In fact, Yon
–
Rogg
wrote a long email to Kree
s Board to say
that as long as he was not present in any directors or members meeting, no meeting
could proceed. He also said that Keller had no
authority to issue a requisition notice as
Keller was not a shareholder in
Kree
. Lastly, he mentioned that Skrulls must always
give 28 days notice to him regarding any proposed resolution to remove him. As a
result, the meeting of members was neither
c
o
nvened nor conducted as required by
Skrulls
requisition notice.
I would like to know, are Yon
–
Roggs arguments correct?
Even if two directors cannot come, our subsidiarys constitution provides for a
quorum of two directors, so why the meeting must be ca
ncelled? Also, why must
everyone be present at the same time? O
ur subsidiarys
proceedings of board
meetings
follow the
Third Schedule of the Companies Act 2016
, which clearly
provides that board meetings can be held by audio and/or visual communication,
no
need physical presence
of everyone
.
F
or members meeting, I hear that the law also
provides that it can
be conducted by video
–
conferencing.
Since Kree
s board of
directors have failed to comply with Skrulls requisition notice,
what are the options
available to Skrulls?
We are also thinking
of just
circulat
ing
a writt
en resolution on
removal of Yon
–
Rogg
. It should be easier, since Skrulls is t
he only shareholder in
Kree
.
Required
: Assume you are
Carol Danvers
. Write
three
(3) Reports
(dated 6
May 2020
each) to the Board of Directors on the issues outlined below:
(a)
Regarding the
first email
, combine all parts of the following issues in a single
Report
:
(1)
In relation to the release of the sum of RM50,000/
–
to Rona
ns bank account,
explain whether Ronan and the Board of Directors have contravened any
provisions of the
Companies Act 2016
and the consequences of contravention
(
2
)
Explain whether
t
he Board of Directors might be held
responsible for breach
of duty of skill, care and reasonable diligence
This
assessment
paper consist
s
of
7
questions on
6
printed pages.
(b)
Regarding the
second
email
, combine all parts of the following issues in a single
Report
:
(
3
)
Exp
lain whether Skrulls may make
Starforce
s shareholders sign an agreement
to pay back the sum of RM100,000/
–
which was a loan from Skrulls to
Starforce
. Elaborate also on whether Skrulls m
ay sue Starforce
s shareholders
pursuant to this
agreement.
(
4
)
In relation to charges that may be created over a debtor companys assets,
explain the differences between these charges. Advise also on which charge
that Skrulls should opt for.
(
5
)
Explain how Skrulls may wind
–
up Starforce if
Starforce is unable to pay its
debts to Skrulls. Address the issues highlighted by Talos regarding undue
preference, floating charges, execution creditors and options available to a
secured creditor.
(c)
Regarding the
third
e
mail
, combine all parts of the following issues in a single
Report
:
(
6
)
Evaluate the correctness of the c
ontents of Yon
–
Roggs email to Krees
Board
regarding: The need for his presence in any directors or members meeting,
Kellers authority to issue
a requisition notice and the need for 28 days notice
regarding any proposed resolution to remove
him.
(
7
)
Since Kree
s Board of Directors have failed to comply with Skrulls
requisition notice, advise on the options
available to Skrull
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