Company Law

QUESTION A

ISSUE

: Whether the company can claim against the insurance company in the respect of the loss arising out of the interruption of the business owing to fire.

RULES

: The rule of this case is under the company limited by shares. It is formed on the principle of having the liability of its members by the clause of Memorandum of Association (M/A).

: The clause will provide division of share capital.

: Johan and the wife is the director of the company and they had RM1 shares of the nominal capital of RM1,000 that were issued to them

: It should be noted that this clause is only applicable for a company limited by share (either public or private company)

APPLICATION

: Johan and his wife were the directors of the company and the owner of the machines.

: The business approximately RM 50,000 and the company agreed to buy RM 80,000.

: The company issued a debenture for RM80,000 to Johan secured by a fixed charge on the company’s fixed assets and a floating charge on all its other assets.

: However, when the business sold to the company, there was no assignment of benefit of the insurance policy to the company, nor did the company affect its own insurance against such risk.

CONCLUSION

: It will not apply to a company limited by share since such a company does not have share capital.

QUESTION B

ISSUE

: Whether Johan can claim against the local council for compensation in respect of loss of business use arising out of the expropriation of premises.

RULES

: The rule applied in this case is ultra vires.

: The provision does not truly protect member and debenture holder.

: Ultra vires act intended by the company usually known by the directors and not the members.

: With regard to debenture holder, they are even worse off than the members as being outsiders, they would likely not know what had happened in the company.

APPLICATION

: The local council had gave notice intention to exercise...