Legal Aspect of Business Organisation complete Dec 2024

Question 1

What does Section 15 state regarding the notice of registration by the ROC?

Answer 1

The ROC will issue a notice of registration when the application for incorporation satisfies the requirements of the CA 2016 and upon payment of the prescribed fee.

Question 2

What is the significance of the notice of incorporation?

Answer 2

The notice of incorporation is conclusive evidence that the company is duly registered.

Question 3

In a partnership, who acts as the agent of the partnership firm?

Answer 3

Partners are agents of the partnership firm.

Question 4

What binds the rest of the partners in a partnership?

Answer 4

Any act or omission committed by one partner within the ordinary scope of the firm’s business.

Question 5

For a third party to hold the partnership liable, what conditions must be met?

Answer 5

• The act must be done for the purpose of partnership business
• The act is done in the ordinary course of the business
• Act must be done by a partner in his capacity as partner

Question 6

What was the outcome of Chan King Yue V Lee & Wong [1962] MLJ 379?

Answer 6

The borrowing was an act necessary for the carrying on of the business of the partnership.

Question 7

What was established in Lee v Lee’s Air Farming Ltd regarding a registered company?

Answer 7

A registered company is a separate legal entity distinct from its founder.

Question 8

What does Section 8 state about partners in a firm?

Answer 8

Partners are bound by acts on behalf of the firm.

Question 9

What does Section 9 state regarding a partner using the firm’s credit?

Answer 9

The firm is not bound unless the act is specially authorized by other partners.

Question 10

How can a partnership sue or be sued?

Answer 10

Partnership can sue and be sued in its firm name.

Question 11

What are the legal rights of partners in a partnership?

Answer 11

• Partners are entitled to share equally in capital and profits
• Partners can enforce rights of the partnership in the name of all partners
• Creditors can sue the firm or any partner for the firm’s debt

Question 12

What is required for the partnership’s accounts?

Answer 12

The accounts should be maintained but need not be published or disclosed.

Question 13

What is the legal status of a company according to the Companies Act 2016?

Answer 13

A company is a separate legal entity and can enforce rights by suing.

Question 14

What is the relationship between a holding company and a subsidiary?

Answer 14

Generally treated as separate legal entities, but may be consolidated for group accounts.

Question 15

What is the principle of separate legal entity in relation to company officers?

Answer 15

The company’s money and properties belong to the company, not to its officers.

Question 16

What constitutes fraudulent trading under Section 540(1) of the CA 2016?

Answer 16

When an officer carries on business with intent to defraud the company’s creditors.

Question 17

What is wrongful trading?

Answer 17

When an officer knowingly contracts a debt for the company without reasonable expectation of paying it.

Question 18

What is the minimum contribution rate for employers to the Employee Provident Fund (EPF)?

Answer 18

Employers must contribute a minimum of 12% of the employee’s salary.

Question 19

What does the Employee Social Security Act 1969 establish?

Answer 19

The Social Security Organisation (SOCSO) for employees’ injury insurance.

Question 20

True or False: A partnership must be registered to be valid.

Answer 20

True

Question 21

What is the legal implication of a company being an artificial person?

Answer 21

A company exists independently of the individuals who are its members.

Question 22

Fill in the blank: The law treats a company as being a _______ from its members.

Answer 22

separate person

Question 23

What happens to the liability of the members when a company is incorporated?

Answer 23

Liabilities are those of the company, not of the members.

Question 24

What must happen for a partnership to be dissolved by court order?

Answer 24

An application must be made by a partner in specific situations.

Question 25

In partnership, what must be done with the partnership books?

Answer 25

They are to be kept at the place of business or the principal place if multiple locations.

Question 26

What is the interest rate entitled to partners for advances beyond their capital?

Answer 26

8% interest per annum.

Question 27

What is required for changes in the nature of the partnership business?

Answer 27

Consent of all existing partners.

Question 28

What was the ruling in Keith Spicer Ltd v Mansell regarding partnership existence?

Answer 28

No partnership existed because the business had not yet started.

Question 29

What happens if a partner uses the firm's credit for non-business purposes?

Answer 29

The firm is not bound unless authorized by other partners.

Question 30

What is the purpose of the injury insurance scheme?

Answer 30

For the benefit of the employees ## Footnote Both the employee and employer will contribute towards its premium.

Question 31

What does Section 101B of the Employment Act 1955 provide?

Answer 31

Directors and managers may be charged jointly with the company for an offence committed by the employer.

Question 32

What is the judicial exception regarding the veil of incorporation?

Answer 32

Courts may lift the veil of incorporation in cases of fraud or improper purpose.

Question 33

In which case did the court hold that a company may be used as a mask to commit fraud?

Answer 33

Lim Kar Bee v Duofortis Properties (M) Sdn Bhd (1992).

Question 34

What principle applies to related companies according to the People’s Insurance Co (M) v The People’s Co Ltd (1986)?

Answer 34

The principle of separate legal entity applies to related companies.

Question 35

What was the court's ruling in Hotel Jaya Puri Sdn v Hotel Bar and Restaurant Workers (1980)?

Answer 35

The hotel company was liable to the restaurant’s employees as they were considered one group enterprise.

Question 36

Fill in the blank: A company is a _______ in law with its own identity regardless of changes in its membership.

Answer 36

continuing entity

Question 37

What is the legal status of a company after it is formally registered?

Answer 37

It is regarded as a body corporate and has a separate legal entity.

Question 38

What case established the concept of separate legal entity?

Answer 38

Salomon v A Salomon & Co Ltd.

Question 39

What was the outcome of Jones v Lipman (1962)?

Answer 39

The court ordered both L and A Ltd to perform the contract with J, stating that A Ltd was a sham.

Question 40

What does the Partnership Act 1961 define as a partnership?

Answer 40

The relationship which subsists between persons carrying on business in common with a view of profit.

Question 41

In Foss v Harbottle, who could take action against the persons who misapplied the company's property?

Answer 41

The company itself could take action, not the shareholders.

Question 42

What is meant by 'perpetual succession' in the context of companies?

Answer 42

A company continues in existence until it is deregistered, regardless of changes in its membership.

Question 43

What was the ruling in Macaura v Northern Assurance Co Ltd regarding ownership of the timber?

Answer 43

Macaura had no interest in the timber that he could insure after selling it to the company.

Question 44

True or False: Members of a company have proprietary interest in the company's property.

Answer 44

False.

Question 45

What happens to the ownership of a company's assets when there is a change in membership?

Answer 45

It has no effect on the ownership of the assets/property of the company.

Question 46

What is the legal implication of a company owning property?

Answer 46

A company may own property distinct from the property of its members.