This website uses cookies to ensure you have the best experience. Learn more

Company Law Case Essay

2942 words - 12 pages

Question 1

The main parties involved in this issue are Wong Siu Long (“SL”) and Wong Siu Foong (“SF”), who are siblings. Both of them are involved in the running of their family business, Weng Fatt Jewellers Pte Ltd (“WFJ”), which manufactures and sells contemporary fine jewellery. In WFJ, SL handled the core business while SF was in charge of designing and ensuring the quality of the jewellery. In 2000, SF effectively retired from the business, but SF still had a significant influence on the company. Furthermore, SF held 25% of share capital when WFJ was duly incorporated. Later, SF was appointed as a director of the company. Subsequently, SL insisted that the following provision be ...view middle of the document...

Astbury J said that “no right merely purporting to be given by an article to a person… in a capacity other than that of a member, as, for instance… director, can be enforced against the company.” Hence, SF cannot enforce the provision against WFJ as the position of director is “in a capacity other than that of a member.” However, there has been much debate over the Hickman principle. It was argued that “a member had a membership right to require the company to act in accordance with its articles, which right could be enforced by the member even though the result was indirectly to protect a right which was afforded to him in another capacity, for e.g., as a

director.”1 This effectively goes against the Hickman principle. The English Company Law Review tried to determine if a reform regarding the Hickman principle was necessary, but there was a lack in response to the proposition. Thus, the Hickman principle continues to stand in the law as of today. The provision is, therefore, ineffective. Another alternative argument is that SF did not exercise her duty as a director of WFJ. Under s157(1) of the CA, it states that: “A director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.” This means that “directors must exercise their discretion bona fide in what they consider is in the interests of the company.”2 The amount of remuneration stated in the provision could be better used for the business’s operations i.e. marketing efforts to gain more customers. Thus, the provision is ineffective for SF is not acting in the interest of WFJ. SF was also no longer interested in performing an active role in WFJ. According to Walter Woon, “Directors who do not perform valuable services for the company are not entitled to the right to be remunerated.”3 The group concludes that the provision is ineffective. The arguments are based on the Hickman principle and that SF did not exercise her duty as a director nor contribute substantive service to the company. Hence, SF has no right to enforce the provision against the company. II. Question 2

WFJ issued a writ against First World (“FW”) to claim damages for breach of warranties and misrepresentation. Due to the financial crisis, FW’s assets were devalued and were transferred to its parent company. Assuming that FW does not have enough resources to pay WFJ for the damages, Samuel (WFJ’s managing director) should be concerned about the restructuring of the group because it will affect the amount that it can claim from the FW or the group. Therefore, the bigger issue is whether WFJ can claim the damages from FW’s parent company. In Salomon v A Salomon & Co Pte Ltd [1897], it was held that the veil of incorporation creates a separate legal personality and a company should be treated like an independent person. In Gramaphone and Typewriter Ltd v Stanley [1908], it was held that the business run by the subsidiary was not the holding company’s business. In the...

Other Papers Like Company Law Case

Company Law - Essay

2489 words - 10 pages Company Law, s.33 CA '06             The introduction of the Companies Act 2006 has reformed the law regulating corporations which over the previous century has been subject to much criticism. This essay will show that in the main change to s.33 of the act has not achieved any noticeable reform in relation to the company constitution, challenging the notion that it heralds a new era in the corporate constitution for small closely held companies

Company Law Section 14 Of The Companies Act 1985

2838 words - 12 pages company, i.e. by ordinary or special resolution, then the courts may be unwilling to intervene. The contractual status between a company and its members cannot be treated in the same manner as that of a commercial contract, in that an infraction of the contract would afford the right to seek judicial enforcement. If litigation were under consideration, existing case law would need to be carefully studied. This, we have seen, can often be both

Company Law

2316 words - 10 pages SOALAN: Pengarah mempunyai kewajipan fidusiari di sisi undang-undang yang perlu dilaksanakan terhadap syarikat. Bincangkan tiga aspek kewajipan fidusiari dengan berpandukan kepada peruntukan seksyen dan kes-kes yang berkaitan. JAWAPAN: Pengarah merupakan ejen dan pemegang amanah kepada syarikatnya. Pengarah secara bersesama dalam lembaga pengarah

Company Law

619 words - 3 pages Discuss the procedure to incorporate a public company in Malaysia. The law relating to incorporation of a company in Malaysia is governed by the Malaysian Companies Act, 1965. As per the act any company doing business or wishing to do business in Malaysia must register with the Companies Commission of Malaysia (CCM) under the Companies Act 1965. To incorporate a company, a person must apply the application of search

Company Law - Promoter

494 words - 2 pages originally a Latin word which means doing and presenting in the absence of fraud. (Oxford Dictionaries) In the other words, a promoter is required to act honestly at all time in the perspective of best interest of the company instead of his own personal interests. In the case given above, Chin did not disclose to Ruth and Ali that his wife is the landowner and he resold the land to the company at a price higher than the original price. In short, Chin

Business Law

982 words - 4 pages procedures. The rules are so complex and they can affect other entities of the business this law is very crucial. Administrative law is the rules that have been established by the company. These rules help guide orderly conduct and established goals for the company. The Case and Common Law Doctrines, which has been discussed earlier about. Furthermore, when you think about common law and all the Sources of American law what is it so

Business Law

1230 words - 5 pages the jury in both criminal and civil cases. Their main task is to search for facts to the case that are afterwards applied by the judge, who is the only one that can determine the law. Concerning this last difference, civil law does not use jury, judges controls the trials. Question 2 a) In this case it is needed a research in the Swedish Contracts Act of 1915:218 in order to determine the existence of a contract between two Swedish company

Accounting

1131 words - 5 pages mid 19th century § Limited liability from mid 19th century HI5027 Corporate Law Holmes Institute 2011 9 HI5027 Corporate Law Holmes Institute 2011 10 Important developments for small business Separate legal entity doctrine § Distinction between public and proprietary companies § Salomon s case § Sole director/shareholder companies § The company is a legal person separate from its participants § This means that: Ø its

Role and Function of Law

1191 words - 5 pages move they make. In the case of Cipollone v. Liggett Group, Inc. the company was sued for failure to disclose the dangers of cigarettes in advertising. Cipollone lost the case in the United States Supreme Court. The Supreme Court ruled previous federal law preempted any state regulations on tobacco labeling. The Supreme Court demonstrated in this case they have a broad preemptive power. The Supreme Court used the Federal the Cigarette Labeling and

Case Of Saloman Vs. Saloman Co. And Case Of Macaura Vs. Northern Assurance Co

2470 words - 10 pages Introduction: Companies are the dominant form of business association. The fundamental concept of company law was developed based on a case decided more than 100 years ago in the UK’s House of Lords. The case of Salomon established a maxim that a company is a separate legal entity distinct from its members. When a company is formed, it is said to have become “incorporated”. Thus it is a separate legal entity or a legal ‘person’ it has features

Comercial Law Tutorial 3 Question 7

351 words - 2 pages Tutorial 3 question 7 The company was incorporated on 1st May. On 10th June the company commenced business whereby the company’s directors, on behalf of the company, purchased the shop from Jacob. Advise the directors the legal position of the company. In Malaysia the law allows a company to ratify a contract entered before its incorporation. Section 35(1) states that any contract entered into by a company prior to its formation or by any

Related Essays

Company Law Essay

1754 words - 8 pages ‘Directors duties occupy a strange position in company law. They must be sufficiently strong so as to keep directors in line but sufficiently weak to allow directors to take risks. It is no wonder the courts can’t enforce them properly.’ Do you agree with the above statement? By any measure the 2006 Act is a momentous and monumental piece of legislation. The largest statute ever enacted by the Westminster Parliament, it has engineered the

Company Law Essay 1080 Words

1080 words - 5 pages INTRODUCTION Company law has now put on a broad scope as a result of global economic and technological advancement in this era thus touching on a number of disciplines. Issues pertaining to the company and its administration has been clearly spelled out in the Companies Act 1963 (Act 179) of Ghana. Company law (or the law of business associations) is the field of law concerning companies and other business organizations. This includes

Company Law Essay 3063 Words

3063 words - 13 pages case of Foss v Harbottle (1843) was applied by the old common law that was based on the theory of the 'Majority Rule'. Majority rule can be explained as the minorities have to accept the suggestion of majority and the decision and choices that pass through the majority. In real life, if an individual can hold the greater amount of share which mean that individual will have greater rights and powers to do decision and choices in the company and

Company Law Derivative Actions Essay

1015 words - 5 pages There are two types of derivative actions, common law derivative actions and statutory ones. For common law derivative action, it is taken based on case laws such as Foss and Harbottle case. In this case, two shareholders, Richard Foss and Edward Starkie Turton claimed the board of directors decided to misuse the land in Manchester of company which made company wasted many on the mortgage. Then, they sued the five directors because of their