1. promoter
1.1. defines by s.2 CA 2016 as- relation to prospectus issued by or in connection with corporation, promoter was a party to preparation of prospectus of any relevant portion of prospectus. does not include person by reason only of his acting in professional capacity
1.2. Twycross V Grand (1877)
1.2.1. A person who undertakes to form a company with reference to a given project and to set it going, and who takes the necessary steps to accomplish that purpose.
1.3. qualification s.199 CA 2016-application by registrar make an order to disqualify any person from acting as promoter/ taking in any management of company directly/ indirectly within 5 years, person has been director of 2 companies or more into liquidation due to his conduct as a director.
1.4. Duties-promoters in fiduciary position. have a duty to disclosure with regard. not disclose the benefit gained, they are in breach. he is obliged to act in good faith. not have conflicts of interest, not disclose confidential information, avoid taking contract / opportunity in equity belongs to company.
1.4.1. disclose any profit or benefit
1.4.2. disclosure to company shareholders can be made at general meeting
1.4.3. duty to make full disclosure of the transaction had into on behalf of the company
1.4.4. partial disclosure is not considered as disclosure
1.4.5. disclose includes all commissions or payment he receives upon any transfer of property
1.5. remedies for breach
1.5.1. Rescission of contract- Where promoter has sold his own property to the company, without disclosing this – the company can rescind the contract and recover the purchase price.
1.5.2. Recovery of secret profit- It is not necessary that there need an imputation of evil purpose or conscious fraud.
1.5.3. Damages for breach of fiduciary duty- A company may also have a remedy in damages against its promoters for breach of their fiduciaries duties.
2. corporate veil & lifting corporate veil
2.1. Pull aside the persona and look to see who is behind Those who are responsible may be held personally liable for the acts or purported acts of the company
2.2. Sec. 36- 1 remaining member & carries business for more than 6 months – liable to pay all debts.
2.3. Sec. 67 Offence relating to financial assistance to purchase shares, etc.
2.4. Sec. 121 Requires company to use its name in the documents or transaction .
2.5. Sec. 303(3) & 304(2) The officer of the company contracted a debt for a company where he had no reasonable expectation that the company would be able to pay debt.
2.6. Sec. 304(1) Liability on officer responsible for fraudulent trading by company.
2.7. Sec. 305 The officer in the company who misapplied or retained the company’s money or property shall be liable to restore or repay in the event company is wound up.
2.8. Sec. 365(2)(b) If the officers wilfully pays or permits to be paid dividend exceeds the comp’s profits, personally liable to pay creditors.
2.9. Sec. 46 EPF Act The employer who failed to comply with the section (contribution) shall be liable.
2.10. Sec. 108A Emp. Soc. Sec. Act The employer who failed to provide the SOCSO shall be personally liable for the company.
3. procedure for incorporation company
3.1. Sec. 14(1) : Minimum no is 2. Form 13A : Search as to the availability and reservation of the proposed name. Name Reservation: Reserved for 3 months.
3.2. Pre-Incorporation Documents:- MoA: Basis purpose, people & brief factual account of comp. AoA: Internal rules and regulations. Form 6: Letter of declaration. Form 48A: Statutory declaration. Form 13A: A copy of the original name acceptance letter. Form 48F: Declaration from the company secretary. Registration fee: Depends on the amount of authorized capital.
4. pre-incorporation contract
4.1. contract made before incorporated. as company no pjysical legal capacity to enter any transaction,promoters responsible act for the company
4.2. s.65 CA 2016 supposed to be made by a company or person as agent when company not yet incorporated. entered in agreement on behalf of the company
4.3. may ratify contract incorporated. not ratify, other party can take action against persons entered into contract on behalf company b4 incorporated. effect ratification is binding entered into by the company at time of the contract- case: cosmic insurance corporation Ltd. V Khoo Chiang Poh (1981)
5. s.21CA2016
5.1. company shall be capable exercising all functions of body corporate and have full capacity carry on or undertake any business
5.2. company type corporation recognized by law having powers and liabilities like an individual. this person is legal fiction as an artificial legal person.
5.3. Salomon V A. Salomon & Co. Ltd (1897)-
5.4. s.21(a) to sue and being sued
5.4.1. can make contract with other parties. when breach, it can sue and be sued in its own name. it can sue in respect of rights and it has liabilities, others may sue against it.-member of company cannot take legal action on behalf of the company, only company itself can enforce its rights. "proper plaintiff rule"
5.4.2. Foss V Harbottle (1843)-member tried to sued director, court held injury complained of was injury to the company and not to the members. members could not take legal action.
5.5. s.21(1)(b) to acquire, own, hold, develop, or dispose of any property
5.5.1. property of company is its own and not of its members. even member hold almost all the shares of a company, he does not own any of comany's assets. the property belong to company. members has rights of dividends of shares they hold.
5.6. s.20(b) perpetual succession
5.6.1. the life of the existence of a company is continuous. exist until it dissolved according to the law.
5.7. s.21(1)(c) conduct into transaactions
5.7.1. a company is artificial individual it has power to conduct all transaction which can be done by an individual under the law.
5.8. limited liabilities on members
5.8.1. All liabilities incurred by the company are to be borne by the company itself and not its members.
5.8.2. The same principle applies to directors and other company officials. In general, they are not responsible for debts incurred by the company despite the fact that a company is run by directors and company officials.
5.9. Powers of a Company
5.9.1. Lie in the memorandum, company articles and relevant legal provisions.
5.10. A company acts trough its agent
5.10.1. A company, being an artificial legal person can only act through natural persons.
6. subscribers to memorandum
6.1. Sec. 14(1) – requires 2 or more to subscribe their names in MoA. Full name, addresses and occupation of the subscribers . Share capital company – subscribers must agree to take the numbers of shares in capital. State the number of shares (>1) in handwriting.Must sign the MoA in presence of >1 independent witness. Subscribers must sign the AoA as procedures required in MoA.
6.2. Deemed to have agreed to become members In its register of members. Even if the subscribers are not entered in the register of the members.
6.3. F8 & F9
6.3.1. Contents :- Company number. Company name. Date of incorporation. The type of company that has been set up e.g. limited by guarantee or an unlimited company. The company’s status e.g. private or public.