2. SECTION A- QUESTION 1 (g) Question: List 4 circumstances under which a director will be required to vacate or cease to hold office

3. Answers: 4 circumstances under which a director will be required to vacate or cease to hold office : -under Companies Act 1965 where; The director on being adjudicated a bankrupt The director being disqualified by a court order Failure to maintain the qualification shares subsequent to the appointment The director on being removed by the company in accordance to its Articles

4. SECTION B- QUESTION 4 Andrew, Boey, Chandran, Edwards and Frerdericks are the directors of Usaha Industries Bhd, a public listed company. The following events have taken place in the company. A) at a recent board meeting, the following decisions were taken: i) that the company shall purchase a new company car for the Fredericks, the chief Executive Officer and that the company shall sell the old car, a Mercedes S280, to Andrew at its market value of RM180,000. ii) that the company shall grant loan of RM300,000 to Boey, the Finance Director, for the purpose of purchasing an apartment.

5. Question: Discuss whether the above board decisions are valid and whether any further actions need to be taken in compliance with the Companies Act 1965.

6. Answers: a- i) the board decisions on purchasing a new company car for Fredericks who is the CEO of the company is valid if: He is entitled to have a company car in his employment contract The car purchased for the use of capacity as an employee of the company

7. The board decisions on selling the old car to Andrew at its market value of RM180,000 is valid because: Andrew is a director of the company and the board has authority to approve the decision But - He shall not vote to the subject resolution if the company adopted Article 81 which stated ‘ a director shall not vote in respect of any contract or proposed contract with the company in which he is interested, or any matter arising thereout, and if he does so his vote shall not be counted.’

8. ii) the Board decision for grant loan to Boey, the director is valid if: Get the prior approval from the shareholders under section 133(2)(a) stated paragraph (1) (a) or (b) shall not authorize the making of any loan, or the entering into any guarantee, or the provision of any security except with the prior approval of the company is not given at a general meeting at which the purpose of the expenditure and the amount of the loan or the extent or the guarantee or security, as the case may be, are disclosed. In the case, its valid when the Board decision get approval by the shareholders at the general meeting and disclosed the amount of the loan and purpose.

9. Then, under section 133 (1) (b) stated to anything done to provide such a director who is engaged in the full-time employment of the company or its holding company, as the case may be, with funds to meet expenditure incurred or to be incurred by him in purchasing or otherwise acquiring a home. In the case, if Boey is the director who is full time employment so he is valid to get a grant from company for purchasing an apartment

10. Under section 133 (1) (c) stated to any loan made to such a director who is engaged in the full-time employment of the company or its holding company, as the case may be, where the company has at a general meeting approved of a scheme for the making of loans to employees of the company and the loan is in accordance with that scheme. In the case of Boey, if he is full time employee of the company and the company had provided scheme for making loan for their employees then the grant is valid without get approval from the shareholders

11. b) Chandran who is a non-executive director seeks the board’s approval to appoint his brother, Maniam as his alternate director. Since he intends to leave Malaysia as soon as possible to spend the next six months on business in India, he requests the board to do this immediately without waiting for the next bi-monthly board meeting Question: Explain how the board may carry out this request and draft the document to approve the appointment of Maniam.

12. Answers: The Board of directors may passing the circular resolution by writing since Chandran request for the immediate appointment. the resolution have to get signature from all the directors regarding the appointment of Maniam as alternate director for Chandran

13. Draft of Director circulation resolution USAHA INDUSTRIES BHD.docx