Notes from lecture

1. Companylecture 3
Reductionof share capital
Share buy backs
Dividens/transfer/transmission
Powerof directorsto allotsharesorgrant rights- s75
 Perludapatkelulusandrpdsyrkt
o By wayof resolutionof the company
o Transaksi-
 Allotmentof sharesinthe company (penawaranshare)
o Exceptions75(2)
 Hak diberi kpdbod,x perluklulusansyrkt..keadaanyangmcm
mana?
 Syrktperlupenuhi solvencytest
o S.112
o No groundof companyunable topay itsdebt
 Cash flow test
 Balance sheettest
o Commencementof windingup-
 Pay indebtinfull within12 monthsaftercommencementof
windingup
o Others-
 Pay debtas itbecome due during12 months- immediatelyafter
date of transaction
o Solvencytestdigunakandlmbeberapakeadaan
 Variationtakperlu
 Redemptionperlu
 Reductionperlu
 Share buy back perlu
o Lembagakenabuktikansolvencytestni
 Solvencystatement- s.113
o Deklarasi drpengarahlepaspengarahdahlakukanpenyiasatan
o Issue bydirectors/hanyamajoriti…checkseksyen.
o Kalaugagal patuhi syaratdan tetaplakukantransaksi..satuoffence s.114
 REDUCTION OF SHARECAPITAL
o Knpnk kurangkanmodal syer?Bolehubahsyer,bolehpinda,dlmsek84
kuasaumum dia.
o Proses-
 Sec115
 Special resos115 andconfirmationbythe court s116
 Special resos292, supportedsolvencystatement113- s117**
solvencytests112
o Reductionfairandreasonable toshareholders

2. Companylecture 3
o Reason/stratergiesreduction
 To write off capital whichisno longerrepresentedbyassets(wants
to reduce issuedshare capital (paidup- liability>asset.Sbbsemakin
ramai pemegangsyersemakinbesarliabilitysbbkenabayardividen
 To returncapital in excessof needstothe company
 To reduce liabilityof the company(bilasyarikatbermasalah)
 Pemegangsyeryangbelumbayar(notpaidup) dikenselkan
o S116- tigasituasi syarikatboleh kurangkanmodal syer..takbolehberlaku
serentakmesti salahsatu.
 Extinguiss/reduce liabilityonanyof itssharesin respectof share
capital not paidup(poole vnational bankof china)
 Cancel paidup capital whichislostor unpresentedasset
 Re HoldersInvestmenttrust 1971
o Redeemable preference share.Syrktadamasalah
kewanga.Syrktnkbatalkanjumlahsyertersebut
dan beri bentukofferdlmbentukpinjaman
o Sbbada beberapakelassyer,diabuatmeetingutk
dpt keizinanclasssyerpreference tersebut
o Faedahyg diperolehi olehprefesyerhanyalah52%
shj…
o The other groupwasn’tnot happy,bantah,
companytaklehbuat
o Fair andequitable berbangkit.
o Mahkamah perluambil kirabahawapembatalanini
tidakmemberi keadilanbgkelastersebut.
 Re saltdean?1968
o Kalautak libatkanvariation,x perluadaclass
meeting.
o Kalauredemption,x perluanotherclassmeeting
 Scottichinsurance corpv Wilson
o Syrktada masalahkewangan
o Syrktnak byksikitlebihansurpluskpsprefere syer
class
o Kelaslainbantah
o Tak boleh bayarlebihantu
o Itu ialahpembatalan
o Gov interfere,bcscourtsaidno,no itwas
nationalised
 Pay off anypaidup share capital in excessof needsof co
 BritishAmericanTrustee vCooper
o Britsco yg jlnknbusinessdi us
o Americaninvestors
o Masalah pengurusansyrktdi ukdenganAmerican
investors
o Apa ygberlaku,syrktnaktebusbalik(batalkan
kelas) tersebutsbbnakelakkananykindof dispute
withAmericaninvestors

3. Companylecture 3
o Ada issue:we are doingwell,whyubuyingusoff? -
masalahpengurusan
o AI bantahsbbsalah satusyarat dlmproses
pengurunganmodal adalahbagaimanaandabagi
fairand equitable treatment?
o Fair andequitable tudependscase bycase
o Oppositionbythe creditors- creditorbolehbuatbantahan
 Procedurestocomply- s116(2),118, 119
 Onlyon diminutionof liability
Legal issues
 Relationshipbetweenredemptionandreduction-similaritiesanddifferences
 Relationshipbetweenvariationandreduction-similaritiesanddifferences
 Whetherreductionamounttoa variationof classright
 What are the effectsof variation,redemptionandreductionandshare buybacks

4. Companylecture 3
 Share buy back sec123. Ada solvencytest
o Rule againstcompanyassistinginthe purchase of itsshares-123
 Dealingbya co. inits ownshares
 Co. prohibitedtogive directlyorindirectlyformsof aloan
guarantee,security/anyformsof financial assistance inrelationto
purchase of any sharesinthe companyto anypersonwhether
companyor subsidiary
 Offence andcompensation
 Remediesbycompanyandanyotherperson
o Bincangvoidand voidable contract- consequencesSec124
 Co contravention -doesnotaffectvalidityof the financial assistance
and anyof the contract or transactionconnectedwiththe financial
assistance
 Sectiondoesnotprohibitscompanyoranypersonfromrecovering
that loantransactionwhichcontravenessection
o Exceptionsec125
 Lendingof money -ordinarybusinessof company
 Scheme forbenefitsforemployees( includingdirectorholding
salariedemployment
 Financial assistance bycoto personsotherthan directors -bonafide
inthe employmentof the co/subsidiaryco-toenablepurchase fully
paidup shares-beneficial ownership
 Making of a loan /guarantee byco inordinarycourse where
activitiesare regulatedbywrittenlaw –banking,insurance ,takaful
or subjectedtoSC
o Purchase bya companyof its ownshares-publiclistedcompany-section127
 Publiclistedcompany
 Authorizedbyconstitution
 Solventatthe date of purchase
 Purchase made throughBursa Malaysia
 Good faithandin the interestof the company
o Effect–S 127 (4) –(15)
 Cancellationof sharesbutnotregardedasreductionof SC –S127(4)
( 15)
 To retainsharesas treasuryshares –s 127 (4),(7) (8) (9)(10) (11)
(12)(13) (14)
 To treat sharesas treasuryandpartly cancelled
 Directormay distribute treasuryshares asdividendsto
shareholders-s127(7)
 Resell treasurysharesthroughBursaMalaysia
 noncompliance –criminal offence –s127(18)
 KES
o BelmontFinance CorpLtdv WilliamFurniture
 Syrktdikenakanliabilitytrhdptindakanygdilakukanoleh pengarah
 Pengarahyanglakukankesalahns123
 So tindakantudiambil atasindividuataysyrkt?Kenabaca

5. Companylecture 3
o KIDURONGLAND SDN BHD V LIMGAIK HUA
 Pihakcreditors