Lecture 2 Revision - Part 1

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Lecture 2 Revision - Part 1

Revision on lecture week 2 for Company Law.


Questions and Answers
  • 1. 
    What is an unlimited liability company? Refer slides 22-23, can choose more than 1 answer
    • A. 

      A Company that has an unlimited liability

    • B. 

      A Company that has a separate legal personality and perpetual succession

    • C. 

      It is a private unlimited company.

    • D. 

      A company where members' liability is limited to the amount unpaid on their shares

    • E. 

      A private unlimited company's name ends with "Sendirian" or "Sdn".

    • F. 

      Like other companies, it is also used for trading.

  • 2. 
    What is meant by conversion from an unlimited company to a limited company? Refer slide 24, can choose more than one answer.
    • A. 

      If convert an unlimited Co to a limited Co, it is an advantage to creditors.

    • B. 

      If convert a limited Co to an unlimited Co, it is an advantage to creditors.

    • C. 

      To convert an unlimited Co to a limited Co, members must pass an ordinary resolution and lodge a notice of conversion with SSM.

    • D. 

      Legal actions or contracts may still continue despite a conversion.

    • E. 

      To convert a limited Co to an unlimited Co, follow the procedure in s.40 CA 2016.

  • 3. 
    Choose the correct statements. Refer to the mind-map in slide 25. Can choose more than 1 answer.
    • A. 

      Unlimited company includes only private companies.

    • B. 

      A company limited by guarantee is a public listed company.

    • C. 

      A Co limited by share is a private Co, a Co limited by guarantee is a public company.

    • D. 

      A public company can be a Co limited by shares or a Co limited by guarantee

    • E. 

      A non-listed public company is a private company.

    • F. 

      An unlimited Co needs not lodge its audited financial statements with SSM.

    • G. 

      An unlimited Co is a partnership.

    • H. 

      A private Co is a Co limited by shares.

  • 4. 
    Explain what is a private company. Refer slides 26-28, can choose more than 1 answer.
    • A. 

      It cannot be a Co limited by guarantee.

    • B. 

      It can have an unlimited number of members.

    • C. 

      If a block of 20,000 shares are in Luke and Rey's names jointly, both of them are counted as 2 members.

    • D. 

      Transfer of shares can be made freely.

    • E. 

      It cannot raise capital from members of the public.

    • F. 

      It must have a spread of public shareholders, i.e. a group of shareholders must be members of the public.

    • G. 

      A bank is usually a private company

  • 5. 
    Explain the compulsory conversion of a private company to a public Co. Refer slide 29, can choose more than one answer. 
    • A. 

      Happens when it ceases to restrict transfer of its shares.

    • B. 

      Happens wWhen it offers its shares to the public

    • C. 

      Happens when it ceases to have a share capital.

    • D. 

      Happens when it has more than 50 shareholders.

    • E. 

      Its shares will be listed on Bursa Malaysia.

    • F. 

      Securities Commission will serve a notice that the Co has ceased to be a private Co from date of notice.

  • 6. 
    Explain an exempt private company. Refer slides 30-31, can choose more than 1 answer.
    • A. 

      It is exempted from having to lodge its audited financial statements and reports with the SSM.

    • B. 

      Maximum number of members is 50.

    • C. 

      A holding company can make any of its subsidiaries an exempt private company.

    • D. 

      Its accounts need not be audited.

    • E. 

      Members will not have access to its audited accounts.

    • F. 

      The Co shall lodge a certificate signed by a Director, Auditor and Secretary; and also a certificate signed by the Auditor.

  • 7. 
    What are the characteristics of a public company and public-listed company? Refer slides 32-33, can choose more than 1 answer.
    • A. 

      It is a Co limited by guarantee

    • B. 

      It has 51 to unlimited number of shareholders.

    • C. 

      It can offer its shares to the public

    • D. 

      A public Co must have “Bhd” as part of its name.

    • E. 

      A public Co's shares are listed on Bursa Malaysia.

    • F. 

      An unlisted public company refers to a private company.

  • 8. 
    • A. 

      All public companies' names end with "Bhd", all private companies' names end with "Sdn Bhd".

    • B. 

      A public limited Co can offer its shares to the public; a private limited Co cannot do that.

    • C. 

      A private Co has a limit of 50 members; a public Co has no limit on members.

    • D. 

      Both public and private companies can have minimum of 1 share and 1 director.

    • E. 

      Both public and private companies must hold Annual General Meeting in every calendar year.

    • F. 

      In a public Co, members’ resolution is to be passed in a meeting; in a private Co, members' resolution can be passed through a written resolution.

  • 9. 
    • A. 

      "Going public" means a private company is compulsorily converted into a public company.

    • B. 

      "Taking private" means a public limited company is converted to a private limited company.

    • C. 

      Conversion will affect the company's identity, legal rights and obligations.

    • D. 

      Conversion will affect the company's name.

  • 10. 
    What is a holding Company and what is a subsidiary company? Refer slides 37-39, can choose more than 1 answer.
    • A. 

      If Jumanji Bhd holds more than 50% of the shares of Jedi Sdn Bhd, Jumanji is the Holding Co of Jedi.

    • B. 

      If Jumanji Bhd can appoint and dismiss directors of Jedi Sdn Bhd, Jumanji is the Holding Co of Jedi.

    • C. 

      If Jedi Sdn Bhd holds more than 50% of the shares of Star Wars Sdn Bhd, and Jumanji Bhd holds more than 50% of the shares in Jedi, all these companies are related corporations.

    • D. 

      A Holding Co must be a public limited Co; while a subsidiary Co must be a private limited Co.

    • E. 

      If Jedi Sdn Bhd holds more than 50% of the shares of Star Wars Sdn Bhd, and Jumanji Bhd holds more than 50% of the shares in Jedi, Star Wars' holding Co is Jumanji Bhd.

  • 11. 
    Refer to the mind-map in slide 40 and choose the correct answer(s) regarding a wholly-owned subsidiary. Can choose more than 1 answer.
    • A. 

      If Jumanji Bhd holds 100% of the shares of Star Wars Sdn Bhd, Star Wars is a wholly-owned subsidiary of Jumanji.

    • B. 

      If Luke holds 100% of the shares of Star Wars Sdn Bhd as a nominee of Jumaji Bhd, Star Wars is a wholly-owned subsidiary of Jumanji.

    • C. 

      If Jumanji Bhd holds 100% of the shares of Jedi Sdn Bhd, and Jedi holds 100% of the shares of Star Wars Sdn Bhd, both Jedi and Star Wars are wholly-owned subsidiaries of Jumanji.

    • D. 

      If Luke holds 100% of the shares of Star Wars Sdn Bhd as a nominee of Jedi Sdn Bhd, and Jumanji Bhd holds 100% of the shares of Jedi, both Jedi and Star Wars are wholly-owned subsidiaries of Jumanji.

  • 12. 
    Distinction between Sole Proprietorship, Partnership and Co limited by shares. Refer to slide 42, pick the correct answer(s). Can choose more than 1 answer.
    • A. 

      A partnership has minimum 2 and maximum 20 partners.

    • B. 

      A private company has 2 to maximum 50 members.

    • C. 

      A public company has 51 to unlimited number of members.

    • D. 

      Sole-proprietorship, partnerships and limited companies must be with the purpose of profit-making.

  • 13. 
    Distinction between Sole Proprietorship, Partnership and Co limited by shares. Refer slide 43 and choose the correct answer(s). Can choose more than 1 answer.
    • A. 

      A Partnership must dissolve upon retirement, death and bankruptcy of partners.

    • B. 

      A company has perpetual succession.

    • C. 

      A partnership can take legal action in its own name.

    • D. 

      Generally, if a wrong is done to a company, only the company can sue.

  • 14. 
    Distinction between Sole Proprietorship, Partnership and Co limited by shares. Refer slide 44 and choose the correct answer(s). Can choose more than 1 answer.
    • A. 

      A Co can own properties in its own name, and members cannot take out insurance over Co's properties.

    • B. 

      In a partnership, partners' liability is unlimited, while in a company, the members' liability is limited.

    • C. 

      In a partnership, a partner cannot assign his shares without other partners' consent, while in a company, members can freely transfer their shares.

  • 15. 
    Distinction between Sole Proprietorship, Partnership and Co limited by shares. Refer slide 45 and choose the correct answer(s). Can choose more than 1 answer.
    • A. 

      A company must have external Auditor and Company Secretary, while a partnership needs not appoint these 2 persons.

    • B. 

      In a partnership, the accounts need not be audited, but in a company, the accounts must be audited.