Reference no: EM133201914

Question 1:
In April 2012, Facebook (now known as Meta) acquired Instagram at the cost of US$1.0 billion. Today this has proven to be a significant acquisition: Instagram currently boasts more than 1 billion users and share prices for both companies are performing well on NASDAQ.

Even though Instagram is owned by Facebook, there was a conscious decision to separate the management of Instagram from Facebook's.
As of March 2020, Facebook's founder Mark Zuckerberg, holds 29% of shares (in Facebook) and 58% voting rights over the company.
Using the above context of discussion and citing relevant laws, describe:
(a) the relationship between a "holding company" and "subsidiary company"
(b) the difference between "preference" and "non-preference" shares; and
(c) the connection between "share ownership" and "control" over a business.

Question 2:
This question is based on a fictional company.
Excellent Sdn Bhd/ Excellent Pte Ltd (EPL) was incorporated in year 2010.
Their business object is to manufacture and sell leather handbags.
EPL has incurred the following debts during their operations, and liquidation proceedings have already begun last month.

Based on the list of creditors below, classify the priority of payment (in liquidation) and potential liability on the company and its officers.
(i) Bank of Bermuda (BOB) granted a loan of RM400,000 to EPL on 30 June 2012 secured by mortgage/ fixed charge against a factory unit owned by EPL located in Bangi. The current value of the factory is RM1 million. As of today, EPL still owes BOB RM250,000;
(ii) Standard Bank Berhad (SBB) issued a corporate credit card to EPL on 1 January 2015. The current unpaid amount ("amount outstanding") on this credit card is RM20,000, to be paid by the end of this month;
(iii) Bank Serba Boleh (BSB) granted EPL an overdraft facility of RM1 million on 3 March 2015. This borrowing for working capital was secured by personal guarantees from Abu, Ah Tan and Ajay, EPL's directors;
(iv) Lenmore Bank (LB) lent RM3 million to EPL on 1 November 2018. This loan was secured by a preferential debenture on EPL's office unit located in MidValley City and floating charge on EPL's inventory; and
(v) Leather Trading Company (LTC), a leather supplier, contracted with EPL on 1 January 2021 to supply leather pieces for EPL's manufacturing process. As of today, LTC has supplied RM50,000 worth of leather pieces to EPL and is awaiting payment.

For simplicity, you may use the creditors' initials as provided in items (i) to (v) above.
Please support your answer with legal reasoning (i.e. why you arranged the creditors that way).

Question 3:
a) Choose ONE Director of a Public Limited Company in Malaysia. Based on this director, match any TWO (2) characteristics that qualifies this person to be a company director under the Companies Act 2016.

b) This question is based on a fictional company.
The Lim family incorporated Good Build Sdn Bhd (‘GBSB") as the vehicle for their landscaping business. For many years, the business of GBSB was conducted by Mr and Mrs Lim and their son, Luke, as directors. When Mr Lim fell ill last year, Mrs Lim focused her time in caring for him and spent very little time at the office. Both of them signed whatever cheques and documents Luke asked them to sign and went along with all of Luke's decisions. Luke, who was under pressure to settle his own debts, subsequently transferred monies and properties from GBSB to his name. Eventually GBSB was wound up and the liquidator wished to bring a civil action against Mr and Mrs Lim. Discuss whether Mr and Mrs Lim has breached any duty as directors of GBSB.

c) Justify, using relevant support, how the roles of auditor, company secretary and director contribute to a company's compliance of the Companies Act 2016.

Question 4:
Refer to the case of Ebrahimi v Westbourne Galleries Limited (1973) AC 360.
Connect the key ideas of the case to any THREE sections of the Malaysian Companies Act 2016.
You are expected to elaborate on the connection and support/ justify your observation(s).