Company Law
COMPANY LAW
ISSUE 1
MAIN ISSUE; Danny, who is one of the directors, doesn’t hold any shares at all in the company.
LAW; Section 124 talks about “Qualification of Director”
Section 124 (1) states that “Without affecting the operation of any of the preceding provisions of this Division, every director, who is by the articles required to hold a specified share qualification and who is not already qualified, shall obtain his qualification within two months after his appointment or such shorter period as is fixed by the articles.”
Section 124 (3) states that “A director shall vacate his office if he has not within the period referred to in subsection (1) obtained his qualification or if after so obtaining it he ceases at any time to hold his qualification.”
Penalty: One thousand ringgit. Default penalty.
Section 124 (4) states that “A person vacating office under this section shall be incapable of being reappointed as director until he has obtained his qualification.”
APPLICATION TO SITUATION;
In this situation, Concrete Icecream Bhd has four directors, namely Danny, Abby, Benny and Catherine. However, of the four directors, Danny does not hold any shares in the company. Concrete Icecream Bhd’s Article of Association states that all directors must hold at least 10% shares in the company, thus Danny, as a director, is in breach of this.
Also, according to Section 124 (1), every director is required to hold a specific share qualification, and if not should obtain this qualification within two months of his appointment, of if stated otherwise in the company’s articles.
However, if Benny cannot acquire the required qualification i.e. if he cannot acquire shares in the company within the stated period, he has to vacate his office as director, and pay a penalty of one thousand Malaysian ringgit. Thus he will not be able to be reappointed until the required qualifications have been met, as mentioned in section 124 (4).
CONCLUSION; The
ISSUE 1
MAIN ISSUE; Danny, who is one of the directors, doesn’t hold any shares at all in the company.
LAW; Section 124 talks about “Qualification of Director”
Section 124 (1) states that “Without affecting the operation of any of the preceding provisions of this Division, every director, who is by the articles required to hold a specified share qualification and who is not already qualified, shall obtain his qualification within two months after his appointment or such shorter period as is fixed by the articles.”
Section 124 (3) states that “A director shall vacate his office if he has not within the period referred to in subsection (1) obtained his qualification or if after so obtaining it he ceases at any time to hold his qualification.”
Penalty: One thousand ringgit. Default penalty.
Section 124 (4) states that “A person vacating office under this section shall be incapable of being reappointed as director until he has obtained his qualification.”
APPLICATION TO SITUATION;
In this situation, Concrete Icecream Bhd has four directors, namely Danny, Abby, Benny and Catherine. However, of the four directors, Danny does not hold any shares in the company. Concrete Icecream Bhd’s Article of Association states that all directors must hold at least 10% shares in the company, thus Danny, as a director, is in breach of this.
Also, according to Section 124 (1), every director is required to hold a specific share qualification, and if not should obtain this qualification within two months of his appointment, of if stated otherwise in the company’s articles.
However, if Benny cannot acquire the required qualification i.e. if he cannot acquire shares in the company within the stated period, he has to vacate his office as director, and pay a penalty of one thousand Malaysian ringgit. Thus he will not be able to be reappointed until the required qualifications have been met, as mentioned in section 124 (4).
CONCLUSION; The