Andy, Boon, Charles, Dennis and ET are the directors (the five directors) of Green Home Development Sdn Bhd (the Company). The Company was incorporated on 1st January 2012. The objects of the Company are on the acquisition of land, development, build and sell quality residential and commercial buildings to purchasers. There are 20 shareholders in the Company; among them, Aileen, Benny, Coco, Jon and Singapo (the five shareholders), each of them holds 10% shares. The balance of 50% is jointly held by the other 15 shareholders. On 1st April 2020, the Company reported its poor financial situation where the building construction work was forced to stop due to the Covid-19 pandemic. At this time, the Company obtained a loan of RM10 million from Papa Bank Berhad. A floating charge over the whole of the Company’s equipment was created in favour of Papa Bank Berhad. To protect Papa Bank Berhad’s interest, the Bank inserted a clause in the floating charge which stipulates that the Company shall not at liberty to create subsequent charges ranking pari passu with or in priority to the floating charge. On 1st August 2020, the Company created a fixed charge over its immovable asset located at Lot 11, Jalan Satu, Kuala Lumpur in favour of Mama Bank Berhad for an amount of RM30 million. All the above two charges are duly registered following the Companies Act 2016. Despite the poor financial situation faced by the Company, the Board of directors sold its 50 acres of agricultural land at Mukim 123, Kampar at RM100,000 to Lady Rose. Last month, the five shareholders discovered that the selling price was far below the market value. The five shareholders decided to confront the five directors and to view the Company’s accounts. The directors admitted that the land was sold to Lady Rose, but they cautioned that no company’s accounts or whatsoever can be viewed by any shareholders. The five shareholders were very unhappy. Soon, the other 15 shareholders also came to know of the land transaction to Lady Rose. All the shareholders wanted Singapo to take action against the five directors. The Covid-19 pandemic situation continues to worsen resulting in the complete stoppage of the Company’s construction works at several locations. By April 2021, the Company defaulted in the repayment of the two charges to Papa Bank Berhad and Mama Bank Berhad respectively.

(a) Advise the shareholders on the legal issue of oppression and any remedy which may be available to them under the Companies Act 2016. 

(b) Advise Singapo on the action and process under the Companies Act 2016 against the five directors on behalf of Green Home Development Sdn Bhd.

Answer rating: 100% (QA)

a Adv ise the shareholders on the legal issue of oppression and any remedy which may be available to ... View the full answer