Man established a sole proprietorship motorcycle crop spraying business since he left school at the age of 18 year old. Man then married Min and together they formed a company known as ManMin Sdn Bhd where he held 2999 shares of the company’s 3000 shares and Min held the other 1 share. Man and Min was also the governing director of the company. Man then applied the position of rider in the company and became the chief rider in the company. His work was to spray fertilizer from the modified motorcycle provided by the company. Every months Man received salary from the company and the company also contributed to his employee provident fund and other statutory requirements and also insured the employee under the company’s special workmen compensation scheme. One day, the motorcycle he was riding crashed and Man died as a result. His wife made a claim from the insurance company on behalf of her deceased husband. The insurance company refused to pay because it considered that Man and the company were one of the same. The company argued that a person cannot be both a director and major shareholder of a corporation on the one hand, and also an employee of the corporation on the other.

Advice Min on the effect of incorporation under Section 20 of the Companies Act 2016 and support your answer with two (2) decided cases.

Answer rating: 100% (QA)

Answer Section 20 of the Companies Act 2016 states that a company is a separate legal entity from its shareholders This means that a company is treated as a separate entity from its shareholders for l... View the full answer