Question 3

(a) ABCD Bhd. was incorporated in the year 2016 and has suffered losses over the last two years.

Advise the Managing Director of the company whether the company can pay a cash dividend

using its capital. Support your answer with reference to the Companies Act 2016. (8 marks)

(b) Examine the capital maintenance rule with reference to a case law. (7 marks)

(c) Syarikat Spend Bhd. is in need of capital. The directors have approached various banks that are

willing to give long-term loans to the company. The loans will be repaid within 15 years. Advise

the directors on the types of charges that may be created on the following assets in return for

the loans from the banks.

(i) A piece of land in Bangsar worth RM1.8 million. (2 marks)

(ii) Several tons of printed papers, computer prints, and newsprints. (2 marks)

(iii) A printing machine, which is used for the company's printing business. This machine

is on lease from Bosalana Finance Bhd. (3 marks)

(iv) Several computers and fax machines which were bought on credit from Leng Eng Sdn.

Bhd. (3 marks)

[Total: 25 marks]