HLC 2013 COMPANY LAW

GROUP ASSIGNMENT
SECTION 01 (AA4.1)

NAME ID NUMBER
ABDUL HAKIM BIN ABDUL RAZAK PTM150117580
NUR SAKINAH HUDA BINTI MOHAMAD PTM150117679
ASRI

PREPARED FOR:
MADAM FATIMAH BINTI ABDUL WAHAB
Assignment: COMPANY LAW HLC 2013

Salmah and Tasya are the directors of a company called Segar Selalu Company. Their
company conducted a business that delivers fresh strawberries in Klang areas. One day
Aisyah had made an order of 20 boxes of fresh strawberries for immediate delivery to her
house in Pandamaran, Klang. Since most of the staffs were on leave, Salmah had personally
delivered the order to Aisyah. Unfortunately, Salmah had involved in an accident and died.
After a week, Salmahs husband, Borhan came to the company to claim for compensation
under the Workmen Compensation Scheme. Tasya declined Borhans claim and refused to
pay the compensation to him.

Advise Borhan.
ISSUE

Whether Borhan can claim for compensation under the Workmen Compensation
Scheme after Salmah had involved in an accident and died? Whether Tasya can decline
Borhans claim and refused to pay the compensation to him?

LAW

Section 4(1) Companies Act 1965, a company incorporated pursuant to this Act
(Companies Act 1965) or pursuant to any corresponding previous enactment. Under section
16(5) Companies Act 1965, once incorporated, a company becomes a body corporate. The
company may sue or be sued in its own name, and it also may own property including land.
The company has perpetual succession, and lastly the members liability may be limited.
Under a company becomes a body corporate, once incorporated, a company becomes a
person (artificial person) separate and distinct from its members. This is known as the
doctrine of separate legal entity or the veil of incorporation.

Based on the case of Lee v Lees Air Farming concerns the veil of incorporation and
separate legal personality. The appellants husband held 99% of the companys shares. He
was killed while on the job, due to a plane crash. Mrs Lee then claimed for compensation
under the Workmens compensation Act 1922. The Court of Appeal held that since the
deceased was the governing director and had full control of the company, he could not also be
an employee of the company. After appealing the case, it was ruled that an owner can also
qualify to be an employee of the same business. The company was considered to be a
separate legal person. The court allowed Mrs. Lee claim. Lee could enter into contract with
the company because he was the employee of the company. Lee formed Lees Air Farming
Ltd. He was the companys majority shareholder. He was also its only pilot. His work to
spray fertilizer from air. Lee was kill while flying for the company. His wife made the claim
from Workmens Compensation Scheme.
APPLICATION

Borhan can claim for compensation under the Workmen Compensation Scheme after
Salmah had involved in an accident and died. Tasya cannot decline Borhans claim and
refused to pay the compensation to him. Under section 16(5) Companies Act 1965, a
company becomes a body corporate. Once incorporated, a company becomes a person
separate and distinct from its members. This is known as the doctrine of separate legal
entity or the veil of incorporation. Salmah was the directors of the company but since
Salmah had personally delivered the order and had involved in an accident and died, Salmah
was consider as a member of the company. Therefore, she was liable to separate entity.

CONCLUSION

In conclusion, Borhan can claim for compensation under the Workmen Compensation
Scheme. Tasya cannot refused to pay the compensation to Borhan.