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Companies Act 1957

Extracts from this document...

Introduction

COMPANY LAW Companies Act 1957 It is an act to provide for the incorporation and registration of companies in Brunei, to control and regulate the relation between members of a company and its creditors and the company and between the company and its creditors and the public, to provide for the conditions under which companies incorporated outside Brunei may carry on business in Brunei and generally to control the functioning within Brunei of companies registered locally or carrying on businesses within Brunei. The Companies Act is enacted on 1st January 1957. this applies to every company registered in Brunei irrespective of the place or places where the business of such company may be carried on. Rules and Fees (General Rules) 1) The Chief Justice may, with the occurrence of His Majesty make general rules for carrying into effect the objects of this Act so far as relates to the winding up of companies, and also rules for the purposes of this Act generally, including rules as to costs. 2) Minister of Law with the approval of His Majesty The Sultan and Yang Di-Pertuan: a) the manner in which applications by persons desirous of being placed upon the authorized list of auditors shall be made; b) ...read more.

Middle

Articles must : a) be printed; b) be divided into paragraphs numbered consecutively; c) bear the same stamp as if they were contained in a deed; d) be signed by each subscriber of the Memorandum of Association in the presence of at least one witness who must attest the signature. Minority Protection Concerning whether the Company Law in Brunei should be updated or not, yes, it needs updating. There are several important sections in the Companies Act that has not been included in the Brunei Laws yet. One of them is Minority Protection. There are two factors that affect the ability of minority shareholders to enforce the rights of a company in respect of harm the company has suffered: ? The principle of majority rule. The majority rule acknowledges that a company is governed by the will of the majority of the shareholders. The court will not allow minority shareholders to start litigation in respect of an issue to which the majority shareholders can subsequently grant their approval (Foss v. Harbottle). If the thing complained of is a thing which in substance the majority of the company is entitled to do regularly or if something has been done illegally which the majority is entitled to do legally, there is no use in having the matter litigated. ...read more.

Conclusion

Another course of action is the representative actions. This is appropriate where a shareholder brings an action on behalf of both himself and other persons, to enforce their collective personal rights. The relief sought will therefore be beneficial to all those persons represented by the plaintiff. Any judgment obtained in respect of a representative action binds all persons so represented. The function of this procedure is obviously to prevent duplicity of actions in respect of the same issue. And the third action that can be brought by a minority shareholder is the derivative actions. A derivative action can be used to enforce the rights of the company against majority shareholders. However, a derivative action cannot be brought by a shareholder who participated in the wrongdoing. Judgment is given in favour of the company. The individual plaintiff or applicant does not, therefore, directly benefit if the action is successful. The company must be joined in the action, and may be ordered to indemnify the shareholder who acted on its behalf for his legal costs in the action if it is a reasonable and prudent course to take in the circumstances. If the company asks the court to strike out a derivative action, prior to commencement of proceedings, the action will be allowed to continue only if allegations in the statement of claim justify a derivative action and a prima facie case is provided. 1 ...read more.

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