[erose04]

I hold 51% share of a private limited company named Suria Alliance. I was influenced by Mat and Mutu (3rd partiy)) to sell my shares in the company.Later, Mat and Mutu had actually bought all Suria Alliance shares by cheating us until all of the other directors resigned. I was reappointed as one of the company's directors but Mat and Mutu had forced us (all directors of Suria Alliance) to appoint Mat and Mutu as the new directors of Suria Alliance. Mat and Mutu also tricked me and another one director to surrender all documents on the Suria Alliance's land ownership, in which we did.

Several weeks later, Mat and Mutu, without the consent of the company secretary and it's shareholders, had passed a resolution authorizingSuria Alliance to use the land ownership documents as collateral to get loan from Dana Bank through a company named Selesa Private Limited ( the company has nothing to do with Suria Alliance).

Selesa Private Limited got the loan but was unable to service the loan which Dana Bank had brought the case into court and got the grant to sell the land by public auction. Suria Alliance has applied for an order for stay of execution of the order for sale.

Now, based on the situation stated above, I'd like to know:-

1) whether the cfreation of the charges was ultra vires Suria Alliance's memorandum of association or power of the directors as provided in articles of association of Suria Alliance Private Limited.

2) whether the creation of the charges was outside the borrowing power of Surai Alliance as provided in the article of association, since they were created not for the benefit of Suria Alliance but for a 3rd party, and also not instruction from the company.

Hope to get your opinion sooner.Thank you.

[RickJ]

This is a very complex legal issue, however you voluntarily sold your shares, so that may be influential as to whether pursueing this legally would benefit you.

I strongly suggest you consult with a local attorney.

[ScottGem]

As Rick said, this is a complex situation and probably beyond the scope of this forum. You also don't tell us where this case is being tried, which further limits our ability to advise.

Why aren't you asking the attorney that applied for the stay?

[erose04]

Tq rick and scott, I am residing in Malaysia and the case is being tried here. I just wonder whether Mat and Mutu have gone beyond their power to use the company's land as a collateral to Selesa's loan. I also wanted to know whether my company is liable to pay for the default loan incurred by Selesa. Your advice has helped me a lot. Thanks

[ScottGem]

Not knowing how Malaysia law differs from US statues, its really hard to advise. The case hinges on several factors.
1) can you prove fraud in their takeover of the company
2) can you prove fraud in their arrangement of the loan
3) under the terms of rules of incorporation did they have the right to use the land as collateral
4) Under Malaysian law can they use collateral from on company as security in a loan by another.

I think those are the key points.