Wrongdoings and mismanagement of funds by the Board of Directors.

Wrongdoings and mismanagement of funds by the Board of Directors.

Maju Gemilang Berhad is a company dealing in oil and gas production industry. Ahmad, Azlan and Abas who are siblings are also the majority shareholders of the company. The three of them are also members of the Board of Directors of Maju Gemilang Berhad. They appointed Kamarul an engineer of the company to be the auditor for the company. Since Kamarul has no knowledge on the financial affairs of the company a lot of fundamental mistakes have been made in the auditor’s report prepared for the shareholders. It was found out later that Kamarul has never made any effort to prepare a proper report.

Saleh a minority shareholder found out that the mistakes made by the auditor was not only on fundamental issues but also as an attempt to cover certain wrongdoings and mismanagement of funds by the Board of Directors. He wishes to file an action on behalf of the company but the directors argued that he has no right to do so as a minority shareholder.

With reference to existing laws and cases discuss the above problem.  (25 Marks)