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Mighty Cake Limited: Case Study: Mighty Cake Limited

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Question 1 In this case, the issue is whether Mike, Yap and Kate are active promoters or passive promoters of the private limited company with the name of “Mighty Cake Limited”. Promoter means a person who in charges to form or register the company before operating a business. He or she is going to enter into contracts and responsible in some legal aspects of particular activities which carried out in the name of company. According to Krishnan, Rajoo and Vergis (2015), a person who actively participates in the formation of the company can be called as an active promoter. However, passive promoter means a person who does not in charges to run a business but is willing to invest an amount of money to the company. Based on the analysis of the case, Mike and Yap are the promoters because they wanted to form a business which selling the “Castella sponge cake” at Alammesra. The case law to support this situation is Twycross v Grant (1877) 2 CPD 469 where Cockburn CJ said a promoter who promises to form a company with reference to a given project, set it going and take the necessary steps to achieve goal. While Kate is a passive promoter because she work as a full time school teacher who does not involved herself in the operating of the business. She only invested an amount of RM15000 as the working capital of joining Mike and Yap in the business. The case law to support this situation is Tracey v Mandalay Pty Ltd (1953) 88 CLR 215 where the court held that a

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