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1. MTTAssociates than Joint Venture Company

Malaysian Turkistan Travel Sdn. Bhd was founded under 40% ownership to MTSB and

60% to TGS. The established company hence was considered as a Joint venture company

and a subsidiary of MTSB. However, in order to recognize MTT as a joint venture

company, both the parties should invest equally in-terms of money, time and effort to

build on the original concept (Joint Venture).

MTSB also considers MTT as its subsidiary company, although its share is less than 50

% percent and its authority to control decisions and make policy is insignificant.

Therefore, MTT cannot get the title as a subsidiary of MTSB unless it possesses half the

share and obtains influencing power in MTT. (Subsidiary)

Recommendation

MTT seems to follow associate company format rather than Joint Venture Company.

Hence, MTSB and TGS could reassess the MOU and divide shares equally to recognize

MTT as a joint venture and subsidiary company. Consequently, it would give more

power to MTSB in decision making and control irregularities.

2.

MOU and MOA interchange

Memorandum of Understanding between MTSB and GTS lacks many crucial contents

that are supposed to be in proper MOU such as general rules and policies, requirements

and responsibilities of parties involved, etc. In contract, it defines the prospect of business

collaboration, objectives, liabilities to be shared, etc. Hence, the presented MOU of MTT

is more into Memorandum of Association as it governs relationship between the company

and outside. (Memorandum of Association)

Recommendation

MTSB and GTS should understand the concept of MOU and include requirements and

responsibilities of both party and it should be contractually bounded through Articles of

Association or Memorandum of Agreement. The presented MOU could be converted to

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MOA as it serves more in defining business prospect than explaining obligation of parties

involved.

3. Share Capital not in Balance Sheet

The Share capital or Paid up Capital contributed by MTSB and GTS is not mentioned in

Projected Balance Sheet and this error might have occurred because of relationship based

transaction between the involved parties. The Board member of TGS, Mr. Omar Yatim

met his father Yatim Nor, an Executive Director of MTSB to form a joint venture

company MTT. Hence, the family relation between the parties who founded MTT could

be the reason for not mentioning total share value of RM. 2,358,935.00.

Recommendation

To project the proper and accurate financial transaction, MTT should include its paid up

capital in contributed capital. It should also establish accounting committee to arrange,

collect and record financial transaction for future use.

4. RM 2 Company to RM. 250,000.00

The RM2 Company is the company with RM2 as paid up capital. Any RM2 company

indicated that the company is not financially strong, the founder of the company or the

founding directors only contribute RM2 to form the company.

MTT increased its paid up capital from RM 2 to RM 250,000 after few months of

commencement. This rapid increase in capital could be the hoax amount to gain the

confidence of shareholders and government authorities as there was no audited accounts

neither issued to the shareholders nor filing made with the Companies Commission of

Malaysia.

Recommendation

The relationship based transaction between MTSB and GTS should be avoided

effectively and the parties involved in the reformation of MTT must not have family or

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any kind of relationship that would influence the contract. The MTT should also maintain

proper accounting procedures and record evidences to support every financial transaction.

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B

Joint Venture. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Joint_venture

Memorandum of Association. (n.d.). Retrieved from Wikipedia:

http://en.wikipedia.org/wiki/Memorandum_of_association

Subsidiary. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Subsidiary

ibliography

http://www.youtube.com/watch?v=47yv7yMMggQ

http://teochiewkia2010.blogspot.com/2010/02/rm2-company.html

http://en.wikipedia.org/wiki/Memorandum_of_agreement

http://www.youtube.com/watch?v=drB1ZscutB0

Subsidiary. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Subsidiary

http://www.youtube.com/watch?v=47yv7yMMggQhttp://www.youtube.com/watch?v=47yv7yMMggQhttp://teochiewkia2010.blogspot.com/2010/02/rm2-company.htmlhttp://teochiewkia2010.blogspot.com/2010/02/rm2-company.htmlhttp://en.wikipedia.org/wiki/Memorandum_of_agreementhttp://en.wikipedia.org/wiki/Memorandum_of_agreementhttp://www.youtube.com/watch?v=drB1ZscutB0http://www.youtube.com/watch?v=drB1ZscutB0http://en.wikipedia.org/wiki/Memorandum_of_agreementhttp://teochiewkia2010.blogspot.com/2010/02/rm2-company.htmlhttp://www.youtube.com/watch?v=47yv7yMMggQ