Malaysian Company Law

2420 Words Oct 2nd, 2014 10 Pages
Part A
Potential Liability
Since the House of Lords decision in Salomon v Salomon & Co Ltd, it has been recognised that an inflexible application of the concepts of separate entity and limited liability will imply that can lead to undesirable consequences. Under certain occasionally, the court will go behind the corporate veil. In refer to cases of Yap Sing Hock v Public Prosecutor where the Supreme Court Peh Swee Chin SCJ would suggest the veil to be lifted by statutes, e.g. the Companies Act 1965 itself for certain specific purposes. The lifting of veil clearly constitute there a violation of the primary principle but this has come to be treated correctly as an exception to the primary principle. There are two situation where Act has
…show more content…
These directors should be persons of calibre, credibility and have the necessary skills and experiences to bring an independent judgement to bear on the issues of company strategy, performance and allocation of funds. Assuming Ali and Sunny reluctance to undertake or second guess business decisions especially struggling in a competitive market. This would caught them under Section 304(1) where the directors knowing that the financial affairs of the company is bad, but still carrying on business with the intention to deceive the creditors, therefore the court would held Ali and Sunny personally liable for the debts.
Furthermore, the potential liability would be the seductive logic. It is describe as a possibility where the transition from fraudulent trading to the new duty of insolvent trading. According to Ramsay (2000), Director is likely to lie his chances to secure the capital injection where his skill and judgement is at the table are probably suspect as well. The court could lift the corporate veil in the circumstances as there was an element of fraud involved in the receipt of the secret profit. Cases such as Aspatra Sdn Bhd v Bank Bumiputra Malaysia Bhd. For example, the director would be making own bet on the next roll hoping that the capital injection would save his job. For example, if directors wind up the

More about Malaysian Company Law