Nov 17 2014, 01:23 PM
QUOTE(CyberSetan @ Nov 17 2014, 10:22 AM)
I wonder why the CEO isn't being sued/or even mentioned in the news for such a screw-up.
Technically, according to the provisions found in SECTION 304 of DIVISION 4 of PART X (WINDING UP) of the COMPANIES ACT 1965 (REVISED - 1973), a director of a company that is wound up because it is insolvent can be made personally liable for such of its debts as the court sees fit, if there has been ‘wrongful trading’. There has been wrongful trading if, at some time beforehand, a director knew (or ‘ought reasonably to have concluded’) that there was no reasonable prospect of avoiding the insolvent firm winding up, but did not take ‘every step’ to minimize the potential loss to the company’s creditors.However, in page 199 of the report titled, ‘Directors' Personal Liability for Corporate Fault: A Comparative Analysis (2008),’ it states:
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It is well recognized that Malaysia's insolvent trading provisions are ineffective, and well overdue for an overhaul. Indeed, it is the lack of effective insolvent trading provisions that is the main obstacle for recovery of losses by creditors in Malaysia.
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