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The courts have acknowledged that the meaning of „carrying on of the business‟
within the section covers a wide range of actions which are not necessarily
confined to trading. This is evidenced from the courts‟ decisions which
concluded that activities such as the passing of resolutions to ratify the usage of
company‟s funds to pay for investments, 287 the usage of loan money for the
purpose of payment for construction works, 288 and payment of certain sums owed
to the defendant director in preference over other trade creditors including those
who stand in priority over the defendant involved 'carrying on of the business.' 289
10.6.2.3 Intent to Defraud or for any Fraudulent Purpose
It is essential for the court to make an inference from the facts of each case in
order to determine whether there is an intention to defraud creditors or whether it
was done for a fraudulent purpose. 290 Nevertheless, for the purpose of section
304(1), showing an intention to defraud is sufficient and it is not necessary for the
creditors to be in fact defrauded. 291 As such, the company‟s financial state is
irrelevant in determining the directors‟ liability.
Despite its name, the insolvent trading in section 303(3) also does not require the
company to be insolvent for liability to be imposed in directors. The section only
287 Siow Yoon Keong v H Rosen Engineering BV [2003] 4 MLJ 569.
288 Tang Eng Iron Works Co Ltd v Ting Ling Kiew & Anor [1990] 2 MLJ 440.
289 Kawin Industrial Sdn Bhd (in liquidation) v Tay Tiong Soong [2009] 1 MLJ 723.
290 See the judgment in PJTV Denson (M) Sdn Bhd v Roxy (Malaysia) Sdn Bhd [1980] 2 MLJ
136 at 138 where the judge referred to English cases and stated: “Whether fraud exists is a
question of fact, to be decided upon the circumstances of each particular case. Decided cases
are only illustrative of fraud. Fraud must mean "actual fraud, i.e. dishonesty of some sort" for
which the registered proprietor is a party or privy. "Fraud is the same in all courts, but such
expressions as 'constructive fraud' are ...inaccurate;" but "'fraud' ... implies a wilful act, on the
part of one, whereby another is sought to be deprived, by unjustifiable means, of what he is
entitled." ( per Romilly M.R. in Green v Nixon (1857) 23 Beav 530 & 535). Thus in Waimiha
Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 at 106 it was said that "if the
designed object of a transfer be to cheat a man of a known existing right, that is fraudulent...";
see also LMW Electronics Pte Ltd v Ang Chuang Juay & Ors [2010] 1 MLJ 185 at 201
“Whether there was any intention on the part of the defendant to defraud or to carry out any
fraudulent purpose is a question of facts to be inferred from the surrounding circumstances and
the subsequent conduct of the defendant especially the concealment of material facts.”
291 Kawin Industrial Sdn Bhd (in liquidation) v Tay Tiong Soong [2009] 1 MLJ 723 at 732-733.
299