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304(1), it also applies when the company is in the course of winding up or in any
proceeding against the company, 305 which means it could apply prior to winding
up. 306
In conjunction with the conviction under section 303(3), a liquidator or any
creditor or contributory of the company may apply for a declaration that the
person be personally liable without any liability for payment of the debt. 307 Since
civil liability is dependent upon criminal conviction, this section is not widely
used by liquidators. 308 To date in Malaysia, there are no reported cases on the
application of these provisions.
Liability under the Malaysian section is imposed on any officer of the company
while its Australian counterpart places liability on directors or any person who
takes part in the management of the company. However, the current Australian
insolvent trading provision is enforced only against directors of the company. 309
Offences under both sections are committed if the company incurs or contracts
debts at the time when there are reasonable or probable grounds to expect that the
company will not be able to pay all its debts. Section 592(1) went further to state
that the „person‟ 310 involved contravenes the section if at the time debt is
incurred there were reasonable grounds to expect that, if the company incurs the
debt, it will not be able to pay all its debts as and when they became due. Section
303(3), however, does not have this requirement and is only concerned with the
305 See section 303(3).
306 Tang Eng Iron Works Co Ltd v Ting Ling Kiew & Anor[1990] 2 MLJ 440.
307 Section 304(2) of the Malaysian Companies Act 1965 –“Where a person has been convicted
of an offence under subsection 303(3) in relation to the contracting of such a debt as is referred
to in that section the Court, on the application of the liquidator or any creditor or contributory
of the company, may if it thinks proper so to do, declare that the person shall be personally
responsible without any limitation of liability for the payment of the whole or any part of that
debt.”
308 ALRC R45 Vol 1 1988 above n7 at [278-279].
309 See section 588G(1) of the Australian Corporations Act 2001.
310 Person in this context refers to directors any persons who take part in the management of a
company.
304