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The court has the power if it thinks proper to grant an order for personal liability
without any limitation for the payment of the whole or any part of the debt. 125 The
objective of this section is presumably to punish the directors, notwithstanding it is a
civil provision. It must be noted that the remedies for insolvent trading under section
303(3) are similar to the remedies for fraudulent trading under section 304(1) of the
Malaysian Act 1965. The availability of a civil remedy for insolvent trading in
Malaysia depends on criminal conviction under section 303(3). The existence of this
pre condition has created an obstacle for liquidators or creditors to make use of this
section. This is evident from the absence of any decided cases on this section since it
was enacted in 1965.
11.3.5 Civil Penalty under the Australian Insolvent Trading
Provisions
In addition to civil remedies in section 588M, the Australian Securities and
Investments Commission (ASIC) can bring proceedings under Part 9.4B for a civil
penalty order against directors who have breached section 588(2). 126 On a
declaration of breach of section 588G, ASIC may seek an order for compensation, a
pecuniary penalty order or a disqualification order. A company also has the right to a
compensation order but not the pecuniary penalty order or the disqualification order.
The court may order against a person, who has contravened the section, to pay to the
Commonwealth a pecuniary sum of up to $200,000. 127 The court also has the power
to make a compensation order for any damage suffered under section 1317H. When
the court determines the amounts under the section, factors listed in sections
125 Section 304(2) states: ―Where a person has been convicted of an offence under subsection 303(3)
in relation to the contracting of such 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
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.‖
126 See section 1317E (1) (e) of the Australian Corporations Act 2001.
127 Section 1317G of the Australian Corporations Act 2001.
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