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Analogy involves a process of reasoning from one specific case to another specific
case. In a situation where it is unclear whether the general rule is applicable to the
specific facts, it is helpful to examine similar cases. If, upon examination, it is found
that the facts are sufficiently similar, it can be concluded that the facts of the case
should be treated in the same way.
A comparative study is undertaken in this area to aid legislative and other law
reforms. 6 Accordingly, selected legislation, which provides for directors’ duties
during insolvency, will be reviewed to determine the extent to which the interests of
the creditors have been considered, and the application of such provisions.
Comparative law is also an effective tool of construction 7 especially in common law
jurisdictions where interpretations of case law (judge made law) form an essential
part.
The method of study is to compare foreign and domestic legislation to ascertain
similarities and differences. In addition, an analysis of solutions offered by different
laws will be looked into, in particular, on issues relating to the protection of
creditors. Therefore, cases in areas such as directors’ duties, maintenance of capital,
and duties of liquidators, will be considered to determine how the law is applied and
whether the legal objective of the statute has been achieved.
For the purpose of comparison with Malaysia, three jurisdictions have been
identified: the UK, New Zealand and Australia. These countries have been chosen
because they share a common historical legal background with Malaysia, as a former
colony of the British Empire, and they all have similar legal systems which are based
on the English Common Law. 8
6 Peter De Cruz Comparative Law in a Changing World (3 rd ed, Routledge-Cavendish, London, New
York, 2007) at 6.
7 Ibid.
8 Lucian Arye Bebchuk and Mark J. Roe “A Theory of Path Dependence in Corporate Ownership and
Governance” (1999) 52 Stanford LR 127 at 129- the theory proposes the choice of legal system of
the country depending on the pattern it had earlier.
6