A case study about Froddo Sdn Bhd v Besi Sdn Bhd & Managing director Fred and General Manager Chin Chai
At the outset, before I go into a detailed explanation of the facts and issues involved in this case, I would love to begin with a highlight and a concise enlightenment of the term director, otherwise known as the principal of a corporation
A director– A director to a company is an “officer” with the meaning of section 4(1). In addition, the word “director” is defined by section 4(1) as including:
* Somebody who has an agreement with a company through which orders otherwise guidelines are familiar in the direction of CA.
* Somebody inhabiting a spot in an organization ...view middle of the document...
Section 132(2) further places conditions on the directors of a corporation be duty-bound to not use facts assimilated through benefit of place of work to benefit himself.
If boards to a corporation as in Froddo sdn bhd, exercise their powers or discretion conferred upon them improperly just as Fred has done, the end result is that the decision and any consequent action taken in reliance on it may be voidable and not void. (Glover and Anor willet and Ors (1996) 20 ACSR 182, full court (Queensland). A fiduciary may be breach of his duties notwithstanding the subjective honesty of his motives.
ISSUES INVOLVED IN THE CASE
* Is all or whichever one of the executives as well as the managing principal can be charged with committing any offence in CA 1965, with regards to RM 2,000,000 debts.
* If it would be right to take legal action on every one of the administrators or is it possible to make a specific one individually legally responsible for the offence.
EXPLAINING AND APPLYING THE LAW RELATING TO THE ISSUE
This case is all about courteous charge on the executives to engaging in a deceitful as well as an unjust transaction. Without any compendium of doubt, Fred, of whom is the management executive of the establishment, as well as Chin Chai of whom is as well the over-all officer as well may perhaps remain accused to constraining an wrongdoing in S304(1) aimed at duplicitous transaction, in the CA of S 303(3) in lieu of allowing the business experience a liability at what time would be when the company remained in no rational panorama to the corporation in actuality capable to reimbursement its liability. Personal liability may also be incurred.
According to the CA of 1965, in S 304(1), where in the itinerary of the finale in business or in whichever events in contradiction of a corporation it look like that such commercial of the corporation partook in an intending doing to cheat the corporation’s creditors, the court of law possibly will, on the request of the overseer or whichever creditor or causative, instruction whichever individual who existed significantly a party in the direction of partaking in the transaction in that fashion to be independently accountable in lieu of the entirely or quite a few of the sum unpaid or additional liabilities of the corporation by means of the court of law’s guides. More also, S 304(5) of the Act states that each individual involved eloquently as a party to the formation of the trade with this such aim or purpose will be therefore guilt-ridden of an wrongdoing in contradiction of section of the act. This fragment stands with an aim towards combating deceitful trading. However, deceit is precisely challenging to corroborate as it embroils in, an attitude. Example on this is the case of HL BOLTON Co. v TJ GRAMAH & SONS (1956)3 ER All and also in William C Leitch Brothers Ltd 2 Ch7, where the judge stated that “…when a still carries on trading and eventually incurs a liability on...