2. LEARNING OUTCOMES
Students shall be able to:
1) Explain the doctrine of capital maintenance.
2) Discuss how a company may effect a reduction of
capital.
3) Discuss the prohibition on the power of companies to
purchase their own shares and to give financial
assistance for the purchase of their own shares and
the exceptions to it.
4) Explain the rules governing the distribution of
dividends in both public and private companies.
5) Apply the law in solving certain problem.
4. Reduction of Capital
The company’s capital is the company’s assets.
Section 115 – allows a company to reduce its capital
upon fulfilment of certain conditions. However, the
company’s constitution may provide otherwise.
Unlimited Company
Section 116(11) – an unlimited company may reduce its
share capital in any manner. It need not comply with the
procedure prescribed in the CA 2016.
5. Reduction of Capital
This open provision might be due to the fact that the
liability of members of an unlimited company is unlimited.
Thus, even though the share capital is reduced, it should
not affect the creditor’s right to proceed against the
member. The member of an unlimited company is liable
too for the debts of the company.
Section 118 confers right on the creditor to object to the
reduction of capital. However, This right is given only where
the company has passed a special resolution under
section 117.
6. Reduction of Capital
Thus, if an unlimited company did not follow the procedure
for reduction of share capital as prescribed in section 117,
the creditors are left without any recourse other than
under section 346 (remedy in cases of an oppression).
Company Limited by Share
Section 115 – 2 methods of reduction of share capital
namely:
Reduction by court
Reduction supported by solvency statements
Both methods require the company to pass a special
resolution.
7. Reduction of Capital
Section 115 also provides that the company may by its
constitution prohibit or restrict the reduction of its capital.
Special resolution supported by solvency statement
S117(3) – All directors of the company are required to
make a solvency statement.
Solvency test – section 112(1) – a company satisfies the
solvency test in relation to a transaction if:
1) Immediately after the reduction of share capital,
there will be no ground on which the company
could be found to be unable to pay its debts;
8. Reduction of Capital
2) Either -
If the company commences winding up within
12 months from the date of the reduction of
share capital, the company will be able to pay
its debts in full within 12 months after the
commencement of the winding up; or
The company will be able to pay its debts as the
debts become due during the 12 months
following the date of the reduction of share
capital.
3) The company’s assets is more than the liability of
the company at the date of the transaction.
9. Reduction of Capital
The company must enjoy:
Cash flow solvency in that the company is in
position to pay off its debts; and
Balance sheet solvency in that the company
must have more assets than liabilities.
Requirements for the solvency statement (section
113 (2)(a)):
It must be signed by all the directors (section
113(2)(a));
It states that each of the directors has formed an
opinion that the company satisfies the solvency
test (section 113(3))
10. Reduction of Capital
A director who makes a solvency statement without
having reasonable grounds for the opinion expressed in
the statement shall be guilty of an offence. He is liable to
imprisonment for a term not exceeding 5 years or to a
fine not exceeding RM500,000 or to both (section 114).
Member’s special resolution is required for reduction of
share capital by a solvency statement.
For private company, the special resolution may be
passed:
by a written resolution; or
in a general meeting.
11. Reduction of Capital
The procedure for written resolution –
The proposed resolution together with the director’s
solvency statement shall be circulated to all
members.
The resolution is deemed passed when the required
majority members signify their agreement to the
written resolution (section 306(4).
Members are given 28 days from the circulation date
to signify their agreement (Section 307(1)).
12. Reduction of Capital
The procedure for passing a special
resolution at general meeting requires the
solvency statement be made available for
inspection by members through out the
meeting. It does not require the solvency
statement to accompany the notice calling
for the meeting(section 117(5)(b))
Section 292 – notice of at least 21 days
need to be circulated to members prior to
the meeting.
It is passed by at least 75% of the votes
casted during the meeting ( section 292).
13. Reduction of Capital
For public company, the special resolution
may be passed only in general meeting.
Notice of at least 21 days need to be given
to the members prior to the meeting. It is
passed by at least 75% of the votes casted
during the meeting.
The solvency statement must be made
available for inspection by the members
through out the meeting.
14. Reduction of Capital
After passing of the special resolution, the
company shall:
1) Make the solvency statement available
at the company’s registered office for
inspection free of charge by a creditor
of the company for a period of six
weeks from the date of the resolution
(section 117(5)(c)).
15. Reduction of Capital
2) Send a notice to the ROC and Director
General of Inland Revenue Board
(DGIR) within 7 days of the resolution.
The notice shall state the resolution has
been passed and contain the date and
text of the resolution (section 117(1)).
3) Advertise a notice of the reduction of
the share capital in one national
language newspaper and one English
language newspaper within 7 days of
the resolution (section 117(10)).
16. Reduction of Capital
Protection to creditor:
Section 118 – A creditor may apply to the
court for the cancellation of the resolution
within 6 weeks from the resolution date.
Creditor is to serve the application on the
company.
The company shall give notice of the
application to the ROC.
17. Reduction of Capital
Section 120 – the court shall make an
order to cancel the resolution where:
The debt to the creditor is outstanding;
The debt is not secured; and
Security for the debt is necessary in
view of the company’s assets after
reduction.
The court may order the cancellation of
resolution where the solvency of the
company is in doubt.
18. Reduction of Capital
Where the court has made an order to
cancel the resolution. The company is
required to lodge a copy of the court order
with the ROC within 14 days of the order.
Section 119 – reduction of share capital takes
effect when the ROC has recorded the
required information in the register.
If no application for cancellation is made by
any creditor, the company is required to
lodge with the ROC between the 7th and 8th
week from the resolution date the following
documents:
19. Reduction of Capital
1) A copy of the resolution;
2) A copy of the solvency statement;
3) Director’s statement confirming:
i. Lodgement of the notice of resolution
with the DGIR and the ROC (section
117(1) notice);
ii. Compliance of the solvency
requirements under section 117(3); and
iii. No application for cancellation of the
resolution
4) A copy of the notice of reduction of share
capital advertised in the national language
and English language newspaper.
20. Reduction of Capital
If the creditor’s application to cancel the
resolution has been dismissed by the court or
withdrawn by the creditor, section 119(2)
requires the company to lodge with the ROC
the following documents within 14 days from
the dismissal or withdrawal of the
application:
1) Director’s statement confirming:
i. Lodgement of the notice of resolution
with the DGIR and the ROC (section
117(1) notice);
21. Reduction of Capital
ii. Compliance of the solvency
requirements under section 117(3);
and
iii. Availability of the solvency
statement to the company’s
members and creditors as required
under section 117(5) or (6); and
iv. The dismissal or withdrawal of the
creditor’s application for
cancellation of the resolution.
22. Reduction of Capital
2) A copy of the court order dismissing the
application, where applicable; and
3) A notice containing the information
relating to the reduction of share
capital.
23. Reduction of Capital
Special resolution confirmed by court
Where the company could not satisfy the
solvency test or where any directors fail to sign the
solvency statement, the company limited by
shares may reduce its capital only with the court’s
confirmation. The procedure is provided in section
116.
Methods
S116(1) – a company with the confirmation of the
court may reduce its capital in any way which
includes:
24. Reduction of Capital
1) Extinguishing or reducing the liability on any
unpaid shares;
2) Cancelling any paid-up share capital which is
lost or unrepresented by available assets;
3) Return to shareholders any paid-up share-
capital which is in excess of the company’s
need
Section 116(1) provides examples how a company
may reduce its capital; it does not restrict the
method by which a company may reduce its
capital.
25. Reduction of Capital
Cancel unpaid capital
The unpaid capital of the company is the amount
unpaid on shares issued which could be called upon
at any time. It is a debt due to the company which
is legally enforceable.
Section 435(2) – the holder of shares which are not
fully paid-up is required to contribute an amount nt
exceeding the unpaid amount when the company
is wound up.
Further, the said sum is available to meet the
company’s future needs.
26. Reduction of Capital
As the unpaid capital is also an asset of the
company, the company can charge it as a security
to raise loans.
Therefore, the cancellation of unpaid capital
benefits the members who have not fully paid-up on
their shares to the detriment of creditors. The court
may allow this only when the company is flushed
with funds, its assets exceeding its liabilities.
27. Reduction of Capital
Cancel any paid-up capital
By cancelling any paid-up capital which is lost or
unrepresented by available assets.
This method is used in a restructuring exercise of the
company. Due to losses incurred by the company, its
paid-up capital is not reflected in its available assets.
Refund any paid-up capital
This method is prescribed in section 116(1)(c).
By refunding any paid-up share capital which is in excess
of the needs of the company
28. Reduction of Capital
The company is flushed with funds and there is no
likelihood that the company needs the funds to
continue with or to expand its business.
Thus, the company refunds part of its capital to its
members.
Conditions
1) The company’s constitution does not prohibit it
(section 115).
2) Members have approved by a special resolution
(section 115 & 116).
29. Reduction of Capital
3) The court has confirmed the proposed reduction.
Ex Parte Westburn Sugar Refineries Ltd (1951)
Held: the court must consider the interest of the
stakeholders of the company, namely:
Its creditors;
Its members; and
The public.
The court will also consider whether the proposal is fair
and reasonable to all members of the company. This is
because the company may have different classes of
shares, and only certain classes may be affected by the
proposed reduction.
30. Reduction of Capital
Re Fowlers Vacola Manufacturing Co Ltd (1966)
In this case the court did not approve of the
company’s proposal to return the excess capital
to only holders of ordinary shares, and not to the
holders of the holders of the preference shares.
However, section 116 appears to provide for the
protection of only the company’s creditor.
Section 116(2) & (4):
The court shall settle a list of creditors of the
company.
31. Reduction of Capital
A creditor shall be entitled to object to the
reduction of the share capital.
The court may confirm the reduction if the court
is satisfied that the creditors consent has been
obtained, or his debt has been discharged,
determined or secured.
Section 116 does not provide for the objection of
a member towards the reduction. A prejudiced
member will have to avail himself of the general
protection given to members under section 346.
32. Reduction of Capital
4) The court order must be lodged with the ROC.
Section 116(6) – only upon its lodgement, the court
order becomes effective, and the company can
proceed to reduce its capital.
The ROC’s notice confirming the reduction of share
capital shall be conclusive evidence that all
requirements of the CA 2016 with regard to the
reduction of capital have been complied with
(section 116(7))
Section 116(10) – members rights shall not be affected
notwithstanding the reduction of capital under
subsection 9. There appears to be an anomaly here as
subsection 9 is on the right of creditor and liability of
members.
33. Reduction of Capital
Issue: would members whose shares have been
cancelled still enjoy the rights attached to those
cancelled shares?
This cannot be the intention of the legislature.
Members liabilities – a past or present member shall
not be liable for an amount greater than the
difference between the issue price of the share and
the aggregate of the amount paid-up on the shares
plus the amount reduced on the share - section 122
& 116(9).
34. Reduction of Capital
Illustration:
Atan subscribed to 1000 shares in ABC Sdn Bhd. The
issue price was RM1.20 each. Atan has paid RM0.70
for each share. The share capital of the company has
just been reduced. The amount reduced on each
share held by Atan is RM0.20. So, Atan’s liability is:
= Issue price – (Amount paid +Amount reduced)
= RM1.20 – (RM0.70 + RM0.20)
= RM1.20 – RM0.90
= RM0.30
35. Reduction of Capital
Nevertheless, section 116(9) provides that a
member of an unpaid share will be liable to
contribute to the original amount of his liability if:
A creditor is ignorant of the proceedings for
reduction or the omission of his name from the
lists of creditors; and
The company is unable to pay his debt.
This is another protection given to creditors of a
company which has undergone reduction of share
capital.
36. Prohibition on company to give financial
assistance for the purchase of their own shares
Section 123(1) – a company is not allowed to give any
form of financial assistance, be it in the form of a loan or
a security for any loan or any type of financial assistance
whatsoever, to enable a person to purchase shares in
the company or in its holding company.
The company cannot give the financing to the
purchaser himself or to another party. It is immaterial that
the shares are purchased directly from the company
(the shares are allotted to him) or from a third party.
37. Prohibition on company to give financial
assistance for the purchase of their own shares
A company is prohibited because a person who wishes
to buys shares should do so using his own resources. If
financing from the company is permitted, and the loan
is not repaid, the company’s asset are dissipated for the
benefit of the said member. This is tantamounts to the
company returning capital to him, giving him priority
over its other members and creditors.
Section 123(1) – lists some form of financial assistance :
loan, guarantee or the provision of security, but they are
not conclusive.
38. Prohibition on company to give financial
assistance for the purchase of their own shares
Datuk Tan Leng Teck v Sarjana Sdn Bhd
Augustine Paul J defined financial assistance as:
The giving of financial assistance means making a provision in
money or money’s worth to which a shareholder was not
already entitled in his capacity as a shareholder.
Wallersteiner v Moir
Lord Denning propounded the following test:
You look to the company’s money and see what has
become of it. You look to the company’s shares and see into
whose hands they have got. You will then soon see if the
company’s money has been used to finance the purchase.
39. Prohibition on company to give financial
assistance for the purchase of their own shares
Section 123(1) prohibits only the company from giving
financial assistance to the purchaser. It does not prohibit
the purchaser from obtaining financial assistance from
other sources.
Shearer Transport Co Pty v McGrath (1956)
Fact: The company gave a loan to a prospective
purchaser for the purpose of purchasing the company’s
own shares.
Held: The company could not recover the loan, enforce
the charge and claim under the guarantee.
40. Prohibition on company to give financial
assistance for the purchase of their own shares
Belmont Finance Corp Ltd v Williams Furniture Ltd (No 2)
(1980)
Facts: The company purchased property from a person
who intended to purchase its shares. The consideration
paid by the company was above the value of the property
Held: The transaction was effected for the sole purpose of
enabling the purchaser to pay for the shares in the
company. This was a financial assistance which was
prohibited by law.
41. Prohibition on company to give financial
assistance for the purchase of their own shares
Selangor United Rubber Estate Ltd v Craddock (No 3)
(1968)
Facts: The company lend money to a third party. The third
party then lend it to the prospective purchaser of the
company’s shares.
Held: This scheme was against the prohibition on a
company giving financial assistance for the purchase of its
own shares.
42. Prohibition on company to give financial assistance for
the purchase of their own shares
Chung Khiaw Bank Ltd v Hotel Rasa Sayang Sdn Bhd
(1990)
Facts: The purchaser of shares of a company
obtained a loan from the bank. As security for the
loan, the company charged its land as security to the
bank. Two years later, in 1982, the bank granted
another loan to the borrower against the security of
the company’s assets and guarantee from the
directors. The proceeds from the second loan were
used to settle the first loan.
43. Prohibition on company to give financial assistance for
the purchase of their own shares
Held: The bank could not recover the second loan
or enforce the securities because:
The two loan should be regarded as one
continuous transaction… The 1980 loan was
clearly a transaction prohibited by statute and
the 1982 loan was tainted with illegality.
44. Prohibition on company to give financial
assistance for the purchase of their own shares
Consequences
Section 124 – the transaction is not void (the validity is not
affected).
Section 123(5) – the company and any person are allowed
to recover the amount of the loan or any amount for
which it become liable.
Effects of section 123(5):
The company as lender may recover the loan;
The company as borrower is liable;
The charge or security given by the company is enforceable.
45. Prohibition on company to give financial
assistance for the purchase of their own shares
The effects of section 123(5) and 124 – the financing
prohibited by section 123(1) and 124 is not void but valid,
resulting in the financier not suffering losses:
Section 123(3) – officers who carried out the transaction on
behalf of the company have committed an offence.
Section 123(4) – The officer who is guilty, is liable to
compensate the company or any person who has suffered
losses or damage as a result of the prohibited transaction.
Section123(4) cover the officer’s liability to the company
and any financier who is not able to recover full financing
given.
46. Prohibition on company to give financial
assistance for the purchase of their own shares
The officers who carried out the transaction on behalf of
the company have committed an offence – Section
123(3).
The officer who is guilty, is liable to compensate the
company or any person who has suffered losses or
damage as a result of the prohibited transaction –
Section 123(4).
47. Prohibition on company to give financial
assistance for the purchase of their own shares
Exceptions:
Foreign company
The word “company” in section 123(1) and (2) mean a
company incorporated in Malaysia (section 2(1)).
Thus a foreign company is not prohibited from giving financial
assistance in Malaysia.
However, foreign company is still subjected to the law of the
country of its incorporation and may also be prohibited from
giving financial assistance for the purchase of the company’s
own shares or its holding company’s shares.
48. Prohibition on company to give financial
assistance for the purchase of their own shares
Ordinary course of business
Section 125(a) – where the lending of money is part of the
ordinary business of the company, the company may then lend
money in its ordinary course of its business to finance the
purchase of its shares or its holding company’s shares.
However in Steen v Law (1964), the court held that if the
company, be a bank or a moneylender whose ordinary
course of business includes lending of money, lent money
deliberately for the purpose of financing the purchase of its
shares or its holding company’s shares, such loan cannot be
the company’s ordinary course of business to lend money to
a third party for the purpose of buying shares in the lender
itself or in the lender’s holding company.
49. Prohibition on company to give financial
assistance for the purchase of their own shares
Trust scheme for employees
Section 125(b) – a company is permitted to provide money
for the purchase of its shares and the shares of its holding
company for the benefit of its employees or the employees
of its subsidiary.
Employees
Section 125(c) – the company may provide financial
assistance to person in its employment and in the
employment of its subsidiaries to enable them to purchase
fully-paid shares in the company and in its holding company.
The shares must be fully paid-up.
50. Prohibition on company to give financial
assistance for the purchase of their own shares
The financing may be in the form of loan from the company
or its subsidiary. Sometimes the company may arrange with a
bank to finance the purchase by its employees and gives an
undertaking to the financier lender to deduct the loan
instalments from their salaries. These arrangements are
permitted by section 125(c).
This exception does not apply to employee who are also
directors of the company or its subsidiaries. Companies are
still restrained from granting financial assistance to its
directors and directors of its subsidiaries to purchase the
shares in the company and in its holding company.
51. Prohibition on company to give financial
assistance for the purchase of their own shares
Bank, insurance or takaful
Section 125(d) applies to companies which are regulated by
any written law relating to bank, insurance or takaful or which
are subject to the supervision of the Securities Commission.
The financial assistance is given in the ordinary course of
business of the said company and on ordinary commercial
terms.
52. Prohibition on company to give financial
assistance for the purchase of their own shares
Non-public listed company
Section 126 – a company other than a public listed company
may give financial assistance for the purchase of its shares or
its holding company’s shares provided the conditions are
fulfilled.
Conditions:
1) A members’ special resolution approving the financial
assistance (section 126(2)).
2) Section 126(2)(a) – a director’s resolution that:
i. The company may give the assistance;
53. Prohibition on company to give financial
assistance for the purchase of their own shares
ii. The giving of the assistance is in the best interest of
the company; and
iii. The terms and conditions are just and reasonable to
the company.
3) The directors who voted in favour of the resolution give
a solvency statement on the same date
(section126(2)(b). This statement is required to be made
by the majority of directors.
Solvency test – section 112(1) – a company satisfies
the solvency test in relation to a transaction if:
54. Prohibition on company to give financial
assistance for the purchase of their own shares
1) Immediately after the transaction there will be no
ground on which the company could be found to
be unable to pay its debts;
2) Either -
If the company commences winding up within
12 months from the date of the transaction, the
company will be able to pay its debts in full
within 12 months after the commencement of
the winding up; or
The company will be able to pay its debts as the
debts become due during the 12 months
immediately following the date of the
transaction; and
3) The company’s assets is more than the liability of
the company at the date of the transaction.
55. Prohibition on company to give financial
assistance for the purchase of their own shares
The majority directors must form the opinion that the
company enjoys:
1) Cash flow solvency as the company is in a
position to pay off its debt
2) Balance sheet solvency as the company must
have more assets than liabilities.
4) The aggregate amount of the proposed assistance
and other financial assistance which are still
outstanding does not exceed 10% of the
shareholders’ funds (section 126(2)(c)).
56. Prohibition on company to give financial
assistance for the purchase of their own shares
The company’s contingent liability under any
guarantee or security given for the purpose of
acquiring the company’s shares or its holding
company’s shares or its holding company’s shares
should also be included when calculating the
amount outstanding (section 126(4)).
5) The company receives fair value in connection with
the financial assistance (section 126(2)(d).
Section 126(5) – the company is required to
communicate to its members the solvency
statement and a notice containing the following
information within 14 days of giving the financial
assistance.
57. Prohibition on company to give financial
assistance for the purchase of their own shares
i. The class and number of shares in respect of
which the assistance was given;
ii. The consideration paid or payable for those
shares;
iii. The identity of the person receiving the financial
assistance and the name of the beneficial
owner of the shares; and
iv. The nature, terms and amount of the financial
assistance.
6) The financial assistance is given not more than 12
months after the date of the solvency statement by
the directors (section 126(2)(e)).
58. Distribution of Dividends
Holders of shares in a company are investors. They invest
with the hope of getting returns.
Returns can come in the form of dividends as well as
capital appreciation on the value of the shares.
The company distributes all or part of its profit to its
members in the form of dividends.
Dividends can be paid in cash or in the form of share
dividends (e.g. section 127(7) and 618(3))
There is a risk that the company may attempt to pay
dividends from its capital causing a reduction in its
capital.
59. Distribution of Dividends
Thus, section 131(1) – a company may only make a
distribution to the shareholders out of profits of the
company available if the company is solvent.
Section 131(2) imposes criminal liability on the company,
its officers and any other person who contravenes this
rule.
The contravention of this rule also attracts civil liability for
the shareholder, director and manager – Section 133.
Section 132(1) – the sole authority to authorise the
payment of dividends is with the directors.
60. Distribution of Dividends
Section 132(2) – the directors may authorise the
distribution at such time and in such amount as they
consider appropriate.
Directors should exercise their discretion fairly and
honestly, failing which the members can take action
against the directors.
Principles
Section 131 CA 2016 :
“a company may only make a distribution to the
shareholders out of profits of the company available if
the company is solvent.”
61. Distribution of Dividends
Section 132 – the directors must be satisfied that the
company will be solvent immediately after the
distribution is made.
Thus, a company may pay dividends only if the following
conditions are fulfilled:
The company is solvent; and
The company has distributable profit.
62. Distribution of Dividends
Sometimes, a company suffers cash flow problems even
though it has made profit.
Whether a company may borrow money to pay
dividend?
Hilton International Ltd v Hilton
Held: The company may borrow money to pay
dividend. The key factors are that the company’s
account must have disclosed that the company has
distributable profits, and the payment of dividends will
not cause the company to go into insolvency.
63. Distribution of Dividends
The profit is the company’s profit and not that of its
subsidiary.
Industrial Equity Ltd v Blackburn (1977)
Held: that even if the subsidiary has made a profit, it
cannot be said that it is the holding company’s profit. The
holding may only consider it if the subsidiary has declared
and paid the profit as dividends to the holding company.
Unless the company’s constitution provides otherwise,
a company is not required to pay out all its profits as
dividends in that year. The company may carry it
forward to the following years and pay out in
subsequent years.
64. Distribution of Dividends
Profit
When must the company have profit?
Section 131(1) – the company must have a profit at the
time of distribution.
Solvent
The second principle is that the company must be
solvent immediately after the distribution is made.
65. Distribution of Dividends
Section 132(3) – “the company is regarded as solvent if
the company is able to pay its debts as and when the
debts become due within 12 months immediately after
the distribution is made”.
Section 132(4) – where the directors cease to be
satisfied that the company will be solvent after the
distribution is authorised but before it is made, the
directors should take all necessary steps to prevent the
distribution.
66. Consequences
The consequences if the distribution is made not out of
the company’s profit or without fulfilling the solvency
test:
Director’s liability
Section 133(2) – “Every director or manager of the company
who wilfully pays or permits to be paid any dividend in
contravention of section 131 or 132, which he knows from his
knowledge is not profits shall also be liable to the company to
the extent of the amount exceeded the value of any
distribution of dividends that could properly have been
made.
67. Consequences
Thus, in order to impute civil liability on the director or
manager, it must be established the he knew that the
dividend was not out of the company’s profit at the time of
payment.
Member’s liability
Section 133(1) – The company may recover the amount of
distribution received by a shareholder, which exceeds the
value of any distribution that could properly have been
made unless the shareholders: (a) has received the
distribution in good faith; and (b) has no knowledge that the
company did not satisfy the solvency test required under
section 132(3).
68. Consequences
It appears that a shareholder is liable only where the
company did not satisfy the solvency test and the
shareholder was aware of it.
Auditor’s liability
An auditor who is negligent in auditing the accounts of a
company is liable to the company.
If the company declared and paid dividends in reliance on
the inaccurate audited accounts, the company may take
action against the auditor for breach of duty
69. Consequences
Segenhoe Ltd v Akins
The court found that as a result of under provision in the
provision of taxes, the company overstated its profits.
Dividends were paid; $494,111 in excess of the
company’s actual profit. The court found the auditors
negligent in the auditing of the company’s account and
ordered the auditors to pay damages to the company for
their negligence. The amount of damages ordered was
$494111 being the amount of dividends paid in excess of
the company’s actual profit.
70. REFERENCES
Chan Wai Meng, Essential Company Law in Malaysia, Navigating the
Companies Act 2016, Sweet & Maxwell.