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Maintain trust in business

Mohd. Sulaiman, Aiman @ Nariman (2020) Maintain trust in business. the Star, 25th September 2020.

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ON Aug 25, Parliament passed the Covid-19 Bill and the Insolvency (Amendment) Bill 2020, which are closely related to the issue of a moratorium on creditors’ actions against companies and individuals. The likelihood of creditors’ actions leading to bankruptcy of the business owner or the closure of the business has been hovering over businesses like a Damocles sword during the lockdown caused by the Covid-19 pandemic. There is also a likelihood of personal liability for directors due to section 539 (3) of the Companies Act 2016, commonly known as the “wrongful trading provision”. Under this section, if the director or ofcer of the company knowingly causes the company to trade or incur debt when there is no reasonable prospect or reason to expect that the company will be able to pay off its debt when due, he or she is personally responsible for settling all or part of the company’s debt; and this is in addition to the risk of imprisonment. One way of helping businesses is by suspending this law, as is being done in several countries. No doubt, there must be safeguards against scoundrels taking advantage of these measures. Protection should not be given where the decision to carry on trading or incur obligations is done with no intention to pay the company’s debts as this is done to cheat or defraud creditors, customers or employees. Directors who receive deposits from customers while knowing that services cannot be provided must not be protected.

Item Type: Article (Electronic Media)
Additional Information: Online newspaper 1872/85712
Uncontrolled Keywords: Companies Act 2016, wrongful trading provision, e Covid-19 Bill , the Insolvency (Amendment) Bill 2020
Subjects: H Social Sciences > HB Economic Theory > HB126.4 Islamic Economics
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Ahmad Ibrahim Kulliyyah of Laws
Ahmad Ibrahim Kulliyyah of Laws > Department of Civil Law
Depositing User: Prof Aiman Nariman Mohd-Sulaiman
Date Deposited: 08 Dec 2020 12:00
Last Modified: 08 Dec 2020 12:00
URI: http://irep.iium.edu.my/id/eprint/85712

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