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Corporate Insolvency: Separate Legal Personality and Directors' Duties to Creditors

UiTM Law Review, Vol. 2, pp. 90-103, 2004

14 Pages Posted: 28 Aug 2009  

Mohammad Rizal Salim

Nottingham University Business School, Malaysia Campus

Date Written: 2004

Abstract

The primary purpose for the doctrine of separate legal personality is to encourage entrepreneurship, by shifting the risks of business failure away from entrepreneurs to creditors and other risk bearers. Unfortunately this doctrine is subject to abuse by corporate controllers, which prompted the courts and the legislature to provide for exceptions. These exceptions are better known as the lifting or piercing of the corporate veil. How do these exceptions protect creditors? How effective are they? This article seeks to examine laws in relation to the separate legal personality doctrine and the duties of directors which directly affects, or attempts to protect, creditors from unfair and improper conduct by corporate controllers. This is Part I of II.

Keywords: corporate insolvency, corporate governance, Malaysia

JEL Classification: K, K2, K4

Suggested Citation

Salim, Mohammad Rizal, Corporate Insolvency: Separate Legal Personality and Directors' Duties to Creditors (2004). UiTM Law Review, Vol. 2, pp. 90-103, 2004. Available at SSRN: https://ssrn.com/abstract=1462906

Mohammad Rizal Salim (Contact Author)

Nottingham University Business School, Malaysia Campus ( email )

Nottingham University Business School
Jalan Broga
43500 Semenyih, Selangor 43500
Malaysia

HOME PAGE: http://www.nottingham.edu.my

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