Peh Swee Chin SCJ:

Four questions of law were earlier allowed to be reserved for determination by this Court under s. 66 of the of Judicature Act 1964 . They are as follows:

1. Whether the definition of "director" under s. 4 of the Companies Act 1965 , a person can be held or deemed to be a director of a private limited company?

2. Whether, in the non-compliance with s. 123(1) and (4) of the Companies Act 1965 a person can be held or deemed to be a director of a private limited company?

3. If the answer to question 2 is in the negative, can a person who is being charged as an agent, or as a director of a private limited company and in that capacity be held to act as an ad-hoc agent by the said company?

4. Whether a director/member of a private limited company can be said to have committed an offence under s. 409 of the Penal Code by paying out monies from the said company's funds to a third party when he is the sole contributor of the paid-up capital and ultimately, the sole beneficial owner of all the issued shares of the said company?

It would be necessary to set out some material facts whenever it is necessary to do so in this judgment.

Three of the charges against the appellants on which they were convicted and which were connected with the four questions were as follows:

1st charge:

That you jointly on 30 April 1985, at the Hongkong and Shanghai Banking Corporation, No. 1, Jalan Bukit Timbalan, in the district of Johor Bahru, in the State of Johor, being agents of Lien Hoe Sawmill Company Sdn. Bhd., to wit, directors and in such capacities entrusted with the dominion over certain property, to wit, RM12,000,000 committed criminal breach of trust in respect of the said property and that you have thereby committed an offence punishable under s. 409 of the Penal Code .

2nd charge:

That you jointly on 10 May 1985, in the district of Johor Bahru, in the State of Johor, being agents of Yap Sing Hock Holdings Sdn. Bhd., to wit, directors and in such capacities entrusted with the dominion over certain property, to wit, RM2,500,751 committed criminal breach of trust in respect of the said property and that you have thereby committed an offence punishable under s. 409 of the Penal Code.

3rd charge:

That you jointly on 30 April 1985, at the Hongkong and Shanghai Banking Corporation, No. 1, Jalan Bukit Timbalan, in the district of Johor Bahru, in the State of Johor, being officers of Lien Hoe Sawmill Company Sdn. Bhd., to wit, directors did give financial assistance to Yap Sing Hock Holdings Sdn. Bhd. for the purpose of a purchase of 4,413,284 shares in the former company, and you have thereby committed an offence punishable under s. 67(3) of the Companies Act 1965 .

The appellants were sentenced by the Sessions Court and their sentences were upheld by the High Court when their appeals were dismissed. The sentences are 3 years' imprisonment each on the 1st and 2nd charges with both sentences to run concurrently; a fine only of RM2,500 in default, three months' imprisonment on the 3rd charge.

Both appellants were already directors of Yap Sing Hock Holdings Sdn. Bhd., the company named in the 2nd charge before the events took place on the dates mentioned in the three charges. Further and significantly, the 1st appellant was the beneficial owner of all the shares or issued capital of this company (hereinafter called the Holdings Company) and his co-directors had held all their shares in the Holdings Company in trust for the 1st appellant by deeds of trust, viz . Exh. D42A and 42B in Sessions Court. This fact of the Holdings Company being a one-man company owned 100% by the 1st appellant has never been disputed also.

Another company named in the 1st and 3rd charges, that is Lien Hoe Sawmill Co. Sdn. Bhd. (hereinafter called the Lien Hoe), prior to the dates in the said charges, as regards its issued capital was owned by two groups of shareholders who could be called majority shareholders and minority shareholders resectively.

Differences havin