Section 365 of Companies Act 1965 state that as regard to the payment of dividend from the company.

Section 365(2)(b) of Companies Act 1965 allows that the court to lift the veil of incorporation in terms of dividends are to be paid by the company even though there are out of profits which to pay creditors, then directors of the company have to declared the dividend as to be liable to pay the debts because the company is unable pay dividends to the creditors, which means dividends exceed the available profits. For an instance, Alex Sdn Bhd is a firm that deal with manufacturing of food processing. Fortnight ago, Alex went into bankruptcy winding up. The fact shows that it has been suffered loss from past 2 years and is totally insolvent. Victor as managing director of the company, and Mr. Chin Jia Rong as general manager have been advised that they should take an action to end up the firm into deliberation status. However, Mr. Chin and Victor think and apply seriously from the advices, and proceed to order on credit raw material that worth RM2 million from Jaya Sdn Bhd. The liquidator is now willing to sue or charge any of the directors to make them personally liable for all or any part of the RM 2 million debts.