4.

The first statutory exception in lifting the corporate veil of incorporation is Section 540(1)
CA 2016 which defines fraudulent trading. According to this section, any person that use the
company to carry on a trading with intention to defraud creditors or for any fraudulent
purpose shall be personally liable for the debts of the company. For example, director in
ABC Sdn Bhd had enter a contract with Mr. Low to buy a new machinery worth RM40,000
although the director know that the company only has RM10,000 in their saving account. In
such case, ABC Sdn Bhd id not liable for the contract and did not need to pay RM40,000. The
director will be the ones that is liable to pay RM40,000.