Chandra, Lim, and Karen are the three directors and equal shareholders of Besar Sdn Bhd (the company) a well-established company in Kuantan. The company, a bottled drink manufacturer, has unlimited objects but the constitution limits the power of a director to enter into contracts over Rm100,000. Recently Chandra placed an order with mineral water for Rm120,000 to take advantage of a significant discount being offered for bulk purchase. The mineral water was delivered last week. As part of the special offer Chandra personally received an RM10,000 cheque which he gave to charity.

Three months ago Besar Sdn Bhd was unable to manufacture a large specialist order from one of its regular customers. To ensure the customer was not let down, Karen arranged for the work to be done by Gasey Bhd. Karen has also sourced for the company much-needed machinery from Mesin Bhd for Rm80,000 and this was delivered last week. Karen holds a 25% shareholding in both Gasey Bhd and Mesin Bhd.

Within the last year, Lim arranged for an agent to source an alternative insurance provider for the company, and prepare the relevant documentation. As she was so busy, she signed the insurance forms without reading them. Unfortunately, the company has just experienced a serious fire resulting in the destruction of stock valued at RM300,000. The insurance company has refused to pay the claim as the documentation submitted by the company contained inaccurate information. Lim accepts that the insurance claim is invalid and, as a result, the company has now gone into voluntary liquidation.

Advise Lim, Karen, and Chandra if they are likely to have any personal liabilities once the liquidator becomes aware of the above facts.