Abstract:
A company is a business organization of particular importance. Its operation is, based upon an economic concept, proceeded with a view to maximum profits. Indeed, corporate corporation is founded upon the English common law concept of separate corporate personality according to which a company is regarded as enjoying a separate legal entity independently of its shareholders. It is on account of this conception that those representing a company are afforded protection. Efforts to increase business profits, in real practice, take precedence over endeavours to promote corporate efficiency. It is often witnessed that, along the line of the above conceptions and theories, business is conducted in a manner generating optimum revenue although the conduct is committed without due responsibility. This jeopadises fairness topersons involved in the transactions concerned, whether the company's shareholders, creditors and the public at large.Notwithstanding, following economic changes, there has occurred new awareness with regard to the growth in the free enterprise economy. A need is felt to depart from the original conception that a company is a profit seeker. It is, instead, perceived that a modem form of corporation must be supported by an ethical foundation - the spirit of the company should by given greater importance than profit- making. A company in the new era carries as much social responsibility as economic one.This study reveals that. During a company's insolvency, transactions committed by it on the basis of the separate corporate personality give rise to problems at the expense of society as a whole. Once a company has been incorporated, its directors may enter into fraudulent transactions with creditors and request for putting the company into bankruptcy. Subsequent to such bankruptcy, a new company may be formed with a view to repeating similar deceitful conduct. Such a vicious circle results in losses to all persons concerned with the transactions committed by the. company's directors and usually brings into existence non - performing debts, which have indeed caused severe financial and economic crises in Thailand from 1997 or 1998 up to present and have accounted for failure of various financial institutions and firms in both private and public sectors.Therefore, to prevent and solve problems in connection with transactions made by a company's directors while the company becomes insolvent, the following actions are recommended.1. Revision should by made of substantive law concerning commission of transactions by a company's directors during the company's insolvency so as to achieve justice and promote directors responsibility to all parties. For these purposes, the concept regarding piercing the corporate veil should be adopted.2. Procedural law regarding transactions committed by a company's directors while the company is insolvent should also be revised to the effect that creditors may, where the repayment obtained from the allocation of debts in a bankruptcy proceedings appears insufficient, claim against fraudulent directors personally.