Liability of Directors for Criminal Breach of Trust: Recovering a Lost Interpretation

Dishonest breach of trust by company directors was proscribed under section 405 of the Penal Code from inception. From this fundamental orientation departing from the English piecemeal treatment of embezzlement, false pretences and conspiracy to defraud, the article exposes differences in the way director’s breach of trust is dealt with under section 405 and under the English statutory offence of embezzlement. Taking into account important backdrop perspectives which bear on the construction of section 409 as a punishability provision, it reaches conclusions opposite to the holding of the Court of Appeal in Lam Leng Hung (CA). One is that directors who commit dishonest breach of trust acting within the scope of authority fall to be punished more severely under the second agency-limb of section 409. Directors who knowingly act without authority in the company’s name also do so but under the first limb. Finally, directors who misappropriate company property for personal use or benefit do not fall within section 409 and are punishable exclusively under section 406.