In the article, Court rules dealer liable to indemnify XXX, the High Court ruled that the former dealer Karen Goh deem her liable to indemnify the brokerage for any and all losses incurred by her clients. Thus, she has to pay up $1.3m to brokerage firm in addition to the $1m she already paid in February 2009.

This is a reminder of the importance of asset protection especially for those who are in such a situation. Some common misconception about asset protection are: (1) that is only for the rich, (2) businessmen with multiple wives (3) those with many commercial enemies etc. Quite on the contrary, many man-in-the-street are at risk and require asset protection such as:

1. Remisiers who are required to indemnify their employers;
2. All professionals such as doctors, surgeons and engineers. (Not sure whether financial advisers are considered professional. Likely they are considered salespersons.);
3. Entrepreneurs who have taken personals loan to fund their businesses;
4. Board of Directors;
5. All sole-proprietors
6. Etc

It is important to do asset protection properly rather than piece-meal. For example, many entrepreneurs think that by setting up a Private Limited Company, they will be safe from creditors since they are merely shareholders of which the maximum lost is their capital. Creditors such as finance companies and banks often require these owners to be guarantors of business loans. Effectively, the ‘shareholder’ becomes fully liable for the debt. When this happens, the private limited company will not shield the shareholder from liability. I speak this from experience seeing how some of my clients did their DIY asset protection in this manner by changing from sole proprietorship to private limited and they thought they were safe. But when I dug deeper, I found them to be guarantors of loans because the banks will not lend money to their companies unless they become guarantors of these loans. Thus, the DIY asset protection will fail.

For more information about asset protection, please read this magazine article I wrote previously: Wealth Protection Against Creditors

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