Directors’ Duties and Responsibilities Part 5 of 5 

01eKTP 70

Restricted Dealings

The other restricted power of directors specified in CA2016 are as follows:

Acquires and disposes property of substantial value (Section 223 & 228)

• Must obtain members’ approval before the company enters into effect any transaction of substantial value.
  
• Substantial value property transactions not involving directors (Section 223)Prior members approval is required if the value of transaction exceeds one of the following:25% of the company’s total assets;25% of the company’s issued capital;The net profit from the property which is to be disposed contributes to more than 25% of the company’s total net profit.Consequences:Transaction shall be void.Member may apply to court to restrain the company from entering into effect the void transaction.Directors who authorised the void transaction guilty for an offence and liable to:Imprisonment ≤ 5 years; orFine ≤ RM3 million; orBoth.
  

Substantial value property transactions not involving directors (Section 223)

• Prior members approval is required if the value of transaction exceeds one of the following:25% of the company’s total assets;25% of the company’s issued capital;The net profit from the property which is to be disposed contributes to more than 25% of the company’s total net profit.

Prior members approval is required if the value of transaction exceeds one of the following:

• 25% of the company’s total assets;
• 25% of the company’s issued capital;
• The net profit from the property which is to be disposed contributes to more than 25% of the company’s total net profit.

• Consequences:Transaction shall be void.Member may apply to court to restrain the company from entering into effect the void transaction.Directors who authorised the void transaction guilty for an offence and liable to:Imprisonment ≤ 5 years; orFine ≤ RM3 million; orBoth.
  

Consequences:

• Transaction shall be void.
• Member may apply to court to restrain the company from entering into effect the void transaction.
• Directors who authorised the void transaction guilty for an offence and liable to:Imprisonment ≤ 5 years; orFine ≤ RM3 million; orBoth.
  

Directors who authorised the void transaction guilty for an offence and liable to:

• Imprisonment ≤ 5 years; or
• Fine ≤ RM3 million; or
• Both.
  

• Substantial value property transactions involving directors (Section 228)The following transactions require prior members’ approval by way of general meeting:A transaction exceeding RM250,000.A transaction value between RM50,000 to RM250,000 if the value exceeds 10% of the company’s net asset value as determined from the previous financial year’s audited accounts.Exceptions:Transaction by a company that is subject to a winding up;Transaction is an arm’s length transaction, made in the company’s ordinary course of business;Where the transaction has been approved by the court;Where the transaction is in connection with a takeover offer.Consequences :Transaction shall be void.Member or director may apply to court to restrain the company from entering into effect the void transaction.Directors who authorised the void transaction guilty for an offence and liable to:Imprisonment ≤ 5 years; orFine ≤ RM3 million; orBoth.

Substantial value property transactions involving directors (Section 228)

• The following transactions require prior members’ approval by way of general meeting:A transaction exceeding RM250,000.A transaction value between RM50,000 to RM250,000 if the value exceeds 10% of the company’s net asset value as determined from the previous financial year’s audited accounts.

The following transactions require prior members’ approval by way of general meeting:

• A transaction exceeding RM250,000.
• A transaction value between RM50,000 to RM250,000 if the value exceeds 10% of the company’s net asset value as determined from the previous financial year’s audited accounts.

• Exceptions:Transaction by a company that is subject to a winding up;Transaction is an arm’s length transaction, made in the company’s ordinary course of business;Where the transaction has been approved by the court;Where the transaction is in connection with a takeover offer.

Exceptions:

• Transaction by a company that is subject to a winding up;
• Transaction is an arm’s length transaction, made in the company’s ordinary course of business;
• Where the transaction has been approved by the court;
• Where the transaction is in connection with a takeover offer.

• Consequences :Transaction shall be void.Member or director may apply to court to restrain the company from entering into effect the void transaction.Directors who authorised the void transaction guilty for an offence and liable to:Imprisonment ≤ 5 years; orFine ≤ RM3 million; orBoth.

Consequences :

• Transaction shall be void.
• Member or director may apply to court to restrain the company from entering into effect the void transaction.
• Directors who authorised the void transaction guilty for an offence and liable to:Imprisonment ≤ 5 years; orFine ≤ RM3 million; orBoth.

Directors who authorised the void transaction guilty for an offence and liable to:

• Imprisonment ≤ 5 years; or
• Fine ≤ RM3 million; or
• Both.