eKTP 66

Directors’ Duties and Responsibilities
Part 1 of 5 

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Directors’ Duties

A director is an agent of the company and owes a fiduciary duty towards the company and as such he is prohibited from acting in a manner which will bring his personal interest into conflict with that of his company. Their principal function is to safeguard the interests of the investors.

The rights, powers, duties and obligations of the directors are prescribed in the CA2016 unless modified by the company’s constitution. Section 213 of the CA2016 specified that the director shall act as follow for the best interest of the company:

  • In good faith;

  • For a proper purpose;

  • Honestly;

  • Exercise reasonable care, skill and diligence with the knowledge, skill and experience.

Any person who contravenes the above shall commits an offence and be liable to:

  • Imprisonment ≤ 5 years; or

  • Fine ≤ RM3 million; or

  • Both.

 

Business Judgement

A director is deemed to have exercised his duty with reasonable care, skill and diligence if he:

  • Makes a decision for a proper purpose and in good faith;

  • Does not have a material personal interest on the subject matter;

  • Makes the decision based on the information given which the director reasonably believes to be appropriate under the circumstances; and

  • Reasonable believes the decision is in the best interest of the company.