eKTP 67

Directors’ Duties and Responsibilities
Part 2 of 5 


Prohibition against improper use of property, position, etc

Section 218 of the CA2016 specified that a director or officer of a company shall not do the following to gain any benefit for himself or cause disadvantage to the company without the consent or ratification by way of a general meeting:

  • Misusing the company’s property;

  • Misusing the company’s information;

  • Misusing the company’s opportunity;

  • Misusing his power as a director; or

  • Engage in business which is in competition with the company.

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

  • Imprisonment ≤ 5 years; or

  • Fine ≤ RM3 million; or

  • Both.


Disclosure of interest

Sections 221 and 222 of the CA2016 provides that:

  • If a director has interest whether directly or indirectly in a contract or proposed contract, he is to declare the nature of his interest at the board of directors’ meeting as soon as practicable.

  • A director is deemed to have an interest in a contract if his spouse, natural child, adopted child or step child has interest in the shares of the other contracting party.

  • A general disclosure of interest notice shall be given to the board of directors

    • At the board of directors meeting; or

    • At the next board of directors meeting after the notice is given.

  • The secretary shall record every declaration in the minutes of the meeting.

  • A director is not deemed to be interested in the contract based on the

    • The director is a member or creditor of the other contracting party and the director interest in not material;

    • The contract is related to a loan given to the company and guaranteed by the director;

    • The other contracting party is a related company.

  • The interested director may attend the meeting but cannot deliberate and vote unless:

    • The company is a private company which is not a subsidiary of a public company;

    • The company is a private company and the contracting party is a related company;

    • The director is also a director of the other contracting party and the number of shares held by him is not more than the number of qualifying shares;

    • The director has interest in not more than 5% of the other contracting party’s paid up capital.

  • Consequences:

    • Any contract entered into in contravention of this section shall be voidable.

    • Every officer who contravenes commits of an offence and be liable to:

      • Imprisonment ≤ 5 years; or

      • Fine ≤ RM3 million; or

      • Both.