Statutory Duties
Statutory duties Main statutory duties of a director are provided by s.132
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Where a director breaches common law duties, these statutory provisions impose criminal liabilities.
• S.132(1) is a general provision that requires directors to act ‘honestly’ at all times and use reasonable diligence in the exercise of their powers. Any breach of fiduciary duty
• Duty imposed on directors to avoid conflict of interest by not using confidential information they obtain by virtue of their position in the company is complemented by s.132(2).
• P.P. v Choudry [1981]1 MLJ 76
The knowledge that company was facing financial crisis was considered as specific confidential information which director had used to his own advantages.
• S.132(3) imposes liability on any officer who commits breach of his fiduciary duty. He is not only liable to the company, but if found guilty can be imprisoned for 5 years or fined RM30,000.
• S.131 imposed a duty upon directors to disclose their interest (directly or indirectly) in contracts with the company.
• Duty to disclose is also imposed by s.135 where directors have to disclose particulars of interest in shares, debentures, participatory interests, options and contracts; change in those interests mentioned; and particulars necessary for maintaining the register of directors, secretaries, managers and auditors.
• To avoid abuse of power by directors, s.133 restricts a company from giving loan to their director, except for exempt private companies, and s.133A prevents a company from making loans to any person connected with a director of a company. • S.167 directors have a duty to ensure that the company’s accounts are properly kept.
• S.171(1) requires directors to take reasonable steps to ensure that the company accounts comply with act.
REMEDIES FOR
BREACH OF DUTY
•
•
•
•
Sue for damages
Seek return of property
Recover secret profit
Rescission of contract
•
Where a director breaches common law duties, these statutory provisions impose criminal liabilities.
• S.132(1) is a general provision that requires directors to act ‘honestly’ at all times and use reasonable diligence in the exercise of their powers. Any breach of fiduciary duty
• Duty imposed on directors to avoid conflict of interest by not using confidential information they obtain by virtue of their position in the company is complemented by s.132(2).
• P.P. v Choudry [1981]1 MLJ 76
The knowledge that company was facing financial crisis was considered as specific confidential information which director had used to his own advantages.
• S.132(3) imposes liability on any officer who commits breach of his fiduciary duty. He is not only liable to the company, but if found guilty can be imprisoned for 5 years or fined RM30,000.
• S.131 imposed a duty upon directors to disclose their interest (directly or indirectly) in contracts with the company.
• Duty to disclose is also imposed by s.135 where directors have to disclose particulars of interest in shares, debentures, participatory interests, options and contracts; change in those interests mentioned; and particulars necessary for maintaining the register of directors, secretaries, managers and auditors.
• To avoid abuse of power by directors, s.133 restricts a company from giving loan to their director, except for exempt private companies, and s.133A prevents a company from making loans to any person connected with a director of a company. • S.167 directors have a duty to ensure that the company’s accounts are properly kept.
• S.171(1) requires directors to take reasonable steps to ensure that the company accounts comply with act.
REMEDIES FOR
BREACH OF DUTY
•
•
•
•
Sue for damages
Seek return of property
Recover secret profit
Rescission of contract