ACT 125

COMPANIES ACT 1965 (REVISED - 1973)

PART V - MANAGEMENT AND ADMINISTRATION

DIVISION 2 - DIRECTORS AND OFFICERS

Section 131A. Interested director not to participate or vote.

(1) Subject to section 131, a director of a company who is in any way, whether directly or indirectly, interested in a contract entered into or proposed to be entered into by the company, unless the interest is one that need not be disclosed under section 131, shall be counted only to make the quorum at the board meeting but shall not participate in any discussion while the contract or proposed contract is being considered at the board meeting and shall not vote on the contract or proposed contract. (2) Subsection (1) shall not apply to— (a) a private company unless it is a subsidiary to a public company; (b) a private company which is a wholly-owned subsidiary of a public company, in respect of any contract or proposed contract to be entered into by the private company with the holding company or with another wholly-owned subsidiary of that same holding company; (c) any contract or proposed contract of indemnity against any loss which any director may suffer by reason of becoming or being a surety for a company; (d) any contract or proposed contract entered into or to be entered into by a public company or a private company which is subsidiary of a public company, with another company in which the interest of the director consists solely of— (i) in him being a director of the company and the holder of shares not more than the number or value as is required to qualify him for the appointment as a director; or (ii) in him having an interest in not more than five per centum of its paid up capital. (3) Where a contract or proposed contract is entered into in contravention of subsection (1), the contract or proposed contract shall be voidable at the instance of the company except if it is in favour of any person dealing with the company for a valuable consideration and without any actual notice of the contravention. (4) A director who knowingly contravenes this section shall be guilty of an offence against this Act. Penalty: Imprisonment for five years or one hundred and fifty thousand ringgit or both. [Ins. Act A1299:s.6]