(1) A director of a company shall at all times exercise his powers for a proper purpose and in good faith in the best interest of the company.
[Subs. Act A1299:s.7]
(1A) A director of a company shall exercise reasonable care, skill and diligence with—
(a) the knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities; and
(b) any additional knowledge, skill and experience which the director in fact has.
(1B) A director who makes a business judgment is deemed to meet the requirements of the duty under subsection (1A) and the equivalent duties under the common law and in equity if the director—
(a) makes the business judgment in good faith for a proper purpose;
(b) does not have a material personal interest in the subject matter of the business judgment;
(c) is informed about the subject matter of the business judgment to the extent the director reasonably believes to be appropriate under the circumstances; and
(d) reasonably believes that the business judgment is in the best interest of the company.
Reliance on information provided by others
(1C) A director, in exercising his duties as a director may rely on information, professional or expert advice, opinions, reports or statements including financial statements and other financial data, prepared, presented or made by—
(a) any officer of the company whom the director believes on reasonable grounds to be reliable and competent in relation to matters concerned;
(b) any other person retained by the company as to matters involving skills or expertise in relation to matters that the director believes on reasonable grounds to be within the person's professional or expert competence;
(c) another director in relation to matters within the director's authority; or
(d) any committee to the board of directors on which the director did not serve in relation to matters within the committee's authority.
(1D) The director's reliance made under subsection
(1C) is deemed to be made on reasonable grounds if it was made—
(a) in good faith; and
(b) after making an independent assessment of the information or advice, opinions, reports or statements, including financial statements and other financial data, having regard to the director's knowledge of the company and the complexity of the structure and operation of the company.
Responsibility of a nominee director
(1E) A director, who was appointed by virtue of his position as an employee of a company, or who was appointed by or as a representative of a shareholder, employer or debenture holder, shall act in the best interest of the company and in the event of any conflict between his duty to act in the best interest of the company and his duty to his nominator, he shall not subordinate his duty to act in the best interest of the company to his duty to his nominator.
Responsibility for actions of delegatee
(1F) Except as is otherwise provided by this Act, the memorandum or articles of association of the company or any resolution of the board of directors or shareholders of the company, the directors may delegate any power of the board of directors to any committee to the board of directors, director, officer, employee, expert or any other person and where the directors have delegated any power, the directors are responsible for the exercise of such power by the delegatee as if such power had been exercised by the directors themselves.
(1G) The directors are not responsible under subsection (1F) if—
(a) the directors believed on reasonable grounds at all times that the delegatee would exercise the power in conformity with the duties imposed on the directors under this Act and the memorandum and articles of association of the company (if any); and
(b) the directors believed on reasonable grounds, in good faith and after making a proper inquiry if the circumstances indicated the need for the inquiry, that the delegatee was reliable and competent in relation to the power delegated.
[ (1A) - (1G)) Ins. Act A1299:s.7]
Prohibition against improper use of company's property, position, corporate opportunity or competing with the company
(2) A director or officer of a company shall not, without the consent or ratification of a general meeting—
(a) use the property of the company;to gain directly or indirectly, a benefit for himself or any other person, or cause detriment to the company.
(b) use any information acquired by virtue of his position as a director or officer of the company;
(c) use his position as such director or officer;
(d) use any opportunity of the company which he became aware of, in the performance of his functions as the director or officer of the company; or
(e) engage in business which is in competition with the company,
[ (2) Subs. Act A1299:s.7]
(3) An officer or agent or officer of the Stock Exchange who commits a breach of this section shall be—
(a) liable to the company for any profit made by him or for any damage suffered by the company as a result of the breach; and
(b) guilty of an offence against this Act.
Penalty: Imprisonment for five years or thirty thousand ringgit.
(4) (Deleted by Act A616).
(5) This section is in addition to and not in derogation of any other written law or rule of law relating to the duty or liability of directors or officers of a company.
(6) In this section—
"agent" includes a banker, advocate and solicitor, auditor, accountant or stockbroker of the corporation and any person who is or at any time in the preceding six months has been knowingly connected with the corporation and has information which—
(a) he holds by virtue of being connected with the corporation;
(b) it would be reasonable to expect a person so connected and in the position by virtue he is so connected not to disclose except for the proper performance of the functions attaching to that position; and
(c) he knows is unpublished price sensitive information in relation to the securities of the corporation;
business judgment" means any decision on whether or not to take action in respect of a matter relevant to the business of the company;
[ Ins. Act A1299:s.7]
"director" includes the chief executive officer, the chief operating officer, the chief financial controller or any other person primarily responsible for the operations or financial management of a company, by whatever name called;
[Ins. Act A1299:s.7]
"officer" includes a person who at any time has been an officer of the company.