A very important part of ‘core company law’ is the rights and duties of key corporate
participants i.e., those who manage or direct the affairs or business of the company on
behalf of investors/ shareholders; these directors who have the necessary skill and
expertise to steer the company towards long-term sustainability. In Malaysia, as with
other common law jurisdictions, the responsibility for managing the affairs the company
is placed with the company’s board of directors, who have a collective responsibility.
Notwithstanding the existence of market forces which operate to discipline directors,
there is still a need for legal controls over directors’ conduct. A study of various
jurisdictions (commonwealth as well non-commonwealth countries) indicates that there
are several approaches or strategies that can be adopted by the law to promote
‘accountability’ of those who manage the affairs of the company. These approaches,
amongst other things, include having in place an effective disclosure regime, ensuring
that shareholders can remove errant directors before the completion of their tenure in
office, regulating transactions entered into by the company with directors and persons
related/connected to the directors, enhancing the shareholders rights to remedy corporate
abuses and of course clarifying and reformulating directors duties. It is to be noted that
these approaches do not apply in isolation and in most cases are complementary of each
other.
