Sign In

Clarifying and Reformulating the Directors’ Role and Duties


In reviewing the existing framework on directors, their role and duties and in formulating the questions for public consultation purposes, the Corporate Law Reform Committee (CLRC) is mindful that its review and its recommendations, if any, must:

  • improve the legal and regulatory structure that will facilitate business in Malaysia;
  • protect the interest of shareholders whilst taking into account the interest of other stakeholders;
  • ensure the accountability of directors within a flexible regulatory framework which promotes efficient risk-taking via the codification of duties and available defences for directors;
  • minimise the agency costs attached to the director / shareholder relationship through the disclosure obligation; and
  • promote an appropriate balance between the legal prescriptions and the selfregulation by the industry.

In preparing this paper, reference was made to international developments for comparative analysis. Further, the CLRC referred to the High Level Finance Committee Report on Corporate Governance (1999) (the CG report) and where appropriate, draws upon and develops the views of the Finance Committee in so far as it coincides with the objectives of the Corporate Law Reform Programme. The recommendations of the CLRC are also based to some extent on current initiatives by Companies Commission of Malaysia to implement the recommendations of the CG report which are reflected in proposed amendments to the Companies Act 1965.

This consultation paper is made up of five (5) parts:

  1. Part I focuses on the definition of ‘directors’, directors’ qualifications, appointment, removal and compensation;
  2. Part II focuses on clarifying and reformulating the roles and functions of the company and the board of directors.
  3. Part III focuses on the duty of care, skill and diligence of directors. It also addresses the need for the enactment of a Business Judgment Rule (BJR);
  4. Part IV focuses on the directors’ fiduciary obligations and conflict of interest; and
  5. Part V focuses on the exemption and indemnification of Directors’ and Officers’ Liability.

We hope to receive views and comments on the recommendations stated in this Consultation Paper. Please reply to Nor Azimah Abdul Aziz at the Companies Commission of Malaysia (SSM) by 14 November 2006.


Download Responses and Comments Received on Consultative Document “Clarifying and Reformulating the Directors Role and Duties” (.pdf)

KPDNKK myGoverment
Agencies under Domestic Trade and Consumer Affairs Ministry (KPDNHEP)
SSM General Line
E-mail: enquiry[at]
Operation Hour
Day: Monday - Friday
Service Counter: 8.15 AM - 4.15 PM
SSM Contact Centre
Telephone: +603-7721 4000
Fax: +603-7721 4001