(1) A company shall not enter into any arrangement or transaction with a director of the company or its holding company or with a person connected with such a director to acquire from or dispose to such a director or person any non-cash assets of the requisite value unless the arrangement or transaction is first approved by a resolution of the company in general meeting and also, if the director or connected person is a director of its holding company or person connected with such a director, by a resolution of the holding company in general meeting.
(2) An arrangement entered into in contravention of subsection (1) and any transaction entered into in pursuance of the arrangement (whether by the company or any other person) shall be voidable at the instance of the company unless the arrangement and transaction are, within a reasonable period, ratified by the company in general meeting and also, if the arrangement and transaction are for the transfer of an asset to or by a director of its holding company or a person who is connected with such a director, by a resolution of the holding company in general meeting.
(3) Where an arrangement is entered into with a company by a director of the company or its holding company or a person connected with him in contravention of subsection (1) and any transaction is entered into in pursuance of the arrangement, that director and the person so connected and any director who authorized the arrangement shall, in addition to any other liability, be liable -
(a) to account to the company for any gain which he had made directly or indirectly by the arrangement or transaction; and
(b) jointly and severally with any person liable under this subsection, to indemnify the company for any loss or damage resulting from the arrangement or transaction.
(4) The Court may, on the application of any member of the company, restrain the company from entering into an arrangement or transaction in contravention of subsection (1).
(5) For the purposes of subsection (1), a non-cash asset is of the requisite value if, at the time of the arrangement or transaction for the acquisition or disposal of the asset, its value is not less than ten thousand ringgit but (subject to that) exceeds one hundred thousand ringgit or ten per centum of the company's asset value, that is-
(a) except in a case falling within paragraph (b), the value of the company's net assets determined by reference to the accounts prepared and laid under Part VI in respect of the last financial year prior to the arrangement or transaction; or
(b) where no accounts have been so prepared and laid before that time, the amount of the company's called-up share capital.
(6) A director of a company or of its holding company, or a person connected with such a director, who enters into an arrangement or transaction with the company in contravention of this section, or a director who authorized the arrangement or transaction, shall be guilty of an offence against this Act.
Penalty: Imprisonment for five years or thirty thousand ringgit or both.".