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Reform Trends i​n Directors’ Duties

 Tarikh Diterbitkan: 1 Februari 2018

By CLRC Secretariat


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.

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