10 Questions
What is the primary consideration for directors when exercising their powers?
The interests of the company as a whole
What is the duty of a director in terms of exercising reasonable care, skill, and diligence?
To use their skills and experience to make informed decisions
What was the outcome of the court's decision in Re W & M Roith Ltd?
The claim for the widow's pension was rejected
What is the general rule regarding the exercise of a director's powers?
To act in the interests of the company and not for collateral purposes
What is the duty of a director in terms of avoiding conflict of interests?
To avoid situations where their personal interests may conflict with the company's
In what case did Dixon J describe the phrase 'the best interests of the company' as an 'indefinite phrase'?
Mills v. Mills (1938)
What is the duty of a director in terms of using their powers?
To use their powers for their proper purposes
What is the consequence of a director breaching their fiduciary duties?
The director will be held liable for any damages caused
What is the effect of a director acting in good faith and in the interest of the company?
The company will benefit from the director's actions
What is the role of a director in terms of company management?
To exercise their powers in the interest of the company as a whole
Study Notes
Director
- A director is defined as any person occupying the position of director of a corporation by whatever name called, and includes a person in accordance with whose directions or instructions the majority of directors of a corporation are accustomed to act, and an alternate or substitute.
Duties and Responsibilities of Directors
- A director shall exercise his power for a proper purpose, and in good faith in the best interest of the company (Section 213(1) of the CA 2016).
- A director shall exercise reasonable care, skill and diligence with the knowledge, skill and experience as a director (Section 213(2) of the CA 2016).
- A director who fails to comply with this Act commits an offence and is liable to imprisonment for a term not exceeding 5 years or to a fine not exceeding three million ringgit or to both (Section 213(3) of the CA 2016).
Declaration of Interest
- Every director of a company who is directly or indirectly interested in a contract or proposed contract with the company shall declare the nature of his interest at a meeting of the board of directors (Section 221(1) of the CA 2016).
Fiduciary Duties
- Directors owe fiduciary duties to:
- Act bona fide (good faith) in the interests of the company as a whole.
- Use powers for their proper purposes.
- Exercise reasonable care, skill and diligence.
- Avoid conflict of interests.
Duty to Act Bona Fide
- Directors must exercise their power in good faith and in the interest of the company as a whole.
- In Re W & M Roith Ltd, the court held that the directors were not acting in the interest of the company, but rather in the interest of one of the directors' wives.
Duty to Exercise Reasonable Care
- Directors must exercise reasonable care, skill and diligence with the knowledge, skill and experience as a director.
- In Re City Equitable Fire Insurance Co., directors owe a duty to exercise reasonable care, skill and diligence.
This quiz covers the definition of an officer in a corporation according to Section 2(1) of the Companies Act 2016, including directors, secretaries, and more. Test your knowledge of company management and corporate law.
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