Do You Think That the Directors' Duties Set Out in the Company Law in Your Country Hinder Entrepreneurship?

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According to the Malaysia Companies Act 1965, although in practice a company is run by its two organs namely, the general meetings and directors, directors usually manage most affairs and business of a company. Directors are empowered with several powers and duties to ensure that a company is operated smoothly and ethically by the directors.

The question in this offering is, do the directors’ duties set out in the Malaysian company law hinder entrepreneurship. This paper seeks to discuss directors’ duties in the context of Malaysian company law and entrepreneurs characteristics that might hinder entrepreneurship.

Directors and their Duties
Generally, duties are owed to the company. In this aspect, duties of directors have two categories, namely fiduciary duties and duties of care and skill: Directors have fiduciary duties to exercise their powers honestly, in good faith and in the interest of the company and the shareholder. Their duty is to avoid conflicts between their duties in position with the company and their own personal interests.

The scope of Directors’ fiduciary duties relates to 4 broad areas as follows: • To act in good faith in what he believes to be in the best interest of the company • To avoid any misuse of information or opportunity through exploitation of company’s property • To act with care and diligence including directors’ liability for negligence. If failed to do so directors’ are liable for the losses occurring to the company • To avoid any form of conflict in the position of director or any interest that a director may have.

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