Company Law Assignment

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Issue:
Whether directors of ABC Bhd had breach their duty as directors.
Whether ABC Bhd can persue their claim against any other party related to ABC Bhd.
Law:
S.4(1) Company Act 1965 (CA1965) states that director includes 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 directors of a corporation are accustomed to act and an alternate of substitute director. For example, in the case of Datuk Sahar bin Arpan v PP followed Re Hydrodam which decided that, to establish that a defendant is a shadow director, it is necessary to prove that the defendant directed those directors how to act in relation to the company and that those directors acted in accordance with such directions and that they were accustomed so to act. S.132(1) CA1965 states that a director of a company shall at all times exercise his power for a proper purpose and in good faith in the best interest of the company. For example, in the case of Re Smith and Fawcett Ltd (1942), it is said that everything that a director does as a director must be done to promote or advance the interests of his company. However, directors would be liable for breach of duty if they fail to give proper consideration to the company’s interests or where they act in such a way that no reasonable person could consider is bona fide in the interest of the company. S.132(2)(c) also states that a director or officer of a company shall not, without the consent or ratification of a general meeting use his position as such director or officer to gain directly or indirectly, a benefit for himself or any other person, or cause detriment to the company. There will be no breach of duty if the director obtains consent or ratification of the general meeting. S.132(1C)(a) states that a director, in exercising his duties as a director may rely on information, professional or expert advice, opinions, reports or statements

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