Were there any abuses of power by the management and breach of fiduciary on the part of the director? Yes, there are abuses of power and breach fiduciary on the part of the director. Under Section 132(1) of the Companies Act 1965 state that the director shall all the times act honestly and use reasonable diligence on discharge his duties as director. As a fiduciary, a director’s duties are duty to exercise power in a good faith and in the interest of company, duty to avoid conflict of interest, duty to act for the proper purpose and duty to act with reasonable care, skill and diligence. In this case, Encik Zayed as director of the company has breach his duty to exercise power in a good faith. He planned to remove the existing auditor, Aziz & Co. and to appoint new ‘friendly party’ auditor. According to the law, a director shall not appoint ‘friendly party’ auditor to unqualified audit report because it can breach his duties as a director. Encik Zayed shall exercise his power in a good faith and bona fide of the company as a whole. He also should act to give a best interest to the company. Encik Zayed also breach his duties to act for the proper purpose. If a director misplace the company assets and use his power for a wrong purposes, it consider as breach of duties to the company. As in this case, Encik zayed was withdrawn a company money for his personal purpose and do not record for this transaction. The amount withdrawn was being charged to the company. Encik Zayed and Puan Hashimah are the directors of the company with secondary school background and do not familiar with Accounting Standards and Provision of the Companies Act 1965. They also do not know their duties as a director since they do not have any knowledge and experience about that. As a director of the company, they should act with reasonable care, skill and diligence but they simply delegate their duties to their employee. Who should be held responsible and accountable?
Directors of the company...
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