Statutory Duties

Topics: Common law, Contract law, Conflict of interest Pages: 7 (292 words) Published: December 3, 2014
Statutory
duties
Main statutory duties of a director are
provided by s.132


Where a director breaches common
law duties, these statutory provisions
impose criminal liabilities.

• S.132(1) is a general provision that requires
directors to act ‘honestly’ at all times and use
reasonable diligence in the exercise of their
powers.
 Any breach of fiduciary duty

• Duty imposed on directors to avoid conflict of
interest by not using confidential information they
obtain by virtue of their position in the company
is complemented by s.132(2).
• P.P. v Choudry [1981]1 MLJ 76
 The knowledge that company was facing financial crisis was considered as specific confidential information which director had used to his own advantages.

• S.132(3) imposes liability on any officer who
commits breach of his fiduciary duty. He is not
only liable to the company, but if found guilty can
be imprisoned for 5 years or fined RM30,000.

• S.131 imposed a duty upon directors to disclose
their interest (directly or indirectly) in contracts
with the company.
• Duty to disclose is also imposed by s.135 where
directors have to disclose particulars of interest in
shares, debentures, participatory interests,
options and contracts; change in those interests
mentioned; and particulars necessary for
maintaining the register of directors, secretaries,
managers and auditors.

• To avoid abuse of power by directors, s.133
restricts a company from giving loan to their
director, except for exempt private companies,
and s.133A prevents a company from making
loans to any person connected with a director of a
company.
• S.167 directors have a duty to ensure that the
company’s accounts are properly kept.
• S.171(1) requires directors to take reasonable
steps to ensure that the company accounts
comply with act.

REMEDIES FOR
BREACH OF DUTY





Sue for damages
Seek return of property
Recover secret profit
Rescission of contract

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