Statutory Duties

Topics: Common law, Contract law, Conflict of interest Pages: 7 (292 words) Published: December 3, 2014
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
 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
• 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.


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

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