Bankruptcy and Directors: Vacating Seat and Potential Illegality

There can be legal repercussions to a company when one of its directors is adjudged bankrupt. It is common in the constitution or articles of association to provide that the office of the director will become vacant if the director becomes bankrupt. I set out below three interesting legal issues that arise from bankruptcy and directors.

First, I will deal with the potential adverse impact of bankruptcy on directors’ resolutions and legal proceedings. This in light of the recent Court of Appeal decision in Sazean Engineering & Construction Sdn Bhd v Bumi Bersatu Resources Sdn Bhd [2018] 5 AMR 443; [2018] MLJU 839. This decision was under the Companies Act 1965 (CA 1965). Secondly, I interpret these issues in light of the Companies Act 2016 (CA 2016). Thirdly, potential ways to overcome such arguments. Continue reading

IMLC Conference Paper: Navigating the Directors’ Duty to Act in the Best Interest of the Company

On 15 August 2018, I spoke at the International Malaysia Law Conference 2018. I presented my paper on Navigating the Directors’ Duty to Act in the Best Interest of the Company. I have uploaded my paper and you can click on the link.

The paper analysed the Federal Court decision in Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Bhd [2018] 2 MLJ 177, FC, or otherwise known as the Petra Perdana decision. The principle on the division of powers between the directors and shareholders was also compared with the present position under section 195 of the Companies Act 2016. Continue reading

International Malaysia Law Conference 2018: Corporate Responsibilities Fiduciary Obligations

I have been invited to speak at this year’s International Malaysia Law Conference 2018. I will be speaking on Day 2, Breakout Session 4, from 12pm to 1.15pm along with other panellist speakers. The session is titled Corporate Responsibilities: The Place of Fiduciary Obligations.

The Honourable Justice Margaret Beazly AO, President of the New South Wales Court of Appeal, will be the main speaker. Dato’ Anantham Kasinather, retired Court of Appeal Judge, and Dato’ Mohammed Faiz, Executive Chairman of PwC Malaysia, will also be sharing their insights.

Company directors have a fiduciary obligation to always act in the best interest of their company – in accordance with the business judgment rule – and to discharge their directors’ duties in compliance with the law. How should conflicts of duty and interests be dealt with? How does the Malaysian position compare with the position in New South Wales?

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Some Recent Developments in Shareholder Meetings in Malaysia

Shareholder meetings are an important platform to allow for members to debate and vote on matters affecting the affairs of a company. Case law has held that the holding of the general meeting, and the right to vote, are a fundamental right of the members.

Hence, it is particularly important to meet all legal requirements for such meetings. A technical non-compliance may result in the meeting being invalid and void.

I wanted to touch on three recent legal developments on shareholder meetings. The issues range from whether there is a need to second a proposed resolution, the powers of the corporate representative, and the ability to requisition a general meeting. Continue reading

Say on Pay: 6 Issues on Shareholders’ Say on Executive Salaries

Shareholders’ say on pay. Over the last few weeks in Malaysia, there have been discussions on the pay of the top executives or directors of companies. I set out 6 key legal issues that relate to this in light of the Companies Act 2016 (CA 2016) and the Malaysian Code of Corporate Governance 2017 (MCCG). The issues include the distinction between directors’ fees and the pay or remuneration of a CEO, and how do shareholders have their say on the payment of these fees or remuneration.

I set out these issues in the context of public listed companies. Continue reading