Directors’ duties and liabilities in a company 

The directors powers and duties are stated in the articles of association and also the board where the power of management lies.

According to Section 122 of the Companies Act 2016, every company shall have at least two directors, who each has his principal or only place of residence within Malaysia. Besides, no person other than a natural person of full age shall be a director of a company.

Generally, there are fiduciary duties, duties of skill, care and diligence and statutory duties. Note that Section 132 of the Companies Act 2016 state the word ‘good faith’. The director of a company shall at all times exercise his powers for a proper purpose and in good faith in the best interest of the company.

In terms of fiduciary duties, a director must act in the interest of the company. Interest of the company is a subjective element – and to how far it can mean is anyone’s guess. For example, director make donations to a charitable institution, does it mean he is not acting in the interest of the company, since the company surely will not benefit anything from the donation and definitely not commercially justifiable.

Plus, what makes a commercial justifiable? In the modern view, it shall not mean that profits have to be maximised at all times – so long that there are other types of intangible benefits, it may be sufficient.