MALAYSIA Law and Practice Contributed by: Dato’ Tan Yee Boon, Stephanie Chan Pik Jia and Joaana Keng Li Xin, David Lai & Tan
Independent directors are also required to make annual declarations affirming their continu - ing independence. The MCCG recommends a cumulative tenure limit of nine years for inde - pendent directors, beyond which shareholder approval is required for continued service. In the event where there are any conflicts of interest, Sections 219 and 221 of CA 2016 man - date directors to disclose any direct or indirect interest in contracts involving the company. Pursuant to Section 222 of CA 2016, directors with conflicts are required to abstain from voting or participating in the relevant decision-making process. For prospectus disclosure, paragraph 8.01 of the Prospectus Guidelines mandates disclosure of any interests directors or substantial sharehold - ers have in entities that compete or transact with the company, including the nature and extent of the interest, and steps taken to address or mitigate the conflict of interest. 4.6 Legal Duties of Directors/Officers The principal legal duties of directors and offic - ers are primarily governed by CA 2016 and grounded in fiduciary and statutory responsibili - ties. These duties aim to ensure that directors always act in the best interests of the company and uphold proper standards of corporate gov - ernance. The core duties include the following. Duty to Act in Good Faith Pursuant to Section 213 (1) of CA 2016, direc - tors are required to exercise their powers in good faith and in the best interests of the company. This duty mandates honesty and the prioritisa - tion of the company’s interest over personal or third-party interests. Directors must not misuse their position or any confidential information
obtained in their capacity, as further outlined in Section 218 (1)(e)–(f) of CA 2016. Duty to Exercise Reasonable Care, Skill and Diligence Pursuant to Section 213 (2) of CA 2016, direc - tors must perform their roles with a reasonable degree of care, skill and diligence. This duty includes staying informed about the company’s operations, actively participating in board meet - ings and making well-informed decisions. Direc - tors are expected to apply their personal exper - tise and experience to the best of their ability. Duty to Avoid Conflicts of Interest Directors must avoid situations where their per - sonal interests might conflict with the compa - ny’s interests. Sections 219 and 221 of CA 2016 impose a duty to disclose any direct or indirect interest in transactions or matters relating to the company. Transparency and integrity are crucial in maintaining stakeholder trust. Duty to Disclose Directors are obligated to provide accurate, timely and complete disclosures of information to shareholders, regulators and other stakehold - ers. This includes ensuring that financial state - ments, annual reports and other disclosures comply with applicable accounting standards and regulatory requirements. Duty to Act for Proper Purpose Directors must exercise their powers only for legitimate and proper purposes, and not for any collateral or improper objectives. This duty ensures that all decisions are aligned with the company’s Constitution and broader corporate objectives, rather than serving personal agen - das.
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