There are certain fiduciary duties performed by the director of a company in order to fulfil their responsibilities (Fiduciary Duty, n.d.). First is the duty of care. It indicated that the directors should obtain sufficient information before they make any business decision. Besides, the directors also need to evaluate the credibility of the information presented in order to protect the company's interests. The second is related to the duty of loyalty as the directors should act as corporate fiduciaries and perform their duties without any personal economic squabble. As stated in the case of ‘Guth v. Loft, 5 A.2d 503, 510 (Del. 1939)’, the court explained the duty of loyalty as “corporate officials and directors may not utilise their positions of trust and confidence to advance their personal interests.” (Fiduciary Duty, n.d.).

Besides the two primary duties, there are some other fiduciary duties of a director such as the duty of good faith, the duty of confidentiality, and the duty of disclosure. The directors should put the company’s interests first and perform their duties under the boundary of law under the duty of good faith. Besides, the duty of confidentiality mentioned that the directors and the officers of a company should protect their company’s confidential information rather than disclose it for personal benefit. Furthermore, the duty of disclosure required the director or officer of the company to disclose all the relevant information regarding the directors’ decision to their shareholder. It stated that the director should act as ‘complete candor’, especially during the essential business decision. For example, big corporate business transactions, such as mergers with or acquisitions of other organisations, the directors need complete and fair disclosure of crucial facts before getting board or investor approval (Fiduciary Responsibility and Corporations, n.d.).

According to the Company Act (2016), Section 213(1), “A director of a company shall at all times exercise his power in accordance with this Act, for a proper purpose and in good faith in the best interest of the company.” Besides, Section 214(1)(a) of the Act also stated that the director who “makes a business judgement for a proper purpose and in good faith will be deemed to meet the requirement of his duty as a director.”

Furthermore, Section 113(5)(b) stated that the director shall declare that “the decision of purchase own company’s share through share buyback is made in good faith and in the interest of the company.”  Besides, Section 127(2)(c) of CA 2016 also mentioned one of the requirements of purchasing a company’s own shares is “the purchase must be made in good faith and in the interests of the company.” 

To ensure such conflict does not influence the directors when making a decision, the shareholders have the power to force the directors to yield all of their personal gain that may be derived from the transactions. This is to establish a decision that is beneficial to the company as the duties of the directors are toward the company and not themselves. Apart from that, when there is a possibility of a conflict of duty and interest that may transpire from the transaction, the director needs to declare to the other directors of the company, the nature and the range of interest (Waddell, 2020).

According to Section 218(1)(e) of the CA 2016, “a director or officer of a company shall not, without the consent or ratification of a general meeting engage in business which is in competition with the company.” This is because the directors will be put in a position where their judgment will be put to the test. For example, if a director of a company has shares in another competing company, a conflict of interest may arise that influences his judgment when making a decision, which indirectly breaches his duties as a director.

It can be further explained by Cooper (2021) that the directors are ordered to repay all the profits that are made from the breach of duties and the court can also order the directors to restore the company to the actual position it is supposed to be in if it is not for the directors’ breach of duties. Lastly, according to Acclime (n.d.), if the directors breach the company law, they will be penalised with the penalties such as being compounded, delisting, dissolution, and getting fines based on applicable rules and regulations, being reprimanded, and suspended. Hence, the directors should exercise their powers in good faith to avoid any unlawful acts from damaging their reputation and also that of the company.

Ahmad Masum, Shahrul Nizam Salahudin, & Hanan Abdul Aziz. (2018). Corporate governance and directors duty to act in good faith and in the best interest of the company: The Malaysian experience. International Journal of Engineering & Technology, 7(4.38), 795-799. http://www.sciencepubco.com/index.php/IJET

Contract Counsel. (n.d.). What is a business transaction? https://www.contractscounsel.com/t/us/business-transaction#:~:text=A%20business%20transaction%20is%20a,be%20recorded%20for%20accounting%20purposes

Cooper, P. (2021). What does the duty to act in good faith really mean? https://legalvision.com.au/what-is-the-duty-to-act-in-good-faith-in-the-best-interests-of-the-company/

Duties of Directors. (n.d.). https://eiza2.pressbooks.com/chapter/duties-of-directors/

Fiduciary Duty. (n.d.). https://www.law.cornell.edu/wex/Fiduciary_Duty

Fiduciary Responsibility and Corporations. (n.d.). https://www.nolo.com/legal-encyclopedia/fiduciary-responsibility-corporations.html

ILBS. (2017). Companies Act 2016 (Act 777) & Regulations (As At 1 February 2017): /International Law Book Services. Malaysia: ILBS.

Mahkamah Tinggi Kuala Lumpur. (2019). Blackstream investments pte ltd & anor v D'Nonce technology bhd [2019] MLJU 923, HC. https://themalaysianlawyer.com/wp-content/uploads/2019/12/blackstream-investment-1-lagi-v-dnonce-technology.pdf

Morris, A. (2019). Directors’ conflict of interest (How to comply). https://www.davidsonmorris.com/directors-conflict-of-interest/#:~:text=Situational%20conflict%20refers%20to%20where,the%20director%20and%20the%20company.

Principles for Responsible Investment. (2015). What is fiduciary duty and why is it important? https://www.unpri.org/fiduciary-duty/what-is-fiduciary-duty-and-why-is-it-important/247.article

Victorian Public Sector Commission. (n.d.). Conflict of interest and duty. https://vpsc.vic.gov.au/html-resources/conflicts-interest-duty-directors-public-entities-practice-guide/2-conflict-interest-duty/#:~:text=Conflicts%20of%20duty%20arise%20when,as%20'wearing%20two%20hats'.

Waddell, J. (2020). Directors’ duties in relation to conflicts. https://www.stevens-bolton.com/site/insights/briefing-notes/directors-duties-in-relation-to-conflicts

To begin, the chairman of the meeting has the authority to call a recess. This can be essential in the adjournment of shareholder disputes, or a difficult meeting where directors are at risk of being dismissed.

It is usual for the company's constitution to include a provision that allows the chairman to adjourn the meeting. An article like Article 50 of Table A states that "[t]he chairman may, with the approval of any meeting in which there are five or more members present (and when so ordered by those present) adjourn" meetings. Notwithstanding, an executive will have a precedent-based regulation capacity to conclude no matter what the constitution's particular arrangement.

The executive had dismissed the gathering in this situation, yet the Court decided that such a deferment was unlawful. The meeting had been adjourned because the chairman had not met the legal requirements for a common-law adjournment. The gathering had been concluded by the director inexplicably by any means.

According to the Plaintiffs' counsel, there are no specific provisions in the Companies Act which require an adjourned general meeting to be adjourned via ballot. The plaintiffs' legal team argued that the same does not require a vote by ballot on adjournment, but instead explicitly states that polling is only for matters specified in the meeting notice and not for adjournment. A Bursa Malaysia official explained to him that a recorded backer should guarantee that any goal set out in the notification of a comprehensive gathering, or in the notification of a goal that might be moved and is planned to be moved at a comprehensive gathering, is decided on by-survey. Article 8.29A(1) under Article 8.54A of the Bursa Malaysia Securities Berhad Listing Requirements was clarified in the Questions and Answers, as follows: "8.54A" “A listed issuer must, among other things, ensure that any resolution set out in the notice of any general meeting, is voted on by a majority of the votes cast at the meeting.” At the point when a matter is excluded from the notification of regular gathering, it isn't dependent upon the survey casting a ballot necessity. Deferment of a regular gathering because of unexpected conditions is one instance of something not explicitly referenced in that frame of mind for a comprehensive gathering's notification.

Second, the Court held that the chairman had erroneously decided that the adjournment decision would be voted on by a poll. This was an error. The proper procedure would have been a simple show of hands.

Third, excluding proxy holders from voting on the adjournment resolution was a mistake made by the chairman. The adjournment question can be decided by proxy holders.

In addition, there is the inevitable legal repercussion of an improper adjournment. The meeting was able to go on and pass all of the necessary resolutions. The shareholders who have remained in the meeting are those who have remained. It is possible for shareholders to proceed with resolutions as long as the quorum is maintained. In other words, this is what happened. The goals to excuse specific chiefs and delegate new ones were done by the investors.

There are many similarities between this case and Datuk Johari Abdul Ghani & Ors v. QSR Brands Bhd & Ors [2007] 4 MLJ 19. This time, the chairman called a recess to announce the results of a poll that had been taken. The gathering had been led as proven by the individuals who remained. On the basis of Byng v. London Life Association [1989] BCLC 400 on adjournment, the Court ruled that the chairman's decision to adjourn was unreasonable and therefore void.