DUTIES AND LIABILITIES OF
DIRECTORS (1)

POSITION OF DIRECTORS
 DIRECTORS ARE :
- AGENTS
[Great Eastern Rly Co v Turner]
- OFFICERS
[s.2(1)]
- EMPLOYEES NOT SERVANTS
- TRUSTEES
[Re Forest of Dean Coal Co]

FUNCTION & POWER OF
DIRECTORS
 SECTION 211
- Business and affairs of the company
must be managed by or under the
direction of the BOD
- Power of managing
- Power of directing
- Power of supervising

TO WHOM THE DUTIES
ARE OWED
 To the company
 To whom?
 The significant groups in the company
 Shareholders and creditors
 What about employees?

PRIMARY DUTIES OF DIRECTORS

Cont.

1) Why a director is required to act in good faith?
- stands in a position of trust towards a
company
- Having a duty known as fiduciary
- This type of duty found in the a special
relationship of certain parties
2) Situation that does/does not amount to good
faith:
- Re W.M. Roith Ltd
- Marchesi v Barnes & Keogh
ACTING IN GOOD FAITH
IN THE BEST INTEREST OF
THE COMPANY AS A WHOLE

Cont.
3) How to act in good faith in the best
interest of the company? How did the
court determine the act that amount to
good faith?
- Re Smith and Fawcett Ltd
- Shuttleworth v Cox Bros & Co
(Maidendhead (Ltd)

USING POWER FOR A PROPER
PURPOSE
 The power entrusted to the director must be used
properly for the purpose for which the company
was formed
 Used in accordance with what has been set out in
the articles and memorandum
 Cannot use the power for any collateral purposes
 Case: Howard Smith v Ampol Petroleum Ltd
- acted in good faith alone is not enough if the
directors had exercised their powers for
collateral purposes

CONT
 A director is in breach of duty when he acts outside
the power despite the action is in good faith in the
best interest of the company
 Cases:
- Mills v Mills
- Kelapa Sawit (Telok Anson) Sdn Bhd v Dr Yeoh Kim
Leng & Ors
- Re Duomatic Ltd
- Section 223
- Section 224
- Section 225
- Section 226
- Section 227 etc

DO NOT BE IN A POSITION OF
CONFLICTING OF INTEREST
 Requirement of no conflict of interest is
one of the most important parts of the
duties of a director
 A director is not permitted to be in a
position where his duties to the company
and his personal interest conflict with one
another
 S. 218

DUTY OF DISCLOSURE
 It is a paramount duty of a director to
advance the interest of the company
rather than his own interest
 To perform the duty effectively, the
directors are required to disclose
whatever interest which might compete
with the interest of the company
 S.219
 S.221