This document discusses whether and how directors of a company can be sued. It notes that under Sections 346 and 347 of the Company Act 2016, any member of a company may apply to the court if the company's affairs are being conducted in an oppressive manner or if an act of the company unfairly discriminates. It provides summaries of two court cases (RDS Bina Sdn Bhd v Ong Chin Hoe & Anor and Keller (M) Sdn Bhd v Ong Leong Chiou & Ors) where the court pierced the corporate veil to hold company directors personally liable for debts, finding evidence that the directors had used fraudulent acts or hiding behind the corporate structure to evade paying debts owed.

1. Can
director
be sued ?
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2. Director’s duties
Duty to act bona fide in
interest of the company
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Can director
be sued ?

3. Director’s duties
Duty to use power for
proper purpose
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Can director
be sued ?

4. Director’s duties
Duty not to fetter
discretions
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Can director
be sued ?

5. Director’s duties
Duty to avoid actual and
potential conflict of
interest.
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Can director
be sued ?

6. Director’s duties
Duty to avoid actual and
potential conflict of
interest.
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08/07/22
Can director
be sued ?

7. Director’s duties
Duty to ensure integrity of
financial information.
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Can director
be sued ?

8. Section 346 & 347 of
the Company Act 2016
provide avenues to sue
director.
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Can director
be sued ?

9. Any member of a
company may apply to
the Court for an order :
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Can director
be sued ?

10. (a) The affairs of the company
are being conducted or the
power of the director are being
exercise in oppressive manner.
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Can director
be sued ?

11. (b) Some act of the company
has been passed which unfairly
discriminate
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Can director
be sued ?

12. RDS Bina Sdn Bhd v Ong
Chin Hoe & Anor
The Plaintiff filed a claim against the directors of a company in order to
enforce payment due under a settlement agreement entered with the
company that subsequently ceased operations and dissolved. The Plaintiff
presented evidence of fraudulent acts by the directors to deregister their
company to evade paying the monies owed to the Plaintiff. The Court allowed
the Plaintiff to lift the corporate veil and found the directors to be personally
liable for the debts owing to the Plaintiff.
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08/07/22
Can director
be sued ?

13. Keller (M) Sdn Bhd v Ong
Leong Chiou & Ors
The Plaintiff roped in several parties including a director of a company for the amount due to them
as the appointed sub-contractor for work done in the construction of a shopping mall project.
Upon close examination of the relationship between the parties, it was discovered that the 1st
Defendant (Director) had orchestrated a complex plan to hide under the corporate veil in order to
escape liability. The 1st Defendant used a company (2nd Defendant) under his control and
command to shield another company (3rd Defendant) from liability for fraud engineered by him.
Shortly after the project was completed, the 1st Defendant and other directors from the 2nd
Defendant resigned and transferred their shares to other parties. In furtherance to the fraud, the
1st Defendant had also actively concealed vital information from the Plaintiff. These actions
allowed the Court to pierce the corporate veil and have the Defendants jointly liable to pay the
Plaintiff.
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08/07/22
Can director
be sued ?