In a private limited company (Sdn. Bhd.), usually, we can hear the phrase ‘director.’ So, what are the roles and duties of a director in Sdn. Bhd. Company? Any individual who occupies the role of director in a corporation, regardless of the designation used, is referred to as a company director. This includes anyone who follows the directions and recommendations of a corporate director and usually takes action, as well as in-turn or substitute director.

Who can be A Director in Malaysia?

According to the Companies Act 2016, an individual who wants to become a director needs to fulfill the following conditions:

– Over the age of eighteen
– A person who is naturally gifted
– A person in good health condition
– Currently stay in Malaysia
– Not an undischarged bankrupt
– Have not been jailed for the aforementioned offenses in the previous five years

Role of A Director

The roles of the director are as per below:

– Organize meetings such as board meetings, annual general meetings, and extraordinary general meetings
– Make company-wide decisions
– Manage the company’s finances and operations
– Prepare and file the necessary legal paperwork

Duties of A Director

Directors must fulfil both fiduciary and statutory obligations to ensure that they are operating in the company’s best interests.

Fiduciary Duties

– Act in the company’s best interests
– Conflicts of interest between personal and business problems should be avoided
– Avoid any hidden profits from the directorship to a minimum level

Statutory Duties under the Companies Act 2016

– Section 213 (1): Appropriate purpose and good faith action
– Section 213 (2): To carry out with caution, competence, and diligence
– Section 214: Making a business decision
– Section 215: Relying on information from a professional report
– Section 216: Delegate authority and accept responsibility from the delegate
– Section 217: Nominee director must act in the best interests of the company
– Section 218: No personal advantage or interest from the position of director is permitted
– Section 218: To make disclosures to individual shareholders
– Section 223: Disposal or acquisition of a property undertaking
– Section 245: Accounting and other records must be kept and managed
– Section 248: Prepare financial statements and directors’ reports (Section 252)

Code of Ethics of Director

A director should follow the following corporate governance codes at all times while performing his duties as below:

  • Should have a thorough awareness of the company’s goals, objectives, capabilities, and capacity
  • Should commit time and effort to attending meetings and learning what the board and each of its directors are expected to do, as well as performing those duties
  • Should ensure that the organization is properly managed and governed at all times
  • Should keep up with the company’s business and be kept informed about the company’s compliance with relevant legislation and contractual obligations
  • To be effective in corporate management, he or she should insist on being kept informed on all things of relevance to the organization
  • Should limit the number of firms to which he may commit his time and effectiveness; each director must assess his abilities and determine how best to spend his time in the company to which he is a director
  • Should have access to the company secretary’s advice and services, who is responsible to the board of directors for ensuring that proper procedures, rules, and regulations are followed
  • Should always use his abilities for the purposes for which they were given, for the company’s benefit and growth
  • Should immediately disclose all contractual interests with the company, whether directly or indirectly
  • He must not divert any commercial opportunity that the company is pursuing to his benefit, nor may he utilize secret information received as a result of his position for his own or others’ benefit
  • Should always behave in the best interests of the company in any transaction, as well as act honestly and responsibly in the exercise of his powers and discharge of his responsibilities
  • Should be willing to make independent decisions and, if required, actively oppose when the company’s fundamental interests are at issue

In a nutshell, the roles and duties of directors are different from shareholders.