| Since a company is a legal entity by itself, its | | | | full-time and is appointed with managerial powers by |
| shareholders are required to appoint directors, officers | | | | the board to carry out the company's daily operations. |
| who are entrusted with the power and authority to | | | | A non-executive director does not work full time, |
| make decisions for the running of the company and | | | | receives a smaller director's fees and functions as a |
| manage the company's affairs. | | | | policy maker for the company. |
| For many private limited companies, the shareholders | | | | Duties and Responsibilities of Directors |
| of the company are often involved in the daily | | | | Directors have fiduciary duties towards the company |
| operations and management of the company, and | | | | and their shareholders who appointed them. Fiduciary |
| therefore, usually appoint themselves to be the | | | | duties include:- |
| directors of the company. | | | | - Act bona fide in the interest for the company. Bona |
| In all limited companies, there must be at least 2 | | | | fide means "in good faith"; |
| directors who each have his/her principal or only place | | | | - Avoid a situation where there is a conflict between |
| of residence within Malaysia. | | | | duty to the company and personal interest; and |
| To qualify to become a director of a company, he | | | | - Not to make any secret profit out of the position as |
| must be: | | | | director. |
| | | | The statutory duties of the directors include:- |
| 1. A natural person | | | | - Act honestly at all times and use reasonable diligence |
| 2. At least 18 years old | | | | when discharging their duties; |
| 3. Of sound mind | | | | - Avoid improper use of information obtained by virtue |
| 4. Not disqualified under the Companies Act 1965 | | | | of position to gain personal advantage personally or to |
| For a newly incorporated company, the first directors | | | | cause detriment to the company; |
| are named in the Memorandum of Association or | | | | - Avoid improper use of sensitive, unpublished |
| Articles of Association and they will hold office until the | | | | information to gain personal benefits; |
| first annual general meeting where they will retire. All | | | | - Before disposing of or executing any transaction for |
| persons who wish to be a director must first lodge | | | | the disposal of a substantial portion of the company's |
| with the Companies Commission of Malaysia (or SSM) | | | | undertaking or property, obtain approval from the |
| a document called "Form 48A". This form is a | | | | members in a general meeting; |
| statutory declaration by the director, that he or she is | | | | - Disclose his shareholdings in the company and any |
| not an undischarged bankrupt and has not been | | | | changes thereof; |
| convicted of an offence. | | | | - Disclose his interest in any contract or proposed |
| Differences between executive and non-executive | | | | contract made by the company; and |
| director | | | | - Ensure registers and statutory books are kept |
| An executive director is a salaried director who works | | | | updated. |