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DIRECTOR - Coggle Diagram
DIRECTOR
Definition: Any person occupying the position of director by whatever name called and includes a person in accordance with whose directions or instruction the majority of directors are accustomed to act and an alternate or substitute [s2(1)]
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Types of Directors
EXECUTIVE DIRECTORS A salaried director who works full-time and is appointed with managerial powers by the board to carry out the company’s daily operations.
NON-EXECUTIVE DIRECTORS A director who does not work full time, receives a smaller director’s fees and functions as a policy maker for the company.
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ALTERNATE DIRECTOR A person appointed by member of board to act and speak during periods of absence or incapacity of the director
ASSOCIATE DIRECTOR Usually for senior executives (salaried employee) to provide training for top management & improve their status within company
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Retirement of Directors
Section 205
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Public co. - all director shall retire at first AGM and at subsequent AGM, 1/3 of directors at that time (if number is not three or multiple of three, number nearest to 1/3) shall retire at conclusion of meeting
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Duties of Director
A director of company shall at all times exercise his powers in accordance with this Act, for a proper purpose and in good faith in the best interest of the company s[s214]
[s213] A director of a company shall exercise reasonable care, skill and diligence with
The knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities
Any additional knowledge, skill and experience which the director in fact has.
Directors may delegate any power of Board to committee of Board, director, officer, employee, expert or any other person [s216]
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A director may rely on information, professional or expert advice, opinions, reports or statements including financial statements and other financial data [s215]
Prohibition against improper use of property,position etc [s218] Director/Officer of company shall not, without consent
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Use any opportunity of the company which he became aware of. in the performance of his functions as the director or officer of the company
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Service Contract
Any contract where director undertakes personally. or through third party, to perform services for public company or its subsidiaries [s231]
Public co. should keep and maintain copy of their directors' service contract and make it available for inspection at its registered office for at least a year from the date of termination or expiry of contract [s232]
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When private co. that have only one member into contract with sole member who is also director of company, company should ensure terms of contract are recorded in minutes of meeting immediately after making contract unless the contract is in writing [s234]
If refuse, liable to fine <RM1million
If requested, company shall provide the copy within 7 days from the date of request is received by company
If refuse, liable to fine <RM250,000 besides court order for an immediate inspection or send a copy to the person requiring
Indemnity :
[S289(3)] CATEGORY 1
A company can give an officer or auditor any indemnity for any cost incurred by him or the company if:
1) relates to the liability for officer/director act or omission
2) judgement in favor of director or acquittal(not guilty)
3) auditor granted relief under the Act
4) legal proceedings discontinued/not pursued
[S289(4)] CATEGORY 2
A company may indemnify an officer/auditor in respect of:
1) any liability to any person (except for the company) for any act or omission in his capacity
2) cost incurred by that director/auditor/officer in defending or settling any claim (except for fine in CRIMINAL PROCEEDINGS, PENALTY IN REGULATORY PROCEEDINGS, DEFENDING CRIMINAL WHERE THERE IS CONVICTION)
D&O Insurance
1)company can purchase an insurance scheme to cover the liability of directors/officer/auditor
2)public listed company usually have it although it is paid by the director and officer for tax reason
Requirements for Indemnity/D&O Insurance
1)Approval by the board
2)Record in the board minutes
3) Disclose particulars of any indemnity/D&O Insurance in the directors report in FS