Is usually Legislation in Malaysia satisfactory post Enron & Worldcomm?


Administrators being support beams of corporate governance (Cowan, 2004) will need to at all times act honestly and use fair diligence in the discharge of their duties. This is certainly more so in light of the latest major corporate issues just like ENRON & Worldcomm in the us and the Transmile case in Malaysia. In essence directors will be agents from the company and as agents, they owe an obligation of trust to the firm and shall do all their utmost to put the interest with the company first before personal kinds.

Cowen (2004) wrote that since company directors are brokers of the company, they are responsible to shareholders and to stakeholders in various guises. It is also very clear that as a custodian of something that does not belong all of them, directors are obligated to pay a fiduciary duty of care to safeguard the company's assets and maximize returns intended for shareholders and also to ensure that the other stakeholders needs are met too. The rule that a organization is a legal entity independently and distinct from its shareholders, directors and managers also lent to the need for company directors to act honestly and vigilantly in the placement that they are vested to.


The statement in Section 132(1A) of the Corporations Act 1965 in Malaysia states that the director of your company shall exercise sensible care skill and diligence. Section 132(1) of the same act further says that a director of a company shall constantly exercise his power for a proper goal and in uberrima fides in the best interest of the company. The statement is more obvious once seen in the context a company is known as a legal enterprise and it exists individually from the two shareholders and staff. Playing the position of the middleman, directors would be the link involving the providers of capital as well as the company together its detailed management staff.

However , it ought to be noted that the director can also be a shareholder because even though physically one person, the overseer plays the role of two unique legal details. This theory of individual and legal entity between company and shareholders was first established inside the landmark case of Salomon vs Salomon & Co. Ltd. (1985) where the term " Veil of incorporation” was established.

Fok (1996), stated that a representative is a person elected by shareholders or perhaps appointed by the board to participate in supervision of the organization. It goes without saying then simply that directors should secure the shareholders' investment in the company with all times act seriously and use reasonable diligence in the discharge of his duties to shareholders. Cowen (2004) composed that seeing that directors happen to be agents in the company, they are accountable to shareholders also to stakeholders in various guises. It is additionally clear that as a custodian of something which does not belong them, owners owe a fiduciary duty of treatment to safeguard you can actually assets and maximize returns for investors and to make sure that the additional stakeholders requirements are fulfilled as well.


Directors are stewards of the company and who give you the company with leadership, assistance and guidelines. Directors of the company could include the following positions or designations;

• Managing Representative

• Executive Director

• Chairman

• Independent non-executive Director

• Non-independent no-executive Director

Most companies in Malaysia are required to have a board of directors plus the minimum number is two. In essence both the originating company directors of a organization would almost certainly also be the shareholders as well. It is also common for shareholders to continue to hold office as directors as well as the board to get filled with reliable associates and relatives. As a result we tend to take the issue of due diligence and honesty for directors being a nonissue. How come would someone cheat themselves or all their relatives?

However , when a company grow and it allures capital in addition to the original shareholders, the...

Bibliography: 1 . Cowan, Neil 2005, Corporate Governance that Works!, Prentice Hall, Jurong, Singapore

installment payments on your Lee, Mei Pheng 2006, General Rules of Malaysian Law 5th Ed., Oxford Fajar, Selangor, Malaysia.

three or more. The Company of Interior Auditors Malaysia, 2006, The Professional Procedures Framework, The Institute of Internal Auditors, Kuala Lumpur Malaysia.

5. Fok, William, 1996, An affordable handbook about Company Secretarial Practice, Manchester Publications, Kuala Lumpur, Malaysia.

5. Legal Review Plank, 2008, Presidio Code (Act 574) while at fifteenth January 2008, International Legislation Book Services, Petaling Jaya, Malaysia.

6. Finance Panel on Business Governance, 2k, Malaysian Code of Company Governance, Malaysian Institute of Corporate Governance, Kuala Lumpur, Malaysia.

six. Ministry of Finance Malaysia, 2007, Companies Act and Regulations- Amendments up to September 2007 26th Edition, MDC Publishers Sdn. Bhd., Kuala Lumpur Malaysia


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