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  Director Responsibility and Liability in Malaysia: Legal Framework and Case Law Implications In Malaysia's corporate landscape, directors bear significant responsibilities and face various liabilities under the Companies Act 2016 (CA 2016), which replaced the Companies Act 1965. Understanding these legal obligations is crucial for directors to effectively discharge their duties while avoiding personal liability. Fiduciary Duties of Directors Directors serve as trustees and agents of the company, managing its affairs on behalf of shareholders. Section 213(1) of the CA 2016 codifies the fundamental duty that directors must exercise their powers "for a proper purpose and in good faith in the best interest of the company." This fiduciary relationship was aptly described in Great Eastern Ry v Turner (1872) , where Lord Selbourne stated that directors are "trustees of the company's money and property; agents in the transactions which they enter into on behalf of the...

  Understanding Dividends in Malaysia: A Guide for Shareholders and Directors In the corporate landscape of Malaysia, dividends represent one of the primary ways shareholders receive returns on their investments. However, the declaration and distribution of dividends involve complex legal considerations that both directors and shareholders must understand to ensure compliance with the Companies Act 2016 (CA 2016).   What Are Dividends?   Dividends are distributions of a company's profits to its shareholders, typically paid in cash but sometimes issued as additional shares. They represent a tangible return on investment for shareholders and signal a company's financial health and management philosophy.   Legal Framework Governing Dividends in Malaysia   The distribution of dividends in Malaysia is primarily governed by the CA 2016, which introduced significant changes from the previous Companies Act 1965. Understanding these provisions is crucial for co...

In corporate accounting in Malaysia, it’s essential to distinguish between “Amount Due to Director” and “Amount Due from Director” because each carries different accounting and tax implications. When you record an “Amount Due to Director,” you are acknowledging a liability ( credit side of Trial Balance, same as Revenue, also on credit side )  on your company’s balance sheet. This relates to genuine obligations the company has toward a director, such as unpaid salaries, bonuses, or advances that have not yet been repaid. In this case, the company owes money to the director, and the transaction must be properly documented to show that the payment is a regular, legitimate expense. If not clearly identified, such liabilities might be scrutinised by LHDN (Malaysia Inland Revenue Board) to ensure they are not misclassified in an attempt to reduce taxable income or mask non-deductible expenses. In contrast, an “Amount Due from Director” represents a receivable, meaning that the director...