Topic 5: Constitution

Constitution is optional? Ans: Yes, but it S.31(1)

depends. S.38(1)
(except for company limited by guarantee)
If no constitution, then CA 2016 will apply. S.31(3)
If a company has a constitution, the rights, S.31(2)
powers, duties and obligations of the
company’s directors and members under CA
2016 shall apply unless otherwise modified
by the company’s constitution.
Constitution has no effect to the extent that S.32(2)
it contravenes or inconsistent with CA 2016
Effect of constitution:
(a) the company
(b) its directors and S.32(3)
(c) its members
Amendment of Constitution
1) Company by special resolution S.36(1)
2) Director or member may apply to the S.37(1)
Court
Effect of alteration on members and third S.194(a) and (b)
party
Non-application of doctrine of constructive S.39
notice
Capacity of company S.21
S.35
Objects clause S.38
S.14

Topic 6: Company’s Management

Director: De facto / shadow director and De S.2

jure (executive – employed by the company /
non-executive – only turns out during board *eg: explain meaning of shadow director
meeting) under UK case and S.2 CA 2016
Sakae Holdings Ltd v Gryphon Real Estate
Investment Corp Pte Ltd [2017] SGHC 73
Classifications and Disqualification S.196
Minimum director: S.198
1. ordinarily reside in Malaysia S.199
2. cannot include alternate / substitute
director
Case: Fong Poh Yoke v The Central
Construction Co (M) Sdn Bhd [1998] 4 CLJ
Supp 112

Undischarged bankrupt / Convicted /

Prohibited / Unsound
Appointment and Removal S.202
S.205
S.206
S.207
Remuneration
- Fees & Benefits with approval S.230
- Compensation for loss of office S.227
- Unfair payment S.288
- indemnity S.289
Loan to directors & persons connected with S.224
directors S.225
- giving loans & securities for loans S.197
- company may recover
Rights, powers, duties and obligations S.31(2) / (3)
Duties S.213(1)
a) bona fide s.213(2)
b) proper purpose s.214
c) reasonable care, skill and diligence s.215
- Business judgement rule (*is a S.216
defence) S.218
a. good faith & proper purpose S.219, 221 & 222
b. x material personal interest
c. informed decision
d. reasonably believes
d) reliance on info by others
e) reliance on actions of delegate
f) no conflict of interests rule
g) disclosure of interest
*no conflict of interest & disclosure of
interest must discuss together
Important Cases:
Thomas Marshall v Guinle
- to make gain for themselves: misuse of confidential information without appropriate
disclosure or approval.
- Megarry VC suggested that four elements were necessary when considering the “quality
of confidence”. First, the release of the information would be injurious to the owner of it
or of advantage to rivals; secondly, that the owner must believe that the information is
confidential, i.e. not in the public domain; thirdly, the owner’s belief in the above is
reasonable; and fourthly, the information must be judged in the light of the usage and
practices of the industry concerned. Broadly speaking is the information commonplace or
in the public domain? Ultimately, the test appears to be an objective one for the court to
consider.
Hivac Ltd v Park Royal Scientific Instruments Ltd
- The COA held that employees who worked for a competitor in their spare time and who
had persuaded colleagues to do the same were acting in breach of the implied duty of
good faith and fidelity. The court were concerned not to establish a general rule that
working for a competitor would always amount to a breach as this could prevent
employees from making a living. Accordingly, they decided that whether or not to impose
the duty might depend on the seniority of the employee.
Shanghai Hall Ltd v Chong Mun Foo
- Disclosure of a director’s interest in a rival company.
Electro Cad Australia Pty Ltd & 2 Ors v Mejati RCS Sdn Bhd & Ors
- the plaintiffs brought an action against the defendants for breach of confidential
information when the defendants produced a similar anti-theft car device manufactured
by the plaintiff and it was held by the court that information concerning the anti-theft car
device were trade secrets and the defendants had breached the confidence when they
used the information without the plaintiffs’ permission. In this case, the court granted an
injunction and awarded damages to the plaintiffs. In Malaysia, for an action on breach of
confidence to succeed, three important requirements must be satisfied, i.e. the
information was of a confidential nature, it was communicated in circumstances
imparting an obligation of confidence, and there was an unauthorized use of the
information.
Avel Consultants Sdn Bhd & Anor v Mohamad Zain Yusof & Ors
- the court held that a director of the company was in a fiduciary position and as such was
precluded from acting in a manner which will bring his personal interest into conflict with
that of his company.