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Delima Enterprise was founded in1981 by En Zayed. The main business are trading and supplying related products including manpower supplies to the oil and gas industries. The enterprise was incorporated in 2004 as Delima Enterprise Sdn Bhd, with En. Zayed and his wife Puan Hashimah, as the controlling directors and two principal shareholders. The company activities had expanded into provision of engineering services as part of their business diversification and expansions plan. However, due to lack of knowledge about corporate administration, there are issues arose that need to be settle by them.
DUTY AND RESPONSIBILITY OF DIRECTOR
Before furthering the discussion, we want to highlight the role and responsibility of Encik Zayed and Puan Hashimah as the Directors of Delima Enterprise Sdn. Bhd. 1. Duty to act bona fide in the best interests of the company This duty is the most basic of all duties. What is meant by bona fide and in the best interests of the company is that a director must at all times ensure that his actions are consistent with the well being of the company’s. An example would be found in the case of Re W & M Roith Ltd  1 WLR 432 a director, Mr Roith, entered into a service contract with his company providing for pension to be given to his wife in the event of his death without taking into consideration as to whether the contract was for the benefit of the company. The object of the contract was considered not to be binding on the company as it did not benefit the company but Mrs Roith. The statutory expression for this principle obtains in Section 132(1) of the Companies Act 1965. 2. Duty to disclose all material information This duty is to avoid potential conflict of interest. In Aberdeen Railway Co v Blaikie Bros (18431860) All ER Rep 249 for example, the director involved was sitting on the boards of both Aberdeen Railway and Blaikie Bros and failed to disclose this when the two companies contracted with each other. This was found to be a failure to disclose material information. Similarly in Guinness plc v Saunders  2 AC 663, the company had as its consultant one of its directors,
may properly be left to such officers. In Re Brazilian Rubber Plantations & Estates Ltd  1 Ch 425 it was held that a director is justified in trusting officers of the company to perform all duties that. Section 132(2) of the Act as amended by the Companies (Amendment) Act 2007 also prohibits generally competing with the company. 3. as then the directors would not be capable of taking more important. Duty to retain discretion As company director. The statutory expression for this rule can be found in Section 131(7B) of the Companies Act 1965 which was added by the Companies (Amendment) Act 2007. as stated in Section 132(1C) of the Companies Act 1965. Duty to avoid conflict of interest Conflict of interest can be described as one situation whereby one profits by one’s position as a director at the company’s expense. In Cook v Deeks  1 AC 554 three out of four directors in a railway company diverted contract in which the company was interested to another company formed by them. 4. having regard to the exigencies of business. where the offeror dislikes most of the board. however. but likes one of the directors and offers the contract personally to him. 5. which makes voidable all contracts done in conflict of interest at the option of the company involved. for example. This is not a rule followed too strictly.and this was only later realised by the rest of the board. The duty to disclose finds expression in Section 131 of the Companies Act 1965. and so was held to be non-disclosure. This duty is so strict it applies even when the company by some reason is incapable of performing the contract. as in the case of Industrial Development Consultants Ltd v Cooley  1 WLR 443. Duty to exercise reasonable care and skill . The newly added Section 131A also makes it impossible for the interested director to vote on the issue. The board of directors is also not prevented from relying on information provided by others in the dispensation of their duties. The contract was held belonging to the company and the directors were not entitled to expropriate it to make a present to themselves. abstract decisions at the board level as held in Dovey v Cory  AC 477. what powers invested within one to do cannot generally be subdelegated.
then the standard of care that would be expected from him would be that of a lawyer. If the director were just a sweeper. provided he makes an effort. it would be a different matter. the standard that a directors skills need not be greater then his skill that may reasonably be epected from a person of his knowledge. for example. DIRECTOR MISSCONDUCT Base on the explanation above. I. we know that both Encik Salam and Puan Balqis were the family members of the directors. Both only have have secondary school background but still. Among them are: Appoinment of Encik Salam and Puan Balqis From the case. if the director were trained as a lawyer. However these standards were held too lax. Romer J only laid down generally lax standards back then. the duty to exercise reasonable care and skill in the performance of one as a company director. Improper Accounting Systems Information and Records It is the responsible of the directors to make sure that all accounting matters are properly handled. Romer J also held that there was no need for a director to attend ALL board meetings.Lastly in this part of the series we consider the common law contribution to the realm of directors duties. We can see here that there are defect in the company’s accounting procedure and administration control such as: 1. We believe that the appointment is been carry out because Encik Salam and Puan Balqis is related to the directors. we have found out that there are misconduct that have unintentionally done by both the directors.e. The posts that hold by them are actually a managerial level. they are appoint to be Operation Manager (Encik Salam) and Human Resource Manager (Puan Balqis). that can only be handled by person who have higher education level such as degree onwards. This was first laid down by Romer J in the case of Re City Equitable Fire Insurance Co Ltd  Ch 407. In subsequent cases such as AWA Ltd v Daniels (1992) 7 ACSR 759 and Dorchester Finance Co Ltd & Anor v Stebbing & Ors  BCLC 498 standards were raised much higher. The MYOB programme was not integrated .
the company will secured a contract worth RM 750. selling. the company had been awarded with several engineering project and its cumulative revenue for 2004 and 2005 were nearly RM 1 million and RM 1. Delima Enterprise Sdn. Sales invoiced are not pre numbered 4. Fail To Comply With EPF Act 1991 . PO are not pre-numbered 7. For employers. We believe that it is not suitable for the company to hire Cik Amy who has no experience in handling this task. and part of the way a company encourages improvement is through training. If an employee thinks a company values him or her. PO are manually prepared 6. Sales invoices are manually produced 3. The other advantage employers should remember about training is it offers them an improved retention rate. Perhaps its most positive benefit is better employees. resulted in poor cash flow 5. Refusal of Director (Encik Zayed) To Invest On Necessary Training Training is essential to the achievements of a business.2. Bhd conducting business relating to trading and supplying related product including manpower supplies to the oil and gas industries. whereas workplace specific proficiencies are easier to nature. A company develops the potential of an employee.000 in May 2006. training allows them to locate a wider range of people with the kind of outlook that matches the company mission statement.7 million. Since 2006. Weakness time attendance for employer Hiring a Non Qualify People To Handle Company’s Financial Matter. Often. manufacturing and others. The right kind of perspective is a hard thing to cultivate. Weakness in monitoring their debtors. We can see that huge transaction have been involved. Employees are more loyal to companies that value their growth and want to cultivate it. that sentiment will go into whatever the employee is designing. Furthermore. no matter how small or large. good training is just as important as a good benefits package for an employee. and thusly provide a better performance and decrease the rollover rate at any company..
all employers and employees are required to contribute to the fund at the rate of 11% and 12% respectively of the employee’s monthly wages. RECOMMENDATION & IMPROVEMENT ISSUES RECOMMENDATION Appoinment of Encik Salam and Puan Balqis Improper accounting systems information and records Hiring a non qualify people to handle company’s financial matter. Bhd. therefore. Refusal of director (Encik Zayed) to Invest on necessary training Fail to comply with EPF Act 1991 Fail to comply with the rules of Separat Entity Concept . it has to be managed by people in different capacities such as owners. Fail to Comply With The Rules of Separat Entity Concept Under Separate Entity Concept. Delima Enterprise Sdn. We can see that the issue here arise when Encik Zayed and Puan Hashimah charged their personal vehicle expenses amounting RM 50. but it is not a human being.The EPF contribution for contract workers were not deducted and remitted to EPF. is treated in its own capacity. As prescribed in the EPF Act 1991. directors.150 to the company during 2005. it is an artificial being. managers or employees. Corporation seal is used for corporation signature on important and legal documents. those are supposed to work ethically and represent it in their vested authorities.