preferential terms , eg.

interest free loans

unsecured loans why does the CA 2016 prohibits loans to directors?

loans with no clear business purpose

A.relationship with common law conflict of interests? no conflict rule

section 7, CA 2016

loan to a director or to a director of a related company under sec 7

B.types of transactions
provide guarantee or security for loan given by any person to such a director

for Bhd, after 6 months from the conclusion of AGM

loan shall be repaid or security shall be discharged (a)
for Sdn Bhd, after 12 months from transaction
civil consequences (b)
sec 224(7)- recovery by the company sec 224(2)
E.Consequences? sec 224, CA 2016 c)
sec 224(6) directors authorising the transaction shall be jointly and severally liable to C.exception to sec 224, loans which are not prohibited
indemnify the company d)

criminal offence sec 224(10) sec 224(8) financial institution in the oridanry course of business and subject to July 2014 Guidelines on Credit Transactions and Exposures with Connected Parties
specifications made by BNM

prior approval at GM and resolution contained disclsoure of purpose and amount of

loans to persons associated with directors (sec 225) expenditure
D.loans under 224(2) (b) & (c), conditions?
for BHD, at or before the next AGM
ratification possible
Sdn Bhd, within 6 months from the transaction