INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

LEGAL OPINION IN CONTINUOUS ASSESSMENT

SEMESTER 1, 2020/2021 SESSION

AHMAD IBRAHIM KULLIYYAH OF LAWS

ANSWER BOOKLET

Name Muhammad Syairazie Kasyfi bin Kaswadi

Muhammad Akiff Iezat bin Mohd Shukry
Siti Bahirah binti Samsul Bahari
Matric No 1718415
1729125
1727272
Course Code LAW 3211
Course Title Company Law II
Section all section
Examiner / Course Instructor Dr. Nasarudin Abdul Rahman
Assessment Date and Time 9 am , 11 DEC 2020 – 9 am , 14 DEC 2020.
INTEGRITY PLEDGE

We certify that the attached group work is entirely our own except where work quoted
or paraphrased is acknowledged in the text. We also certify that it has not been
submitted for assessment in any other unit or course.

We have not communicated with or sought the assistance from any other students,
any other person or any professional agencies to produce this work.
We agree that AIKOL/IIUM may make and retain copies of this work for the purposes of
marking and review, and may submit this work to an external plagiarism-detection
service who may retain a copy for future plagiarism detection but will not release it or
use it for any other purpose.

By signing this pledge, we acknowledge that as students in Ahmad Ibrahim Kulliyyah of

Laws, International Islamic University Malaysia, we are expected to conduct ourselves
in a manner that exemplifies amanah, honesty, integrity, and good akhlaq.

Name Muhammad Syairazie Kasyfi bin Kaswadi

Matric Number 1718415
Date 14 December 2020
Name Muhammad Akiff Iezat bin Mohd Shukry
Matric Number 1729125
Date 14 December 2020
Name Siti Bahirah binti Samsul Bahari
Matric Number 1727272
Date 14 December 2020

* Plagiarism occurs when a student passes off as the student's own work, or
copies without acknowledgment as to its authorship, the work of any other person.
Collusion occurs when a student obtains the agreement of another person for a
fraudulent purpose with the intent of obtaining an advantage in submitting the final
assessment.

* The Kulliyyah reserved the right to reject the answer if the declaration appearing
above is not completed by the student.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 1

Floor 45, Tun Razak Exchange, Tel. No. : 03-44455987

Persiaran TRX, Jalan Tun Razak, Fax No. : 03-10005349
55188, Kuala Lumpur.

Reference No : SA/CO/2020/069 Date : 14 December 2020

Mr. Ramli,
No. 50, Jalan Pinang 18/A,
Seksyen 18, 40000 Shah Alam,
Selangor Darul Ehsan

Dear Mr. Ramli,

Re: LEGAL OPINION ON ACTIONS THAT CAN BE TAKEN FOR THE BREACH OF
DUTY TO EXERCISE POWERS AS DIRECTOR IN THE BEST INTEREST OF
ARMADA BHD
With kind reference to the above and our meeting on 11th December 2020, we are pleased to
provide herein our legal opinion on the said matter.

1.0 FACTS
Based on the information that you have presented us with, the following is a brief summary of
facts regarding this case.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 2

1.1) Armada Bhd is a public limited company which conducts property development business,
where Kamal who holds the majority shares, had appointed Mahmud in 2017 as one of its
directors, along with Ahmad, Khairul, Ramli, Idris and Mahmud.
1.2) Ramli disagreed with Ahmad, Khairul, Idris and Mahmud’s of not to pursue legal action
against Crystal Sdn Bhd, who had already gone into liquidation, for failing to pay the total profits
accrued from Armada’s investment, which was already payable. Such a decision was due to
avoidance of future time consumption, money spending and reputation being tarnished.
1.3) Ramli was dissatisfied with the issue of sale of assets at an undervalued price to
purchasers who were closely connected to Ahmad and Khairul, where such issue was ratified in
the EGM.
1.4) In February 2020, Ramli resigned from directorship and sold some of his shares in
Armada. Later, Ramli indicated his intention in a letter to file an application to the Court for
leave to sue Armada’s directors on behalf of Armada within 14 days of receipt, including Idris,
which was received by them in June 2020.
1.5) The board replied that Ramli had sent the notice too short, has no locus standi, and did
not detail out his allegations, aside from filing an action against Ramli for breach of his duties to
act in the best interest of Armada.
1.6) The board of directors of Armada Bhd had sold one of the company’s assets below
market value and had paid the due salary increments to the employees using the proceeds of sale
of the said asset.
1.7) The board of directors of Armada Bhd also had decided to use the proceeds of sale of the
said asset for the bonus payment and a trip to Gold Coast, Australia sponsored by the company
for the employees.
1.8) One of the board directors, Idris had set up a new rival company upon his resignation
called ‘Zircon Sdn Bhd’ and had invited the employees of Armada Bhd to work for Zircon Sdn
Bhd by offering better salary wages.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 3

1.9) Mr. Ramli who is one of the directors of Armada Bhd had affirmed with his decision to
take civil action against Cristal Sdn Bhd even though the decision was argued by other directors
that the action would involve a large sum of money and it is time consuming.
1.10) Mr. Ramli had encouraged Armada Bhd employees to work for another rival company
called ‘Zircon Sdn Bhd’ through his frustration with the other directors and from this, some of
Armada Bhd key employees had resigned to work for Zircon Sdn Bhd.
1.11) Mr. Ramli had resigned as the director of Armada Bhd and sold some of his shares in
Armada Bhd in February 2020.

2.0 ISSUES
2.1) Whether Mr. Ramli can bring a statutory derivative action under section 347 of the
Companies Act 2016 to sue the directors on behalf of the company
2.2) Whether the other directors excluding Mr. Ramli had breached their duty in exercising their
powers for the interest of Armada Bhd?
2.2.1) Whether the board of directors excluding Mr. Ramli had acted in the interest of the
company and the employees?
2.2.2) Whether Idris, who is one of the board of directors need to disclose his conduct of
setting up a rival company to Ramli who at the time was still one of the directors of
Armada Sdn Bhd?
2.3) Whether Mr. Ramli had breached his duty as the director of Armada Bhd for failure to
exercise his powers in the best interest of the company?

3.0 APPLICABLE LAWS

3.1) For the first issue, there are few statutory requirements that need to be fulfilled in
deciding whether a statutory derivative action under section 347 is applicable or not. Section
347 of the Companies Act 2016 provides a complainant can enforce a company’s right against
wrongdoers who committed wrongs to the company, by obtaining court’s permission to initiate,
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 4

intervene or defend a proceeding on behalf of company. By virtue of section 345, a complainant

includes members of a company.
3.2) The court will, by virtue of section 348(4), grant the leave application if the complainant
is acting in good faith and appears prima facie that it is for the best interest of the company. In
Teo Gek Luang v Ng Ai Tiong [1999] 1 SLR 434, in defining the term good faith, one must
show a legitimate claim which the directors of the company are unreasonably reluctant to pursue
with the appropriate vigor. Meanwhile, the party opposing such an application will seek to show
that the application is motivated by an ulterior purpose, which may include due to dislike, ill
feeling or other personal reasons, rather than the applicant’s actual concern for the company. If
such an opposing party succeeds in showing that the applicant is motivated by vendetta, which
his judgment will be clouded by purely personal considerations, then the court will find a lack of
good faith on the applicant’s part.
3.3) In Pang Yong Hock & Anor v PKS Contracts Services Pte Ltd [2004] SGCA 18 [2004] 3
SLR 1, it was stated that good faith requirements include a claim where such claim have a
reasonable semblance of merit, not that it is bound to succeed or likely to succeed, but that if
proved the company will stand to gain substantially in money or money’s worth. Absence of
good faith is where the applicant is set on damaging or destroying the company out of sheer spite
or worse, for the benefit of a competitor.
3.4) In Goozee v Graphic World Group Holdings [2002] 42 ACSR 534, it essentially states
that if that fact involves hostilities, it does not mean that it is for collateral purposes.
3.5) In Lembaga Tabung Angkatan Tentera v Prime Utilities Berhad [2012] 2 AMCR 521,
the plaintiff held 10% of shares and had a representative in the board of the defendant’s
company, to which the court had granted a leave to sue on behalf of the company. This is because
the directors of the company had failed to diligently pursue the recovery of the amount due from
Boston Asset Management by the series of action that were not followed through and by their
failure to file proof of debt
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 5

3.6) In Swannson v Pratt [2002] 42 ACSR 313, it was mentioned that where the application is
made by a current shareholder of a company who has more than a token shareholding and the
derivative action seeks recovery of property so that the value of the applicant’s shares would be
increased, good faith will be relatively easy for the applicant to demonstrate to the Court’s
satisfaction.
3.7) In Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd [1995] 3 MLJ
417 (COA), it was mentioned that “it is sufficient for a plaintiff in an action grounded upon the
doctrine to show that those wielding majority control abused the powers vested in them in the
sense that they used or omitted to use their powers for an oblique or collateral motive or purpose
and not for the true purpose for which the power was entrusted to them either by the
memorandum and articles of association, by statute or the general law."
3.8) Section 348(2) requires that the complainant must inform the directors of his intention to
file the application at least 30 days before such petition is made. This is to give the directors the
opportunity to decide whether to commence the actions and take over the litigation or not. While
by virtue of section 348(3), the complainant is mandated to bring the action within 30 days from
the grant of leave by court.
3.9) The case of Ng Hoy Keong v Chua Choon Yang & Ors [2010] 9 MLJ 145 applies
section 582, which mentions that a proceeding will still be valid notwithstanding any defect,
irregularity or deficiency of notice or time, unless the court opines that substantial injustice has
been or may be caused which cannot be remedied by any order of the court.
3.10) In Mohd Shuaib Ishak v Celcom (Malaysia) Bhd (2008) 5 MLJ 893, the court in
considering whether the plaintiff was acting in good faith, stated that the test of good faith is
two-fold, where one is an honest belief on the part of the respondent, and two, that the
application is not brought for a collateral purpose. It was mentioned that a delay is a ground for
the court to refuse application on the basis that there has been tacit approval and acquiescence of
the practices adopted by the company. In short, the applicant ‘who come to equity must come
with clean hands’ and if the court feels that the applicant has made misconduct, then the court
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 6

may refuse the leave application. If the petitioner would benefit personally from derivative
action, it does not necessarily mean that he lacks good faith and that it was not in the best interest
of the company.
3.11) In Independent Oil Tools Ltd v Dato' Ramli bin Md Nor & Ors [2018] MLJU 133, the
petitioners sent email to the company secretary; who sent it to the other directors; that the letter
itself was undated is of no particular consequence, as what matters is the date on which the
notice was sent and received. If the directors refuse to accede to the request of the complainant,
then the complainant can proceed to make the leave application.
3.12) In Daniels v Daniels (1978) 2 All ER 89, since the company sold its assets at an
undervalue to one of its directors, then a minority shareholder may bring an action on behalf of
the company. Therefore, where directors had used their power, intentionally or unintentionally,
fraudulently or negligently in a manner which benefits themselves at the expense of the
company, there was fraud on the minority
3.13) For the issue mentioned in 2.2.1, in order to decide whether the other board of directors
excluding Mr. Ramli had acted in the best interest of the company and the employees, there are
several views that need to be taken into consideration. There are three views on the directors
duties to promote the company interests in which the first view is ‘shareholder primacy’ which
can be considered as the traditional view in which the directors are obliged to promote the
company’s interests that benefits only to the shareholders of the company. The second view,
which is ‘stakeholder primacy’ argued that directors who make decisions based on the
consideration of the stakeholder which is the employees or creditors are not in breach of their
obligation to promote the company’s interest. However, for the last view, which is ‘enlightened
shareholder value’ whereby this view argues that the board of directors are obliged to promote
the interest of the company for the benefit of the shareholders and may take consideration of the
benefit of the stakeholder.
3.14) Moving on, looking into the case of Parke v Daily News Ltd [1962] Ch 927, whereby
Daily News Ltd had suffered loss for several years and later, the board of directors of the
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 7

company had decided to terminate the employment of most of the employees. The board of
directors also had proposed to give an ex-gratia payment from the proceeds of the sale business.
The court held that the ex-gratia payment was not within the directors powers and the proposed
payment can be considered to be detrimental to the shareholders and the company. In the next
case of Teck Corp v Miller (1973) 33 DLR, whereby the court were in opinion that the directors
had the obligation to act in the interest of the shareholders since the shareholders and the
company are considered as a whole. Furthermore, directors who make decisions in preference to
the employees are regarded to be in breach of their duty in promoting the company interest.
3.15) However. in the next case of The Bell Group Ltd (in liq) v Westpac Banking
Corporation [No 9] [2008] WASC 239, whereby the court held that the directors also need to
consider the interest of other groups such as the stakeholders when making a decision for the best
interest of the company rather than just making decisions based on the shareholders concerns
only.
3.16) For the issue mentioned in 2.2.2, looking into the case of Sundai (M) Sdn Bhd v Masato
Saito & Ors [2013] 9 MLJ 729, whereby the defendant who was the director of the plaintiff’s
company had resigned and set up a new rival company. The defendant also had released
confidential information to the rival company and had assisted the employees of the plaintiff’s
company to leave the company to work for the rival company set up by the defendant. From this,
it had made the plaintiff’s company businesses to be disrupted due to shortage of employees. It
was later held that the defendant is liable for breach of fiduciary duty and later on appeal, it was
held that the defendant had the duty to disclose his wrongdoings to the plaintiff’s company since
a director is obliged to act in the interest of the company.
3.17) Moving to the next case, British Midland Tool Ltd v Midland International Tooling Ltd
& Ors [2003] EWHC 466 (Ch), whereby the four defendants who were the directors of the
plaintiff’s company had planned to leave the company and set up a rival company. After one of
the defendants had resigned and set up the said rival company, the other three defendants had
assisted the rival company by providing skilled workers from the plaintiff’s company. Later, the
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 8

three defendants had resigned from the plaintiff’s company and joined the rival company. From
this conduct, it had caused the plaintiff’s company to be unable to operate its business and later,
the plaintiff’s company had to be closed down. The court later held that the three defendants had
breached their fiduciary duty and they were held liable for the said breach due to the failure to
inform the plaintiff’s company board of their actions.
3.18) In discussing issue 2.3, Section 213 of the Companies Act 2016 provides that a director
of a company shall exercise his powers in accordance with the act and in good faith in the best
interest of the company. From this, it can be understood that a director must act in bona fide for
the interest of the company.
3.19) The duty of the directors is obliged under fiduciary and statutory rules by which they
need to act in good faith in the interest of the company because there are no major differences in
the content of the duties. A decided case of Hodgson v Amcor [2012] VSC 94 in its judgment
held that Hodgson was an officer in Amcor as he was in charge of the largest division and the
most senior executives of the company. Therefore, he owns the control and responsibility over a
significant portion of Amcor’s business. In Re Smith v Fawcett Ltd [1942] 1 All ER 542 of
fiduciary duty, it was held that the directors must apply their preferences bona fide in what they
consider but not what a court may consider, is in the best interest of the company, and not for any
collateral purpose while the legal provision of statutory duty had been mentioned in the above
statement.
3.20) In defining the “ best interest of the company” and determining the duties, the test found
in the case of Charterbridge Corp Ltd v Lloyds Bank Ltd [1970] Ch 62 is, “whether an
intelligent man in the position of a director of the company could, in the whole of the existing
circumstances, have reasonably believed that the transactions were for the benefit of the
company”. The elements of the test is that, subjectively, the director must act honestly and
semi-objectively, the director must act in a manner motivated by the best interest of the company
as an intelligent director in the identical position would have.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 9

3.21) In another test for good faith given is that, ‘While there has been some debate about the
application of an objective test, and whether it is appropriate to consider whether in fact the
directors considered the interests of the company, it is now generally accepted that an objective
test ought to be applied’. the subjective test is meant to test whether directors acted bona fide in
the interests of the company as a whole is largely (though by no means entirely). It is a factual
question that focuses on the state of mind of the directors. in the meantime, for the
quasi-objective stated in the case of ASIC v Adler (2002) 41 ACSR 72, ‘Bona fides cannot be the
sole test, otherwise you might have a lunatic conducting the affairs of the company, paying its
money…in a manner that is perfectly bona fide yet perfectly irrational’.
3.22) The practical difference between ‘Subjective’ and ‘Objective’ test is that, if only director
subjectively acted in good faith and reasonable directors would have agreed, but wasn’t in the
interests of the company, only a civil penalty would be imposed, but if director’s actions were
objectively and subjectively not bona fide, this will falls under the criminal penalty (this is the
fault element).
3.23) Among the examples of acting in bad faith provided in Resource Equities Ltd v Carr -
[2007] WASC 246 are, the directors approving their own remuneration in excess of the limits
imposed by the Constitution, loaning company money to associates of directors who cannot
repay those loans, investing company funds in insolvent companies who pay consultancy fees to
the directors, using company funds to defend legal action brought against them personally for
improper conduct and using funds to avoid voluntary administration simply to frustrate legal
action.

4.0 STEPS TO BE TAKEN

4.1.1) Mr. Ramli is entitled to bring a statutory derivative action under section 347 of the
Companies Act 2016 to sue the directors on behalf of Armada Bhd, and. Mr. Ramli has the
locus standi and is a complainant by virtue of section 345, as he still owns shares in Armada,
because he only sold some of his shares before, and not all.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 10

4.1.2) Referring to section 348(4), the court may grant the leave application, as Mr. Ramli is
acting in good faith and that the facts appear prima facie that it is for the best interest of Armada.
In applying the case in 3.2, Mr. Ramli can be considered as acting in good faith, as the directors
of Armada refused to pursue any legal action for payment of money that is owed by Cristal Sdn
Bhd. Such refusal forms an unreasonable reluctance, and causes Armada to lose the chance to
receive a substantial amount of profits, thus he is motivated by actual concern over Armada’s
management.
4.1.3) Further, in referring to the case in 3.3, it strengthens that Mr. Ramli is acting in good
faith, as Armada will stand to gain substantially in money, which will be the return of the
substantial profit owed. Mr. Ramli is not aiming to damage or to destroy Armada, but for the
financial benefit of Armada.
4.1.4) Meanwhile, referring to the case in 3.4, although Mr. Ramli is frustrated and dissatisfied
with Armada’s directors, and there exists hostility between them, it does not mean that Mr.
Ramli’s action is for collateral purposes.
4.1.5) In applying the case in 3.5, the court may grant leave to Mr. Ramli to sue on behalf of
Armada, because its directors had failed to pursue the recovery of profits made by Cristal Sdn
Bhd before, even when Mr. Ramli was on the board.
4.1.6) In addition, referring to the case in 3.6, it will relatively be easy for Mr. Ramli to
demonstrate to the Court’s satisfaction of his good faith, as the action that he seeks might cause
Armada to gain the owed profits, thus Armada’s shares would likely be increased as well.
4.1.7) Furthermore, in applying the case in 3.7, it is sufficient for Mr. Ramli to vest upon the
ground that although he was in the board before, the board was nevertheless were being
controlled by the majority directors, namely Ahmad, Khairul, and Mahmud, aside from the fact
that the majority shareholder, Kamal, were on their side, as Mahmud were influenced by Kamal.
They had abused their powers when they had sold Armada’s assets at a price below market value
and suspectedly sold such to purchasers who were closely connected to Ahmad and Khairul.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 11

4.1.8) Mr. Ramli is required to have sent the notice at least 30 days before the date the petition
is actually made, and not 14 days as mentioned in the letter sent, by virtue of section 348(2).
Meanwhile, once Mr. Ramli has gotten the grant of leave by court, he will bring the action within
30 days onwards, by virtue of section 348(3).
4.1.9) However, such 14 days’ notice will still be valid, despite of not confirming with the 30
days requirement, as in applying the case of the case in 3.9 which applies section 582, states that
Mr. Ramli’s proceeding will be valid despite any defect in the notice or time.
4.1.10) In referring to the case in 3.10, it further strengthens the good faith on Mr. Ramli’s part,
as he had fulfilled the two-fold test. Although Mr. Ramli initiated his intention for the leave
application in 2020, which is few years after Armada’s directors refused to pursue the legal
action in 2018, and had sold its assets at an undervalued price some time after that, it does not
however mean that there has been tacit approval and acquiescence on the part of Mr. Ramli. This
is because he had raised concerns and against such actions taken before, and that 2 years is still a
reasonable time to initiate the leave application.

4.1.11) In applying the case in 3.11, Mr. Ramli should have made specific request to the
directors, like having them to pursue the legal action against Cristal Sdn Bhd, to which if the
directors of Armada had refused to accede to the request, then Mr. Ramli can proceed to make
the leave application.

4.1.12) Lastly, in applying the case in 3.12 to address the issue in 2.1, not only is Mr. Ramli a
minority shareholder, also Armada directors’ act of selling its assets at undervalued price that
fraudulently benefitted themselves at the expense of Armada, entitles Mr. Ramli who is a
minority shareholder of the company to bring an action on behalf of Armada.

4.2.1) In discussing the issue mentioned in 2.2.1, the directors of Armada Bhd excluding Mr.
Ramli may be liable for breach of duty to exercise their powers in the best interest of Armada
Bhd.
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 12

4.2.2) By referring to the enlightened shareholder value view in and the case mentioned in (the
bell group ltd), the directors must act for the benefit of the shareholders. However, the benefit of
the stakeholder in which in this case is the employees also needed to be taken into consideration.
Furthermore, in this case, the directors of Armada Bhd excluding Mr. Ramli had sold one of the
company’s assets below market value and used the proceeds of the sale to pay the salary
increments due to the employees.
4.2.3) However, by applying the cases mentioned in 3.14, the directors excluding Mr. Ramli had
agreed to provide bonus payment for the employees and sponsored the employees for a trip to
Gold Coast, Australia by using the proceeds of the sale made by selling one of the company’s
assets. This conduct constitutes a breach of duty in promoting the interest of Armada Bhd since
the said decision was made in preference of the employees and the conduct of the directors is
detrimental to the interest of the company.
4.2.4) Therefore, the directors of Armada Bhd excluding Mr. Ramli is liable for breach of duty
to exercise powers in interest of Armada Bhd since they had made decisions in preference to the
employees only in which provided bonuses for the employees and sponsored all of the
employees for a trip to Gold Coast, Australia which can be considered detrimental to the interest
of Armada Bhd.
4.2.5) In discussing the issue mentioned in 2.2.3, Idris who was one of the directors of Armada
Bhd has set up a new rival company known as ‘Zircon Sdn Bhd’ may be liable for breach of
fiduciary duty.
4.2.6) By applying the relevant law mentioned above, Idris may be liable for breach of fiduciary
duty since he had failed to inform to the board of Armada Bhd that he has set up a new rival
company in which his conduct of setting up a new rival company can be considered as an act that
is detrimental to the interest of Armada Bhd.
4.2.7) Furthermore, he had also failed to inform the board of Armada Bhd that he had been
inviting the employees of Armada Bhd to work for Zircon Sdn Bhd in which had offered a better
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 13

salary package. This act can be considered as an act that is detrimental to the interest of Armada
Bhd.
4.2.8) Therefore, it can be said that Idris can be liable for breach of fiduciary duty due to failure
of informing the board of Armada Bhd that he had set up a rival company and had invited the
employees of Armada Bhd to work for the rival company known as ‘Zircon Sdn Bhd’ since the
act itself constituted to be detrimental to the interest of Armada Bhd.
4.3.1) In discussing the issue mentioned in 2.3, observing the legal aspects provided in 3.19 to
3.23, it cannot be said that Ramli would be liable for breach of duty as a director of the company
seeing that he had done nothing wrong against the benefit of the company. All he did was for the
best interest of the company and not for himself or any other agendas. It is important to note that
at the time Ramli made the decision, he honestly believed it to be in the best interests of the
company.
4.3.2) The concept of good faith is closely linked to acting in the best interests of the
corporation. Acting in the best interests of the corporation means acting for the benefit of the
members (i.e. shareholders) of the company as a whole. Where there are competing interests,
Ramli as the director, had the intention and effort in balancing the competing interests fairly.

5.0 Conclusion
5.1) In conclusion, on the first issue, we opined that Mr. Ramli can bring a statutory derivative
action under section 347 of the Companies Act 2016 to sue the directors on behalf of Armada.
We are in view that Mr. Ramli is acting in good faith and that he is not aiming for any collateral
benefit, but aiming for the benefit of Armada, thus fulfilling section 347’s requirements. Mr.
Ramli has the locus standi to pursue it since he still holds shares, thus making him a
complainant, and that the notice given was not too short, aside the fact that Armada’s directors
had breached their duties as directors.
5.2) On the issue on whether the other directors excluding Mr. Ramli had breached their duty
in exercising their powers for the interest of Armada Bhd, we are in view that the directors had
Matric No. 1718415
1729125
1727272
Course Title LAW 3211
Section No. 3
Page | 14

breached their duty in exercising their powers for the interest of Armada Bhd by providing the
bonus payments and sponsoring a trip for the employees and one of the directors, Idris also in
breach of duty due to his conduct that is detrimental to Armada Bhd.
5.3) There is no liability can be made upon Ramli as the directors intended due to lack of
reasonable claims and charges filed on the action done by Ramli. It can be seen clearly that
Ramli owns the good faith in acting for the best in the interest of the company. The decision
made in good faith is a decision where he genuinely believes it to be for the benefit of the
company as a whole and not merely for his personal interest.
5.4) To conclude, we pray for the best in dealing with the parties involved on each matter
accordingly as had been discussed above. If you have any further questions regarding the said
matter or in need of other assistance, please do contact us through email at
syaipartners@gmail.com or call us at 03-44455987. Thank You.

Yours faithfully,

MUHAMMAD SYAIRAZIE KASYFI BIN KASWADI

Advocate & Solicitor

SYAIRAZIE & PARTNERS