The issue is whether Imran is absolved from his liability of breach of duty as a director after

his resignation.

Law

The director of a corporation is an agent of the corporation, and as such, he is given authority
and is responsible for administering the corporation. The directors have a fiduciary obligation
to operate the corporation in the best interests of the company; any breach would result in
legal action. In Foss v Harbottle, the directors violated their obligations by stealing the
business's property, and the court rules that the firm may sue to recover the harm it sustained.

In Zaheran Zakaria v Redmax, the directors had breached their fiduciary duties and made
fraudulent transactions. The case emphasises that the directors must exercise reasonable care,
skill and diligence in maintaining the status quo of the company as stated in section 213(2) of
the Companies Act 2016 (the Act). Section 213(1) of the Act states that the company’s
director shall exercise its powers for a proper purpose and in good faith in the best interest of
the company and not for his own benefit. Any breach committed by the director shall be
liable for criminal offences as provided under section 213(3).

In section 218(1) of the Act states that without the member's consent, the director is
prohibited from exploiting the firm's resources, knowledge, or opportunities for his or her
personal or another person's profit, including using that position to compete against the
company. Nonetheless, in section 215, a director may rely on information and advice by
a third party and make an independent assessment based on his knowledge.

In section 132(2)(d) of Companies Act 1965, a directors’ duties are not to take or use
corporate opportunity. Relating to section 213 of the Companies Act 2016, a director must
use corporate opportunity for the company’s benefit only. In Avel Consultant Sdn bhd v
Mohd Zain, the defendant was the director of the plaintiff but wants to take on the benefits
of corporate opportunity thus terminating the contract of corporate opportunity for the
plaintiff. The court decides that the defendant had breached his fiduciary duty and had a
conflict of interest against the company.

Section 132(2)(d) also applies to situations whereby the directors shall not take up the
corporate opportunity even if the company failed to take the corporate opportunity presented.
In Industrial Development Consultants Ltd v Cooley, the plaintiff said the company failed
to take the corporate opportunity, the contract and the defendant was subsequently offered the
contract thus he resigned and took upon the corporate opportunity. The court decides that the
defendant knew about the contract offered to the company therefore he was still bound by his
fiduciary duty to the company and liable for the benefit he received.

However, an exception to section 132(2)(d) is when in a situation that the company had
rejected the corporate opportunity, the director is not prohibited to take the corporate
opportunity for his own benefit. In Peso Silver Mines Ltd v Cropper, the plaintiff, the
company was offered by a prospector to purchase certain land but was rejected by the
company due to financial situation. Defendant was subsequently offered the same opportunity
and was accepted through a newly incorporated company. Defendant had disclosed his
interest in the newly incorporated company and refused to turn over the company to the
plaintiff, thus was subsequently fired and then the defendant resigned as director. The court
finds that the director does not have duty to account and it does not give rise to corporate
opportunities doctrine.

Application

Imran had a fiduciary duty to FFC Bhd as one of its directors, and under section 213(2) of the
2016 Companies Act, he was required to perform his obligations with the utmost care and
attention. Imran would be responsible for the damage that the FFC Bhd experienced and
endured if he violated his duty to the FFC Bhd, as demonstrated in the cases of Foss v.
Harbottle and Zaheran Zakaria v. Redmax. Imran therefore has a duty under section 213(1)
of the Behave to act appropriately and exercise his director authority for the advantage of
FFC Bhd. As a result, based on the cases previously mentioned, Imran still had a fiduciary
duty to the company even though he had resigned as a director of the FFC Bhd. He should
therefore refrain from violating that duty to avoid being held accountable for criminal
offences under section 213 of Malaysia's Penal Code (3).

Among Imran directors’ duties would be keeping the company’s assets, information and
opportunity for the company’s interest as stated under section 218(1) of the Companies
Act2016. Furthermore, this section also prohibits Imran from engaging in business competing
with FFC Bhd and use his position as director to gain any personal benefits without the
consent of the member. As such, Imran who had received information of a contract with CBA
Bhd and had negotiated the contract on behalf of FFC Bhd shall not use the information and
opportunity of the contract with the CBA Bhd for his own gain.

Moreover, in section 132(2)(d) of the Companies Act 1965, Imran shall not use the corporate
opportunity, contract made by CBA Bhd for his own advantage at the expense of and without
the members' permission. If it is determined that Imran had a conflict of interest against the
FFC Bhd and took on the contract of CBA Bhd for himself despite his resignation as the FFC
Bhd's director, he would be held criminally liable as stated in Section 213(3) of the Act,
similar to the cases of Avel Consultant Sdn Bhd v. Mohd Zain and Industrial Development
Consultants Ltd v. Cooley.

The truth, however, was that FFC Bhd made the decision to withdraw from and reject the
CBA Bhd contract during the contract discussions. The deal was then presented to Imran by
CBA Bhd, and Imran accepted it using his own corporation. As FFC Bhd had rejected the
contract, this brings to an exception of section 132(2)(d) of Companies Act1965 and
section 218(1) of the Companies Act 2016 (the Act) whereby the corporate
opportunity and the company’s information and opportunity could be utilized by the director
for his own benefit. As in Peso Silver Mines Ltd v Cropper, Imran was contacted personally
by the CBA Bhd after FFC Bhd had withdrawn from taking any contract with the CBA Bhd.
Imran as the director would have an obligation of fiduciary duty towards the FFC Bhd if the
FFC Bhd wanted to take up the corporate opportunity from the CBA Bhd. Thus, Imran had
done his duties and diligence as FFC Bhd’s director in accordance with section 213 of the Act
when the FFC Bhd decided to withdraw the contract.

This grants Imran the authority to utilise the business opportunity and data of the FFC Bhd
for his own gain when the CBA Bhd approached him directly regarding the contract. Imran
could not be held responsible for his contract with CBA Bhd since the FFC Bhd had first
rejected it, and the corporate opportunity theory is not applicable, as was determined in Peso
Silver Mines Ltd v Cropper. Therefore, even if Imran hadn’t resigned his post as a director of
FFC Bhd, he is free to contact a contract with the CBA Bhd with his own incorporated
company and absolved from any liabilities for breach of duty to the FFC Bhd provided that
he disclosed his interest on his newly incorporated company to the members of FFC Bhd as
stated undersection 221 of the Act.
Conclusion

In conclusion, Imran is not completely absolved from his liability of breach of duty as a
director after his resignation under certain circumstances.