1. Were there any abuses of power by the management and breach of fiduciary on the part of the directors?
Yes, there are breached of fiduciary duties by the management or directors of Delima Enterprise Sdn Bhd.
In general, directors take up a fiduciary position or relationship with the company. A fiduciary relationship is the relationship between a person in a position of trust in which the fiduciary and the person for whose benefit the fiduciary acts. In other words, a fiduciary’s powers are exercised on behalf of others who are being in a position of dependence. In this case, directors of Delima Enterprise Sdn Bhd have fiduciary duties to the shareholders and stakeholders of the ...view middle of the document...
Based on this finding, it can be concluded that Encik Zayed and Puan Hashimah as the directors of the company had breached their fiduciary duty to exercise power in good faith and in the interest of the company as they had used the company’s funds for their own interests. Even though both of them are the owners of the company, they cannot use the company’s funds for their own expenses as the company is a separate legal entity from its members.
b. Duty to avoid conflict of interest
As being in fiduciary position, a director is under a duty to avoid conflict of interest. It means that, directors should not engage into situation in which there is a possibility that their personal interest could conflict with the company. Directors will be breached the fiduciary duty if they placed their own personal interest in priority over the interest of the company.
In accordance to the case, the auditor had found that there were several personal withdrawals and the personal vehicle expenses for Encik Zayed and Puan Hashimah totaling RM50,150 were charged to the company during the year 2006. Once again, this situation can be used to illustrate that both of them as the directors of Delima Enterprise Sdn Bhd had breached the fiduciary duty to avoid conflict of interest as they had misused the company’s funds for their own personal interest and not for the company. In fact, the property or the funds of the company must only be used to make profit or to give benefit to the company.
c. Duty to exercise power for the...