116 Exercise of powers

Exercise of powers

1. The BoD exercise its powers in board meetings. The meetings are usually conducted with sufficient notice given to all directors of these meetings. The chairman of the meetings must ensure that the required quorum is present before any business may be conducted.

2. If a meeting is held without notice having been given, it may still be valid if all of the directors attend.

3. However, it has to be noted that in common law, the court has held that a failure to give notice may negate resolutions passed at a meeting because the persuasive oratory of a minority of directors might have persuaded the majority to change their minds and vote differently.

4. The powers of the board are vested in the board as a whole. The powers are not vested in the individual director. However, there could be instances where an individual director may still bind the company by his acts that were carried out bona fide and by virtue of his ostensible authority. (Read “Rule in the Turquand’s Case” as can be found in Malaysian Company Law Principles and Practice, second edition by Ben Chan, Philip Koh and Peter Ling, Thomson Sweet & Maxwell Asia, p. 517, or Concise Principles of Company Law in Malaysia, second edition by Shanty Rachagan, Janine Pascoe, Anil Jashi, LexisNexis, p.122. )

5. The board owes a duty to the company to exercise its powers for proper purposes. It shall not use its power to dilute shareholders’ voting power or indulge in an oblique motive in raising capital or demonstrate refusal to register transfer of shares.


Activity 2.13
Question to activity 2.13 Suggested answers to activity 2.13


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