Division Of Powers Between Shareholders And Directors

Lee Shih and Joyce Lim discuss the effect of the Federal Court's decision in the Petra Perdana case.

On 14 December 2017, the Federal Court delivered its grounds of judgment in the case of Tengku Dato' Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Bhd [2018] 2 MLJ 177 ("Petra Perdana"). This case relates to two appeals which emanated from a High Court action relating to questions in company law on governance and management of a company as between its directors and shareholders in general meetings. In particular, it gives guidance on the division of powers between the shareholders and directors on managing the affairs of a company and sets out the test to be adopted in determining whether a director has acted in the best interest of the company.