From the legal perspective would there any abuse of power, and breach of fiduciary?
Yes, there is abuses of power by the management and breach of fiduciary duty of director. A fiduciary is someone who is in control of property in which others have aninterest, or is given powers which is exercised on behalf of those who are in a position of dependence.
He owes a duty of loyalty and good faith. Section 132 (1) states that „A
director shall at all times act honestly and use reasonable diligence in the discharge of the
duties of his office. As a fiduciary, a director‟s duties are:
Duty to exercise power in good faith and in the interest of the companyThe director occupied a fiduciary position and must therefore exercise their power ingood faith and in the interest of the company as a whole. As in this case, the directorsof Delima Enterprise are Encik Zayed and Puan Hashimah. Encik Zayed engaged theexternal Auditor Aziz & Co (Chartered Accountant), to perform statutory audit for the period 2003 to 2006 as Encik Zayed had applied for banking facilities toimplement several contracts the company had managed to secure he must send theAudited Financial Statements to the bank at least by September 2006. However, theAuditors expressed their intention to qualify the Financial Statements due to severalunresolved issues. So, Encik Zayed try to negotiate with the Auditors to unqualifiedthe report. The Auditors did not agree to unqualify the report and Encik Zayed triedanother way by planned
to terminate the auditor‟s appointment and appoint a new“friendly party” auditor. According to the law, the director should not appoint
“friendly party” to unquali
fied the report as Encik Zayed must act in a good faith and bona fide in the interest of his company. b)
Duty to avoid conflict of interestDirector should not enter into engagement in which there is a possibility that thedirector personal interest could conflict with those of the company which...