A survey has been conducted by the students of DCI 7 under the subject Introduction to Corporate Law. The respondents are requested to give opinion on the issue of would the “business judgment rule” incorporated in the Companies Act 2016 help the business to grow better.
Based on the survey, all of the respondents agreed with the statement that the “business judgment rule” incorporated in the Companies Act 2016 help the business to grow better.
Reference is made to the article Directors’ Duties of Care, Skill and Diligence: An Analysis of Some Developments in Malaysia written by Sujata Balan et. All. In 2007, the Companies Act 1965 was amended to incorporate provisions to deal with director’s duties of care, skill and diligence and their powers of delegation and reliance on information provided by others. In addition, a complementary provision was inserted into the Act, namely a “business judgment rule”, intended to protect directors from liability for their business judgments, provided that certain requirements are fulfilled.
The previous provisions under Companies Act 1965 only imposed a general obligation on a director “to act honestly and use reasonable diligence in the discharge of his duties”. The enactment of the new statutory provisions dealing with directors’ duties of care, skill and diligence and the business judgment rule illustrates Malaysia’s commitment to modernise its company laws.
The new Companies Act 2016 is anticipated to transform the business landscape in Malaysia with the implementation of new age technology and the simplification of business operational process. The compliance of good governance and stricter requirements regarding the financial management of companies will safeguard the interests of all parties concerned. It is hoped that the conducive legal and regulatory framework will attract more investors to boost the economic growth of Malaysia.