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are not personally liable for any losses or damage suffered by a third party because
of the principle of separate legal entity. However, in some circumstances, directors
can be personally liable for their actions, for example when they have breached their
duty at common law or by statute as well as in torts.
In practice, directors are known as either executive or non-executive directors. 16 The
responsibility and liability imposed on directors are similar, regardless of the
categories. 17 The former are directors who are employed on full time basis while the
latter are not. Directors are defined in the statute as “include[ing] any person
occupying the position of director, by whatever name called.” 18
A director, therefore, is identified by the functions performed rather than the label
attached to the person. There are three types of directors:
a) de jure directors;
b) de facto directors; and
shadow directors.
9.2.2.1 De Jure Directors
De jure directors are formally appointed according to the Company‟s Constitution;
the Articles of Associations and the Memorandum of Associations with their
consent. 19
16 Keay above n5 at 5.
17 Ibid; see also Ravichathiran a/l Ganesan v Percetakan Wawasan Maju Sdn Bhd & Ord [2008] 8
MLJ 450 at 457.
18 See section 126 of the New Zealand Companies Act 1993; section 250 of the UK Companies Act
2006; Part 1.2 Interpretation in the Australian Corporations Act 2001 and section 4 of the
Malaysian Companies Act 1965.
19 Keay above n5 at 5.
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