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law regards this duty as very important and imposes liability for breach of such duty
even though the company does not suffer any losses. 65
The following case shows that as fiduciaries, directors have a strict duty not to put
themselves in situations where conflict of interests may arise. In Regal (Hastings)
Ltd v Gulliver, 66 the directors argued that the company was not deprived of the
business opportunity since it did not have funds and the directors purchased the
shares with their money as members of the public. The court rejected the argument
and found that the directors obtained the shares by reason, and only by reason, of
their position. The court also stated that the directors‟ claim that the shares were
purchased by them as members of the public was a travesty of facts and they could
have protected themselves by disclosure at the general meeting.
The same argument was also used in the Malaysian case of PJTV Denson (M) Sdn
Bhd & Ors v Roxy (M) Sdn Bhd. 67 The Federal Court, following the decision in
Regal (Hastings) Ltd v Gulliver 68 upheld the High Court‟s decisions. The court
decided that the transfer was voluntary, made in order to defraud the creditors and set
aside the transaction. In respect of the registration of the land which was in the
directors‟ name, the title to the land was indefeasible 69 but directors held the land in
trust for the company.
65 Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461; see also Bray v Ford [1896] AC 44.
66 [1942] 1 All ER 378 at 389.
67 [1980] 2 MLJ 136; In that case the company entered into a sale and purchase agreement for a piece
of land and registered the said land in its directors‟ name. Prior to the contract of sale of the said
land, the respondent (Roxy), a creditor, obtained judgment against the company which was not
satisfied. Roxy then brought an action against the company and its directors for declaration that the
land belonged to the company against which the judgment may be executed. The company denied
ownership and claimed that the land was bought by the directors with their own money as members
of the public.
68 [1942] 1 All ER 378.
69 Section 340 of the Malaysian National Land Code 1965 (NLC) provides that the “title or interest of
any person or body for the time being registered as the proprietor of any land,….shall be subject to
the following provisions of this section, be indefeasible.” Due to this provision, the directors‟ title
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