View/Open - Research Commons - The University of Waikato

engage in activities which may benefit shareholders while disadvantaging existing
creditors who transact with the company.
Page 221 the conclusion is offered that directors should not only have a duty to
consider the interests of creditors throughout the life of the company (as part of the
duty to act in good faith for the benefit of the company) but also suggests right of
enforcement
Malaysian law adopts Canadian law which gives locus standi to creditors (debenture
holders) to apply for an order under section 181(1) on the ground that that the affairs of
the company has been conducted in a manner oppressive to debenture holders. This
section does not involve direct enforcement of breach of duty owed to the company and
is predominantly used by minority shareholders.
The law in Malaysia as it stands now is full of contradictions and to date the full
implication of section 181 has not been worked out. Since the provision is derived from
Canada, it may be useful if reference is made to case law that allows and uses it. The
Canadian Supreme Court in BCE Inc. v 1976 Debenture holders 9 which concerns the
allegation by debenture holders that the directors had acted oppressively when they
approved the sale of the company, had to consider the duties of directors in circumstances
where their decision would benefit some but not all stakeholders. The court rejected the
debenture holder‘s claim and held that the directors had considered the interests of the
debenture holders and if they required better protection, they could require it by
contract. 10
9 2008 SCC 69
10 Ibid at [81]-[84-― As discussed, conflicts may arise between the interests of corporate stakeholders inter
se and between stakeholders and the corporation. Where the conflict involves the interests of the
corporation, it falls to the directors of the corporation to resolve them in accordance with their fiduciary
duty to act in the best interests of the corporation, viewed as a good corporate citizen.
The cases on oppression, taken as a whole, confirm that the duty of the directors to act in the best
interests of the corporation comprehends a duty to treat individual stakeholders affected by corporate
actions equitably and fairly. There are no absolute rules. In each case, the question is whether, in all the
439