What section 221 requires

Section 221(1) of the Companies Act 2016requires every director who has, directly or indirectly, an interest in a contract or proposed contract with the company to declare the nature of that interest at a board meeting as soon as practicable after the relevant facts come to the director's knowledge.

The duty is comprehensive: it covers commercial contracts, employment arrangements with related parties, property dealings, loan agreements, any contract in which the director (personally, or through a family member, or through a corporation in which the director holds substantial shares) has any benefit, financial or otherwise.

The connected-person reach

Section 221(2) extends the duty by deeming a director to have an interest in a contract if any of the following are interested:

  • the director's spouse;
  • the director's parent;
  • the director's child (including step-children and adopted children);
  • a corporation in which the director, the spouse, the parent, or the child is a substantial shareholder or controlling director.

A director cannot avoid disclosure by routing the contract through a family member or a related corporation.

The voting prohibition under section 222

Once an interest has been disclosed, section 222generally prohibits the interested director from voting on any board resolution relating to the contract, and from being counted in the quorum for that resolution. The company's constitution may relax this rule for private companies, but the default is exclusion.

Penalties for non-disclosure

A breach of section 221 is a criminal offence. On conviction, the director may face a fine of up to RM3 million and/or imprisonment of up to 5 years, in addition to potential civil liability to the company. The transaction itself may also be voidable at the company's option.

Practical mechanics

  • Standing declaration. Most boards open every meeting with a standing call for directors to declare any new interests. Some directors maintain a permanent register of interests that is updated annually.
  • Document the disclosure.The minutes must record the disclosure, the nature of the interest, and the director's recusal from the vote. Verbal declaration without minute entry will not protect the director.
  • One-line "I declare" is not enough.The "nature" of the interest must be sufficiently specific to allow the other directors to assess the conflict.
  • Continuing duty.If the nature of the interest changes (the contract is amended, the director's shareholding in the counterparty changes), a fresh declaration is required.

Where directors most often slip

  • Property leases between the company and a corporation owned by the director's spouse.
  • Service agreements with a consultancy firm in which the director's adult child has a substantial interest.
  • Loans or financial accommodations to a related corporation, these can intersect with sections 224 and 225.
  • Group reorganisations where the director sits on multiple boards and benefits indirectly from inter-company transactions.

If your board is unsure whether an interest needs to be disclosed under section 221, or you would like a clean disclosure protocol for future transactions, please contact us.

第 221 条要求什么

《2016 年公司法令》第 221(1) 条要求每位董事，凡对公司之任何合同或拟议合同存在直接或间接之利益，须在相关事实进入其知悉范围后，尽快在董事会上声明该利益之性质。

义务范围广泛：覆盖商业合同、与关联方之雇佣安排、不动产交易、贷款协议，任何董事（本人、家庭成员，或其持重大股份之公司）从中获得任何利益（无论是否财务上的）之合同。

对「关联人士」之扩展

第 221(2) 条扩展了披露义务，将下列人士之利益视为董事自身之利益：

  • 董事之配偶；
  • 董事之父母；
  • 董事之子女（含继子女与收养子女）；
  • 董事、配偶、父母或子女担任重大股东或控制董事之公司。

董事不能借由将合同绕道家庭成员或关联公司而规避披露。

第 222 条之表决禁止

利益经披露后，第 222 条原则上禁止该利益冲突之董事就相关合同之董事会决议进行表决，亦不得计入该决议之法定人数。私人公司之章程可放宽此规则，但默认为排除。

未披露之罚则

违反第 221 条构成刑事罪行。一经定罪，董事最高可被处以 300 万令吉罚款及／或 5 年监禁，并可能对公司承担民事责任。相关交易本身亦可由公司选择宣告无效。

实务机制

  • 常设申报。多数董事会在每次开会开始时即设定常设环节，请董事申报任何新增利益。部分董事会保留一份永久利益登记册，每年更新。
  • 记录披露。会议记录须载明披露行为、利益性质、以及该董事之回避。仅口头声明而无记录，不能为董事提供保护。
  • 「我申报」一句不够。利益之「性质」须具体到足以让其他董事评估冲突。
  • 持续义务。若利益性质发生变化（合同被修订、董事在对方公司之持股变化），须重新申报。

董事最常忽略之处

  • 公司与董事配偶持股之公司间之不动产租赁；
  • 与一家其中董事成年子女持重大股份之顾问公司签订之服务协议；
  • 对关联公司之贷款或资金便利，与第 224、225 条交叉；
  • 董事任职多个董事会、并间接受益于公司间交易之集团重组。

若贵公司董事会不确定某项利益是否须依第 221 条进行披露，或希望为未来交易建立清晰之披露流程，请与本所联系。