Friday, 24 November, 2023
The Malaysian stock market encountered a rather unusual or probably unprecedented event recently whereby an independent director (ID) commenced derivative proceedings against individual directors and management of the company for alleged breaches of fiduciary duties.
IDs owe fiduciary duties to the company like other directors, while at the same time playing a unique role in safeguarding the interests of minority shareholders. If they deem that other directors have breached their fiduciary duties or harmed the company, pursuing a derivative action may be seen as a responsible and necessary step.
Accordingly, the unprecedented steps taken by the director may inspire IDs to play a more active and vigilant role in corporate governance.
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