IN January last year, two former Sea Tackle Sdn Bhd directors, namely Teo Tzi Sin and Wong Poh Wah, were each fined RM100,000 for the offence of abusing their positions by using RM200,000 in company funds to pay themselves unauthorised bonuses.
They were charged under Section 218(1)(c) of the Companies Act 2016, read with Section 34 of the Penal Code.
The case clearly sends a clear message that company directors must carry out their functions and use their given authority in the company’s interests, and not for personal benefit.
Under Section 218 of Companies Act 2016, directors and company officers who misuse their positions to benefit themselves or others, or to harm the company, may face up to five years in prison, a fine of up to RM3 million, or both.
But abuse of power does not happen only when directors take company money.
It can also involve directors awarding contracts to friends, family members or business associates, hiding personal interests, manipulating financial records, submitting false invoices and using confidential company information for personal gain.
The problem does not lie only with large corporations.
According to the Malaysian Anti-Corruption Commission, corruption involving private-sector entities in 2025 amounted to approximately RM520 million, comprising RM124 million from listed companies, RM383 million from non-listed companies and RM11 million from sole proprietorships.
Under Section 213 of the Companies Act 2016, directors must act honestly, make decisions for proper reasons and put the company’s interests first.
They must also use reasonable care, skill and attention when carrying out their duties. A director who breaks these legal duties may face up to five years in prison, a fine of up to RM3 million, or both.
Section 218 deals more directly with the misuse of a director’s or company officer’s position, company property, information or business opportunities for personal benefit or to harm the company.
The MACC Act 2009 also applies when corrupt payments are involved. Sections 16 and 17 deal with offering, giving, soliciting or receiving bribes by any person or by an agent.
Section 17A allows a company to be held liable when an associated person commits bribery to benefit the company. Section 23, meanwhile, deals with public officers who misuse their positions to obtain gratification.
It may also apply to officers of certain GLCs that qualify as public bodies under the act.
The Penal Code covers other offences, including criminal breach of trust, cheating, forgery, using false documents and falsifying company accounts.
The Capital Markets and Services Act 2007 covers market manipulation, false statements and insider trading, punishable by up to 10 years’ imprisonment and a minimum RM1 million fine.
One incident may involve several offences, but authorities must prove each offence; suspicious transactions alone does not mean someone is guilty. There is an important difference between making a poor business decision and deliberately breaking the law or committing error and fraud.
A director may make a business decision that turns out badly, which does not automatically mean that the director has committed a crime. However, directors must still take reasonable care and assess the risks before making decisions.
The situation is different when someone deliberately cheats the company, misappropriates money for personal use, accepts bribes or hides dishonest transactions where such actions may amount to criminal offences.
Laws in the country do not provide for “carelessness and stupidity” to be charged as offences.
In Hong Kong, public officers can face up to seven years in prison and a fine for seriously abusing their positions or deliberately neglecting their duties without a valid excuse, in breach of public trust.
Malaysia should continue to examine whether its laws provide sufficient protection when serious failures of responsibility lead to the misuse or loss of public money. Any criminal charge, however, must be supported by evidence and a clearly established legal offence.
Laws alone cannot prevent corporate abuse. Companies need a strong leadership, a clear tone at the top, effective controls and people committed to acting with honesty and integrity.
The Attorney-General’s Chambers carries out the prosecution of criminal cases.
Ultimately, company directors and senior executives are entrusted with money, assets and the confidence of shareholders, employees and the public.
They must never forget that their positions carry a huge responsibility, not personal privileges.
- The writer is president of Malaysian Integrity and Governance Society (MIG) and professor of criminology at HELP University