I am quite bewildered to note that the attorney-general (AG) of Malaysia has been appointed into Tabung Haji’s board as reported .

This is very irregular and raises issues of governance and separation of powers.

The AG is the No 1 law officer in the country and his job is to prosecute wrongdoers in the land.

So surely he will be conflicted now if Tabung Haji has transgressed the law and the AG has to prosecute.

The liability of directors of a board are joint and several, so any potential wrongdoing, or wrong decision or mistake of one board member impacts on the rest.

Therefore it seems quite odd and highly unusual for the AG to be appointed into any board, let alone that of Tabung Haji.

The role of a director under Malaysian Companies Act as listed here are:

The Act essentially codifies the common law duties of directors and provides for technical details in respect of the discharge of such duties. The statutory duties of a director under the Act include the following:

  • Duty to Act in Good Faith and for Proper Purpose: Directors owe a duty to the company to act in its best interests in good faith, and to do so with reasonable skill and care. The degree of skill and care imposed is that which a reasonable person would exercise had he been in a similar position as the director, taking into account any special skill, knowledge or expertise that the director may possess.
  • Discharge of the Duty to Exercise Reasonable Care and Skill: The Act deems this duty discharged when a director is informed about the subject matter of a business judgment and considers it appropriate, he makes a business judgment in good faith, believing that such judgment is in the company’s best interest and has no material personal interest in the subject matter of the business judgment.
  • Reliance on Information and Advice: Directors may rely on information, professional or expert advice, opinions, etc. presented by individuals retained by the company to provide such advice. A director’s reliance is made on reasonable grounds where it is made in good faith and was made after an independent assessment by him, having regard to his knowledge of the company and the complexity of the corporate structure or operation.
  • Duty to ensure dividends declared from profit: Directors are to ensure that dividends are paid from profits and not capital.
  • Duty to seek shareholders’ approval: Directors are to seek shareholders’ approval at the general meeting of the company prior to carrying into effect any arrangement or transaction of substantial value relating to the company. This includes the acquisition and/or disposition of property whose value, profit or shares value exceeds 25 percent of the total assets of the company, net profit or issued share capital of the company. Further, directors must also obtain shareholders’ approval prior to issuing new shares. Any transaction between the company and a director or a substantial shareholder, where the transaction is of substantial worth requires prior approval to be obtained from the shareholders at the company’s general meeting. For the purposes of discharging this duty, “substantial worth” is defined as a value exceeding 25 percent of the total assets of the company, or the net profits, or the issued share capital of the company, whichever is the highest.
  • Duty to keep proper accounts and registers Directors have a duty to maintain proper accounts and registers (i.e. of members or transfers of shares, etc.) and to make the same available for inspection when required.

Although Tabung Haji is not governed by the Companies Act but rather the Tabung Haji Act , the general principle will and should remain the same.

This appointment is as confusing as if the auditor-general is appointed into any of the companies The Auditor-General’s Department is for auditing.