Aug 4 — Lest we forget, the release of the report of the Tabung Haji Royal Commission of Inquiry (RCI) just days before the Negeri Sembilan state election sparked intense debate over the timing.

One political analyst described the timing as “very fishy”.

But now that the state election is over, let’s turn to what matters more - the findings of the report.

One of the findings is the payment of RM2.19 million in bonuses to selected directors and officers of TH Properties Sdn Bhd (TH Properties) approved without following the required legal procedures.

The RCI said bonus payments made by TH Properties in 2017 and 2018 had breached the provisions of Sections 230(2), (3) and (4) of the Companies Act 2016 (Act 777), as the necessary approvals and shareholder resolutions were not obtained.

What are the provisions about?

Section 230 relates to approvals for fees of directors and is part of the provisions on “Directors’ Duties and Responsibilities” – Sections 210 to 234.

In the case of a public company or a listed company and its subsidiaries, the fees of the directors, and any benefits payable to the directors, must be approved at a general meeting – as Section 203(1)(a) and (b).

A company that contravenes the foregoing commits an offence and, upon conviction, is liable to a fine not exceeding RM3,000,000 and any payment in contravention of the foregoing constitutes a debt due by the director(s) to the company – Section 230(6).

In the case of a private company like TH Properties, the Board of Directors may, subject to the constitution of the company, approve the fees of the directors and any benefits payable to the directors – Section 230(2).

Any approval made under the foregoing must be recorded in the minutes of the directors’ meeting and the Board of Directors must notify the shareholders of the approval of the fees within 14 days from the date of the approval – Section 230(3).

The company and every officer who contravene the foregoing commit an offence and, upon conviction, is liable to a fine not exceeding RM250,000 – Section 230(7).

Where a fee is made or other benefits payable to which the foregoing applies, members holding at least 10% of the total voting rights and who consider that the payment was not fair to the company, within 30 days after they have knowledge of such payments, may require the company to pass a resolution to approve the payment either by way of a written resolution or at a general meeting – Section 230(4).

Unless an approval has been obtained through a resolution passed under the foregoing, the payment must constitute a debt due by the director to the company – Section 230(5).

So, the provisions are clear: bonuses paid in contravention of the provisions constitute debts due by the directors to the company, and any contravention of the provisions is an offence under the Act.

Who has authority to investigate offences committed under the Act?

The short answer is the Registrar of the Companies Commission of Malaysia (CCM), by reason of Section 27D, among others, of the CCM Act 2001 (Act 614).

Section 27D(a) of Act 614 says the Registrar has the power to conduct investigation where there is reason to suspect that an offence or breach has been committed under the Act.

The CCM must commence an investigation.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.