ACTIONS AGAINST FRAUDULENT CONDUCT BY DIRECTORS, OFFICERS & EMPLOYEES IN MALAYSIA
There are many ways in which directors, officers and employees of a company may commit and perpetuate fraudulent conduct to the detriment of the company. A classic example is when a company director or finance executive siphons off company funds through various fictitious transactions.
Causes of action. In all cases of fraudulent conduct committed against a company, Malaysian law allows the company, as the victim of the fraud, to sue the wrongdoers and obtain the appropriate remedies from them.
The common causes of action that a company can pursue against wrongdoers to obtain those remedies are: (i) breach of the common law fiduciary duties owed by the directors (and in some cases, by employees) to the company; (ii) breach of the statutory duties owed by the directors to the company under the Companies Act 2016; (iii) breach of the common law duties of loyalty and fidelity owed by the employees to the company; (iv) fraud or tort of deceit; (v) tort of bribery; (vi) conspiracy to injure the company by unlawful or lawful means; (vii) dishonest assistance; (viii) knowing receipt; and (ix) unjust enrichment or monies had and received.
Remedies. The primary remedy which a company will be entitled to is monetary damages to compensate for the actual losses and damages suffered. Depending on the type of fraudulent conduct committed, the company may also be entitled to other equitable reliefs such as an account of profits on all secret or unauthorised profits or bribes, tracing and restitution.
Oct-Dec 2025 issue
Rahmat Lim & Partners