Enforcement of directors’ duties in Malaysia and Australia: the implications of context

Abstract

ABSTRACTIn recent years, the misappropriation of corporate assets by 1MDB, a high-profile Malaysian company, has precipitated international investigations by regulatory authorities. Although the scandal resulted in the imprisonment of Singaporean bankers, for many years no enforcement proceedings were taken against the directors of 1MDB in Malaysia despite the existence of corporate law modelled substantially on Anglo-Australian law. The article investigates the enforcement of directors’ duties in Malaysia and seeks to explain the manner and extent to which regulatory safeguards against the expropriation of corporate property are enforced. The analysis draws from the Australian experience to illuminate the differences across jurisdictions. Features of the Malaysian context are examined to explain differences in the enforcement of directors’ duties across countries. The findings reveal the significance of the politics-business nexus, corporate ownership structures and cultural norms for the enforcement of corporate law. The implications of the Malaysian experience are considered within a broader regional context.