Protecting minority shareholders in Malaysian public listed companies against conflicts of interest by related parties: Some important developments

Abstract

The global financial crisis has highlighted instances of conflicts of interest and corporate abuse by company controllers. This has been the case in Malaysia and elsewhere, where weaknesses in the legal framework have enabled corporate misconduct to occur. This paper critically examines the legal framework protecting minority shareholders of Malaysian Public Listed Companies (PLCs) against controlling shareholders (also referred to as substantial shareholders) and directors being engaged in related party transactions (RPTs) and other conflict of interest situations. It considers gaps in the law which have enabled related parties to engage in improper transactions with their companies and outlines recent developments aimed at strengthening the rules protecting shareholders against improper RTPs. The paper considers the significance and likely effectiveness of recent reforms.