Section 75. Exercise of power of directors to allot shares or grant rights

(1) Unless the prior approval by way of resolution by the company has been obtained, the directors of a company shall not exercise any power—

(a) to allot shares in the company;

(b) to grant rights to subscribe for shares in the company;

(c) to convert any security into shares in the company; or

(d) to allot shares under an agreement or option or offer.

(2) Subsection (1) shall not apply to—

(a) an allotment of shares, or grant of rights, under an offer made to the members of the company in proportion to the members’ shareholdings;

(b) an allotment of shares, or grant of rights, on a bonus issue of shares to the members of the company in proportion to the members’ shareholdings;

(c) an allotment of shares to a promoter of a company that the promoter has agreed to take; or

(d) shares which are to be issued as consideration or part consideration for the acquisition of shares or assets by the company and members of the company have been notified of the intention to issue the shares at least fourteen days before the date of issue of the shares.

(3) For the purposes of paragraph (2)(d), members of the company are deemed to have been notified of the intention to issue shares of the company if—

(a) a copy of the statement explaining the purpose of the intended issue of shares has been sent to every member at his last known address according to the register of members; and

(b) the copy of the statement has been advertised in one widely circulated newspaper in Malaysia in the national language and one widely circulated newspaper in Malaysia in the English language.

(4) Any issue of shares made by a company in contravention of this section shall be void and consideration given for the shares shall be recoverable accordingly.

(5) Any director who knowingly contravenes, or permits or authorizes the contravention of, or fails to take all reasonable steps to prevent the contravention of this section with respect to any issue of shares commits an offence and shall be liable to compensate the company and the person to whom the shares were issued for any loss, damages or costs which the company or that person may have sustained or incurred.

(6) Notwithstanding the Limitation Act 1953 [Act 254], no proceedings to recover any such loss, damages or costs shall be commenced after the expiration of three years from the date of the issue.