Section 221. Disclosure of interest in contracts, proposed contracts, property, offices,etc.

(1) Subject to this section, every director of a company who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the company shall, as soon as practicable after the relevant facts have come to the director’s knowledge, declare the nature of his interest at a meeting of the board of directors.

(2) The requirements of subsection (1) shall not apply in the case where the interest of the director being a member or creditor of a corporation interested in a contract or proposed contract with the first mentioned company if the interest of the director may be regarded as not being a material interest.

(3) A director of a company shall not be deemed to be interested or to have been at any time interested in any contract or proposed contract by reason only—

(a) in a case where the contract or proposed contract relates to any loan to the company that the director has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan; or

(b) in the case where the contract or proposed contract has been or will be made with or for the benefit of or on behalf of a corporation which by virtue of section 7 is deemed to be related to the company that he is the director of that corporation,

and this subsection shall have effect not only for the purposes of this Act but also for the purposes of other written laws, but this subsection shall not affect the operation of any provision in the constitution of the company.

(4) For the purposes of subsection (1), a general notice given to the board of directors by a director to the effect that the director is an officer or member of a specified corporation or a member of a specified firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that corporation or firm shall be deemed to be a sufficient declaration of interest in relation to any contract made if the notice specifies the nature and extent of the director’s interest in the specified corporation or firm and the interest is not different in nature or greater in extent than the nature and extent so specified in the general notice at the time any contract is so made.

(5) The notice referred to in subsection (4) shall be of no effect unless the notice is given at a meeting of the directors or the director takes reasonable steps to ensure that the notice is brought up and read at the next meeting of the directors after it is given.

(6) Every director of a company who holds any office or possesses any property where duties or interests may be created in conflict with his duties or interests as director shall declare the fact and the nature, character and extent of the conflict at a meeting of the directors of the company.

(7) The declaration shall be made at the first meeting of the directors held—

(a) after he becomes a director; or

(b) if already a director, after he commenced to hold the office or to possess the property,

as the case requires.

(8) The secretary of the company shall record every declaration made under this section in the minutes of the meeting at which the declaration was made.

(9) For the purposes of this section, an interest in the shares or debenture of a company—

(a) of the spouse of a director who is not a director of the company; or

(b) of a child, including adopted child or stepchild, of a director of a company who is not a director of the company,

shall be treated as an interest in the contract and proposed contract.

(10) A contract entered into in contravention of this section shall be voidable at the instance of the company except if it is in favour of any person dealing with the company for any valuable consideration and without any actual notice of the contravention.

(11) Except as provided in subsection (3), this section shall be in addition to and not in derogation of the operation of any provision in the constitution restricting a director from having any interest in contracts with the company or from holding offices or possessing properties involving duties or interests in conflict with his duties or interests as a director.

(12) Every officer and any other person or individual who contravene this section commit an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.