Section 226. Prohibition of tax free payments to directors

(1) A company shall not pay a director any remuneration, whether as director or otherwise, free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or the rate of income tax.

(2) Any provision contained in the constitution or a ny resolution of the Board or members of the company for payment to a director of remuneration free of income tax or otherwise calculated by reference to or varying with the amount of his income tax or the rate of income tax shall have effect as if the provision or resolution, as the case may be provide for payment as a gross sum subject to income tax, of the net sum for which it actually provides.

(3) The company and 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.