When Directors Misuse Company Resources
Corporate leadership comes with significant legal responsibilities. Directors and senior executives are entrusted with confidential information, company resources, employees and business opportunities. Malaysian law requires them to exercise these powers honestly, loyally and in the best interests of the company.
In the recent High Court decision of Hartalega Holdings Berhad & Ors v Dr Danaraj Nadarajah [2026] CLJU 1710, the Court reaffirmed these important principles after an 11-day trial involving extensive factual and expert evidence.
Background
The plaintiffs alleged that the defendant, while serving as a senior executive and director within the Hartalega Group, had used company employees, confidential information, business opportunities and corporate resources to advance private commercial ventures without the company’s knowledge or approval.
The defendant denied the allegations and filed a counterclaim against the plaintiffs.
What Did the High Court Decide?
After hearing evidence from multiple factual and expert witnesses, the High Court found in favour of the plaintiffs.
The Court held that the defendant had, among other things:
- Used company employees to assist in private business ventures;
- Used company resources and confidential information for unauthorised purposes;
- Directed employees to prepare purchase orders and financial forecasts for businesses connected with his personal interests;
- Placed himself in a position where his personal interests conflicted with his duties owed to the company.
Importantly, the Court emphasised that although an employee may generally compete after leaving employment (subject to applicable legal restrictions), he cannot use his employer’s employees, confidential information or corporate opportunities for personal benefit while still employed.
The Court’s Orders
The High Court:
✔ Allowed the plaintiffs’ claim.
✔ Dismissed the defendant’s counterclaim.
✔ Declared that the defendant had breached his fiduciary, statutory and contractual duties.
The Court further granted:
- Declaratory relief;
- Discovery orders;
- An account of profits;
- An account of company resources utilised;
- Injunctive relief;
- Return of confidential information;
- Damages (to be assessed);
- Interest at 5% per annum; and
- Costs of RM90,000.
Why Is This Decision Important?
This decision serves as an important reminder that:
- Directors and senior executives owe fiduciary duties to act in the company’s best interests.
- Corporate opportunities belong to the company—not individual officers acting for their own benefit.
- Company employees and resources cannot be diverted for personal projects without proper authority.
- A conflict of interest may arise even before a competing business is formally established.
- Malaysian courts are prepared to grant substantial remedies where fiduciary duties have been breached.
For businesses, this case highlights the importance of implementing strong corporate governance policies and taking prompt legal action where company resources have been misused.
Our Experience in Corporate and Commercial Disputes
Corporate disputes involving directors’ duties, shareholder conflicts, breach of fiduciary obligations and misuse of confidential information often require careful strategic planning and strong courtroom advocacy.
At JY Ko Advocates & Solicitors, we regularly advise and represent companies, directors and shareholders in complex commercial litigation, corporate governance disputes and breach of fiduciary duty claims.
If your business is facing a dispute involving directors, senior management or corporate misconduct, obtaining early legal advice can significantly improve your legal position.
Written on: 29th June 2026, Monday
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Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!