There are many directors in Malaysia who accept the appointment, collect their director fees, and leave everything else to their business partner. They do not attend meetings, do not review accounts, and do not get involved in any decisions. In their minds, they are just a name on paper. A High Court judgment delivered on 18 May 2026 is a direct message to all of them. The court made clear that once your name is on the register as a director, the law holds you responsible whether you are active or not.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞 iPay Solution Sdn Bhd is a small private company providing smart payment terminals. It had only two directors and two shareholders. Miss Khon Sze Hooi held 30% of the shares and Madam Iylia Diyana binti Abdul Hisham held the remaining 70%. The partnership broke down by mid-2025 when Madam Iylia stopped communicating entirely. Miss Khon's complaint went beyond deadlock. She alleged that Madam Iylia had committed serious breaches as a director that caused real harm to iPay. Because Madam Iylia controlled 70% of the votes, the company could not take action against her through normal channels. Miss Khon therefore applied to court for permission to sue Madam Iylia on iPay's behalf.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐀𝐩𝐩𝐞𝐥𝐥𝐚𝐧𝐭 (Khon Sze Hooi) Miss Khon raised four complaints. First, statutory employee contributions to EIS and PERKESO were not paid for over a year, exposing iPay to penalties. Second, Madam Iylia charged a key client a rate higher than what the contract allowed, without authority, resulting in an overcharge of RM298,406.20 that only came to light when the client complained. Third, from June 2025 Madam Iylia went completely silent and left the company without any management oversight. Fourth, she had an unresolved personal debt of RM2,600 owed to iPay that she never settled.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐑𝐞𝐬𝐩𝐨𝐧𝐝𝐞𝐧𝐭 (Iylia Diyana binti Abdul Hisham) Madam Iylia's defence rested on one main argument. Although she was registered as a director holding 70% of the shares, she said she was a dormant director who never actively ran the company and was never given operational responsibilities. She argued that because she was not involved in day to day management, she should not be held to the same duties as a fully active director. On the overcharging issue, she said the higher rate was applied to cover network costs not accounted for in the original contract, and that Miss Khon had known about it all along based on a WhatsApp conversation in November 2024.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭 The court allowed Miss Khon's application. On the dormant director defence, the court rejected it entirely. Director's duties come with the title itself, not with how much work is actually done. A person who accepts the appointment and stays on the register cannot escape those duties by saying she was not involved. To allow that would mean directors could avoid accountability simply by doing nothing. On the overcharging issue, the WhatsApp conversation Madam Iylia relied on happened eleven days after the client had already raised the complaint, so it could not prove that Miss Khon knew about the arrangement beforehand.

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