What is the potential fine for violating director bonus rules in private companies?

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The potential fine for violating director bonus rules in private companies is up to RM250,000.

In cases where a private company, such as TH Properties, contravenes the provisions regarding director fees and benefits, the company and any officer involved commit an offence. Upon conviction, they are liable to a fine not exceeding RM250,000. This is stipulated under Section 230(7) of the Companies Act 2016.
Approval Procedures for Private Companies

For private companies, the Board of Directors has the authority to approve director fees and benefits, provided it is in accordance with the company's constitution, as outlined in Section 230(2). Any such approval must be formally recorded in the minutes of the directors' meeting. Furthermore, the Board is required to inform the shareholders of this approval within 14 days from the date it was granted, according to Section 230(3).
Consequences of Non-Compliance

Failure to adhere to these stipulated procedures can result in significant penalties. If a company and its officers are found to have contravened these sections, they face an offence which carries a fine of up to RM250,000 upon conviction. Additionally, any payments made in contravention of these rules are considered a debt owed by the director to the company, as per Section 230(5).
Shareholder Rights in Case of Disputed Payments

Shareholders who hold at least 10% of the total voting rights have recourse if they believe a payment was not fair to the company. Within 30 days of becoming aware of such payments, they can demand that the company pass a resolution to approve the payment, either through a written resolution or at a general meeting, as detailed in Section 230(4). If no such approval is obtained, the payment remains a debt due from the director to the company.

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What is the potential fine for violating director bonus rules in private companies?

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