You signed the papers. You made the call. You voted yes in that board meeting.

Now imagine a shareholder, a creditor, or even a regulator decides that call was wrong — and comes after you. Not the company. You, personally. Your savings. Your property. Your name.

This isn’t a hypothetical. It happens more than most directors realise, and it happens to directors of private companies just as much as public ones.

The company is not your shield

There’s a common assumption among Malaysian business owners and directors: the Sdn Bhd structure protects me. The liability stays with the company.

That’s true — until it isn’t.

Under the Companies Act 2016, directors can be held personally liable for decisions made in their capacity as a director. Wrongful trading, breach of fiduciary duty, misrepresentation to lenders, regulatory non-compliance — these aren’t just company problems. They can become your problem.

And it doesn’t require criminal intent. A director who approves a contract that later causes financial loss to a third party, or who signs off on accounts that turn out to be inaccurate, can find themselves named in a civil suit.

The company’s public liability policy won’t cover that. Neither will your fire and theft.

What D&O insurance actually covers

Directors & Officers (D&O) insurance is designed specifically for this gap. It covers the personal legal liability of individuals acting in a managerial or supervisory capacity — which means directors, CEOs, CFOs, and in some cases, senior managers.

When a claim is made against you personally for a decision made in your professional role, D&O steps in to cover:

• Legal defence costs — which start accumulating from day one, before any verdict
• Settlements or damages awarded against you
• Investigation costs, including regulatory enquiries

What it doesn’t cover: fraud, intentional criminal acts, or claims you knew about before taking out the policy.

Who actually makes these claims?

More people than you’d expect. In Malaysia, D&O claims typically come from:

Shareholders — alleging mismanagement or decisions that damaged the value of their stake.

Creditors and banks — especially relevant when a company is in financial difficulty and directors are accused of continuing to trade while insolvent.

Regulators — SSM, BNM, and the Securities Commission all have powers to investigate and act against individual directors, not just companies.

Employees — wrongful dismissal or employment-related disputes where a director is personally named.

The trigger doesn’t have to be dramatic. A dispute with a business partner. A vendor who didn’t get paid. A former employee with a grievance. Any of these can escalate into a personal claim against you.

“But I’m a director of a small company”

This is where most people switch off — and where the risk is actually highest.

Large listed companies almost always have D&O cover as standard. Their legal and compliance teams insist on it. The directors of private Sdn Bhdcompanies — the people running family businesses, growing SMEs, companies with RM5 million to RM50 million in revenue — are the ones who typically have nothing in place.

They assume the risk doesn’t apply to them. It does. And they have far fewer resources to absorb a legal fight.

A high-profile case or a lengthy legal dispute doesn’t need to end in a judgment against you to be damaging. Legal fees alone — for a case that drags on 18 months — can run into hundreds of thousands of ringgit.

What a review looks like

D&O insurance isn’t complicated to put in place, but it does need to be structured correctly. The scope of cover, the limit of indemnity, and what’s excluded all matter.

At Maxima Advisory, we start with a straightforward risk gap review — looking at your current policies, your company structure, and where your personal exposure actually sits. Most directors we speak to are surprised by what’s missing.

It takes 45 minutes. There’s no obligation to do anything after.

If you’re a director of a Malaysian company and you’ve never reviewed your personal liability exposure, that conversation is worth having. Request a consultation.