Directors' duties must be assessed subjectively by their beliefs in the company's interests, alongside an objective evaluation of the reasonableness of their decisions.

[1] These two related appeals emanated from the same action in the High Court of Malaya at Kuala Lumpur (Commercial Division) under Civil Suit No: D-22NCC-1057-2011. These appeals raised important questions in company law on governance and management of a company as between directors, and shareholders in general meetings. Disagreements concerning management and direction of a company have given rise to frequent legal disputes in courts; the present appeals are cases in point.

[2] The first appeal, which is Federal Court Civil Appeal No: 02(f)-7-03-2016 (W) is by Tengku Dato' Ibrahim Petra bin Tengku Indra Petra (the 1st defendant in the High Court). The second appeal, which is Federal Court Civil Appeal No: 02(f)-8-03-2016 (W) is by Wong Fook Heng and Tiong Young Kong (the 2nd and 3rd defendants in the High Court). In both appeals, Petra Perdana Berhad (the plaintiff in the High Court), is the respondent.

[3] We shall refer to the parties in this judgment as they were cited in the High Court.

[4] The subject matter of the dispute between the parties revolved around the issue of the directors' duties to act in the best interest of the plaintiff in the divestments of the plaintiff's shareholding in Petra Energy Berhad ("PEB").

[5] PEB was a wholly owned subsidiary of the plaintiff. To that extent, PEB comprised an asset of the plaintiff. PEB was important for the income base of the plaintiff. The Court of Appeal described PEB as the "jewel in the crown" of the plaintiff.

[6] In a nutshell, these appeals vitally concern alleged breaches by the directors of the duty owed to the plaintiff in the divestments of the PEB shares. The dispute centred on the purpose for which the divestments in 2009 were actually effected.

[7]As a consequence of these divestments, the plaintiff complained that it lost its controlling block of shares in PEB and that PEB ceased to be a subsidiary of the plaintiff. The plaintiff further complained that all the shares so divested eventually ended up in the hands of one Shorefield Resources Sdn Bhd ("Shorefield"), who became the single largest shareholder in PEB.

[8] The legal dispute arose when the plaintiff then took issue with these divestments by instituting the High Court action. After a lengthy trial stretching over 23 days, which involved 14 witnesses for both sides, the learned High Court Judge dismissed the plaintiff's claim with costs. Against that decision, the plaintiff proffered an appeal to the Court of Appeal. The Court of Appeal unanimously allowed the appeal and effectively reversed the decision of the High Court.

[9] As a result of the Court of Appeal's decision, the defendants applied for leave to appeal to this Court. This Court thereafter granted the defendants leave to appeal for the determination of several questions of law pertaining to the division of powers between shareholders and directors, the test for breach of director's duty, and 'best interest of the company'.

[10] Hence, the present appeals before us, which in substance arose from the reversal by the Court of Appeal of the decision of the High Court that essentially concluded that there was no breach by the defendants of their directors' duties in undertaking the divestments of the plaintiff's shares in PEB shares.

The Parties

[11]At the material time, the plaintiff was a public listed company whose shares were traded on the Main Board of Bursa Malaysia. The plaintiff was principally an investment holding company. The plaintiff's group of companies was predominan