1.2
Definition of "independent director"
Paragraph 5.1 of Guidance Note 9 in relation to sub-Rule (g) of the said definition states that a person is disqualified from being an independent director of a listed corporation if he had engaged personally in transactions with the listed corporation or its related corporation (other than for board services as a non-executive director) within the last 2 years, or is presently a partner, director or major shareholder of a firm or corporation (“the Entity”) (other than subsidiaries of the listed corporation) which has engaged in transactions with the listed corporation or its related corporation within the last 2 years, and the consideration in aggregate exceeds 5% of the gross revenue on a consolidated basis (where applicable) of the person or the Entity or RM1 million, whichever is the higher (“the said Threshold”). Mr A is an independent director of X Bhd, a listed corporation. If Mr A were to purchase a car from X Bhd for his own use, the value of which exceeds the said Threshold, would he be disqualified from being an independent director of X Bhd pursuant to sub-Rule (g) of the said definition and Paragraph 5.1 of Guidance Note 9?
As clarified under paragraph 5.2(a) of Guidance Note 9, an acquisition of a car from the listed corporation will not be considered a “transaction” where it is purchased for personal use provided that the transaction is on normal commercial terms. Therefore, Mr A would not be disqualified from being an independent director of X Bhd pursuant to sub-Rule (g) of the said definition and paragraph 5.2(a) of Guidance Note 9 due to the purchase of the car, provided that the purchase is on normal commercial terms.