A CEO Hired 25 Staff Without Board Approval: Why the RM3.4m Order Stood

About this guide: This explainer uses an incident reported on 2020-09-08 as a starting point. The legal rules below are general; they do not decide anyone's guilt, liability or individual case.

Decision tree and document pack

Authority check before a senior executive commits company money

1. Identify the decision: write down the hires, purchase, appointment or contract, its full annual cost and every related commitment rather than approving each item in isolation.
2. Check the source of authority: compare the constitution, board resolutions, delegation matrix, approved budget and employment contract; a self-approved internal memo is not a substitute for board authority.
3. If authority is unclear or a threshold is exceeded: pause, disclose the full facts and obtain a recorded board or committee decision from the body that actually has power to approve it.
4. After approval: keep the papers, conflict declarations, minutes, signed terms and implementation record together so the company can later show what was decided and on what information.
5. If something was already done without authority: preserve all records, stop further commitments where lawful, tell the board accurately and obtain Malaysian legal advice before trying to ratify, reverse or settle it.

What happened

The underlying events began when Badlisyah Abdul Ghani was appointed MARA Corporation’s group chief executive officer on 8 September 2020. Free Malaysia Today reported that he was suspended on 19 November 2020 and his contract ended on 12 January 2021. MARA Corporation sued in September 2021, alleging several breaches during the short tenure, including hiring 25 people and making other appointments or purchases without board approval.

The High Court ruled for the company in May 2024. Malay Mail reported that the order comprised RM2,728,673.82 and RM739,541.60, together with an indemnity relating to expenses arising from industrial-relations actions involving former employees. Those figures belong to this dispute and should not be treated as a formula for valuing another company’s governance failure.

On 17 August 2026, a three-judge Court of Appeal bench dismissed the former CEO’s appeal and affirmed the High Court decision. Both current reports put the total at about RM3.4 million and say the appellate court ordered a further RM50,000 in costs. The fresh legal development is the concluded appeal, not the original 2020 management conduct.

The reported findings focused on authority and candour. Malay Mail said the 25 employees were hired without taking the decision to the board, and that the former CEO misrepresented the status of four employees to the Board Nomination and Remuneration Committee. Free Malaysia Today reported that the hires cost RM9.4 million in salaries for the year against an approved 2020 emolument budget of RM1.799 million, and that an internal memo could not validly expand powers reserved to the board.

The legal insight: what law applies

A company acts through people, but each person’s authority has limits. A chief executive may have broad operational power while the constitution, board resolutions, delegation matrix, budget or contract reserves particular hiring, procurement or appointment decisions to the board. The court reports show why job title alone is not proof that a commitment was authorised.

The reports describe the liability as contractual, fiduciary and statutory. These are related but distinct sources of responsibility. A contractual duty comes from agreed terms; a fiduciary duty requires loyalty and proper use of entrusted power; a statutory duty comes from legislation. Without the complete written grounds and pleadings, readers should not assume that one Companies Act section decided every part of the award.

Good faith is not established merely by saying a decision was intended to help the company. Process and information matter. Where an executive knows that approval belongs to the board, proceeding first and explaining later can expose the company to payroll, termination, vendor and litigation costs. A committee recommendation is also different from approval by the body holding the actual power.

Candour to the board is a separate control. Directors and committees can only make a meaningful decision when they receive accurate information about whether candidates are already employed, the full recurring cost, budget headroom, conflicts and related commitments. An incomplete description can undermine both the decision and any later argument that the board informally accepted it.

How does this impact me?

For founders and directors, a delegation matrix should name both the person and the limit. Separate authority for headcount, annual payroll, individual salary, equipment purchases, consultants and contracts. State when several connected commitments must be aggregated, so a large project cannot be split into smaller approvals.

For CEOs and senior managers, ask for the governing document rather than relying on custom or verbal reassurance. If the board reserved the decision, prepare a paper that states the business need, full cost, alternatives, conflicts and recommendation. Do not draft a memo that appears to enlarge your own powers.

For company secretaries, finance and HR teams, approval evidence should be part of the transaction file. A signed employment letter or purchase order is not the same as proof of authority. Keep the relevant resolution, minute, budget approval and delegation version that applied on the decision date.

For employees hired during an internal authority dispute, the company’s claim against an executive does not by itself answer every employment right. Salary, notice, termination and Industrial Court issues depend on the worker’s own facts and documents. Workers should preserve their offer, acceptance, payslips, instructions and termination correspondence and seek specific advice.

What this incident teaches us

The strongest control is a pause before commitment, not a forensic exercise after money has been spent. A one-page authority check can prevent years of litigation: who may decide, under which instrument, up to what amount, with whose recommendation, and where the approval will be recorded.

Boards also need usable information. A nominal approval process fails if papers hide recurring costs, treat connected hires as separate events or describe current employees as future candidates. Minutes should record the material facts placed before decision-makers, not merely the resolution’s final wording.

The verdict

The Court of Appeal left the RM3.4 million High Court order in place after reported findings about unauthorised hiring, financial impact and misleading information to a board committee. The useful lesson is not that every failed executive decision creates personal liability. It is that senior officers must stay within real delegated authority, disclose material facts and leave a reliable approval trail.

What can I do if this happens to me?

• Create or update a written delegation matrix covering hiring, annual payroll, procurement, professional appointments, contracts and connected transactions.
• Match every material commitment to the constitution, board resolution, approved budget and the executive’s contract before any offer or purchase order is issued.
• Use board papers that disclose the full recurring cost, current status of candidates or vendors, conflicts, alternatives and any commitments already made.
• Keep the approving resolution, minutes, version of the delegation and supporting paper in one transaction file with HR or finance records.
• Escalate uncertainty before signing; do not rely on an internal memo drafted or approved by the same person whose authority is in question.
• If an unauthorised commitment is discovered, preserve records and obtain Malaysian corporate and employment advice before reversal, ratification, recovery or termination steps.