Artificial Intelligence (AI) and corporate governance: rethinking directors’ legal responsibilities in Malaysia

The rapid advancement of artificial intelligence (AI) has significantly transformed corporate governance, introducing both opportunities and challenges for directors in fulfilling their legal responsibilities. As AI increasingly integrates into corporate decision-making and compliance mechanisms, directors face heightened expectations to manage complex technological risks while ensuring accountability and transparency. However, the absence of clear regulatory frameworks complicates their ability to navigate these challenges, raising critical concerns about the adequacy of existing corporate law principles. This paper explores the legal implications of AI on directors' fiduciary and statutory duties, particularly in the context of risk management and decision-making. Despite the well-established principles of directors’ fiduciary and statutory duties, there is limited clarity on how these obligations extend to decisions influenced by AI systems, leaving accountability in cases of AI-driven errors or fraud largely unexplored. The research highlights the pressing need for updated governance models and regulatory guidelines through a qualitative, doctrinal analysis of legal literature and comparative case studies, including incidents involving deepfake scams in Malaysia and Singapore. The findings underscore that while AI enhances efficiency, it also amplifies risks, placing an increased burden on directors to exercise due diligence and adapt to emerging threats. The paper concludes by emphasizing the importance of proactive legal reforms to support directors in navigating the evolving corporate landscape shaped by AI.