DIRECTORS OF A COMPANY - Not a person who has engaged in a

transaction with the company

Sec 2 CA:
- Not a nominee of major shareholder
 Any person occupying the position or executive director of a listed
 A person in accordance with whose company.
directions or instructions the
Board structure according to MCCG
majority of directors of a corporation
(2021)
are accustomed to act
 Alternate or substitute director.  Kena ada clear functions reserved for
 Nominee director (director yang the board.
dipilih untuk jadi wakil ke company  Conduct assessment of its
lain) independent directors annually.
 Tenure for ID: not exceed 9 years.
Requirements for Directors
 CM tak sama dengan CEO, CM:
Sec 196(1) of CA 2016 non-executive member of the board.

Minimum: Qualifications of Directors

 Public: 2 directors 1. Sec 196(2): A natural person – 18

 Private: 1 director years old: not a body corporate.
2. Sec 196(4):
Sec 196(4) CA: not include alternate or  reside in Malaysia; principal
substitute director. place of residence in Malaysia.
Types of Directors  Not include alternate or
substitute.
 Managing Director (CEO) – 3rd sch, 3. Consent the appointment
para 22-25  Sec 201: kena ada consent and
 Executive/Non-executive Director declare that he is not disqualified.
 Independent Director  Yap Sing Hock
 Chairman of Directors – 3rd Sch, para Non filing of the consent is
1-2 merely an irregularity and does
 Committee of Directors – 3rd sch, not invalidate the appointment.
para 19-21 o Not lodge statutory
 Alternate/Substitute Directors – para declaration.
7.33 BMLR o Still the directors as defined
 Nominee Directors
under Sec 4 of CA
BMLR defined independent directors  Lembaga KWSP v Adorna RMIT
Sdn Bhd & Ors
- Not a major shareholder o A director failed to submit
- Not an executive director or its
the statutory declaration
related company
cannot use his own default as
- Not a principal of a professional
a defence in a proceeding
advisor to the Co
against him.
 o Sec 204: valid even ada office until ceases… in accordance
defect. with the Act
(2) Subsequent directors: appointed by
Disqualification of Directors ordinary resolution (sec 291,
Section 198(1) CA 2016 members of the company)
a. Public: shall hold office until
(a) Undischarged bankrupt unless has next AGM (sec 203 – voted
consent of the Officer Receiver or individually; single resolution
the court. (sometimes boleh jadi if agreed unanimously)
sebab ada guarantee) b. Private: shall hold office in
(b) Convicted of an offence relating to accordance to the terms of
promotion, formation or appointment.
management of a corporation unless
has consent from the court. Vacation of Office of Directors (sec 208)
(c) Convicted for bribery, fraud or (1) Automatic vacation (Casual
dishonesty unless has consent from Vacancy)
the court.  Resignation
(d) Convicted of an offence under sec  Retirement and not re-elected
213, 215-218, 228 and 539 (cukup term)
(e) Disqualified by the Court under Sec  Removal
199  Disqualified under section
Disqualification by Court – Sec 199 198 or 199.
 Unsound mind under the
Court may disqualify a director by Mental Health Act 2001.
application of Official Receiver/Registrar if (Para 7.27 BMLR include
– bankrupt)
 The companies under his  Dies
directorship went into liquidation  Vacation by the terns of
within the last five years due to his constitution.
conduct as a director which Para 15.05 BMLR – absent for more
contributed wholly or partly to the than 50% of the total board meetings
liquidation. held during the financial year.
 Due to his contravention of the
duties of a director (sec 213) Director’s Resignation
 Due to his habitual contravention of Sec 208(2): may resign by giving a written
this Act. notice to the company.
Appointment of Director  Notice shall be effective when it is
Sec 202 of CA 2016 delivered at the address of the
registered office.
(1) A person named as director in an
application of incorporation; hold
Sec 196(3): can not resign if the number of  Where a director was appointed to
directors is reduced below the minimum represent the interests of any
number. particular class of shareholders or
debenture holders, the resolution to
Sec 209(1): a company who has one last
remove him shall not take effect until
director, that director can not resign until he
his successor has been appointed.
has called a meeting to receive the notice of
resignation and appoint another director. Sec 207: right to be heard for directors of
public company against removal.
Khoo Choon Yam v Gan Miew Chee [2003]
Sec 318(3) CMSA 2007: SC may remove
 Undated resignation letter is not
the CEO/director of PLC if they convicted
valid.
an offence under securities law.
 ‘no other inference other than it was
signed under compulsion or duress’ Soliappan & Ors v Lim Yoke Fan & Ors
(1968)
Director’s retirement (Sec 205)
I: what is the position if the AOA provides
(2) Priv: may pass a written resolution to
for a shorter notice, than the statutory
determine the retirement of a
requirement under Sec 153 of CA 1965 i.e.
director.
28 days notice of the resolution?
(3) Pub: concept of retirement by
rotation shall be applicable H: the shorter notice shall be sufficient.
a. At first AGM, all retire.
Sec 206(3): Special notice is required.
b. At every subsequent AGM;
1/3 or nearest to 1/3 shall Casual Vacancy
retire (retiring director
eligible for re-election) Sec 208(4): Board have the power to appoint
(4) Directors who are longest in office any person to fill in the vacancy.
shall retire… That person shall hold office as director:
Removal of Directors. (Sec 206)  Pub: till next AGM
May be removed before the expiration of the  Priv: according to term of
director’s period of office (retires) appointment

Priv: removed by ordinary resolution or Para 7.22 BMLR: similar with above and
subject to constitution (ex; “by unanimous”) that director can be re-elected.

Pub: must be through ordinary resolution, Remuneration of Directors

notwithstanding, the consti or any agreement Sec 230(1): the fees of the directors, and any
between the Co and its shareholders. benefits payable to the directors including
 Special notice of a resolution (28 any compensation for loss of employment of
days) to remove director is required. a director or former director of
 A vacancy may be filled as a casual (a) a pub company or
vacancy. (b) a listed company and its subsidiaries
shall be approved at a general meeting.
Private company (Sec 230(2)-(5))
 the Board may (subject to consti)
approve the fees of the directors and
any benefits payable to the directors
including any compensation for loss
of office.
 Such approval must be notified to
shareholders within 14 days from the
date of approval.
 If unfair – at least 10% voting by the
sh, it will be subject to shareholders’
approval.
 If no approval obtained from
shareholders, the payment shall
constitute a debt due by the director
to the company.
Board of Directors
Power of the board of Directors
 Issue shares
 Transfer of shares
 Convene general meeting
Board meeting – refer 3rd Schedule

Audit Requirement
Must be audited by an independent third
party (external auditor)
Sec 267 – 270 Auditor of Private Company
Sec 271 – 273 Auditor of Public Company
MEMBERSHIP & DIVISION OF - Sec 147 CA 2016
POWER
Rights of a member
How can a person become member
(1) Financial rights
(shareholder)?
a. To receive a distribution
(1) When a name stated in the (dividend) of the shares he
application form for the registration holds
of the company and the name is b. To be returned their capital
entered as members in the register of upon winding up if the
members. OR; company is solvent.
(2) By acquiring the shares of the (2) Control Rights
company and registered as a a. To attend meeting and vote.
member. b. To approve alteration of
constitution, dealing relating
Ways of Acquiring Shares
to share capital & capital
(1) Acquire shares from the raising, transactions which
company/subscribe shares require members approval,
o Where company issue shares electing and removal of
to new shareholder director, initiate winding up.
(2) Acquire share from existing
shareholder
 Known as transfer of shares.
 Involve contract of sale &
purchase between existing
shareholder and new
shareholder.
(3) By operation of law
 Acquire the shares by
inheritance or by way of a
gift.
Obtain membership status
For unlisted companies: when his name
appears on the register of members.
- Sec 50(3) & 101 CA 2016
The entry of the name of a person in
the register of members as
shareholder is prima facie evidence
that legal title to the share is vested
in that person
For public listed company: when his name
appears on the record of depositor.