Resignation and Retirement of Directors

Resignation and
Removal of Directors
LEE SWEE SENG
LLB, LLM, MBA
Advocate & Solicitor

Notary Public, Trademark, Patent Agent
Certified Mediator
sweeseng@tm.net.my
www.leesweeseng.com
Appointment of
Directors
Who can be appointed
as a director?
The person appointed must:-
Consent to the appointment (s123 Companies
Act 1965)
bean individual and not a company (s 122(2)
Companies Act 1965)
Atleast 18 years old (s 122(2) Companies Act
1965)
Not disqualified from being a director
Appointment of Directors
Section 122(3) provides that the first directors
of a company shall be named in the
Memorandum and Articles of Association
(M&A).
The first directors are deemed to have been
appointed on the incorporation of the company.
The first directors will hold office until the first
Annual General meeting (AGM) where they will
retire.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 85
Appointment of Directors
Any subsequent appointment is governed by the
M&A and they are usually appointed by the
directors themselves for filling of casual
vacancy or as an additional director.
The Articles of the company usually provides
that directors appointed to fill casual vacancies
or as additional directors shall hold office until
the next AGM where they shall be eligible for
re-election.
Casual Vacancy
 May arise as a result of : -
a) Death;
b) Insanity;
c) Resignation;
d) Disqualification due to absence from board
meetings;
e) Bankruptcy
f) Failure to obtain qualification shares
g) Becomes prohibited from being a director by
reason of an order made under the Act.
Statutory Declaration before
Appointment as a Director
Form 48A
Before a person is appointed as a director, he
must lodge with the ROC a statutory declaration
using Form 48A that :-
He consents to act as a director;
He is not an undischarged bankrupt;
He has not been convicted of any offence
whether within or outside Malaysia;
He has not been imprisoned for any offence
within the period of 5 years immediately
preceding the date of the declaration.
Statutory Declaration before
Appointment as a Director
An updated Form 49 must be lodged with
the ROC for any appointment of directors.
The Register of Directors, Managers and

Secretaries must be updated.
Resignation of Directors
Table A art 72(e)
The office of director shall become vacant if
the director –
resigns his office by notice in writing to the
company;
S141(6)(b) states that the company must notify
the ROC of the director’s resignation.
If the company refuses to give notice to the
ROC so that the director’s name remain on
records of the company, this will not affect the
validity of the resignation.
The failure to comply with the procedural
requirement to notify ROC on the director’s
resignation will not force a person to remain as
director without his consent.
Latchford Premier Cinema Ltd v Ennion [1931]
2 Ch 409
The facts:-
A company's articles of association provided that
the office of a director should ipso facto be vacated
if by notice in writing to the company he resigned
his office. Two of the directors orally tendered
their resignations at the annual general meeting of
the company and their resignations were accepted
by the meeting.
Latchford Premier Cinema Ltd v Ennion
[1931] 2 Ch 409
Held:-
Where the company accepts the notice, oral
notice will suffice even where written notice
is required. Notice is presumably effective
not on posting but only on receipt by the
company.
Latchford Premier Cinema Ltd v Ennion [1931]
2 Ch 409
Held:-
A director’s position is analogous to an employee
as far as resignation is concerned. An employee is
entitled to resign any time, provided that he pays
damages if he breaches his contract by not giving
sufficient notice. The company cannot on principle
refuse to let him go.
Jimat bin Awang v Lai Wee Ngen [1995]
3 SLR 293
The facts:-
The petitioners were directors and
shareholders of the company. They argued
that their resignation as directors was invalid
as there were no resolutions accepting their
resignation;
Jimat bin Awang v Lai Wee Ngen [1995]
3 SLR 293
Held:-
The validity of any resignation did not
depend on whether it was accepted by
resolution unless this was provided for in
the contract or in the articles of association
of the company.
Glossop v Glossop [1907] 2 Ch 370
Neville J
“I have no doubt that a director is entitled to
relinquish his office anytime he pleases by
proper notice to the company, and that his
resignation depends upon his notice and is
not dependant upon any acceptance by the
company, because I do not think that they
are in a position to refuse acceptance.”
Signed but Undated Resignation
Letter
Khoo Choon Yam v Gan Miew Chee
[2000] 6 MLJ 20
The facts:-
The Plaintiff was a director of the
company. A resolution was passed by for
the appointment of additional directors of
the company. This resolution was not sent
to the plaintiff.
Letter
Khoo Choon Yam v Gan Miew Chee [2000] 6
MLJ 20
The facts (contd):-
The Defendants contended that the Plaintiff had
resigned from the company, and the resignation
was effected through an undated letter of
resignation given by the Plaintiff upon his
appointment as a director. The Plaintiff
contended that he never signed such resignation
letter and his signature was forged.
Letter
[2000] 6 MLJ 20
Held:-
Whether or not the Plaintiff signed the
undated letter of resignation could not be
decided on conflicting affidavit evidence.
However, even if the plaintiff had signed
such a letter, it was void and of no effect.
Letter
Khoo Choon Yam v Gan Miew Chee [2000] 6
MLJ 20
Held (contd):-
A resignation letter under compulsion is no
resignation in law. When a person is required to
sign an undated resignation letter as a condition
for appointment as a director, what other
inference can be drawn except that it was signed
under compulsion or duress
Letter
[2000] 6 MLJ 20
Held (contd):-
There is a procedure by which the board
and the company may get rid of their
directors. All that needs to be done is to
follow the procedure.
Notwithstanding anything in the Articles, a
director may not resign if his resignation will
leave the company with less than 2 directors, or
with no directors.
Therefore, the last 2 directors of a company may
not resign.
However, a person who is disqualified from
being a director by the provisions of the Act or
the Articles, may resign notwithstanding that he
is one of the last 2 directors, since continuing in
office would be an offence.
Retirement of Directors
Retirement by Rotation
The Articles of the company will usually
contain provisions relating to retirement
by rotation.
The purpose is to give the shareholders an
opportunity to review the directors’
performance and to replace them, if
necessary.
At the first AGM. all directors shall retire
from office.
At the subsequent AGM, one third of the
directors for the time being shall retire
from office. The directors who have been
longest in office since their last election
shall retire.
A director appointed to fill casual vacancy or as
additional director in between two AGMs is
required to retire at the forthcoming AGM.
When considering the number to retire by

rotation, directors appointed between two
AGMs and managing director is not to be taken
into account in determining the directors to
retire by rotation.
 The Articles usually provide that the

retiring director shall be eligible for re-
election.
 However, a company may elect some
other person in place of the retiring
director at the meeting.
Failing this, the retiring director will be deemed
to have been re-elected, unless:
a) another person is elected

b) a resolution not to fill the vacancy is passed
c) a resolution for the re-election of that director is
lost.
See Teow Chuan & Anor v YAM Tunku
Nadzaruddin Ibni Tuanku Jaafar & Ors [2007] 2
MLJ 212
The facts:-
The Board of Directors made a resolution
that all executive directors must retire on
attaining 55 years of age. The Plaintiffs
brought an action challenging the
introduction of a new term into their
existing contract that they should retire.
MLJ 212
Held:-
The power to pass the resolution as to
retirement of directors was a fiduciary
power entrusted by the memorandum and
articles of the Company. That power was
used for a collateral or improper purpose,
namely to remove the Plaintiffs and was
invalid.
MLJ 212
Held:-
In common law, an attempt by a party to a
contract to unilaterally introduce a new
term into it is regarded as a breach of
contract. This amounts to an ‘intimation
of an intention to abandon and altogether
to refuse performance of the contract’
How can a director be removed?
It may be that a dispute in the company leads to
either some of the directors or members wanting
to remove a director from office. A director may
have a service contract with the company
If the company terminates the director’s
appointment in breach of the contract, the
director may be entitled to damages.
The rights that a director may have under a
contract will depend upon the provisions
contained in the contract.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 227
of Public Companies
of Public Companies
Removal by other directors
It is not possible for directors of a public

company to remove another director.
This is prohibited by section 128(8)
of Public Companies
Removal by members
Resolutions coupled with special notice (S153
Companies Act)
Section 128 of the Companies Act gives the
members of a public company the power of
control over the directors.
The members of a public company can remove a
director by giving special notice to the company
to remove him, (usually a simple majority)
notwithstanding any provision in the Articles
of Public Companies
Removal by members
• Resolutions coupled with special notice (S153
Companies Act)
S128(1) Companies Act 1965
A public company may remove a director by

ordinary resolution before the expiration of his
term of office.
of Public Companies
Removal by members
Resolutions
coupled with special notice (S153
Companies Act)

If the director who is being removed was
appointed to represent the interests of a specific
class of shareholders or debenture holders, the
resolution to remove him will not be effective
until a successor has been appointed.
of Public Companies
Resolutions
coupled with special notice (S153
Companies Act)

Transposed to s. 128(1) of our Act the proper
meaning of "A public company may by ordinary
resolution remove a director ..." means that a
simple majority of the shareholders of the
company may vote to remove a director and no
agreement made by the directors or the company
can fetter that right.
of Public Companies
 TheCourts will not interfere with the statutory right of
shareholders to remove directors: Soliappan v Lim Yoke
Fan [1968] 2 MLJ 21; Dato' H.M. Shah & Ors. v. Dato'
Abdullah b. Ahmad [1991] 1 MLJ 91 - a Supreme Court
decision which applied s. 128(1) and upheld the
shareholders' right to terminate the appointment of the
executive chairman and managing director of the
company in the 9 month of a three-year contract with the
company appointing him to those positions: Tuan Ishak
Ismail v Leong Hup Holdings & Or Appeals [1996] 1
CLJ 393
of Public Companies
Removal by members
Resolutions
coupled with special notice
(S153 Companies Act)

Special notice of the resolution to remove
a director is required – that is not less than
28 days notice to the company of the
intended resolution.
of Public Companies
Removal by members
Companies Act)
 S153 Companies Act 1965
defines special notice as the notice of intention
of its member(s) to move the resolution
proposed, served to the company not less than
28 days before the meeting at which the
resolution is to be moved.
of Public Companies
Removal by members
Companies Act)
• The 28 days grace period is to allow the
directors who are to be removed time to prepare
for their defences.
• On receipt of the special notice of resolution, the
company must then give notice of the resolution
to its members at least 14 days before the
meeting.
of Public Companies
Removal by members

Companies Act)
If the twenty-eight days grace period was not

complied with, the resolution shall not be
effective.
of Public Companies
Removal by members
Rights of director to be heard - S128(2)
The director who is being removed has an
opportunity to defend himself.
He is entitled to be heard on the resolution at the
meeting and to make written representations to
the company and request the company to send
copies of the representations to every member if
the company notified in the meeting.
Guide to Company Law in Malaysia & Singapore, 2 nd Ed, CCH Asia Ltd, pg 67
of Public Companies
Removal by members
Rights of director to be heard - S128(3)

If copies of the representations are not sent out
because they were received too late, the director
may ask for the representations to be read out at
the meeting without affecting his right to be
heard orally.
of Public Companies
Removal by members
Rights of director to be heard -
S128(4)
However, the director’s right to be heard is not
absolute. That director cannot use his right to
attract publicity for defamatory matter.
If a director does that, the company or any
affected person may apply to court to stop him
from sending or reading out the representations
at the meeting.
of Public Companies
Removal by members
Rights of director to be heard
In practice, it will usually be easier to proceed
under the articles of association of the company
rather than under the statutory procedure.
Company articles usually provide that the

company may by resolution remove a director
before his term expires.
Guide to Company Law in Malaysia & Singapore, 2nd Ed, CCH Asia Ltd, pg 67
of Public Companies
Where a company adopts
Table A as
its articles or association
of Public Companies
If a company adopts Table A as its
articles or association, then the director
may, notwithstanding the provisions of
the Companies Act, be removed from
office before the expiry of his term via an
ordinary resolution without special notice.
Guide to Company Law in Malaysia & Singapore, 2nd Ed, CCH Asia Limited, pg 67
of Public Companies
Table A art 69 provides that:-
Subject to section 128, the company

may by ordinary resolution remove any
director before the expiration of his period
of office.
of Public Companies
Proceedings under the articles will also
deprive the director the statutory right to
make representations. That right only
arises when special notice is given under
the Act’s procedure.
Guide to Company Law in Malaysia & Singapore, 2 nd Ed, CCH Asia Limited, pg 68
of Public Companies
Meeting convened under

Section 144 or Section 145
Companies Act 1965
Requisition by shareholders (s
144, CA)
If a company is unwilling to call a meeting
pursuant to S128 and S 153 Companies Act
1965, the proposer of the resolution will fail in
his bid to oust the director unless he has 10% of
the voting rights in the company, or can muster
support from members with equivalent voting
power. This will enable him to have a meeting
convened under S144 or S145 Companies Act
1965
144, CA)
Requisition shall state the objects of the
meeting and shall be signed by the
requisitionists and deposited at the
registered office of the company. The
requisition need not be under
corporation’s seal; Roxy Electric
Industries (Malaysia) Bhd v Syarikat
Nominee Bumiputra Sdn Bhd [1989] 3
MLJ 231.
144, CA)
Upon receipt of requisition the director
must convene an extraordinary general
meeting not later than two months.
If the directors do not convene a meeting

within 21 days, the requisitionists may do
so themselves (s 144(3)) within 3 months.
144, CA)
Any reasonable expenses incurred by the
requisitionists in calling the meeting are to
be paid by the company, which may
reimburse itself out of any sums due to the
defaulting directors by way of fees or
other remuneration: sub-s (4).
144, CA)
If it is impracticable to call a meeting in
accordance with the Act or the articles,
the court may order a meeting to be called
upon application of any director or of any
member who would be entitled to vote at
the meeting or of the personal
representative of any such member, and
may make such orders as are necessary to
provide for its conduct: (s 150)
Eg of a notice under s 144
NOTICE OF EXTRAORDINARY GENERAL
MEETING
NOTICE IS HEREBY GIVEN THAT an

Extraordinary General Meeting of the Company
will be held pursuant to Section 144 of the
Companies Act, 1965 at [location] on [date] at
[time] for the purpose of considering and if
thought fit to pass the following ordinary
resolutions:-
Call for meetings s 145
Meetings called by shareholders as provided by
the articles where it may provide that the
directors have power to convene extraordinary
general meetings.
Thesection gives members holding of at least

10% of the voting rights in the company, the
power to convene a meeting themselves.
Call for meetings s 145
Differs from s 144 in that the directors are

not involved in this section.
At least 14 days’ notice must be given of

meetings other than a meeting to pass a
special resolution.
“We, HLB Nominees (Tempatan ) Sdn Bhd

(Company No.47697-U) and Mr. Cheong Heng
Choy (NRIC No.571002-10-5287), holders of
not less than one-tenth of the paid-up share
capital of SJA Berhad ("Company") intend to
convene an extraordinary general meeting of
SJA Berhad ("Meeting") pursuant to Section
145 of the Companies Act 1965 on 2 July 2003.
The objects of the Meeting are as

follows:-
To Appoint with Immediate Effect by way

of Ordinary Resolution the Following
Persons as Directors of the Company:-
INDIAN CORRIDOR SDN BHD &
ANOR
V.
GOLDEN PLUS HOLDINGS BHD
[2008] 5 CLJ 774
INDIAN CORRIDOR SDN BHD & ANOR V.
[2008] 5 CLJ 774

The facts:-
The two appellants are shareholders of the
respondent (a public listed company) holding
19.745%. On 27.12.2007, acting under s145
Companies Act 1965, they issued a
requisitionists' notice to the respondent
company. The purpose of the meeting was to
remove the directors of the respondent and to
appoint others in their place.
[2008] 5 CLJ 774
The facts (contd):-
The meeting was to be held on 26 January 2008
in Penang. However, on 16 January 2008, the
respondent company took out an originating
summons seeking declaratory relief which
impugned the validity of the requisition.
[2008] 5 CLJ 774
The facts (contd):-
An application to restrain the meeting was
also made within the summons but was
not pursued as both sides agreed to have
the summons disposed off on its merits.
[2008] 5 CLJ 774
The facts (contd):-
Article 55 of the respondent’s articles of association
reads as follows:-
‘The Directors may, whenever they think fit, convene an
Extraordinary General Meeting and Extraordinary
General Meetings shall also be convened by such
requisitionist, as provided by section 144 of the Act. If at
any time there are not within Malaysia sufficient
Directors capable of acting to form a quorum at a
meeting of Directors, any Director or any two Members
may convene an Extraordinary General Meeting in the
same manner as nearly as possible as that in which
Meetings may be convened by the Directors.
[2008] 5 CLJ 774
Court of Appeal: -
In the present instance, the High Court
held that the appellants had by reason of
art 55 of the respondent’s articles of
association contracted out of s. 145 of the
Act and were therefore not entitled to rely
on that section to requisition a meeting.
[2008] 5 CLJ 774
Court of Appeal:-
 “If the High Court is right, the appellants are forever
barred from requisitioning a meeting under s. 145 of the
Act if they want to remove one or more of the directors.
 We must say at once that if so drastic a result was
intended by the legislature it would be found in the Act
 But we must confess our inability to find such a
limitation upon the right conferred by s 145.
 Therefore, the appellants were not barred from
requisitioning a meeting under s. 145 of the Act”
[2008] 5 CLJ 774
Court of Appeal:-
ss 128(2) and 153 are to be read as follows. If a

public company by resolution in general
meeting wants to remove one or more of its
directors, then special notice of that resolution
must be given to the company. And special
notice means notice of not less than 28 days.
[2008] 5 CLJ 774
Court of Appeal:-
On having been given special notice, the burden

is on the company, that is to say the board of
directors having conduct of the management of
the company’s business and affairs to give
notice of the meeting to the shareholders. If the
company acting through its board of directors
fails to do so, surely it cannot rely on its own
omission to frustrate the requisitioning members
from exercising the very valuable right
conferred upon them by s. 145 of the Act.
[2008] 5 CLJ 774
Court of Appeal:-
The setting out of the grounds for proposing the

removal is not a requirement of s128
The notice requirement in s128 meets the
element of fairness as it makes the director
concerned aware of the fact that there is a
proposal to remove him.
[2008] 5 CLJ 774
Court of Appeal:-
Nowhere in s128 does the Act require

requisitionists to furnish explanatory
statements along with a resolution moving
for the removal of a director
[2008] 5 CLJ 774
Special Notice pursuant to Sections 153 &
128(2) of the Companies Act 1965
‘We, Indian corridor Sdn Bhd. (Co No. 784936-
A) and Pembangunan Qualicare Sdn. Bhd. (Co
No.442213-M), being two (2) members of
Golden Plus Holdings Berhad (“the Company”)
holding not less than one-tenth of the paid-up
and issued shares capital of the Company,
hereby give notice of our intention to propose
the following resolutions…
[2008] 5 CLJ 774
…which require special notice pursuant to
Sections 153 and 128(2) of the Companies Act
1965 as Ordinary Resolutions at an
Extraordinary General Meeting of the Company
to be convened pursuant to Section 145 of the
Companies Act 1965 to be held at Sri Pinang
Ballroom, Level 4, Dorsett Penang Hotel, 3
Jalan Larut, 10050 Penang, Malaysia on
Saturday, 26 January, 2008 at 9.00 am and any
adjournment thereof:-’
KOW KEK LEONG
V.
KL TEAM DEVELOPMENT SDN
BHD & ORS
[1998] 5 CLJ 328
KOW KEK LEONG V. KL TEAM
DEVELOPMENT SDN BHD & ORS
[1998] 5 CLJ 328
The facts:-
The petitioner was unhappy with the way the
other directors had prepared and managed the
company’s accounts and had queried over the
same in the general meetings of the company
[1998] 5 CLJ 328
The facts (contd):-
An extraordinary general meeting of the
company was held and a resolution was
passed removing the petitioner from the
directorship of the company.
[1998] 5 CLJ 328
The facts (contd):-
Having removed the petitioner, the
remaining directors thereafter convened a
director’s meeting and increased the
payment of the director’s fee to
themselves.
[1998] 5 CLJ 328
The facts (contd):-
The petitioner petitioned to wind up the
company and applied for declarations that
the resolution passed did not comply with
s 128 of the Act, and was null and void
[1998] 5 CLJ 328
Held:-
S128(2) overrides the articles of association of
the company in respect of the notice period for
the removal of a director of the company. The
notice given to the petitioner did not comply
with s 153 and it was bad. Where a meeting is
held pursuant to a bad notice, the meeting is
void, and resolutions passed thereat is null and
void
Filling of vacancy - S128(5)
of Public Companies
Filling of vacancy - S128(5)
A vacancy created by the removal of a

director if not filled at the meeting at which
he is removed, may be filled as a casual
vacancy.
of Public Companies
A person appointed director in place of
a person removed shall be treated, as if he
had become a director on the day on which
the person in whose place he is appointed
was last appointed a director.
of Public Companies
Nothing in subsections (1) to (6) shall
be taken as depriving a person removed
there under of compensation or damages
payable to him in respect of the termination
of Public Companies
Southern Foundries (1926) Ltd v Shirlaw
[1940] 2 ALL ER 445 (House of Lords)
The facts:-
Shirlaw was appointed as managing director
of Southern Foundries by contract. Three
years after the appointment, the entire share
capital of Southern Foundries was acquired
by Federated Foundries Ltd.
of Public Companies
The facts:-
New articles were then adopted by
Southern, including one that gave Federated
the power to remove Shirlaw at any time.
of Public Companies
The facts:-
Federated then removed Shirlaw as director
under the new articles. Shirlaw sued for
damages for breach of contract.
of Public Companies
Held:-
Notwithstanding that the removal was in
accordance with the articles, it remained a
breach of contract. The company could not
be restrained from amending its articles, but
to act on the amended articles might
nevertheless amount to a breach of contract.
of Public Companies
The measure of damages is the salary he
would have received during the period of
notice.
He cannot, however insist on remaining
as a director.
Nor would the court specifically enforce
a contract so as to require the company to
retain a director.
Company Law by Walter Woon, Sweet & Maxwell Asia, Second Edition, pg 244
Age Limit for Directors
S129(1) provides that:-
Notwithstanding anything in the
memorandum or articles of the company,
no person over the age of seventy years
shall be appointed or act as a director of a
public company or of a subsidiary of a
public company.
Age Limit for Directors
S129(2) provides that:-
the office of a director of a public
company or of a subsidiary of a public
company shall become vacant at the
conclusion of the annual general meeting
commencing next after he attains the age
of seventy.
of Private Companies
Removal by other directors
It is possible for the constitution of a

private company to have a provision that
allows directors to remove another
director.
Commercial Applications of Company law in Malaysia, 2002 CCH Asia Pte Ltd, pg 227
Removal by Members
The provisions of section 128 do not apply to a
private company.
The removal of directors of private companies
are governed by the company’s articles of
association.
If there is no provision in the Articles pertaining
to removal, the directors can be removed by not
being re-elected when he is due to retire by
rotation at the annual general meeting.
The articles may permit the majority of
members to remove a director.
However, it is possible for the articles to limit
this in some ways.
For example, the articles might specify that a
director cannot be removed by a majority of
members for at least a year after taking office.
In the case of a public company section 128
would mean that even though this restriction is
contained in the company’s articles, the majority
of members could still remove the director at
any time.
However, in the case of a private company, the

restriction would have to be observed.
In addition to the above, the articles of a
private company may provide for any
other manner of removal.
It may be possible for the company to

request in writing that the director vacate
his office.
The director cannot be removed if it will
cause the number of directors to fall below
two as this will go against the requirement
that each company must have at least two
directors. (see S.122 CA 1965)
Sometimes, a director is required to hold a specified
amount of shares as a condition to being elected as
director of the company. The share qualification
must be acquired within a specified time, failing
which the director is automatically removed from
office. This requirement is mandatory and applies to
a company even if it will cause the number of
directors to fall below two: see S.122(7) and
S.124(3) of the Companies Act.
A private company may adopt article 69 of

Table A of the Companies Act 1965 and if so
its shareholders will have the power to
remove a director prematurely from office.
Footnote at p.25 of A Consultative Document – On Clarifying and Reformulating the

Directors' Role and Duties by CLRC for CCM.
Para 1.23 of A Consultative Document – On Clarifying
and Reformulating the Directors' Role and Duties By
CLRC for CCM
However, it was noted by the CLRC that one issue

which requires clarification is whether the removal of a
director which is done in accordance with the company's
Articles of Association would still require a special
notice to be served on the company.
In Soliappan v Lim Yoke Fan & Others [1968] 2
MLJ 21, the court decided that section 128 is an
independent source for the power of removal that
can be relied on in the absence of provisions in the
Articles empowering the removal of a director.
However, subsequent to this case, section 128(2) was
amended where the words 'under this section' were
removed, leading to arguments that whilst directors of
a public company may be removed by a simple
resolution passed at a general meeting irrespective of
anything stated in the Articles, a special notice must
still be given to the company in respect of the
resolution to remove a director even if the removal is
accordance with procedures specified in the Articles
and even in the case of a director of a private
company.
The CLRC is of the view that special notice to the
company is only required when the director of a
public company is to be removed at a shareholders'
general meeting. This is because the special notice is
to be served by shareholders who want to propose for
the removal of the director and as such, the special
notice is to provide a reasonable opportunity to the
directors of public companies to make their
representations to the shareholders at the general
meeting in relation to their removal. If the director is
not removed at a shareholders' general meeting, a
special notice will be irrelevant as no meeting will be
called to consider the removal.
The CLRC recommends that:
(a)where the right of the shareholders at a general

meeting to remove a director (as reflected in section
128 of the Companies Act 1965) is concerned, this
right should be made applicable to public companies
only and should not be extended to private
companies; and
(b) where a director of a public company is to be

removed, special notice is required when the director
is to be removed in accordance with section 128 of
the Companies Act 1965.
Where directors do not serve under a
contract of service:-
They may be removed in accordance
with the articles without the necessity of
paying them damages
The power of removal is usually vested
in the general meeting. (Table A art 69)
Where directors do not serve under a contract
of service:-
In the case of a public company, even if the
articles provide that the board shall have
power to remove a director, such an article is
ineffective. s128(8)
In the case of a private company, a power
granted to the board to remove directors is a
fiduciary power which must be exercised in
the interests of the company.
‘Entrenchment’ of Directors
In the case of a private company:-
Possible to ‘entrench’ directors by
including suitably drafted articles. For eg
i. by providing that a director may not be
removed without a special resolution;
ii.that a particular director will hold office
for life.
Company Law by Walter Woon, Sweet & Maxwell. Second Edition pg 245
In the case of a public company:-
Not possible to ‘entrench’ directors.
S128(1)provides that a public company
may always remove a director by ordinary
resolution, notwithstanding anything
contained in the company’s memorandum
or articles or in any agreement that may
exist with the director.
In the case of a public company:-
S128(2)
special notice must be given of such
resolution.
S128(3)
The director who is to be removed is entitled
to make representations in writing to the
company, which is bound to circulate them.
How does a Company amend its
Articles of Association?
How does a company amend its
Section 31 Companies Act 1985 states that the
amendment or repeal of any provision in the
articles requires a special resolution of members.
A company may also include in its articles of

association a further requirement that must be
satisfied before the special resolution takes
effect.
For eg, in a small company, the members may
agree that amendments to the articles require the
written consent of all of the members.
If such a requirement were included, any

purported amendment to the articles by special
resolution would not take effect unless that
additional requirement was satisfied.
Section 31(2) Companies Act 1965
Where a company has passed a resolution
to amend or repeal its articles, that
resolution will take effect on the day it is
passed or on a later date specified in the
resolution.
Section 31(2) Companies Act 1965 Alteration
of the articles must be made by special
resolution.
The alteration of the company’s articles is also

subject to some limitation on the members’
voting power. The members must vote in the
best interests of the company as a whole.
This stipulation prevents the majority
shareholders from exercising their vote to alter
the articles to the prejudice of a minority.
It is for the members to decide what is best for

the company. The court will not interfere unless
the decision is not one that a reasonable man
could have made.
Guide to Company law in Malaysia & Singapore, 2nd Edition, CCH Asia Limited, pg 50
Conclusion
Directors hold office at the behest of the
shareholders and at the end of the day,
unless there is a valid compensation
agreement for removal before expiry of a
director’s term of office, the director so
removed may have little recourse in law.
Courts are reluctant to interfere generally
with shareholders’ decision in removing
directors if proper procedure has been
followed.
The End
Thank you
Assisted by
Patricia Boo
LLB (Hons) London, CLP

Resignation and Retirement of Directors

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Resignation and Retirement of Directors

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Resignation and

Advocate & Solicitor

The Register of Directors, Managers and

When considering the number to retire by

 The Articles usually provide that the

a) another person is elected

It is not possible for directors of a public

A public company may remove a director by

S128(1) Companies Act 1965

S128(1) Companies Act 1965

S128(2) Companies Act 1965

Resolutions coupled with special notice (S153

If the twenty-eight days grace period was not

Rights of director to be heard - S128(3)

Company articles usually provide that the

Table A art 69 provides that:-

Subject to section 128, the company

Meeting convened under

If the directors do not convene a meeting

NOTICE IS HEREBY GIVEN THAT an

Thesection gives members holding of at least

Differs from s 144 in that the directors are

At least 14 days’ notice must be given of

“We, HLB Nominees (Tempatan ) Sdn Bhd

The objects of the Meeting are as

To Appoint with Immediate Effect by way

ss 128(2) and 153 are to be read as follows. If a

On having been given special notice, the burden

The setting out of the grounds for proposing the

Nowhere in s128 does the Act require

A vacancy created by the removal of a

It is possible for the constitution of a

However, in the case of a private company, the

It may be possible for the company to

A private company may adopt article 69 of

Footnote at p.25 of A Consultative Document – On Clarifying and Reformulating the

However, it was noted by the CLRC that one issue

(a)where the right of the shareholders at a general

(b) where a director of a public company is to be

A company may also include in its articles of

If such a requirement were included, any

The alteration of the company’s articles is also

It is for the members to decide what is best for

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