{"id":8113,"date":"2023-08-24T12:24:38","date_gmt":"2023-08-24T04:24:38","guid":{"rendered":"https:\/\/malayacorporate.com\/?post_type=article&p=8113"},"modified":"2023-09-07T11:17:41","modified_gmt":"2023-09-07T03:17:41","slug":"removal-of-director","status":"publish","type":"article","link":"https:\/\/malayacorporate.com\/my\/article\/removal-of-director\/","title":{"rendered":"REMOVAL OF DIRECTOR"},"content":{"rendered":"
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REMOVAL OF DIRECTOR<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Oleh AZIZAM AZIZAN<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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A Pathway for Director Removal<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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The Companies Act 2016 of Malaysia introduces provisions that govern the removal of <\/span>
directors from both private and public companies. This legal framework, encompassed in <\/span>
Section 206 of the Act, empowers companies to remove directors before the <\/span>expiration<\/span> of their <\/span>
term, presenting an avenue for corporate flexibility and governance. This article elucidates the <\/span>
mechanisms and implications of director removal, shedding light on the procedural nuances <\/span>
and the safeguards in place.\u00a0<\/span><\/p>

The Companies Act <\/span> 2016, in Section 206, establishes the procedures for the removal of <\/span>
directors from their office, irrespective of whether the company is private or public. This <\/span>
departure from the previous Companies Act 1965 marks a significant shift, allowing both <\/span>
private <\/span>and public entities the statutory right to remove directors prior to the expiration of their <\/span>
tenure.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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When a Director Can Be Remove<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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According to the <\/span>case<\/span> law<\/span> of Low Thiam Hoe & Anor v Sri Serdang Sdn Bhd & Ors<\/span>, the High<\/span><\/div>
Court referred to the Hong Kong case of Yeung Bing Kwong Kennet v Mount Oscar Ltd. The <\/span>
court emphasized that the legal right to remove a director is unrestricted, meaning that there <\/span>
is no obligation to provide reasons for their removal.<\/span><\/span><\/div>
<\/span>
The aut<\/span>hority granted to shareholders is absolute and can serve various purposes. <\/span>Such as <\/span>
a s<\/span>hareholder<\/span> can remove directors who are performing poorly or even those who are <\/span>
competent but act against the shareholders’ desires. This seemingly strict and mandatory <\/span>
r<\/span>ule empowers shareholders, through a regular resolution, to remove any or all directors <\/span>
without needing to explain the decision.<\/span><\/span><\/div>
\u00a0<\/div>

It’s important to note that the power to remove a <\/span>
director doesn’t require justification. This concept is closely linked to the<\/span> basic legal principle <\/span>
that courts don’t interfere with a company’s internal management as long as it’s within their <\/span>
legal authority. In fact, the court lacks the jurisdiction t<\/span>o meddle in such matters<\/span>.<\/span> Walau bagaimanapun, <\/span>
the removal of directors must be exercise in<\/span> the interests of the company, as it is a fiduciary <\/span>
power.<\/span><\/span><\/p><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Distinct Processes for Private and Public Companies<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Private Company:<\/span> <\/span><\/strong>
A director may be removed before the expiration of the director\u2019s period of office subject to the <\/span>
constitution, by ordinary res<\/span>olution.<\/span><\/span><\/p>

<\/span>
Public Company<\/span>:<\/span> <\/strong><\/span>
In contrast<\/span>, public companies have to follow both Section 206 and Section 207. Section 207 <\/span>
makes sure that <\/span> the director <\/span> is<\/span> given the right to make oral representation or written <\/span>
representation within a reasonable time from when he was removed as <\/span> a director via the <\/span>
resolution. <\/span>Also, before the company votes to remove a director, <\/span>S.206(3) requires that special <\/span>
notice shall be g<\/span>iven to the director concerned and he is<\/span> entitled to be heard on the resolution <\/span>
at the meeting and to make representation orally or<\/span> in writing to the company and request that <\/span>
the members of the company be notified<\/span> accordingly.<\/span> Thus, a<\/span> resolution to remove <\/span>the director <\/span>
shall not take effect until the director\u2019s successor has<\/span> been appointed.<\/span><\/span><\/p>

<\/span>
Compensation and Disclosure<\/span><\/strong><\/span> <\/span>
Previously, the Companies Act 1965 granted removed directors the right to compensation <\/span>
under Section 128(7). The Companies Act 2016, however, <\/span> introduces a revised approach. <\/span>
Section 227 mandates that any compensation for loss of office or retirement\/transfers must <\/span>
be <\/span>disclosed <\/span>to <\/span>company <\/span>members <\/span>Dan <\/span>receive <\/span>their <\/span>approval. <\/span>This <\/span>added <\/span>layer <\/span>of <\/span>
transparency ensures that unauthorized payments are no<\/span>t made, safeguarding the company’s <\/span>
interests.<\/span> <\/span>
<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"featured_media":0,"template":"","meta":{"_acf_changed":false,"site-sidebar-layout":"no-sidebar","site-content-layout":"page-builder","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"disabled","ast-breadcrumbs-content":"","ast-featured-img":"disabled","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}}},"class_list":["post-8113","article","type-article","status-publish","hentry"],"acf":[],"yoast_head":"\nREMOVAL OF DIRECTOR -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/malayacorporate.com\/my\/article\/removal-of-director\/\" \/>\n<meta property=\"og:locale\" content=\"ms_MY\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"REMOVAL OF DIRECTOR -\" \/>\n<meta property=\"og:description\" content=\"REMOVAL OF DIRECTOR By AZIZAM AZIZAN A Pathway for Director Removal The Companies Act 2016 of Malaysia introduces provisions that govern the removal of directors from both private and public companies. 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