{"id":8431,"date":"2023-09-06T16:20:30","date_gmt":"2023-09-06T08:20:30","guid":{"rendered":"https:\/\/malayacorporate.com\/?post_type=article&p=8431"},"modified":"2023-09-07T11:11:27","modified_gmt":"2023-09-07T03:11:27","slug":"disqualification-of-director","status":"publish","type":"article","link":"https:\/\/malayacorporate.com\/my\/article\/disqualification-of-director\/","title":{"rendered":"DISQUALIFICATION OF DIRECTOR"},"content":{"rendered":"
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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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DISQUALIFICATION 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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The Director’s Dilemma: Exploring Disqualification Under Company Law<\/span> <\/span><\/strong>
In the realm of corporate governance, the role of directors is pivotal in steering the direction <\/span>and success of a company. However, not all individuals are <\/span>deemed suitable for this <\/span>responsibility. The Companies Act 2016, a fundamental legal framework in Malaysia, outlines <\/span>provisions for disqualifying directors who fail to meet certain criteria or engage in misconduct. <\/span>This article delves into the disqualifica<\/span>tion of directors as per the Companies Act 2016, <\/span>shedding light on the reasons, process, and implications of such disqualifications<\/span>.<\/span><\/span><\/p>\n

What does it mean by director?<\/span> <\/strong><\/span>
S2 of Companies Act 2016 <\/span><\/span>\u201cDirector\u201d includes any person occupying the position of director o<\/span>f a corporation by whatever <\/span>name called and includes a person in accordance with whose directions or instructions the <\/span>majority of directors of a corporation are accustomed to act and an alternate or substitute <\/span>director.<\/span><\/span><\/p>\n

Persons disqualified from being a di<\/span>rector<\/span> <\/span><\/strong>
S198 of Companies Act 2016 <\/span><\/span>A person shall not hold office as a director of a company or whether directly or indirectly be <\/span>concerned with or takes part in the management of a company, if the person<\/span>–<\/span> <\/span>
I. <\/span>Undischarged<\/span> bankrupt<\/span><\/span><\/p>\n

II. Convicted whether <\/span>within or outside Malaysia for any offences:<\/span> <\/span>
\uf0b7<\/span> in connection with promotion or management of a corporation <\/span> <\/span>
\uf0b7<\/span> involving bribery, fraud or dishonesty<\/span> <\/span>
\uf0b7<\/span> involving breach of duties of directors<\/span><\/span><\/p>\n

III. Disqualified by Court due to;<\/span> <\/span>
\uf0b7<\/span> his conduct which has resulted in 2 c<\/span>ompanies went into liquidation in the last 5 years<\/span> <\/span>
\uf0b7<\/span> His contravention of his duties under the Act<\/span> <\/span>
\uf0b7<\/span> Habitual contravention of the Act<\/span><\/span><\/p>\n

IV. Power of Registrar to remove name of directors who have been disqualified<\/span> <\/span><\/p>\n

Effect of Disqualifications<\/span> <\/span><\/strong>
\uf0b7<\/span> Sec 198(6) <\/span> <\/span>
The <\/span>period of disqualification for<\/span> above<\/span> cases (S198 (1) (b, c, d & e) is five (5) years. So, <\/span>he is not required to apply for the court leave after the expiry of 5 years (from date he is <\/span>convicted or if he is being sentenced to imprisonment, after his release <\/span>from prison).<\/span> <\/span>
\uf0b7<\/span> Any person who contravenes the above sections (S198) commits an offence and shall, <\/span>on conviction, be liable to imprisonment for a term not exceeding 5 years or to a fine <\/span>not exceeding RM1.0 million or both.<\/span> <\/span>
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\uf0b7<\/span> Sec 200 <\/span>\u2013<\/span> registrar may remove the<\/span> name of the director who has been disqualified <\/span>
under Sec 198 & 199 from the register kept by the registrar.<\/span> <\/span>
<\/span>
Can a Disqualified Director act as Director again? <\/span> <\/strong><\/span>
Yes, a disqualified director has the potential to act as a director again, <\/span>a<\/span> person may <\/span>apply <\/span>for a leave of the<\/span> Court<\/span> but the process and conditions vary based on the specific legal <\/span>framework of the jurisdiction. <\/span> <\/span>
<\/span>
The Companies Act 2016 empowers regulatory bodies and concerned individuals to uphold <\/span>the integrity of corporate leadership by scrutin<\/span>izing and addressing instances of potential <\/span>misconduct, incompetence, or breach of fiduciary duties. Through a structured process that <\/span>encompasses investigation, due process, and potential legal consequences, the Act strikes a <\/span>delicate balance between acco<\/span>untability and fairness.<\/span> <\/span>
<\/span>
By disqualifying directors who fail to meet the stipulated criteria or who engage in actions  <\/span>detrimental to the company, the legislation not only protects the interests of shareholders and <\/span>stakeholders but also sends a resounding <\/span>message that ethical conduct and diligent oversight <\/span>are non<\/span>–<\/span>negotiable aspects of directorship. This, in turn, cultivates an environment of trust, <\/span>transparency, and corporate responsibility, essential for sustained business growth and public <\/span>confidence.<\/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

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INGIN MENGETAHUI LEBIH LANJUT?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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