A limited and Private Limited company in Malaysia must have at least one directors (two directors in the case of a public company) at all times. They must be a natural persons (living persons, not organizations) who have their principal or only place of residence within Malaysia.
1. What does it mean by director?
S2 of Companies Act 2016
“Director” includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the majority of directors of a corporation are accustomed to act and an alternate or substitute director.
S196 of Companies Act 2016
A private company must have at least 1 director (2 directors in the case of public company) who must be residence of Malaysia.
S210 of Companies Act 2016
“Director” includes chief executive officer, chief financial officer, chief operating officer or any other person primarily responsible for the management of the company.
2. Types of Directors
Take part in the collective decision of the BOD.
He has no other function except by express delegation.Managing or Executive Director
Who is in addition to their function of attending board meeting (as full members).
But also work, usually full-time, in the management of the company as employee
3. Appointment of directors
S202 of Companies Act 2016
First director – A person named as a director in an application for incorporation of a company shall hold office as a director from the date of incorporation until that person ceases to hold office as a director in accordance with this Act.
Subsequent director – All subsequent directors of a company may be appointed by ordinary resolution.
A person shall not be appointed as a director of a company unless he has consented in writing to be a director and make a declaration that he is not disqualified from being appointed or holding office as a director of a company under Companies Act 2016
5. Persons disqualified from being a director
S198 of Companies Act 2016
A persons shall not hold office as a director of a company or whether directly or indirectly be concerned with or takes part in the management of a company, if the person-
- is an undischarged bankrupt (in Malaysia or oversea)
- has been convicted of an offence relating to the promotion, formation or management of a corporation (in Malaysia or oversea)
- has been convicted of an offence involving bribery, fraud and dishonesty (in Malaysia or oversea)
- has been convicted of an offence under Section 213, 217, 218, 228 and 539 of Companies Act 2016 (in Malaysia or oversea)
- has been disqualified by the Court under Section 199 of Companies Act 2016 (in Malaysia)
The period of disqualification for cases of all the above is five years, i.e. within the period of five years after his conviction or if he is being sentenced to imprisonment, after his release from prison.
6. Directors’ Duties and Responsibilities
S213 of Companies Act 2016
A director of a company shall at all times exercise his powers in accordance with the Companies Act 2016, for a proper purpose and in good faith in the best interest of the company.
A director of a company shall exercise reasonable care, skill and diligence with
- the knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities; and
- any additional knowledge, skill and experience which the director in fact has.
7. Can a Company loan to its Director?
S224 of Companies Act 2016
A Company shall not make a loan to a director of the company or any related company. A Company also shall not enter into any guarantee or provide any security in connection with a loan made to such a director by any other person.
This section shall not apply if:
- the company is an exempt private company
- the loan is a fund to meet the expenditure incurred or to be incurred by the director for the purpose of the company
- the loan is provided to a full time director in purchasing or acquiring a home
- a passed resolution to approve a scheme for the making of loan to employees of the company and the loan is in accordance with that scheme.