Resignation and
Removal of Directors
LEE SWEE SENG
LLB, LLM, MBA
Advocate & Solicitor
Notary Public,Trademark, Patent Agent
Certified Mediator
[email protected]
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)

be an individual and not a company (s 122(2)
Companies Act 1965)

At least 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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 85
Casual Vacancy

a)
b)
c)
d)
e)
f)
g)
May arise as a result of : Death;
Insanity;
Resignation;
Disqualification due to absence from board
meetings;
Bankruptcy
Failure to obtain qualification shares
Becomes prohibited from being a director by
reason of an order made under the Act.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 85
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
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;
Resignation of Directors

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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 90
Resignation of Directors
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.
Resignation of Directors
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.
Resignation of Directors
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.
Resignation of Directors
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;
Resignation of Directors
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.
Resignation of Directors
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.
Signed but Undated Resignation
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.
Signed but Undated Resignation
Letter

Khoo Choon Yam v Gan Miew Chee
[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.
Signed but Undated Resignation
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
Signed but Undated Resignation
Letter

Khoo Choon Yam v Gan Miew Chee
[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.
Resignation of Directors

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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 90
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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 90
Retirement by Rotation
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.

Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 90
Retirement by Rotation

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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 91
Retirement by Rotation


The Articles usually provide that the
retiring director shall be eligible for reelection.
However, a company may elect some
other person in place of the retiring
director at the meeting.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 91
Retirement by Rotation

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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 91
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.
See Teow Chuan & Anor v YAM Tunku
Nadzaruddin Ibni Tuanku Jaafar & Ors [2007] 2
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.
See Teow Chuan & Anor v YAM Tunku
Nadzaruddin Ibni Tuanku Jaafar & Ors [2007] 2
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’
Removal of Directors
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
Removal of Directors
of Public Companies
Removal of Directors
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)
Removal of Directors
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
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 87
Removal of Directors
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.
Removal of Directors
of Public Companies
Removal by members

Resolutions coupled with special notice
(S153 Companies Act)
S128(1) Companies Act 1965
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.
Removal of Directors
of Public Companies

Resolutions coupled with special notice
(S153 Companies Act)
S128(1) Companies Act 1965
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.
Removal of Directors
of Public Companies

The Courts 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
Removal of Directors
of Public Companies
Removal by members

Resolutions coupled with special
notice (S153 Companies Act)
S128(2) Companies Act 1965
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.
Removal of Directors
of Public Companies
Removal by members
Resolutions coupled with special notice
(S153 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.
Removal of Directors
of Public Companies
Removal by members
Resolutions coupled with special notice
(S153 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.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 124
Removal of Directors
of Public Companies
Removal by members
Resolutions coupled with special notice
(S153 Companies Act)
If the twenty-eight days grace period was not
complied with, the resolution shall not be
effective.
Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 124
Removal of Directors
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, 2nd Ed, CCH Asia Ltd, pg 67
Removal of Directors
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.
Guide to Company Law in Malaysia & Singapore, 2nd Ed, CCH Asia Ltd, pg 67
Removal of Directors
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.
Removal of Directors
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
Removal of Directors
of Public Companies
Where a company adopts
Table A as
its articles or association
Removal of Directors
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
Removal of Directors
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.
Removal of Directors
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, 2nd Ed, CCH Asia Limited, pg 68
Removal of Directors
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
Guide to Company Law in Malaysia & Singapore, 2nd Ed, CCH Asia Ltd, pg 67
Requisition by shareholders (s
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.
Requisition by shareholders (s
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.
Requisition by shareholders (s
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).
Requisition by shareholders (s
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.

The section 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.
Eg of a notice under s 145

“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.
Eg of a notice under s 145

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. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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”
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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.

INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[2008] 5 CLJ 774
 Special Notice pursuant to Sections 153 &
128(2) of the Companies Act 1965
‘We, Indian corridor Sdn Bhd. (Co No. 784936A) 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…
INDIAN CORRIDOR SDN BHD & ANOR
V. GOLDEN PLUS HOLDINGS BHD
[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
KOW KEK LEONG V. KL TEAM
DEVELOPMENT SDN BHD & ORS
[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.
KOW KEK LEONG V. KL TEAM
DEVELOPMENT SDN BHD & ORS
[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.
KOW KEK LEONG V. KL TEAM
DEVELOPMENT SDN BHD & ORS
[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
KOW KEK LEONG V. KL TEAM
DEVELOPMENT SDN BHD & ORS
[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)
Removal of Directors
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.
Removal of Directors
of Public Companies
S128(6) Companies Act 1965
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.
Removal of Directors
of Public Companies
S128(7) Companies Act 1965
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
Removal of Directors
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.
Removal of Directors
of Public Companies
Southern Foundries (1926) Ltd v Shirlaw
[1940] 2 ALL ER 445 (House of Lords)
The facts:New articles were then adopted by
Southern, including one that gave Federated
the power to remove Shirlaw at any time.
Removal of Directors
of Public Companies
Southern Foundries (1926) Ltd v Shirlaw
[1940] 2 ALL ER 445 (House of Lords)
The facts:Federated then removed Shirlaw as director
under the new articles. Shirlaw sued for
damages for breach of contract.
Removal of Directors
of Public Companies
Southern Foundries (1926) Ltd v Shirlaw
[1940] 2 ALL ER 445 (House of Lords)
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.
Removal of Directors
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.
Removal of Directors
of Private Companies
Removal of Directors
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 of Directors
of Private Companies
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.

Malaysian Company Secretarial Practice, Prentice Hall 2006 by Zubaidah Zainal Abidin at page 88
Removal of Directors
of Private Companies

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 228
Removal of Directors
of Private Companies

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 228
Removal of Directors
of Private Companies

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 228
Removal of Directors
of Private Companies
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)
Removal of Directors
of Private Companies
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.
Removal of Directors
of Private Companies
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.
Removal of Directors
of Private Companies
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.
Removal of Directors
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)
Company Law by Walter Woon, Sweet & Maxwell Asia, Second Edition, pg 244
Removal of Directors


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.
Company Law by Walter Woon, Sweet & Maxwell Asia, Second Edition, pg 244
Removal of Directors
‘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
Removal of Directors
‘Entrenchment’ of Directors
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.
Removal of Directors
‘Entrenchment’ of Directors
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
Articles of Association?

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 124
How does a company amend its
Articles of Association?

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 124
How does a company amend its
Articles of Association?

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 124
How does a company amend its
Articles of Association?

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.
Commercial Applications of Company Law in Malaysia, 2002 CCH Asia Pte Ltd, pg 124
How does a company amend its
Articles of Association?

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