Directors in MY


The Companies Act of Malaysia specifies certain information with regard to the role of a director in the country. This is done in Section 196 of Subdivision 2. A company in Malaysia is to have at least one director if it is a private company or at least two directors if it is a public company. For this reason, the director of a company in Malaysia is barred from resigning or vacating the position if doing so would reduce the number of directors of the company to a number below the required minimum. Should the director attempt to do so, this attempted resignation or absence will not take effect unless a person is appointed to replace the director who is leaving. The director also has to be a natural person, and the age of the director must be at least 18 years or older. Every one of a Malaysian company’s directors is to be an ordinarily resident of Malaysia. This means that each director is to have a primary residential location in Malaysia. Alternate or substitute directors are not allowed to be selected.

Every company is allowed to specify any additional requirements to be fulfilled for one to become a director of that company. This is because the Companies Act does not mention any specific academic or work qualifications which have to be fulfilled by a person who plans to become the director of a company in Malaysia. Nevertheless, it is often advisable for a prospective company director to hold individual shares in the company. Although doing so will not necessarily grant the person eligibility for director status, it will nonetheless aid the person’s chances of becoming a director.


People Who Are Connected with Directors in Malaysia

The Companies Act also specifies which people are considered to have close connections with directors in Malaysia. According to the Companies Act, those who are deemed to be connected with a director can be divided into four groups of people or entities. The first group contains members of the director’s family. These people include the director’s spouse, parent, child (including any stepchild or adopted child), sibling, and spouse of the director’s child or sibling. The second group contains bodies corporate which are directly linked to the director in question. The Companies Act also defines which bodies corporate are directly linked to a director. Such entities are those which are obliged or which have a majority of directors of the body corporate being obliged to act in such a way as to suit the director. Should the director have a controlling interest in the body corporate, the body corporate will also be deemed to be connected with the director. Such is also the case if the director or anyone else connected with the director have the authority to either exercise or control the exercise of at least 20% of the votes related to voting shares in the body corporate.

Trustees of a trust from which either the director or a member of the director’s family benefits are the people who comprise the third category. Such people do not include trustees of an employee share scheme. The final category includes people who are partners of the director in question or partners of people connected with the director. 


Duties and Responsibilities of a Director

The director of a company has to carry out many important tasks. Thus, the director has responsibilities to the company and its shareholders.

Company directors are appointed to manage a company’s business and affairs. They are to make decisions and determine policies to be put in place for the company, then see to it that they are implemented. Directors are also to prepare and file any required statutory documents with the agencies which require such documents from companies. They also call meetings including annual meetings of shareholders, annual general meetings (AGMs), and extraordinary general meetings (EGMs). Directors also maintain and keep records. One other duty of a director is brokering contracts with lenders, suppliers, and others who interact with the company. Any further duties and responsibilities might be stated in the company’s constitution.

A responsible director is one who acts in a manner that serves the best interests of the company at all times. The director must also ensure that no actions taken, whether by the director or company, violate the Companies Act, the company’s constitution, or any other legal or official regulations. In general, directors are to use their power while serving in the role for the proper purposes. 

Filing Obligations

A director is responsible for the fulfillment of all of a company’s filing obligations. Such information may include accounting and company records, the constitution of the company, minutes of one or more meetings, and the share register. The documents to be filed depend on which documents are required by the relevant authorities.

If you need any assistance with completing any of your company’s filing obligations, we at Paul Hype Page & Co will be able to assist you. We will ensure that you and your company remain compliant with all of the statutory requirements and regulations of Malaysia. We will even contact any relevant authorities on your behalf, should you need such. 


Financial Responsibilities

Every director is to act in such a manner that will not create a significant risk of severe loss to the creditors of the company. They are also to avoid giving approval to actions which would bring about such a risk. Actions taken which increase the chances of significant financial losses to be suffered by the company are known as reckless trading. The exact definition of reckless trading varies among all companies.

A director must also attempt to reduce the impact of any financial difficulties against the shareholders, employees, and creditors of the company as well as any other people who have any financial interest in the company. Directors must also ensure that the company does not carry out any trade activities if it has gone bankrupt. Directors of companies which continue to carry out trade activities while bankrupt could be considered to have violated the law. Another financial responsibility of a director is that of ensuring that the company is able to pay all the debts of companies, thus causing the company to have more assets than liabilities 

In many cases, a director ought to seek professional assistance from an accountant, solicitor, or any provider of financial advice on how to improve the company’s financial status. Fortunately for you, we at Paul Hype Page & Co have employed many people who are well-versed in providing financial advice. Our team of financial experts will work with you to develop a viable and feasible financial plan that will put your company in the best financial condition in which it could possibly be.


People Who Are Ineligible to be a Director in Malaysia

According to the Companies Act of Malaysia, a person is not allowed to serve as a director of a company or either directly or indirectly be involved with the management of a company if certain facts apply to the person in question. Such people include those who are undischarged bankrupts; have been convicted of an offense relating to the creation or management of a business, fraud, dishonesty, or bribery; have been convicted of an offense under any other relevant sections of the Companies Act; or have been disqualified by a court. These facts apply to prospective directors regardless of the director’s current location, whether within or outside Malaysia.

Anyone who violates the requirements which have been stipulated this section will have committed an offense. Upon conviction, such people might be liable to a jail term of up to five years, a fine of up to RM1 million, or both.