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There are certain scenarios in which the director of a Malaysian company ought to be fired. Such firings are usually carried out through ordinary resolutions made by shareholders which are passed at any of the company’s AGMs.

Firing a Director of a Company in Malaysia

 

How a Director of a Malaysian Company Could Be Fired

Almost every company which is based in Malaysia is required to hire one or more directors. Such is the case because only the director of a company is granted the permission to perform certain tasks which are necessary to be completed in order for the company to function in a proper manner. In any private limited company or a company of any other business entity which is located in Malaysia, the director of a company plays a critical role in the company’s operations and leadership. The core functions of the director of the company are those pertaining to the management and administration of the company. In general, the director serves as the leader who is to be in charge of a company. As one of the primary leaders of the company, the director is therefore responsible for guiding, giving advice to, and offering any required assistance to the employees.

On a related note, perhaps you are yourself interested in starting a company based in Malaysia just as many have already chosen to do. If such is the case, we at Paul Hype Page & Co are always willing and able to serve your needs. We have provided many services and packages related to the registration and incorporation of any company in Malaysia. Once we have finished working with you, your Malaysian company will be completely established and able to commence its business operations.

In certain situations, the removal of the director of a Malaysian company must take place. When such a course of events occurs, the director of the company would be removed by those of higher powers and responsibilities who are also among the shareholders of the company. The removal of a Malaysian director according to Section 128 of the Companies Act, the primary law which governs all matters related to company directors in Malaysia, mentions that the shareholders of a company may remove the director before the director’s term in office expires by passing an ordinary resolution during any of the company’s annual general meetings (AGMs). However, this is only applicable to public companies. When the matter at hand is related to a private company, the powers of shareholders to remove a director from office will solely depend on the specifications mentioned in the company’s Articles of Association.

The Articles of Association of any company based in Malaysia may be modified to mention just how any of the company’s directors could potentially be fired. A company which has adopted a set of customized Articles of Association is permitted to use such Articles as a means which may provide various ways by which a director of a Malaysian company might be fired from such an important position. For instance, the Articles of Association may state that what has been bestowed on the members of the board of directors is the power to remove the director of the company from office through the results of a vote by the members of the company. There are other cases in which the Articles of Association confer powers to the majority of shareholders which allow them to ask a director to resign through the giving of a notice on such a matter.

However, if there is no mention within the Articles of Association regarding the clear definition of the removal of a Malaysian company’s director from office, the shareholders of the company are permitted to remove a director from office before the expiration of the director’s term during one of the company’s annual general meetings. The Companies Act makes a mention of this fact.

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What Must Be Done Before Firing the Director of a Malaysian Company

Before removal of a Malaysian company’s director from office, the director of a public company should be presented with a prior special notice and, according to the requirements which are mentioned in Section 207 of the Companies Act, must be given an opportunity to plead a personal case as well as to provide reasons against the proposed removal.

There are certain differences related to the removal of the director of a private company which is based in Malaysia. In the case of a private company, if the removal is through other means other than those which have been stipulated in Section 206 of the Companies Act, neither providing the director in question with a special notice nor convening a general meeting are necessary.

During instances in which the removal of a director from office is through an annual general meeting, the shareholders are not permitted to make a written resolution. Instead, a general meeting ought to be convened for the purpose of the removal of the director. The director must then be compensated for the loss of the office.

As an aside, after the director has been fired, another person will have to replace the fired director in the position. It may occasionally be difficult for someone to hire a qualified and suitable person to serve as the director of the company. Fortunately, if you are faced with such a problem in your own company, we at Paul Hype Page & Co have services which we provide in order to alleviate this problem. We will aid you in the selection of a nominee director who has fulfilled all of the directorial qualifications of a Malaysian company. After you have paid a reasonable and affordable fee, this person will fill this important role until a full-time director is appointed.

 

The Firing of a Malaysian Company’s Director

There is no specific time during which a director of a Malaysian company must be fired. Once the company has found out through its management that the director has either committed offenses which are in violation against of company’s policies or engaged in any illegal or flagrantly unethical conduct, the director must be terminated immediately and another director must be appointed to the position to allow for continuity in the leadership of the company.

A director of a company based in Malaysia can be forced to relinquish the position of director if the director has failed to have attained the minimum age requirement or if the director becomes or is declared to be bankrupt. There are also certain instances in which a court order forbids a person from becoming the director of a company in Malaysia. If the director has been found to be such a person, the director ought to be fired. Other situations which ought to bring about the firing of a company’s director include a situation in which a director does not own a certain percentage of the company’s shares as dictated by the Articles of Association of the company as well as during instances of the director’s frequent absence from important company meetings. Of course, if a director of a company chooses to resign, the director will immediately cease to serve as one of the directors of the company.

 

Conclusion

In summary, a company’s director is a crucial person who does much to ensure the success of any Malaysian company. However, there are certain instances during which it can clearly be seen that the director ought to be removed from the position. A director is an important leader to the company and should be replaced as soon as the director is fired from the company. However, the director can go to court to contest firing if the director believes that the firing was conducted through either illegal or inappropriate means?

Firing a Director of a Malaysian Company FAQs

What is the minimum number of directors which may be possessed by a Malaysian Company?2020-04-29T11:56:23+08:00

According to Malaysia’s Companies Act, every company which has been incorporated in the country is required to have a minimum of one director. This director is also to have a primary place of residence within Malaysian borders.

Are Foreigners allowed to serve as Company Directors in Malasyisa?2020-04-29T11:55:20+08:00

It is legally permissible for certain foreigners to serve as company directors of Malaysian companies; however, only specific foreigners are permitted to do so. Such foreigners include permanent residents (PRs), those who are in Malaysia through a Resident Talent Pass, and those who are in Malaysia through the Malaysia My Second Home (MM2H) program.

What is the Maximum Number of Directors which may be possessed by a Malaysian Company?2020-04-29T11:53:42+08:00

The Companies Act does not state a maximum number of directors for any company in Malaysia. Therefore, it can be concluded that there is no upper limit to the number of directors which may be employed by any company based in the country.

2021-02-02T17:45:34+08:00January 10, 2020|0 Comments
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