Directorship in Malaysia: Roles, Duties & Requirements

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Director – General Framework

A company needs to have at least 1 director who is:-
1. At least 18 years old
2. Ordinarily resides in Malaysia
Reference: (Section 196)

Section 196 – Minimum Number and Qualification of Directors

Section 196 of the Companies Act 2016 sets out the minimum requirements relating to the appointment and qualification of directors in a company. The provision is intended to ensure that every company has a responsible individual who can be held accountable for the management and administration of the company.

Firstly, every company must have at least one director at all times. This requirement applies to both private and public companies and reflects the fundamental principle that a company, being an artificial legal person, can only act through natural persons.

Secondly, the director must be a natural person who is at least 18 years of age. This ensures that the director has legal capacity and maturity to undertake the duties, responsibilities, and fiduciary obligations imposed under the Act.

Thirdly, the director must ordinarily reside in Malaysia. The purpose of this requirement is to facilitate regulatory oversight, enforcement, and accountability by the Companies Commission of Malaysia (SSM). A director who ordinarily resides in Malaysia is more easily subject to legal proceedings and compliance requirements under Malaysian law.

Failure to comply with Section 196 may result in the company and its officers being in breach of the Act, which may attract statutory penalties or enforcement action by SSM.

In summary, Section 196 establishes the basic eligibility and residency requirements for directors and ensures that every company maintains at least one qualified and locally resident director to safeguard proper corporate governance.

Appointment of Director

First Directors
Appointed upon incorporation (Section 201)
Subsequent Appointments
Done by members in general meeting or by the board of directors (Section 202)
Consent to Act
A person must not act as a director unless he has provided a written consent to act as a director (Section 201)

Section 201 – Appointment of Directors

Section 201 of the Companies Act 2016 governs the appointment of directors, particularly in relation to the first directors of a company and the requirement of consent to act.

Firstly, the first directors of a company are appointed upon incorporation. These directors are usually named in the incorporation documents lodged with the Companies Commission of Malaysia (SSM). Upon registration of the company, the named individuals automatically assume office as directors. This ensures that the company has a properly constituted board from the moment it comes into existence.

Secondly, Section 201 expressly provides that a person shall not act as a director unless he has given his written consent to be appointed as a director. This requirement is crucial as it prevents individuals from being appointed or held responsible as directors without their knowledge or agreement. It also reinforces accountability, as the person is deemed to have accepted the duties and statutory obligations imposed on directors under the Act.

The written consent to act must be properly documented and is typically lodged with SSM together with the relevant appointment forms. Failure to obtain such consent may render the appointment invalid and expose the company and its officers to regulatory consequences.

In essence, Section 201 ensures that:

the company has directors in place immediately upon incorporation; and
only individuals who have knowingly and willingly accepted the role may act as directors.

This provision plays an important role in promoting transparency, certainty, and good corporate governance within Malaysian companies.

Section 202 – Appointment of Directors after Incorporation

Section 202 of the Companies Act 2016 governs the appointment of directors after the incorporation of a company, commonly referred to as subsequent appointments.

Under this provision, directors appointed after incorporation may be appointed:

by the members in a general meeting, or
by the board of directors, if the company’s constitution expressly confers such power on the board.

This section ensures flexibility in corporate administration while maintaining adherence to the company’s constitutional framework.

Any person appointed as a director under Section 202 must satisfy the statutory requirements prescribed under the Act, including the eligibility criteria under Section 196 and the requirement to give written consent to act under Section 201.

Once a director is appointed, the company is required to notify the Registrar of Companies (SSM) within 14 days of the appointment in accordance with Section 58 of the Companies Act 2016. Failure to lodge the notice within the prescribed period constitutes an offence and may expose the company and its officers to statutory penalties.

In essence, Section 202 regulates how directors are appointed after incorporation, ensuring that such appointments are conducted in a lawful, transparent, and constitutionally compliant manner.

Lodgement with SSM

The company must lodge notice of appointment of a director with SSM within the prescribed period (14 days) (Section 58)
Failure to lodge will constitute an offence

Section 58 – Notification to the Registrar

Section 58 of the Companies Act 2016 imposes a statutory obligation on a company to notify the Registrar of Companies (SSM) of certain corporate information, including the appointment of directors.

Under this section, when a director is appointed, the company must lodge a notice of appointment with SSM within the prescribed period of 14 days from the date of appointment. This requirement ensures that the public register maintained by SSM remains accurate, up to date, and reliable for regulatory, commercial, and public reference purposes.

The duty to lodge the notice lies with the company, and the responsibility is typically carried out by the company secretary or authorised officer. Timely lodgement is essential as directors are key officers of the company and their details are material information under the Act.

Failure to comply with Section 58 constitutes an offence under the Companies Act 2016. Where a company fails to lodge the required notice within the stipulated timeframe, the company and every officer in default may be subject to statutory penalties or enforcement action by SSM.

In summary, Section 58 reinforces transparency and corporate accountability by requiring prompt notification of changes in directorship, thereby enabling effective regulatory oversight and public confidence in corporate records.

Resignation of directors – When is a director’s resignation legally effective?

Director has the right to resign and may resign by giving notice to the Company (Section 208)
Wong Kok Meng v Preserver Bina Sdn Bhd [2019] mentions that the resignation of directors does not require acceptance or consent by the Company.
The resignation will take effect on the date specified in the notice or if there is no date, the date where the notice is received.
However there is a minimum director requirement and the resignation will be invalid if the sole director resigns with no replacement or no appointment of director in replacement – (Section 209)

Section 208 – Resignation of Director

Section 208 of the Companies Act 2016 provides for the right of a director to resign from office. Under this provision, a director may resign at any time by giving written notice to the company. The law recognises resignation as a unilateral act, meaning that the director does not require approval or acceptance from the company for the resignation to be valid.

The resignation of a director takes effect:

on the date specified in the notice of resignation, or
if no date is specified, on the date the notice is received by the company.

This position was affirmed in the case of Wong Kok Meng v Preserver Bina Sdn Bhd [2019], where the court held that a director’s resignation is effective upon proper notice and does not require the consent or acceptance of the company.

However, the right to resign under Section 208 is subject to compliance with other provisions of the Act, particularly the requirement that a company must maintain a minimum number of directors at all times. Where the resignation would result in the company having no director, such resignation may be rendered invalid under Section 209 unless a replacement director is appointed.

In essence, Section 208 ensures that directors are not compelled to remain in office against their will, while balancing this right with the need for continuity and proper management of the company.

Benefits of e-invoice?

Reduce manual efforts and human errors

automates invoicing processes and minimizes manual data entry, reducing mistakes and inaccuracies.

Facilitate efficient tax filling
- enables faster and more accurate tax submission with readily available and standardized invoice data.