Interactive Director Resignation Flowchart

Start of Process

Director decides to resign and must provide written notice.

Sample Resignation Letter

To the Board of Directors of <Company Name>,

I am writing to inform you that I am resigning from my position as Director effective from <Date of Resignation>.

I am grateful for the opportunities presented to me and I am personally taking this opportunity to thank the Chairman and the Board for the guidance and support I received during this time.

I wish the organization best of luck for its future endeavors.

Regards,
<Your Name>

1. Does the company have a Constitution?

Follow Constitution

The specific procedures laid out in the company's constitution must be followed.

Refer to Companies Act 2016

The process defaults to the provisions of the Companies Act 2016.

2. Will the company meet minimum director requirements after resignation?

(S196 of CA2016)

Section 196 of Companies Act 2016

(1) A company shall have a minimum number of directors as follows:
(a) in the case of a private company, one director; or
(b) in the case of a public company, two directors.

(2) A director shall be a natural person who is at least eighteen years of age.

(3) A director of a company shall not resign or vacate his office if by his resignation or vacation from office, the number of directors of the company is reduced below the minimum number required under subsection (1) and any purported resignation or vacation of office in contravention of this section shall be deemed to be ineffective unless a person is appointed in his place.

3. Is the remaining director an alternate or substitute director?

(S196(4) of CA2016)

Section 196(4) of Companies Act 2016

(4) For the purposes of this section, the minimum number of directors—
(a) shall ordinarily reside in Malaysia ; and
(b) shall not include an alternate or substitute director.

4. Do remaining directors reside in Malaysia?

Hoh Kiang Ngan & Ors v Hoh Han Keyet [2013] 4 MLJ 199

Paragraph 13 GROUNDS OF DECISION Issue 3 — Whether with the removal of the respondent as a director of the company, the company was in breach of s 122(1) of the Companies Act 1965 in that the company did not have at least two directors who each has his principal or only place of residence in Malaysia....

u it is trite that when determining the principal or only place of residence of a person, the court has to consider various factors and the weight to be attached to such factors. The court has to consider the length of time spent at one place, the connection the person has with that place, the frequency of residence, the element of regular occupation (whether past, present or intended for the future, even if intermittent) and some degree of permanency in the occupation of such residence (see Re Y (Minors) (Adoption: Jurisdiction) [1985] 3 All ER 33);

v the determination of a person’s residence is not an exact science and can only be arrived at upon a perusal of the prevailing factors cumulatively. In Levene v IRC [1928] AC 217 Lord Cave was of the view that the term resident connotes residence in one place with some degree of continuity and apart from accidental or temporary absences. And in the case of Williams v Horsham District Council [2004] 3 All ER 30 it was held by the English Court of Appeal that:

We think that it is probably impossible to produce a definition of 'main residence' that will provide the appropriate test in all circumstance. Usually, however, a person's main residence will be the dwelling that a reasonable onlooker, with knowledge of the material facts, would regard as that person's home at the material time."

Resignation Effective Tan Kei Vin & 2 Ors v Feed Me Love Sdn Bhd & 2 Ors [2019] MLRHU 1034

- the Consent of the Board is Not Required for Resignation of Director

Resignation Ineffective

Resigning Director gives written notice to the company at its registered office

(S208 of CA2016)

Section 208 of CA2016 Vacation of office of director

(2) Subject to subsection 196(3) and section 209, a director may resign his office by giving a written notice to the company at its registered office.

(3) A notice under subsection (2) shall be effective when it is delivered at the address of the registered office or at a later date specified in the notice.

When is Resignation Effective?

1. When it is delivered to the address of the registered office.
2. At a later date specified in the notice.

Wong Kok Meng v Preserver Sdn Bhd [2019] MLRHU 1292

- the director's resignation is effective from the date of when his/her notice is delivered to registered office

Notify SSM within 14 days

Company must lodge notice with SSM. If not, the resigned director can do so personally.

Section 57 Register of directors, managers and secretaries

(4) If there is any change in the particulars of a director, manager or secretary the company shall effect the change in the register within fourteen days from the change.

Section 58 Duty to notify of particulars and changes of director, manager and secretary

(1)(c) after a person ceases to be, or becomes, a director of the company, the particulars required to be specified in the register required under section 57;

Post-Resignation Liability

Director remains liable for any breach of fiduciary duties that occurred before resignation.

CTI Leather Sdn Bhd v Hoe Joo @ Khoo Hock Tat & Ors [2011] 8 MLJ 521

Former Directors who were in breach of fiduciary duties before their resignation were still held liable for the losses suffered by the company.

Action Required

A meeting must be called to appoint new director(s) who reside in Malaysia to meet statutory requirements before the resignation can be effective.

Resignation, vacation or death of sole director or last remaining director

209. (1) Subject to subsection 196(3), where a company has only one director or the last remaining director, that director shall not resign office until that director has called a meeting of members to receive the notice of the resignation and to appoint one or more new directors.

Resignation Ineffective