MALAYSIA Law and Practice Contributed by: Dato’ Tan Yee Boon, Stephanie Chan Pik Jia and Joaana Keng Li Xin, David Lai & Tan
4.4 Appointment and Removal of Directors/Officers
removal does not take effect until a successor is appointed. Eligibility and Restrictions Notably, not all individuals are eligible to be appointed as directors. Under Section 198 of CA 2016, a person is disqualified if he/she is an undischarged bankrupt, convicted of offences involving fraud or dishonesty or convicted under CA 2016. Additionally, a director must be at least 18 years old and of sound mind, and must pro - vide written consent to act. Directors of public listed companies are further restricted to holding no more than five directorships under the Listing Requirements. 4.5 Rules/Requirements Concerning Independence of Directors In Malaysia, the independence of directors and the management of potential conflicts of interest are primarily governed by CA 2016, the MCCG and the Listing Requirements, as well as the pro - spectus guidelines issued by the SC (the “Pro- spectus Guidelines” ). Pursuant to paragraph 1.01 of the Listing Requirements, an independent director is one who is independent of management and free from any business or other relationships that could interfere with the exercise of independent judgment or the ability to act in the best interests of an applicant or a listed issuer. The MCCG further outlines criteria for independ - ence, which include the absence of: • any material shareholding or business rela - tionship with the company; • recent employment or executive positions within the company; and • close family ties with directors, major share - holders or senior management.
In Malaysia, the appointment and removal of directors and officers are governed by CA 2016, the company’s Constitution and, for public listed companies, the Listing Requirements. Appointment of Directors/Officers For private companies, the appointment of directors is usually a straightforward process. Pursuant to Section 202 (1) of CA 2016, indi - viduals named as directors during a company’s incorporation assume their roles from the date of incorporation. Subsequent directors can be nominated by shareholders via ordinary resolu- tion under Section 202 (2) of CA 2016, or by the Board if permitted by the company’s Constitu - tion. For public listed companies, directors are gen - erally appointed by shareholders at general meetings or via written resolutions, in accord - ance with the company’s Constitution, CA 2016 and the Listing Requirements. Section 203 of CA 2016 mandates that appointments of two or more directors must be voted on individually, reinforcing transparency and preventing block appointments. Any resolution passed contrary to this is void. Removal of Directors/Officers Pursuant to Section 206 of CA 2016, directors of both private and public listed companies may be removed by shareholders through an ordinary resolution. This power applies regardless of any contrary provision in the company’s Constitu - tion or a director’s service contract, thereby pre - serving shareholder control. However, a special notice is required for any resolution to remove a director or appoint a replacement at the same meeting, and if a director represents a specific class of shareholders or debenture holders, the
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