Serving as a company director comes with significant responsibilities and legal obligations. Before taking up such a role, it is important to understand who qualifies to be a director and who may be disqualified under the Companies Act 2016.
Who is Considered a Director?
Pursuant to Section 2(1) of the Companies Act 2016, director “includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the majority of directors of a corporation are accustomed to act and an alternate or substitute director”.
Who Can Be a Director?
Under Section 196(2) of the Companies Act 2016, a director shall be a natural person who is at least eighteen years of age.
Who is disqualified from being a Director?
According to Section 198(1) of the Companies Act 2016, a person shall not hold office as a director of a company or whether directly or indirectly be concerned with or takes part in the management of a company, if the person—
(a) is an undischarged bankrupt;
(b) has been convicted of an offence relating to the promotion, formation or management of a corporation;
(c) has been convicted of an offence involving bribery, fraud or dishonesty;
(d) has been convicted of an offence under Sections 213 (Duties and responsibilities of directors), 217 (Responsibility of a nominee director), 218 (Prohibition against improper use of property, position, etc.), 228 (Transactions with directors, substantial shareholders or connected persons) and 539 (Liability where proper accounts not kept) of the Companies Act 2016; or
(e) has been disqualified by the Court under Section 199 of the Companies Act 2016.
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Author(s):
Ashley Yeo, Founder
E: ashley@yeoashley.com.my
Nicole Goh, Associate
E: nicole.goh@yeoashley.com.my
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Hello! This is Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia. We provide comprehensive services tailored to growing businesses to meet your complex needs.
Our experiences include structuring of company shares for purposes of fundraising and incentivising employees, capital markets, mergers and acquisitions, regulatory compliance, and other shares-related matters, ensuring efficient and compliant processes. Our dedicated team is committed to empowering companies with the tools and guidance needed to navigate these critical areas, enabling them to focus on growth and success with confidence.
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This article is intended to provide general information and does not constitute and/or should be relied on as any legal opinion or professional advice. For more information, you may reach out to Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia.
