DUTIES OF DIRECTORS FOR PRIVATE LIMITED COMPANIES
A company is a separate legal entity, separate and distinct from its individual members/shareholders. Members of the company will appoint directors who will be entrusted with the power and authority to make decisions for the running of the company and manage the company's affairs. For many small businesses, members of the company who have come up with their own capital to fund their businesses are often involved in the day-to-day management of the company. These members usually appoint themselves to be the directors of the company. For larger businesses such as public listed companies, it is practically impossible for the shareholders to manage the company's affairs and therefore directors are empowered to operate the company. What are the requirements of directors of a company?
There must be at least 2 directors who each have his/her principal or only place of residence within Malaysia. To qualify to become a director of a company, he must be:
1. A natural person
2. Of full age (18 years old and above)
3. Of sound mind
4. Not disqualified under the Companies Act 1965
Directors are not required by law to have special knowledge, or experience to act in that capacity. How to appoint directors?
For a newly incorporated company, the shareholders of the company have before or upon incorporation of the company decided who they want to be the directors of the company to manage the affairs of the company. The first directors are named in the Memorandum of Association or Articles of Association (the incorporation documents) and they will hold office until the first annual general meeting where they will retire. A first director must lodge with the Companies Commissioner of Malaysia a Form 48A, which is a statutory declaration the director is not an undischarged bankrupt and has not been convicted of an offence. Rules governing the subsequent appointment of directors are stated in the...