The Last Remaining Director: No Resignation Until a Replacement Is Appointed

Introduction

In Malaysia, a director may resign by giving written notice to the company at its registered office.¹ However, that right is subject to section 196(3) of the Companies Act 2016, which provides that a director ‘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)‘. Any purported resignation in contravention ‘shall be deemed to be ineffective unless a person is appointed in his place‘.²

The minimum is one director for a private company and two for a public company, and the minimum number ‘shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia‘.³ Directors living overseas do not count towards the minimum.

Section 209(1) of the Companies Act 2016 further provides that a sole director or the last remaining 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‘. The same applies where the sole director is also the sole shareholder.⁴

The issue arises most often where the shareholders and other directors are overseas, and the director who ordinarily resides in Malaysia wishes to leave. The difficulty arises when the director who wishes to leave is also the only director who ordinarily resides in Malaysia. In such circumstances, whether and when that director may leave becomes critical.

Blackstream Investments Pte Ltd v D’ Nonce Technology Bhd [2019] MLJU 923

In Blackstream Investments Pte Ltd v D’ Nonce Technology Bhd,⁵ the Malaysian High Court heard an application concerning an extraordinary general meeting (‘EGM’) of D’ Nonce Technology Bhd, a public listed company, convened by shareholders to remove the four incumbent directors and appoint three new directors. The chairman, himself one of the directors to be removed, adjourned the EGM. The requisitioning shareholders continued the meeting and passed the resolutions.

The Malaysian High Court held, inter alia, as follows:

(a)The adjournment of the EGM was invalid, and the resolutions passed at the continued EGM were valid.

(b)After the decision was delivered, it was brought to the Court’s attention that, among the three new directors, only one ordinarily resided in Malaysia. If all the resolutions took effect, the company would be left with only one director who ordinarily resides in Malaysia, below the minimum of two for a public company.⁶

(c)The Court therefore varied its order so that resolution no. 7, removing Tengku Ahmad Badli Shah bin Raja Hussin, was subject to section 196(3) of the Companies Act 2016. The resolution, ‘although valid, is not effective until a suitable person is appointed in his place‘.⁷

Blackstream recognises that the restriction under section 196(3) of the Companies Act 2016 applies equally where the shareholders pass a resolution to remove a director, rather than the director resigning. A removal, like a resignation, takes effect only once a replacement who ordinarily resides in Malaysia is appointed.

Tan Kei Vin v Feed Me Love Sdn Bhd [2019] MLJU 1024

In Tan Kei Vin v Feed Me Love Sdn Bhd,⁸ the Malaysian High Court heard an originating summons brought by directors of Feed Me Love Sdn Bhd, a private company, for declarations that they had validly resigned. The Plaintiffs had resigned with immediate effect on 15 March 2019 by written notices delivered to the company secretary at the registered office. The 2nd Defendant, the remaining director who held 99% of the shares, resigned with effect from 18 March 2019. The company secretary then informed the Plaintiffs that she could not lodge the return reflecting their resignations, as there was no board resolution and no director left to pass one. The 2nd Defendant contended, inter alia, that the Plaintiffs’ resignations were invalid as there was no acknowledgment of receipt of their notices.

The Malaysian High Court allowed the application and held, inter alia, as follows:

(a)A resignation must be by written notice and takes effect on the date stated in the notice upon the notice being delivered to the registered office.⁹

(b)There is no requirement of acknowledgment of receipt, no requirement that the notice be served on the remaining directors, and no requirement that the resignation be accepted by the board.¹⁰

(c)The Plaintiffs had therefore validly resigned on 15 March 2019. The 2nd Defendant’s resignation on 18 March 2019 as the sole remaining director was ‘in contravention of and deemed ineffective under subsection (3) read with subsection (1) of s 196‘. She had not resigned and remained the sole director.¹¹

(d)The company and the 2nd Defendant were ordered to lodge the return and rectify the register within 14 days, failing which the Plaintiffs were entitled to sign and lodge the return themselves.¹²

The case shows that the timing of a resignation matters. The Plaintiffs’ resignations took effect on 15 March 2019, when their notices were delivered. When the 2nd Defendant resigned with effect from 18 March 2019, she was already the last remaining director, and her resignation could not take effect until a replacement was appointed. It is not unlike a game of musical chairs. Where directors resign one after another, the director who is last to move is left holding the office.

Sazean Engineering & Construction Sdn Bhd v Bumi Bersatu Resources Sdn Bhd [2019] 1 MLJ 495

In Sazean Engineering & Construction Sdn Bhd v Bumi Bersatu Resources Sdn Bhd,¹³ the Malaysian Court of Appeal heard an appeal by Sazean Engineering & Construction Sdn Bhd (‘Sazean’) against the Malaysian High Court’s refusal to set aside three adjudication decisions obtained by Bumi Bersatu Resources Sdn Bhd (‘Bumi Bersatu’). Sazean contended that Bumi Bersatu’s board had no capacity to commence the adjudications or appoint solicitors, as one of its two directors had been adjudged a bankrupt in 2012, leaving only one competent director. The Malaysian High Court, in dismissing Sazean’s application to set aside the adjudication decisions, had taken the view that section 122(6) of the repealed Companies Act 1965 (substantially in pari materia with section 196(3) of the Companies Act 2016) kept the board at the statutory minimum.¹⁴

The Malaysian Court of Appeal allowed the appeal and held, inter alia, as follows:

(a)Section 122(6) of the repealed Companies Act 1965 refers to ‘an affirmative or positive acts attributable to the director himself or herself in wanting to resign as a director or vacating his or her office‘, that is, a voluntary act on the part of the director.¹⁵

(b)Section 122(7) of the repealed Companies Act 1965 provided for the situation where the director has no choice, as the law requires him or her to vacate office on the happening of specified events, including disqualification. In that situation, section 122(6) of the repealed Companies Act 1965 does not apply, and the number of directors may fall below the minimum.¹⁶

(c)Section 122(6) of the repealed Companies Act 1965 ‘was however, not an absolute provision. Its purview of operation did not seek to forgive directors who are otherwise disqualified by operation of law‘.¹⁷

(d)Bumi Bersatu’s board had fallen below the minimum number of directors and lacked the locus standi to commence the adjudications or appoint solicitors.¹⁸

Sazean shows that the minimum number of directors is not maintained in every case. The restriction applies only where the director chooses to resign or vacate office. Where the law itself requires the director to vacate office, such as on bankruptcy, the director does not remain in office, and the company may be left with fewer directors than the minimum.

Comparative position in Singapore

Section 145(5) of the Singapore Companies Act 1967 (2020 Rev Ed) provides that a director ‘must not resign or vacate his or her office unless there is remaining in the company at least one director who is ordinarily resident in Singapore‘, and that any purported resignation in breach ‘is invalid‘.¹⁹

In written answers to Parliament on 8 and 9 September 2026, Ms Indranee Rajah acknowledged that there are situations where a sole director who is ordinarily resident in Singapore ‘is unable to resign because foreign directors and/or shareholders are unresponsive or uncontactable and hence no replacement can be appointed‘. In such a scenario, the director ‘has the option to wind up the company under the Insolvency, Restructuring and Dissolution Act 2018 via application to the Court‘. The Accounting and Corporate Regulatory Authority (‘ACRA’) may also strike off a company that is not carrying on business, and ACRA is consulting stakeholders on the matter.²⁰

Adip Mittal v Offshore Holding Company Pte Ltd [2022] SGHC 239

In Adip Mittal v Offshore Holding Company Pte Ltd,²¹ the Singapore High Court heard an application by a director of Offshore Holding Company Pte Ltd, an insolvent shipping company, for permission to commence winding up proceedings under section 124(1)(b) read with section 124(2)(a) of the Singapore Insolvency, Restructuring and Dissolution Act 2018.²² The company’s two shareholders were an Indian listed company under an insolvency process in India and a Singapore company in liquidation. A voluntary winding up required a special resolution, but the Indian shareholder never confirmed whether it would attend and vote.

The Singapore High Court granted permission and held, inter alia, as follows:

(a)Before the Insolvency, Restructuring and Dissolution Act 2018, a director had no legal standing under Singapore law to apply to wind up the company. This created difficulties where ‘the shareholders and other directors of the company have abandoned the company, and the locally resident director becomes subject to liability for insolvent or fraudulent trading or failure to file annual returns‘.²³

(b)Section 124(1)(b) of the Insolvency, Restructuring and Dissolution Act 2018 was introduced to give a director that standing, with safeguards against its use as ‘a pressure tactic or to secure a strategic advantage‘.²⁴

(c)The director must show a prima facie case that the company ought to be wound up, and that the application is made ‘for a legitimate reason and not for an improper purpose‘.²⁵

(d)The claimant was ‘almost compelled‘ to apply, as it would be impossible or difficult to achieve a quorum of shareholders to pass a special resolution for a voluntary winding up.²⁶

Adip Mittal did not involve a last remaining director, as the claimant was one of two directors. It shows, however, that in Singapore a director whose shareholders do not respond is not confined to waiting for them. With the court’s permission, the director may apply to wind up the company, which is the route identified in Parliament for a sole resident director who cannot resign.

Position in Malaysia

Taken together, these decisions show that in Malaysia the restriction on resignation is strictly applied, that it extends to removal by shareholders, and that it gives way only where the law itself requires the director to vacate office.

Unlike section 124(1)(b) of the Singapore Insolvency, Restructuring and Dissolution Act 2018, there is no specific sub-provision under section 464(1) of the Companies Act 2016 giving a director, as such, the locus to apply to wind up the company.²⁷

That said, it appears that a director in Malaysia is not entirely without recourse. Where the director also holds shares in the company, one possible avenue is a petition, as a contributory, to wind up the company on the just and equitable ground.²⁸ Whether that ground is made out depends on the facts. As Lord Wilberforce observed in Ebrahimi v Westbourne Galleries Ltd, a just and equitable winding up case, it would be ‘impossible, and wholly undesirable, to define the circumstances which these considerations may arise‘.²⁹

In the interest of justice, however, a director who ordinarily resides in Malaysia and holds no shares ought not to be left wholly dependent on the shareholders in order to leave office. Singapore closed a similar gap by giving a director standing to apply to wind up the company, subject to showing a prima facie case and obtaining the court’s permission.³⁰ A similar provision in the Companies Act 2016, with similar safeguards, may well be the way forward for Malaysia.

Until then, section 209(1) of the Companies Act 2016 continues to apply in full: the last remaining 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‘.

Ang Jia Hern, Partner, Ang & Lim Partnership

Notes

1. Companies Act 2016, s 208(3). ↩
2. Ibid s 196(3). ↩
3. Ibid s 196(1), (4). ↩
4. Ibid s 209(1)–(2). ↩
5. Blackstream Investments Pte Ltd v D’ Nonce Technology Bhd [2019] MLJU 923 (HC). ↩
6. Ibid [114], [116]. ↩
7. Ibid [118]. ↩
8. Tan Kei Vin v Feed Me Love Sdn Bhd [2019] MLJU 1024 (HC). ↩
9. Ibid [18]. ↩
10. Ibid [19]. ↩
11. Ibid [22]. ↩
12. Ibid [23]. ↩
13. Sazean Engineering & Construction Sdn Bhd v Bumi Bersatu Resources Sdn Bhd [2019] 1 MLJ 495 (CA). ↩
14. Ibid [28]. ↩
15. Ibid [30]. ↩
16. Ibid [31]–[32]. ↩
17. Ibid [33]. ↩
18. Ibid [38]. ↩
19. Companies Act 1967 (2020 Rev Ed) (Singapore), s 145(5). ↩
20. Singapore Parliamentary Debates, Official Report (8 September 2026) vol 96, sitting no 35, written answer (Indranee Rajah); Singapore Parliamentary Debates, Official Report (9 September 2026) vol 96, sitting no 36, written answer (Indranee Rajah). ↩
21. Adip Mittal v Offshore Holding Company Pte Ltd [2022] SGHC 239. ↩
22. Insolvency, Restructuring and Dissolution Act 2018 (Singapore), s 124(1)(b), (2)(a). ↩
23. Adip Mittal (n 21) [7]. ↩
24. Ibid [9]–[10]. ↩
25. Ibid [11]. ↩
26. Ibid [32]. ↩
27. Companies Act 2016, s 464(1). ↩
28. Ibid s 465(1)(h). ↩
29. Ebrahimi v Westbourne Galleries Ltd [1972] 2 All ER 492 (HL), cited in Suki Mee v Far Origin Sdn Bhd [2020] MLJU 1408, [2020] 1 LNS 1057 (CA) [98], [101]. ↩
30. Adip Mittal (n 21) [7], [9]–[11]. ↩

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