Can a company's board of directors be fired if its members refuse to leave? Yes — under the Companies Act 2016, shareholders can remove a director in Malaysia before their term ends by ordinary resolution, subject to a private company's constitution.
In this blog, we explain who can remove a director and why shareholders may do so. We cover the statutory steps, directors' rights, alternatives to removal and the required Companies Commission of Malaysia (SSM) filings.
Who Has the Power to Fire Directors in a Company in Malaysia?
Section 206 lets shareholders remove a director by ordinary resolution, even against the director's wishes. For a private company, removal is subject to its constitution.
Every company in Malaysia answers to the Companies Commission of Malaysia (SSM), which administers the Companies Act 2016. Under Section 206, shareholders may remove a director before the term ends by ordinary resolution at a general meeting. Private-company removal is subject to the constitution. For a public company, the power applies notwithstanding the constitution or an agreement with the director.
On a show of hands, an ordinary resolution needs a simple majority of members; on a poll, it needs more than half of the voting rights of members entitled to vote and voting in person or by proxy. A simple majority of votes cast can pass the resolution even if the board opposes it, subject to applicable rules.
The board's own powers are narrower. Subject to the applicable constitution, a board may revoke its appointment of a managing director. That does not necessarily remove the person as a director. Directors appointed by members, however, answer to members. The distinction matters whether you operate a local startup or one of the multinational companies in Malaysia that maintain a locally resident board.
One constraint remains. Section 196 generally requires one director ordinarily resident in Malaysia for a private company and two for a public company. Plan replacements so the company retains its required minimum. Where a director is willing to step down voluntarily, resignation of company directors in Malaysia follows a simpler process than formal removal.
The Act prescribes no grounds for removal, although a private company's constitution must also be considered. Documented reasons may strengthen the company's position.
Section 206 does not list acceptable reasons for removal. Members may act because they have simply lost confidence in a director. What matters is following the applicable procedure, including notice and a properly convened meeting. Public-company directors have statutory hearing rights; a private-company constitution may also provide them.
1. No statutory grounds are required
The Companies Act 2016 leaves the commercial judgement entirely to shareholders. Courts generally will not overturn a removal merely because members changed their minds, provided the statutory steps were followed. That said, a clear, minuted rationale helps if the decision is later scrutinised.
2. Common grounds cited by shareholders include:
- Breach of fiduciary duties, such as diverting company assets for personal benefit
- Undisclosed conflicts of interest in related-party transactions
- Persistent failure to attend board meetings or discharge duties
- Strategy disagreements that have eroded investor confidence
- Insolvency events or conduct that risks disqualification under Section 198
3. When removal is not the right route
An undischarged bankrupt or a person convicted of a specified offence may already be disqualified under Section 198. Disqualification can bar the person from holding future directorships, subject to the Act's provisions. For listed issuers, Bursa Malaysia's Listing Requirements impose board-composition rules, so a removal may need a simultaneous appointment to preserve independent representation.
Director Exit Routes in Malaysia Compared
| Route | Who decides | Vote or trigger | Typical timeline |
|---|---|---|---|
| Shareholder removal (Section 206) | Members at a general meeting | Ordinary resolution, simple majority | 5-8 weeks including special notice |
| Resignation | The director | Written notice under the constitution or service agreement | Immediate to 30 days |
| Non-reelection at term end | Members | Subject to the constitution, a retiring director who offers himself for re-election may be deemed re-elected unless the company resolves not to fill the vacancy or a re-election resolution is put and lost | Annual general meeting |
| Court disqualification (Section 199) | High Court | Disqualification order | Several months, litigation-driven |
| Board removal from managing director role (Schedule 3) | Board of directors | Board resolution | Days, at a board meeting |
What Is the Process for Removing a Director in Malaysia?
Removal runs on a statutory clock: special notice at least 28 days before the meeting, then the vote, then the SSM notification within 14 days of the change.
Section 206 of the Companies Act 2016 sets out removal procedures. Private-company removal is subject to the constitution, and hearing rights differ between private and public companies.
Step 1: Serve special notice
A member intending to move the removal resolution gives the company special notice under Sections 206 and 322. Special notice means written notice of at least 28 days before the meeting at which the resolution is to be moved. The company then notifies all members that the resolution will be tabled.
Step 2: Convene the general meeting
The directors convene the meeting on receipt of the notice, or members may requisition one under the Act. Ordinary-resolution meetings generally require at least 14 days' notice. A public company's annual general meeting generally requires at least 21 days. The constitution may require longer notice, and shorter notice is possible with the required consent.
Step 3: Give the director a fair hearing
For a public company, the company must send the director a copy of the special notice. Section 207 provides rights to make oral or written representations, with rules on circulation and reading them out. A private company's constitution may provide equivalent rights.
Step 4: Pass the ordinary resolution
At the meeting, the resolution passes with a simple majority of the votes cast. Proxies are permitted, and the outcome must be minuted. Removal may be delayed where a required replacement has not been appointed. This includes certain public-company directors representing a class of shareholders or debenture holders.
Step 5: Notify SSM and update the records
The company lodges the change in directors through SSM's online systems within 14 days under Section 58, then updates the statutory registers, bank mandates and licences. SSM's Practice Note 9/2024 requires the removal notification to be accompanied by an extract of the general meeting resolution, signed as specified in the note. The next Annual Return will reflect the new board.
What Rights Does the Director Facing Removal Have?
Public-company directors have statutory rights to notice and representations. Private-company constitutions may provide similar rights, and employment claims can survive removal.
The Act deliberately balances shareholder power with procedural fairness. Cutting corners on the director's rights is the most common reason a removal is later challenged, so each protection below deserves attention.
1. The right to be heard
Section 207 requires a public company to send the director a copy of the special notice. The director has the right to make oral or written representations. A private company's constitution may provide equivalent rights.
2. Written representations under Section 207
A public-company director may request circulation of a written representation of reasonable length. If it is not circulated because it arrived too late or through company default, the director may require it to be read at the meeting. A court may allow non-circulation and non-reading if it finds the rights are being abused.
3. Contracts and employment claims
Removal ends the office of director, not necessarily an employment contract. A director serving under an executive contract may claim damages for wrongful dismissal or breach of a service agreement. For a public company, such agreements cannot block the resolution itself. They may still carry financial consequences the company should assess before voting.
Removal Steps and Statutory Timelines
| Step | Requirement | Deadline or timeframe |
|---|---|---|
| 1. Special notice | Notify the company of the intent to move the removal resolution | At least 28 days before the meeting |
| 2. Meeting notice | Company sends general meeting notice to members | 14 days (private) or 21 days (public AGM) |
| 3. Director's hearing | Copy of notice to the director; right to speak and circulate representations | Before the circulation deadline |
| 4. Ordinary resolution | Show of hands: simple majority of members; poll: more than half of voting rights of members entitled to vote and voting in person or by proxy | At the general meeting |
| 5. SSM notification | Lodge the change in directors via SSM's online systems | Within 14 days of the change |
How Does Removal Differ From Resignation and Court Disqualification?
The comparison covers five routes: resignation, shareholder removal, non-reelection, disqualification and removal from a managing director role. Disqualification can arise by law or through a court order.
Removal under Section 206 is a shareholder decision that can happen while the director wants to stay; resignation is the director's own voluntary act under the constitution or a service agreement, and court disqualification under Section 199 is a separate legal bar. Resignation needs no shareholder vote. Court disqualification follows specified offences or misconduct and a court order that prevents the person from holding future directorships, whereas removal generally leaves the person eligible to serve elsewhere.
Shareholders sometimes ask whether an entire board can be dismissed at once. Members can remove directors individually at a single, properly noticed meeting, subject to the applicable rules and constitution. The company must retain or appoint the required number of directors ordinarily resident in Malaysia.
The route does not extend to every entity type. Following limited liability partnership registration, an LLP is governed by the Limited Liability Partnerships Act 2012: partner cessation may follow the LLP agreement, while changes to registered particulars must also be notified to the Registrar under the Act. Confirm the entity type before drafting any notices.
Post-Removal Compliance Checklist
| Obligation | Timing | Authority |
|---|---|---|
| Change notification under Section 58 | Within 14 days of the change | SSM |
| Update statutory registers of directors | Promptly after the vote | Internal |
| Notify banks, licensors and key counterparties | As contracts and mandates require | Third parties |
| Annual Return reflects the new board | Within 30 days of the incorporation anniversary | SSM |
What Must the Company File After the Resolution Passes?
Within 14 days of the change, the company must notify SSM; the registers, bank mandates and the next Annual Return follow.
Section 58 of the Companies Act 2016 requires companies to notify SSM of any change in directors within 14 days, through the prescribed online notification. Late or missed notifications are offences, and the exposure compounds. The Annual Return, due within 30 days of the incorporation anniversary, must show the correct board, and late lodgement can expose the company and every officer in default to fines of up to RM50,000.
Director changes also ripple into tax and payroll records. If the outgoing director received director's fees, the company must report them correctly across the filings tracked in our statutory filing calendar for Sdn Bhd companies.
In practice, we help clients draft the special notice, manage the meeting paperwork and lodge the Section 58 notification on the day the resolution passes. Companies that began with our Malaysia company incorporation services receive the same end-to-end support whenever their board changes.
Conclusion
Removing a director in Malaysia is ultimately a shareholder decision. The process generally involves special notice, a properly convened meeting and a simple-majority vote. Public-company directors have hearing rights; private-company constitutions may also provide them. The company must notify SSM within 14 days of the change. Resignation, non-reelection and court disqualification remain alternatives, each with different costs and consequences.
Getting the process right the first time matters. A defective notice or denial of an applicable hearing right can expose the resolution to challenge. A missed SSM filing can expose the company and its officers to penalties. The company must retain its required minimum of directors ordinarily resident in Malaysia: generally one for a private company and two for a public company.
As a Corporate Services Provider, 3E Accounting Malaysia helps shareholders and boards plan director changes end to end. We draft notices and resolutions, lodge SSM notifications and update registers. Contact our team to remove, appoint or replace directors without disrupting your company's compliance calendar.
Plan a Director Change With a Corporate Services Provider
Our corporate secretarial team drafts the notices, runs the meeting paperwork and files with SSM on time, so your board change is valid and fully compliant.
Frequently Asked Questions
Yes. Section 206 allows shareholders to remove a director by ordinary resolution before the term ends. Private-company removal is subject to the constitution. For a public company, the power applies notwithstanding an agreement with the director. The applicable procedure must be followed.
Allow roughly five to eight weeks as a planning estimate, not a statutory deadline; actual timing depends on meeting arrangements and notice requirements. Special notice generally requires 28 days before the meeting. Ordinary-resolution meetings generally require at least 14 days' notice; a public company's annual general meeting generally requires at least 21 days. Notify SSM within 14 days of the change.
Only partially. Subject to the applicable constitution, a board may revoke its appointment of a managing director without necessarily removing that person as a director. Directors appointed by shareholders must be removed by shareholders through an ordinary resolution at a general meeting.
Yes, removal ends the office of director regardless of any other role. Shareholdings are unaffected, and removal from office does not automatically end an employment contract. Whether employment continues depends on the service agreement, and the director may claim damages if that agreement is breached, but that cannot undo the resolution.
Yes. Section 58 of the Companies Act 2016 requires the company to notify SSM of any change in directors within 14 days, whether the change arises from resignation, removal or death.
Abigail Yu
Director
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
