Resignation of Company Directors in Malaysia and How to Plan a Graceful Exit
Just like how there’s always a start, there be a finish line for any career as well; company directors included. There are many reasons why a company director would choose to resign, namely due to company liquidation or voluntarily for other personal reasons. Regardless of the case, the process remains much the same, and in compliance with the Companies Act 2016. Given that this is not an instant event, it is essential to understand what this choice will entail and hence, the process. Here’s the operation of the resignation of company directors in Malaysia and how to plan a graceful exit.
The following are the general steps that you can use to plan your resignation and, at the same time, minimize the effects that would arise as a result of your leaving the company.
Know Your Rights
As a company director, you have the right to tender your resignation. However, this does not apply if your resignation will cause your company to have less than two directors for public companies and one for private companies, following the Companies Act 2016. If you are in one of these situations, you will have to find a suitable replacement first before legally resigning. In short, you leaving the company must not affect the required numbers of members for the board.
Your resignation will serve as a legal acknowledgement that you shall not be held liable for anything that the company incurs in the future. While this is appropriate, it is also worthy to note that you will still be held responsible for former liabilities during the time of your service and its present-day consequence, if any.
Prepare a Notice
A written notice of resignation will have to be drafted and submitted to initiate the process formally. Depending on the company, some notice of resignations will take immediate effect, whereas others require acknowledging or accepting the company. This is dependent on your company. If you are the sole director in a private company, you will have to call for a meeting with your shareholders to inform them of the change.
Nominate a New Director
If your company is not being liquidated and its asset distributed, to resume normal operations is to elect a new director. This nominee will assume your responsibilities and take your place. Generally, this condition is under the discretion of the company.
If you happen not to have any suitable replacement candidates on hand, your company can also employ Company Nominee Director Services to fulfil the statutory requirements. 3E Accounting Malaysia comprises multidisciplinary experts trained to handle such services at a cost-effective price.
A company nominee director service means you hire someone to step into your former position. The only difference is that this designated nominee director will not be responsible for the operations, finance, business, and other signatory requirements. They merely fulfil the statutory requirements for your company and can be terminated at any moment appropriate to you or when there is a suitable replacement for your former position. This process is safer, as a careless election can invoke dire consequences for the entire company. Consult us here at 3E Accounting Malaysia and plan your exit today!