Director’s resignation – the procedure for a swift and successful exit


Directors are appointed by shareholders to manage and operate the business of a company using their respective skills, knowledge and experience. Business decisions are made through the Board of Directors’ (BOD) meeting and reflected in the Board’s resolutions. Board’s resolutions are legal documents giving effect to the decision made by the company.


Since the Board’s resolutions are executed by consensus collectively, this would mean that any mismanagement or malpractice, all the directors would be held jointly and severally liable for offences committed under the Companies Act 2016 (CA 2016).


At times, due to conflicting views or opinions with other members of the Board for effecting Board’s resolutions, an individual director or several directors may, acting together, concurrently resign, thus putting an end to their involvement with the company.


This article attempts to set out the mechanism and procedure clearly for a swift and successful exit from a company as provided for under CA 2016.

The legislation

Sections 196 to 209 of the CA 2016 govern directors’ matters. Section 208(2) expressly provides that a director may resign by tendering a letter of resignation to the company at its registered office.


Section 208(2) states:

“Subject to sub-s 196(3) and s 209, a director may resign his office by giving a written notice to the company at its registered office.”

A director, appointed by the shareholders, is said to be holding an office, i.e., the position of director. Section 208(2) mandatorily requires a director, wishing to resign, to notify the company at its registered address in writing, stating clearly and unequivocally his intention to resign. Oral notification of his intention to resign during a discussion with board members or even at a BOD’s meeting is held to be invalid and ineffective.


In Alphonsus Hii Heng Tuong v Lok Min Wah & 2 Ors [1995] 4 CLJ 350, the High Court held that a verbal notification by the director to the BOD of his intention to resign, which was also subsequently affirmed in an EGM, was invalid and ineffective. This was because the director never tendered any notice in writing as required by the articles of association of the company.


Dato Hj Abdul Kadir b Sulaiman J held on p 357:

“… the informal meeting had between the plaintiff and the defendants before 31 December 1993 which is oral in nature could not be the basis for a valid resignation of the plaintiff as a director for under article 74 of the articles of association of the company (exhibit “AH5” to the second affidavit of the plaintiff) the only valid resignation of the office of a director of the company is by the director tendering a notice in writing to the company. In this case of the plaintiff as admitted by the defendants, the notice if any, was only oral.”

The minimum threshold on number of directors

Section 208(2) of CA 2016 must be read together with s 196(1) and s 196(3). Section 196(1) stipulates the minimum number of directors required at any one time for a Sdn Bhd and a Bhd.

Section 196(1) provides:

“A company shall have a minimum number of directors as follows:
(a) in the case of a private company, one director; or
(b) in the case of a public company, two directors.”

In the case of a Sdn Bhd, a single director is adequate and sufficient to carry on the management and operation of the company. In summary, at any one time, a Sdn Bhd must have at least one director to be responsible for the company’s business and affairs.


Section 196(3) stipulates that any resignation of a director or directors that caused a non-fulfilment of this minimum number would result in the purported resignation to be rendered invalid and ineffective.


Section 196(3) states:

A director of a company 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 sub-s (1) and any purported resignation or vacation of office in contravention of this section shall be deemed to be ineffective unless a person is appointed in his place.

Section 196(3) reading with s 196(1) clearly shows that the resignation of the last remaining director of a Sdn Bhd or any resignation that caused the number of directors of a Bhd to fall below two would be regarded as invalid and ineffective.


In Tan Kei Vin & 2 Ors v Feed Me Love Sdn Bhd & 2 Ors [2019] 7 AMR 623, the High Court held that the resignation of the last and remaining director in a Sdn Bhd contravenes s 196(3) and is, thereby, deemed ineffective. The director was held as having not resigned and remained the sole director of the company.

Company secretary’s duties and prompt action

Upon receiving the letter of resignation of a director, the company secretary has the duty to notify the BOD the requirement to pass a resolution in relation to the resignation of the said director. The statutory timeline to effect the changes and to notify the Registrar of Companies (SSM) is 14 days, counting from the date of resignation.


In summary, the company secretary is obliged within 14 days from the date of resignation of the director to:

  1. effect the changes in the register of directors, managers and secretary [s 57(4)];
  2. notify SSM that the individual ceases to be a director of the company [s 58(1)].

The failure to comply on the notification to SSM and amendment on the register of the directors would result the company and the company secretary to be liable to a fine of ≤ RM10,000 in relation to (a) [s 57(6)] and a fine of ≤ RM50,000 in relation to (b) [s 58(4)].

Swift exit

The procedure governing the resignation of directors is stated in ss 208(1) and (2). They provide that the resignation is effective once the director has delivered the written notice of his intention to resign to the registered office of the company.

Section 208(2) spells out in clear terms that the resignation is valid and complete once the letter of resignation has been delivered to the company’s registered office. That marks the end of the matter.

A Sdn Bhd always has both business address and a registered address. A business address is distinct from a registered address. A business address is where the company is carrying on its business. The statutory books, which are required to be maintained by a company and kept available for inspection, are kept in the registered office, which normally refers to the business place of a company secretary. It is a common practice in Malaysia that the registered address of the company would be the company secretary’s office address.

Although it is not a legal requirement it remains a good practice for the director to send a copy of his resignation letter to the business address of the company, attention to the managing director and other directors.

In Tai Kei Vin & 2 Ors v Feed Me Love Sdn Bhd & 2 Ors [2019] 7 AMR 623, the High Court held that the reading of s 208(1) requires only a written notice to be delivered to the company’s registered address. This would suffice to make the resignation valid and effective.

The High Court held that:

  1. there is no requirement for the acknowledgement of receipt by the company of the written notice;
  2. there is no requirement for the notice of resignation to be served on the remaining directors;
  3. there is no requirement for the resignation to be subject to acceptance by the board of directors.

Amarjeet Singh Serjit Singh JC held on p 627:

“… it is clear that the resignation of a director must be by way of a written notice and takes effect on the date stated in such notice upon the notice being delivered to the company’s registered office.


There is no requirement of acknowledgement of receipt of such written notice. There is also no requirement that the notice of resignation must be served on the remaining directors or that the resignation of a director is subject to such resignation being accepted by the board of directors.”

The High Court went on to conclude that once the written notices have been delivered to the company’s registered address, the directors are deemed to have validly vacated their directorships of the company. That ends the matter.


In Wong Kok Meng v Preserver Bina Sdn Bhd [2019] 7 AMR 302, the High Court held that the resignation of a director does not require the acceptance nor approval of the board of directors.

Gunalan Muniandy J held on p 308:

“… the law does not require the consent of the company (defendant) for the plaintiff to tender his resignation as a director which the plaintiff duly did. All that he is required to do under s 208 is to resign in accordance with under s 208(2) which is to give a written notice to the company at its registered office and the plaintiff had complied with this statutory requirement.”

This High Court held that the resignation of the director was valid and effective from the date of notice of resignation.

Unfinished matters

In Wong Kok Meng v Preserver Bina Sdn Bhd [2019] 7 AMR 302, the company’s board of directors contended that the plaintiff, being the managing director of the company, ought to finalise the company’s audit report and resolve outstanding management issues prior to his resignation. It was for this reason that the BOD refused to hold a meeting to approve a directors’ resolution consenting to the resignation.

Likewise, in Tai Kei Vin & 2 Ors v Feed Me Love Sdn Bhd & 2 Ors [2019] 7 AMR 623, it was contended that the mass resignation of three directors concurrently on 15.3.2019 prompted the one remaining director to also put up a resignation on 18.3.2019, leaving the company in a total vacuum with no director to effect the BOD’s resolution to approve the resignation of directors, and also to facilitate the lodging of returns.

The company contended that:

  1. the three directors who resigned had failed to inform the remaining director of their intention to resign;
  2. there is no acknowledgement by the company of receipt of the resignations;
  3. the directors were in possession of statutory documents of the company.

In both cases, the High Court laid down the proposition of law that any unfinished matters of the company and the possession of company documents do not in any way or whatsomanner debar the directors from vacating their office so long as the written notices have been delivered to the registered address of the company in compliance with s 208(2).

Outstanding remuneration due to a director

A director is exercising an employment with the company or acting as a consultant for fees in respect of services provided to the company. A director holds office subject to the contract of service (employment) or contract for service (consultant) between the director and company. The resignation marks the end of an employment contract or a service contract. However, it does not relinquish the company from liability to pay any outstanding fees or salary due to the director. In short, any amount owing by the company remains payable to the director.


In Su Mee Eyu v Ideal Blossom Sdn Bhd [2019] 7 AMR 810, the plaintiff pursued a claim against the company for cumulative unpaid monthly salary of RM3,000 from the time he was appointed as a director on 27.5.2009 till he resigned on 22.3.2017. Together with the trade sum owing of RM36,627, the director claimed a total of RM360,490 that was cumulative owing to him.


In his letter of resignation, he had put in the following clauses:

‘I … hereby tender my resignation as the director … with immediate effect and confirm that I have no claims
whatsoever on the company or any director of the company.’

The company relied forcefully on the statement that “I have no claims whatsoever on the company or any director of the company” meant that the director had relinquished and foregone the entire sum of RM360,490 due to him. Being aggrieved, the director sued the company for recovery of the sum owed to him.


The High Court ruled that the statement as stated in the resignation letter does not in any way amount to the plaintiff having renounced all his rights on the amount owing to him by the company. Rather, it meant that since he had resigned and ceased to be a director, he has no further claims against the company. However, this does not relieve the company from their obligation or liability to pay any outstanding debt due to him.


Muniandy Kannyappan JC held on p 816:

“The context of the resignation letter (as alluded to above) ought to be construed in its context. It is a resignation letter by the appellant, who has been a director of the respondent, which is a limited liability company. He had disposed of his shares in the company and also resigned as a director. Thus the effect is, that he has ceased to be the director of the company, with no nexus with it. It was in that context; he has no further claim against the company.


But it does not relieve the respondent from paying any debt due and owing to the appellant, as alluded above. Such debt has to be paid, regardless of the letter of resignation. There is absence of a precise declaration that he intended to release the debt owed to him by the respondent. Such was not within the appellant’s contemplation, when he issued the said letter of resignation.”

The company contended that the plaintiff has waived all claims against the company through the phrase ‘I …. confirmed that I have no claims whatsoever on the company’ in his letter of resignation. The High Court however found this argument defied logic and was devoid of any merit. The resignation by the director from the company was entirely separate and distinct from the claim against the company.


Muniandy Kannyappan JC continue on p 816:

“The letter of resignation has to be construed so as not to be given a meaning in favour of the respondent as opposed to the intention of the plaintiff when issuing the letter. It does not bar the appellant from pursuing his legitimate claim against the respondent. Albeit the letter of resignation, he is still entitled to claim, subject to the proof on a balance of probabilities that the debts owed by the respondent are due and payable to him. By virtue of the evidence adduced by him as well as the contemporaneous documentary proof proffered during the course of trial, he has been successful in doing so. The resignation letter by the appellant ought to be given the meaning he has intended, and to construe otherwise in the absence of express words, will only prejudice him. The respondent cannot fill in its own construction when giving effect to the said letter.”

In the upshot, the High Court concluded and confirmed that the letter of resignation by the director does not amount to a release of debt owed to him by the company.


The resignation of a director from a company must be carried out in strict compliance with s 208(2) of the CA 2016. The content of the letter by the director should be precise and concise to reflect his intention to resign without causing or giving rise to any complications.


  1. Dr Choong on Companies Act 2016, Peng You Solutions Plt, 2020, 3rd ed.
  2. Dr Choong on Interpretation of Companies Act 2016 (2020, 1st ed.), Peng You Solutions Plt, 2020, 1st ed.
  3. For a sample copy of the director’s resignation letter, please email to
  4. Hallmark Legal Principles on Companies Act 2016, Choong Consultants Plt, 2019, 1st ed.
  5. To order the books, please email to
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