Not that difficult if you are preparing from a template and blissfully unaware of what you don’t know.

Not that difficult if you know which provisions in the Companies Act 2016 of Malaysia apply.

Drafting and reviewing resolutions is an integral part of corporate transactions. It’s crucial to have a clear understanding of the requirements of the Companies Act 2016 to ensure compliance.

Here are a few pointers:

Directors’ resolution

1. Declaration of directors’ interest

A director who is interested in a contract or proposed contract with the company must declare his nature of interest at a board meeting. This can be done by including a declaration of directors’ interest in the relevant directors’ resolution (s. 221).

2. Interested director not to vote

A director interested in a contract entered or proposed to be entered by the company must not participate in any discussion while the contract or proposed contract is being considered during the meeting or vote on the contract. This restriction does not apply to a private company which is:

• not a subsidiary of a public company; or
• a wholly-owned subsidiary of a public company, in respect of any contract or proposed contract to be entered by the private company with the holding company or with another wholly-owned subsidiary of that same holding company (s. 222).

In the context of an IPO, note which director of the listco is required to abstain from voting on the resolution to approve the execution of pre-IPO restructuring agreements due to s. 222. This depends on whether the listco is a private company or a public company at the time.

3. Authorisation to act on behalf of the board

Directors’ resolution typically authorises any one of the directors to do the necessary to give effect to the directors’ resolution. If the person who will act on behalf of a company is not a director, the resolution should specifically authorise that person.

Members resolution

1. Written resolutions for private companies only

Only private companies may pass members’ written resolutions. Public companies (whether listed or not) must pass members’ resolutions through a physical meeting (s. 290).

2. Removal of directors or auditors

A members’ resolution to remove a director or an auditor before his expiration of his term of office shall not be passed as a written resolution (s. 297). Such resolution must be passed through a physical meeting.

Drafting and reviewing resolutions may look deceptively easy but in fact requires a solid understanding of the Companies Act 2016.

This post was first posted on LinkedIn on 23 May 2024.