In M&A transactions, it is common for a purchaser acquiring a stake in a company to seek a board seat as part of the deal. This allows the purchaser to have a say in the company’s strategic direction and governance post-transaction.

Under the Companies Act 2016 of Malaysia, a director must be a natural person who is at least 18 years old. A private company must have at least one resident director while a public company must have at least two.

The Companies Act 2016 does not prescribe other qualities and experience for appointment as a director. However, the statute does specify categories of persons who are disqualified from holding office as a director or be concerned with or take part in the management of a company. The disqualified categories under section 198 of the Companies Act 2016 are:

• Undischarged bankrupt
• Person who has been convicted of an offence relating to the promotion, formation or management of a corporation
• Person who has been convicted of an offence involving bribery, fraud or dishonesty
• Person who has been convicted of an offence relating to breach of directors’ duties and responsibilities under the Companies Act 2016
• Person who has been disqualified by the Court from acting as a director or promoter

The Companies Commission of Malaysia has previously brought charges against directors in separate cases for acting as directors while being undischarged bankrupts.

This post was first posted on LinkedIn on 9 January 2025.