What is the dissolution of a company?

Is a company that has been wound up considered to have been dissolved? The answer is, no. The dissolution of a company occurs when the company’s name and records have been legally removed from the Companies Commission of Malaysia.

How can a company be struck off?

According to section 549 of the Companies Act 2016, a company may be struck off when the company is not carrying on business or is not in operation, the company has contravened the Companies Act 2016, the company is being used for unlawful purposes or any purpose prejudicial to or incompatible with peace, welfare, security and  public interest in Malaysia. 

What to do if the sole director dies?

If the sole director dies, the secretary shall, according to section 209 of the Companies Act 2016, call a meeting of the next of kin, other personal representatives or a meeting of members for purposes of appointing a new director. 

In the event that a new director is not appointed within 6 months from the death of the director, the Registrar may direct the company to be struck off from the register of companies. 

How can a company  director be removed?

A company director may be removed from his office according to section 206 of the Companies Act 2016. Referring to the section, a company director may be removed before the expiration of the director’s period of office by ordinary resolution (for a private company) or for a public company, in accordance with the Companies Act 2016. 

Can a dismissed company director claim for payment?

Payment to a company director who has been removed from his office can be claimed according to Section 227 of the Companies Act 2016 where payment to a director for losing his office must first be disclosed to the members of the company and the proposed resolution approved by the members.

If the payment is made without the particulars of the payment being disclosed to the company members and the resolution for the proposed payment has been approved by the company members,  the payment is considered as unlawful.

Dismissal of a company director. Oppression or not?

In the case of Hoon Wah v. NG & Ors [2014] 9 MLJ 114, the plaintiff sued two companies that are businesses owned by a family, including his parents and sister. The plaintiff claimed that it was his idea to convert the first company’s business to plastic waste recycling. The plaintiff also alleged that he was promised a 50% shareholding in the first and second companies. He was given 50,000 shares in the first company and 30% of the second company’s shares. However, his shareholding in the first defendant company was reduced without his knowledge. In an extraordinary general meeting of the first company, the plaintiff was removed as a director, and this was followed by his removal as a director by the second company as well. Hence, the plaintiff claimed that the defendants actions constituted oppression under Section 181 of the Companies Act 1965.

The Court dismissed the plaintiff’s claim due to the removal of the plaintiff according to a properly constituted extraordinary general meeting, and the majority of the two companies have spoken against the plaintiff. The Court also said that the promise of 50% shares could not amount to oppression as it is not an agreement and could not constitute an intention to create a legal relationship.

Do you need legal advice?

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