Our firm recently successfully acted for a company director seeking to give effect to their resignation, after the company secretary refused to lodge the necessary notification with the Companies Commission of Malaysia (“SSM”).
While the dispute arose from what appeared, on its face, to be a routine administrative step, it raised an important legal question: whether a company secretary’s statutory obligations under the Companies Act 2016 can be withheld pending payment of their professional fees.
The High Court answered this decisively in the negative. At the time of writing, the High Court’s full grounds of judgment have not yet been issued.
Brief Facts
The Applicant tendered their resignation as director by written notice pursuant to Section 208(2) of the Companies Act 2016. Following this, the company and/or its company secretary were required to notify SSM of the cessation within 14 days under Section 58(1)(c).
Despite clear statutory timelines and repeated follow-ups, no lodgement was made.
Instead, the company secretary took the position that the notification would only be filed upon settlement of outstanding professional fees owed by the company.
High Court’s Findings
The High Court affirmed that the Applicant’s resignation had taken effect upon service of her written notice pursuant to Section 208(2) of the Companies Act 2016. The company secretary’s failure or refusal to lodge the notification did not affect the validity of the resignation.
The Court further held that the obligation to notify SSM under Section 58(1)(c) is a statutory duty which must be complied with strictly within the prescribed timeframe.
The Court rejected the company secretary’s justification that lodgement could be withheld pending payment of outstanding fees. There is no provision in the Companies Act 2016 which permits statutory compliance to be made conditional on private or commercial considerations.
Key Takeaways
This decision underscores that statutory obligations under the Companies Act 2016 are mandatory. Once triggered, they must be complied with strictly and cannot be deferred or qualified.
Company secretaries are not entitled to withhold statutory filings as leverage for fee recovery. Any dispute over professional fees must be pursued separately and cannot override statutory duties.
Directors should note that a resignation takes effect upon proper notice, regardless of whether the relevant lodgement has been made.
However, a failure to update the statutory records may give rise to practical complications, as members of the public and regulatory authorities may remain unaware of the resignation if the records are not promptly updated. Accordingly, timely action should be taken to ensure compliance and avoid any potential misunderstanding or exposure.
The decision serves as a timely reminder that compliance under the Companies Act 2016 is not merely procedural, but mandatory.
***
This article was written by Ilyssa Jace (Associate) from Donovan & Ho’s dispute resolution practice.
Donovan & Ho is a law firm in Malaysia. Our dispute resolution provides advice and legal representation in the civil and industrial courts. We also represent clients in both domestic and international arbitration, as well as other forms of alternative dispute resolution. Our experienced lawyers are also able to assist in commercial and civil disputes (such as debt recovery, shareholders’ or directors’ disputes, breach of contract and claims for injunctive relief), constructive disputes (arbitration and/or adjudication proceedings, disputes relating to delays, liquidated damages, defects and rectification work) and employment disputes (unfair dismissal claims, judicial review proceedings, and employment-related civil claims). Have a question? Please contact us.
