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Live Webinar: Nominee Director under Companies Act 2016

specially for Company Secretaries, Company Directors & Shareholders​​​​​​

Date: (Fri) 6 Sept 2024 

Time: 9:30am - 4pm

FREE Session:

9:30am - 10:30am

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PAID Session:

11am - 1pm

1pm - 2pm (Lunch Break)

2pm - 4pm

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Proposed Webinar Agenda: Nominee Director under Companies Act 2016

Master Trainer: Ms Mah Li Chen (MAICSA Chartered Secretary)

Date: 9 Sept 2024

Time: 9:30am - 4pm

Audience will experience 3Is after attending Learnabee’s webinar 

• In-Depth Sharing
• Immersive Learning
• Indigestion

Proposed Webinar Agenda

Pre-Webinar Quiz (7 multiple choice questions)

Introduction, Overview & Objectives 

Types of Directors

• Executive Director
• Non-Executive Director
• Independent Director
• Non-Independent Director
• Alternate Director
• Shadow Director
• Managing Director
• De Facto Director
• De Jure Director
• Resident Director
• Nominee Director

Case Analysis regarding Resident Director

• Hoh Kiang Ngan & Ors v Hoh Han Keyet
• 5 Criterias in determining whether one qualifies as a resident director

Understanding Nominee Directors under Companies Act 2016

• Definition and distinction between Nominee Directors and regular directors
• Key provisions in the Companies Act 2016 relating to Nominee Directors
• Duties and liabilities of Nominee Directors under the law

Familiarize with the Sections in CA2016 relevant to Nominee Director (Fiduciary Aspect)

• Section 2 Interpretation of “director”
• Section 196 Directors of company
• Section 213 Duties and responsibilities of directors 
• Section 217 Responsibility of a nominee director 
• Section 218 Prohibition against improper use of property, position, etc.

Practical Aspects of Managing Nominee Director (Processes & Flowcharts & Administrative Aspect)

• Appointment of Nominee Director: 
• Resignation of Nominee Director
• Removal of Nominee Director. Public Company S206(4)
• Retirement of Nominee Director
• Disqualification of Nominee Director

Samples and Templates

• Sample: DIRECTORS' WRITTEN RESOLUTION - Nominated by Holding Company (Nominated by Major Shareholder)
• Sample: DIRECTORS' WRITTEN RESOLUTION - Nominated by Holding Company - Fixed Term
• Sample: DIRECTORS' WRITTEN RESOLUTION - Nominated by Holding Company (Nominated by Major Shareholder with Pre-signed Resignation Letter)
• Sample: Nominated by Holding Company - Pre-Signed Resignation Letter / Re-Designation Letter
• Sample: SERVICE AGREEMENT between Nominator and Nominee Director
• Discussion: Is a pre-signed Resignation letter challengeable ?

AzmiLaw Article: Conflicting Issues Faced by Nominee Directors 

Conflict of Interest in Commercial Transactions: Nominee directors often face conflicts when the company enters into transactions with the shareholder or entity that nominated them. They must balance the interests of the company against the interests of their nominator, which can be challenging.

Handling Confidential Information: Nominee directors may struggle with whether to share confidential information obtained from the company with their nominator. This creates a conflict between their duty to the company and their loyalty to the nominator.

Insolvency Situations: When a company is nearing insolvency, a nominee director appointed by a creditor might face a conflict between acting in the best interest of the company or protecting the interests of the creditor-nominator.

The Edge Article: Duties and potential liabilities of nominee directors and their appointors by Philip Koh

Scottish Co-operative Wholesale Society Ltd v Meyer [1959]

wrong to believe that as nominees, their duty is owed wholly to the appointor. The nominee directors' passive support for the parent company's strategy, which led to the decline of the subsidiary and was deemed the oppression against the minority shareholders.

Malaysia: Industrial Concrete Products Bhd v Concrete Engineering Products Bhd [2001]

nominee directors who took decisions merely at the behest of directions of their appointors are in breach of their duty to the company. Directors must act within their authority and in the company's best interest.

Charterbridge Corp Ltd v Lloyds Bank Ltd [1969] 2 All ER 1185

the court's emphasis on the fiduciary duties of directors, particularly in the context of group companies. The court ruled that while directors must consider the interests of the company they serve, they can also reasonably consider the broader interests of the corporate group so long as an intelligent and honest man in the position of the director could reasonably believe that the transaction was for benefit of the subsidiary

1Malaysia Development Bhd-SRC International Sdn Bhd (1MDB-SRC) 

The appellant (the former prime minister and minister of finance) is a shadow director of 1MDB. Both the SRC constitution and the evidence demonstrated that the then minister of finance/PM and Advisor Emeritus (under the SRC constitution) gave instructions and directions to the 1MDB board and the de jure directors were accustomed to following them

LM l Pty v Baudlerstone Pty Ltd [2001] NSWSC 886

a director installed as such on the board of another company by his or her employer is in general presumed not to be subject to the employer’s direction when performing functions as a director, so that no vicarious liability attaches to the employee’s conduct in that capacity

Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Berhad 

Illustrates how directors may act independently of shareholder resolutions and importance of allowing directors to exercise their business judgment freely, as long as they act in good faith and in the best interest of the company

Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371 (Supreme Court of Canada): Fiduciary duties & obligations are not automatically terminated by resignation, at least where the resignation is motivated by personal gain at the expense of the former company.

Industrial Development Consultants Ltd v Cooley [1972] 2 All ER 162 (High Court, England)

A director's fiduciary duty to their company prohibits them from exploiting business opportunities for personal gain, even if the company itself could not have secured the opportunity. 

Peso Silver Mines Ltd (NPL) v Cropper (1966) 58 DLR (2d) 1 (Supreme Court of Canada)

a director is not in breach of fiduciary duty if they pursue a business opportunity that the company has bona fide rejected, provided that there is no conflict of interest or misuse of their position.

Other Articles regarding Nominee Directors:

• Singapore
• India
• Hong Kong

Recent Regulatory Developments for Directors

• Bursa Malaysia’s - Guidance on Conflict of Interest
• Securities Commission’s Guidelines - Conduct of Directors of Listed Corporations and Their Subsidiaries
• SSM’s Consultative Document - Proposed amendments to the Companies Act 2016 relating to nominee directors

I encourage all of you to actively participate in today’s session. If you have any questions during the presentation, feel free to type them in the chat box. We’ll have designated times for Q&A, but don’t hesitate to share your thoughts as we go along.

The End

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Disclaimer

Thank you for joining our educational webinar,

Before we begin, we would like to draw your attention to the following disclaimer:

1. Purpose: This webinar is intended solely for educational purposes. The information provided is for general informational and educational purposes only and does not constitute professional advice. The content presented should not be considered a substitute for professional advice, diagnosis, or treatment.

2. Expertise: The presenters and speakers in this webinar are experts in their respective fields. However, the information they provide is based on their own opinions and experiences. Attendees are encouraged to consult with qualified professionals for advice tailored to their individual situations.

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