Clarity On Director Retirement And Re-election

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The Court of Appeal’s recent ruling in Dato’ Sri Andrew Kam Tai Yeow v Raub Mining & Development Company Sdn Bhd & Raub Oil Mill Sdn Bhd has brought clarity on director retirement and re-election processes. 

When a company director is due to retire at an impending general meeting, can the director be deemed to have retired upon the expiry of the period in which the meeting ought to have been convened, if the meeting could not be held for some reason?

Background Facts

The appellant, Dato’ Sri Andrew Kam Tai Yeow, was a director of Raub Mining & Development Company Sdn Bhd (the first respondent company) and Raub Oil Mill Sdn Bhd (the second respondent company). In August 2017, the respondents issued a notice to convene their respective extraordinary general meetings to consider and vote on, amongst others, a motion to remove the appellant as their director. In response, the appellant filed a writ at the High Court against both respondents and secured an ad interim injunction to restrain the respondents from removing him as a director and from holding any general meeting. 

In May 2019, the appellant requested for the company’s financial statements, ledgers and certain contractual documents from the respondents but were refused on the premise that the appellant was no longer a director in the respondent companies. The appellant disagree as he took the position that the injunction has the effect of preserving his status as a director in both companies. 

The appellant then filed an originating summons   (OS) seeking access to the said documents as a director. On the other hand, the respondents also filed OS to seek for a declaration that the appellant had retired as a director according to the companies’ articles of association.

At The High Court

The High Court allowed the OS filed by the respondents and declared that the appellant had retired from the board of directors of the relevant respondent companies. The court also dismissed the OS filed by the appellant. The High Court held that a director due for retirement at the annual general meeting (AGM) of a certain year will retire automatically, even if no AGM is held that year on the basis that a director, upon appointment does not ordinarily step into an office perpetually. 

At The Court of Appeal

On appeal, the Court of Appeal reversed the High Court’s decision for these reasons:

(a)​Clear language of the articles on retirement at general meeting

The Court of Appeal found that the language of the relevant provisions in the articles was clear in stating that the retirement of the directors occurs at the general meeting. The court agreed with the appellant’s position that the relevant articles in the respondent companies did not provide for any automatic vacation of office by way of retirement in the absence of the convening of an AGM.

(b)​The process of retirement and re-election, and Section 205 of the Companies Act 2016 (Act)

The Court of Appeal emphasised that the retirement and re-election of directors are intertwined as a single process at the general meeting. The directors retire at the end of such meeting and if voted for, their re-election takes effect upon the conclusion of the meeting. This process was recognised as an important aspect of shareholder democracy.

As the relevant articles in the respondent companies clearly speak of retirement and eligibility for re-election, the Court of Appeal was of the view that interpreting those provisions to allow for a director’s deemed retirement despite the absence of a general meeting fails to address the director’s eligibility for re-election. This opened the possibility of abuse where, for example, a majority of directors could deliberately decide not to convene the requisite AGM in order to ensure the removal of a director who was due to retire by rotation at the AGM by invoking this deeming interpretation without affording such director the opportunity to offer himself to the general meeting for re-election.

The Court of Appeal referred to Section 205 of the Act, which provides for the eligibility of retiring directors to offer themselves for re-election unless disqualified under the Act. The court was of the view that the statutory provisions are generally consistent with the relevant articles of association of the respondent companies and found that the appellant had the right to offer himself for re-election. However, due to the absence of the AGM, he was denied that opportunity.

(c)​ Distinguishing the authorities 

The respondents’ position, as well as the finding of the High Court was considerably predicated on the decision in the following cases, which were distinguished by Court of Appeal for reasons set out below:

(i)​ Tan Sri Dato' Wan Sidek bin Wan Abdul Rahman v Rahman Hydraulic Tin Bhd [2012] 6 MLJ 681

​The Court of Appeal held that the director in Tan Sri Dato' Wan Sidek was not subject to the provisions of the articles of the relevant company on retirement by rotation, as he was appointed to fill a casual vacancy in the board of the respondent company, only until the date when the next AGM would be held. The articles of association of the company also provided that the director would hold office only until the date when the next AGM would be held.

​In contrast, the directorship of the appellant  was endorsed by the general meeting. Directors who have been elected by the members are not required to retire every year but are instead subject to the process on a rotational arrangement requiring the retirement of those who have been longest in office since their last election.

(ii) ​ In re Consolidated Nickel Mines, Limited [1914] 1 Ch 883

​The English High Court in Consolidated Nickel Mines ruled that despite no general meetings were held, two of the company directors who should have retired pursuant to articles of the company were held to have vacated office on the last day on which a meeting of the company for that year could have been held. 

​However, the Court of Appeal in the present case opined that the articles of association in Consolidated Nickel Mines contained specific wordings stating that all directors must retire at the meeting in 1906. On the other hand, there was no such specificity in the articles of the respondent companies in the current appeal.

Further, the Court of Appeal also remarked that the cases of Tan Sri Dato' Wan Sidek and Consolidated Nickel Mines did not discuss the implication or application of the provision on re-election of retiring director nor did they touch on the provision regarding the deemed re-election of retiring directors.

Commentary

This ruling in Dato’ Sri Andrew Kam Tai Yeow reinforces the critical importance of procedural integrity in corporate decision-making. This decision sets a good precedent that protects the rights of directors and shareholders alike, reaffirming that the retirement of directors under a company’s articles of association must occur through the prescribed process at a duly convened general meeting where the right to seek re-election is preserved.

19 May 2025