Retirement of Directors

Retirement of Directors

Retirement of directors is something that most of the companies will face, but not all of them know how they should deal with it. In this case, it is more advisable for them to get assistance from a corporate secretarial firm in Johor Bahru so that the processes required in the retirement is well-managed. 

According to Section 205 in Companies Act 2016, except if there is a particular provision in the constitution of a company or the director’s term of appointment about the retirement of directors, the provisions in this Section should be applicable to the director’s retirement. Apart from that, the company can also determine the director’s requirement by passing a written resolution. 

Section 205 states that at the first AGM of a public company, all of its directors should retire from their position when the meeting ends. At the AGM in every succeeding year, at the end of the meeting, one-third of the company’s director for the moment should retire from being the director. If the number of directors is not a multiple of three, the number nearest to one-third of the directors should retire from their office when the meeting ends. 

The directors (Also see Notifying the Particulars and Alterations in Company’s Director, Manager and Secretary) who should retire should be those who have held the position for the longest period since the last election. In some occasions, there may be two directors who started to become the company’s director (Also see Do Companies Need to Keep a Register of Directors, Managers and Secretaries?) on the same day. In this case, the director who has to retire should be determined by lot, except if both of them have made an agreement between themselves. 

The retiring director should be entitled to reelection if he is not disqualified. If the company’s constitution has not listed any terms related to the retirement of directors, then at the AGM where a director retires, the company (Also see Tips for Company Incorporation) can appoint any individual who is not disqualified from filling in the vacancy. If the company (Also see Does Your Company Prepare Accounts Receivable Aging Report?) has not selected anyone to fill the vacancy, then the retiring director should be judged as he has been reelected if he presents himself for the reelection. There are some exceptions to this, where at the meeting, the company has clearly resolved that it do not want to fill in the vacancy, or a resolution for the director’s reelection is lost. 

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