Have you always wondered what are the differences between the types of directors. Here are the 6 typical types of directors of a company in Malaysia.
A director is a person who manages the business of the company. Section 196(1) of the Companies Act 2016 (“the Act”) provides that every private company must have at least one director, whereas a public company is required to have a minimum of two directors. But do you know how many types of directors are there in Malaysia?
An executive director is a person who works for the company on a full-time basis and manages the day-to-day running of the company.
A non-executive director does not work for the company in a full-time capacity. They do not participate in managing the company. Their job is not to run the company but to keep a close eye on the managers and executive directors.
A nominee director is a person appointed by virtue of his position as an employee of a company, or who was appointed by or as a representative of a shareholder, employer or debenture holder.
De Facto Director:
A de facto director is a person who acts in the position of a director with or without lawful authority. An example of this is where a person acts as a director even though his appointment is defective.
A shadow director is a person in accordance with whose directions or instructions the majority of directors of a corporation are accustomed to act. What this means is that, although the person has not been appointed as a director, he still controls the actions of the board of directors. The majority of the directors act on his direction or instruction as a matter of practice.
Alternate or Substitute Director:
An alternate or substitute director is a person nominated by another director to attend meetings or perform duties on his behalf. A director may nominate an alternate or substitute director only if it is permitted by the company’s constitution.
Now that you have read about the types of directors in Malaysia, you should read if you are qualified to be one. If you don’t have a director that resides in Malaysia, MISHU can provide nominee director service too.
The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.
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