In a recent case of Dato’ Sri Andrew Kam Tai Yeow v Grandfoods Sdn Bhd & Anor and other appeals [2025] MLJU 819 , the Court of Appeal examined the issue of whether a company director can be deemed to have retired automatically upon the lapse of their directorship timeframe stipulated under the articles of association of the company where no general meeting has been held.
This article seeks to provide a summary of the said case and its key takeaways.
Background Facts
• The appellant, Dato’ Sri Andrew Kam Tai Yeow, was a director of the first and second respondent companies, Raub Mining & Development Company Sdn Bhd and Raub Oil Mill Sdn Bhd. Each of the respondent companies had 4 other directors on their respective board of directors at the material time in September 2017.
• In August 2017, the first and second respondents each issued a notice to convene an extraordinary general meeting (EGM) to vote on a motion to remove the appellant as a director of the respective companies.
• In response, the appellant obtained an injunction from the High Court to restrain the first and second respondents from removing him as a director and from holding any general meeting.
• In May 2019, the appellant requested access to the respondent companies’ financial statements, ledgers and certain contractual documents. The request was refused by the respondent companies on the ground that the appellant had ceased to be a director and had no locus to such access.
• The appellant disagreed and argued that the injunction preserved his status as a director.
• Given the disagreement, the appellant filed two suits seeking access to the company documents of the first and second respondent companies whilst the respondent companies filed three suits seeking declarations that the appellant had retired as a director of the first and second respondent companies pursuant to the respective articles of association of the said companies.
The High Court’s decision
The High Court ruled that the appellant had automatically retired and vacated his office as a director of the first and second respondent companies upon the end of the period during which the general meetings ought to have been convened, despite those meetings not taking place due to the injunction. The High Court’s basis is that a director does not ordinarily stay in office perpetually and is limited by the terms of the articles of association of the company.
The Court of Appeal’s decision
The Court of Appeal overturned the High Court’s decision and unanimously held that company directors who are eligible for re-election cannot be deemed to have automatically retired without convening an annual general meeting.
In arriving at its decision, the Court of Appeal considered the following:
• Clear wording in the Articles of Association.
The relevant provisions of the articles of association of the first and second respondents clearly stated that the retirement of the directors occurs at the general meetings. There was no express or implied provision for any automatic vacation of office by way of retirement in the absence of the convening of an annual general meeting.
• Retirement by rotation comes with eligibility for re-election.
A retiring director is entitled to be considered for re-election at the same meeting where he or she retires. This preserves the shareholders’ right to vote and decide on whether to re-elect the retiring director – an important aspect of shareholder democracy.
• Statutory support from the Companies Act 2016.
The Court of Appeal found support in section 205 of the Companies Act 2016 which reinforces the view that the retirement of directors is inextricably intertwined with their eligibility for re-election. Of significance, section 205(3) states that the retirement is to happen at the conclusion of the relevant general meeting whereas section 205(5) states that a retiring director shall be eligible for re-election.
Key takeaways
This case provides clarity on the governance process for the retirement of company directors. A director’s term cannot be considered lapsed simply because time has passed. The due process such as a general meeting or shareholders’ resolution must take place.
The decision upholds shareholders’ democracy where the shareholder retains the right to vote for or against a director’s re-election during the annual general meeting. Automatic retirement without a shareholders’ meeting would essentially deny such shareholder’s right.
For a company with a constitution, it is important to adhere strictly to the process and terms stipulated in the constitution, which is treated as a contract in law. This case shows the need for a well-drafted constitution to ensure the terms are clear on director retirement and removal procedures.
Upholding Shareholder Democracy: Can a Director Be Deemed To Have Automatically Retired Without The Convening of a Shareholders’ Meeting?
In a recent case of Dato’ Sri Andrew Kam Tai Yeow v Grandfoods Sdn Bhd & Anor and other appeals [2025] MLJU 819 , the Court of Appeal examined the issue of whether a company director can be deemed to have retired automatically upon the lapse of their directorship timeframe stipulated under the articles of association of the company where no general meeting has been held.
This article seeks to provide a summary of the said case and its key takeaways.
Background Facts
The High Court’s decision
The High Court ruled that the appellant had automatically retired and vacated his office as a director of the first and second respondent companies upon the end of the period during which the general meetings ought to have been convened, despite those meetings not taking place due to the injunction. The High Court’s basis is that a director does not ordinarily stay in office perpetually and is limited by the terms of the articles of association of the company.
The Court of Appeal’s decision
The Court of Appeal overturned the High Court’s decision and unanimously held that company directors who are eligible for re-election cannot be deemed to have automatically retired without convening an annual general meeting.
In arriving at its decision, the Court of Appeal considered the following:
The relevant provisions of the articles of association of the first and second respondents clearly stated that the retirement of the directors occurs at the general meetings. There was no express or implied provision for any automatic vacation of office by way of retirement in the absence of the convening of an annual general meeting.
A retiring director is entitled to be considered for re-election at the same meeting where he or she retires. This preserves the shareholders’ right to vote and decide on whether to re-elect the retiring director – an important aspect of shareholder democracy.
The Court of Appeal found support in section 205 of the Companies Act 2016 which reinforces the view that the retirement of directors is inextricably intertwined with their eligibility for re-election. Of significance, section 205(3) states that the retirement is to happen at the conclusion of the relevant general meeting whereas section 205(5) states that a retiring director shall be eligible for re-election.
Key takeaways
This case provides clarity on the governance process for the retirement of company directors. A director’s term cannot be considered lapsed simply because time has passed. The due process such as a general meeting or shareholders’ resolution must take place.
The decision upholds shareholders’ democracy where the shareholder retains the right to vote for or against a director’s re-election during the annual general meeting. Automatic retirement without a shareholders’ meeting would essentially deny such shareholder’s right.
For a company with a constitution, it is important to adhere strictly to the process and terms stipulated in the constitution, which is treated as a contract in law. This case shows the need for a well-drafted constitution to ensure the terms are clear on director retirement and removal procedures.
A copy of the Court of Appeal judgment is available here:
https://hhq.8finite.co/wp-content/uploads/2025/05/Dato-Sri-Andrew-Kam-Tai-Yeow-v-Grandfoods-Sdn-Bhd-Anor
About the authors
Yap Cheng Yah
Partner
Corporate & Capital Markets
Halim Hong & Quek
[email protected]
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Sherzanne Lee
Associate
Corporate & Capital Markets
Halim Hong & Quek
[email protected]
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