168. Payments to director for loss of office, etc. Flashcards
- Payments to director for loss of office, etc.
General overview
[168.01] In view of a director’s lengthy service to the company, a company often wishes to reward a director’s past services when he retires. Matters of remuneration of directors are often deliberated by the board as they are management decisions. However, where the remuneration relates to past services, it can become contentious when members raise questions as to how that would benefit the company. In particular, it may be a ploy by some directors who refuse to retire unless they are adequately remunerated for the loss of office or retirement. Hence, s 168 was enacted to allow such remuneration if the general meeting approves of it. Note: a plain reading of s 137(1)(a) of the Companies Act 1965 (Malaysia) (in pari materia with s 168) would show that the intention of Parliament is to provide “greater disclosure to the shareholders”. It is certainly not the legislative intention to provide disclosure to the shareholder’s shareholders, for to do so would mean that the plaintiff is going beyond the legislative intent, rendering a bizarre and tortuous construction to what Parliament had contemplated: RHB Capital Bhd v Tan Sri Dato’ Abdul Rashid bin Haji Mohamed Hussain [2006] 4 MLJ 80, HC.
