iv. Explain the significance of the “veil of incorporation”?

 The veil of incorporation ensures that a company is a separate legal entity from its directors and
shareholders, thus protecting the personal assets of owners and investors from lawsuits.
 It carries with it the concept of limited liability which ordinarily flows from the doctrine of corporate
personality.
v. List out situations in which the veil will be lifted?
 The concept of a company being a legal entity can sometimes give undesirable results. In particular,
shareholders could use a company to obtain funds dishonestly, and then not be liable for repayment.
 There are therefore numerous exceptions to the rules defined by Salomon v Salomon & Co Ltd. These can be
implemented by the courts on a case-by-case basis, or by statute.
 Judicial veil lifting because of fraud. This occurs when individuals have used a separate legal entity to do
something, they are personally forbidden from doing.
 Supreme Court decision in Hotel Jaya Puri Bhd v National Union of Hotel Bar and Restaurant Workers
[1980] 1 MLJ 109 (‘Hotel Jaya Puri’ case) where the Industrial Court ordered the Hotel (parent company) to
pay compensation to the workers of the Restaurant (subsidiary).
 The Restaurant closed due to financial losses and the employees were subsequently entrenched.
 The reasoning behind the decision was that the Hotel and Restaurant were interdependent as the functionality
and management can be constituted as a single unit.
 Salleh Abas FJ (as he then was) upheld the decision of the Industrial Court and observed the following: -
 “.. The court seems quite willing to lift the ‘veil of incorporation (so the expression goes) when the justice of
the case so demands…
 In Lam Kam Loy & Anor v Boltex Sdn Bhd & Ors [2005]
 “ …it is not open to the courts to disregard the corporate veil purely on the ground that it is in the
interests of justice to do so….”
 There must be “…actual fraud…or some inequitable or unconscionable conduct amounting to fraud…” per
Gopal Sri Ram JCA.
 In the Federal Court decision of Gurbachan Singh Bagawan Singh & Ors V. Vellasamy Pennusamy & Other
Appeals [2015] 1 CLJ 719 it was held:
 “…we are of the view that it is now a settled law in Malaysia that the court would lift the corporate veil of a
corporation if the such corporation was set up for fraudulent purposes, or where it was established to
avoid an existing obligation or even to prevent the abuse of a corporate legal personality.”
 Judicial lifting – Agency
 Smith, Stone & Knight Ltd v Birmingham Corporation (1939)
 SSK owned some land, and a subsidiary company operated on this land. BC issued a compulsory purchase
order on this land. BC would reasonably compensate any owner for the business they ran on the land. Since the
subsidiary company did not own the land, BC claimed they were not entitled to compensation.
 The courts held that the subsidiary company was an agent and BC must pay compensation.
 Judicial veil lifting - Group of companies
 Creasey v Breachwood Motors [1993]
 An employee brought an action for unfair dismissal against his employer who transferred the company
assets to another company formed for the purpose.
 The employee won but there were no assets to pay his claim.
 The judge allowed him to transfer the claim to the new company; i.e. He lifted the veil.
 Judicial veil lifting - Group of companies
 Ord v Belhaven Pubs Limited [1998]
 The plaintiffs were suing the defendant for misrepresentation. The defendant company was part of a
group that underwent several reorganizations.
 This worried the plaintiffs who feared the defendant company would have no funds to pay if they won.
 The plaintiffs went to court to substitute the company with another company in the group.
 The Court of Appeal refused to allow the substitution saying they would only lift the veil in cases of
impropriety and there was none in this case.
 Asparta Sdn Bhd v Bank Bumiputra Malaysia Bhd [1987]
 The court would generally lift the corporate veil to do justice, particularly when an element of fraud is
involved,and here there was abuse from the very structure of the companies after lifting the corporate
veil.
 While in Sparta the court did lift the veil on a group of companies there are other cases where they declined to
do so. For example, in:
 People's Insurance Co (M) Sdn Bhd v People's Insurance Co Ltd
 Hotel Jaya Puri Bhd v National Union of Hotel, Bar & Restaurant Workers
 In Double Acres Sdn Bhd v Tiara Setia Sdn Bhd [2000] the court was of the view that Malaysian courts have
been lifting the corporate veil about a group of companies rather too easily.
 Judicial veil lifting - Single Economic Entity
 DHN Food Distributors Ltd v London Borough of Tower Hamlets (1976)
 A subsidiary company of DHN-owned land LBTB issued a compulsory purchase order.
 The courts held that DHN was able to claim compensation because it and its subsidiary were a single
economic unit.
 Woolfson v Strathclyde Regional Council (1978)
 This was similar to DHN v Tower Hamlets. However, the House of Lords ruled that Woolfson and its
subsidiary were not a single economic unit due to operational practices.
 Adams v Cape Industries plc and Another (1991)
 A worked for a US subsidiary of CI, which marketed asbestos in the US. The US subsidiary had no assets.
 A suffered injuries through exposure to asbestos dust and wanted to sue. If he had sued the US subsidiary, he
would have received no compensation since there was no money to pay out.
 He, therefore, sued CI in the UK and claimed that the company was a single economic unit.
 The courts held that, even though they recognized that the corporate structure was designed to minimize
liability and taxation, it was not illegal and should not be considered a single economic unit.
 Adams v Cape Industries plc and Another (1991)
 If the company is not a single economic entity, then A had no legal status in suing another corporate entity!
 Single economic entity – the same organization, examples are Hotel Jayapura, DHN v London Borough of
Tower Hamlets (agency), and Aspatra v BBMB.
 Not a single economic entity – Adams v Cape, Woolfson v Strathclyde Regional Council (1978)
 Single economic entity – the same organization, examples are Hotel Jayapura, DHN v London Borough of
Tower Hamlets (agency), Aspatra, and v BBMB. (fraud & unfairness – courts will lift the veil).
 No single economic entity – Adams v Cape, Woolfson v Strathclyde Regional Council (1978). (no
fraud or unfairness – courts will not lift the veil).
 Judicial veil lifting - National Emergency
 Daimler Co Ltd v Continental Tyre and Rubber (GB) Ltd (1916)
 C sued D for debts owed. C was a UK company; however, all the shareholders but one was German. D
argued that they should not pay the debt to German individuals to prevent money from going toward
Germany’s war effort.
 The court held that C was German.
 Judicial veil lifting - Tax Evasion
 Companies may transfer assets between subsidiary companies to reduce tax liability, but the courts may then
treat them as a single unit.
 Judicial veil lifting - Tortious claims
 Williams v Natural Life Health Foods Ltd [1998]
 In its judgment, the House of Lords considered that a director or employee of a company could only be
personally liable for negligent misstatement if there was reasonable reliance by the claimant on an
assumption of personal responsibility by the director to create a special relationship between them.
 There was no evidence in the present case.
 Statutory Veil Lifting
 s. 30 CA 2016– misdescription (unless the company is willing to ratify). So for example A company cheque
must bear the name of a company exactly, otherwise, the director who signs is liable if the cheque is not
cleared. This applies even if the omission is due to a printing error.
 Statutory Veil Lifting
 s57 CA 2016: Register of directors etc. – if particulars are wrong then any officer can be liable.
 Statutory Veil Lifting
 An officer of the company can be liable for providing financial assistance to purchase its shares, s 123 (3).
 Groups of companies must produce accounts acknowledging their internal relationship, and profits and
losses of different subsidiaries can be offset for taxation purposes – s 169.
  Statutory Veil Lifting
 Taxation purposes - s 140 Income Tax Act 1967.
 Payment of dividend from profit – s131CA 2016
 Issuance of prospectus s154 CA 2016
 Incapable of paying the company’s debts. 539 CA 2016
 Fraudulent trading – s. 540 CA
2016 2a. Read the following:
Ida Lim, ‘SIS: Court’s fatwa challenge refusal dark moment for Malaysia, women’s rights
i. What was the reason adopted by the court to lift the veil?
ii. Is this approach within the recognized exceptions in which the veil can be lifted?
 Lawyers are divided on a claim that a recent ruling dismissing Sisters in Islam’s (SIS) challenge of a fatwa
against the Muslim women’s rights group will have far-reaching implications as far as the tentacles of Islamic
laws are concerned.
 The High Court, in throwing out SIS’ challenge against a fatwa labeling it as deviating from Islamic teachings,
disagreed with the group’s argument that state religious authorities have no power over it as it is registered as a
company.
 “The company and directors of SIS Forum are Muslims, and their activities relate to Islamic laws. The fatwa is
applicable,” said High Court judge Nordin Hassan.
 In response, activist Marina Mahathir criticized the judgment as a “backdoor Shariah station” of Malaysian laws.
 She also said the ruling meant that any company that has Muslims in it, including directors, shareholders, and
staff, can come under shariah jurisdiction.
 But lawyer and rights activist Kuthubul Zaman Bukhari said the court decision only affects SIS.
 “In my opinion, it doesn’t affect Muslim directors in other companies,” said the former Bar Council president
who also chaired the council’s shariah law committee.
 However, he said Muslims who carry out similar activities as SIS may be affected by the decision.
 Lawyer Lim Wei Jiet said the court ruling appears to give Islamic authorities a say in the regulation of
companies, which are subject to non-shariah laws.
 “The idea that a corporate entity – a non-person – can be subjected to Islamic laws and declared a ‘deviant’
could lead to very negative consequences,” he told FMT.
 “This is contrary to the secular fabric of the country, in which Islam is only supposed to function within the
personal domain.”
 Lim also asked how a company can be determined as “Muslim enough” to be subject to Islamic law.
 He asked what would happen if a non-Muslim holds shares on trust for a Muslim shareholder.
 “The permutations are endless, and this Pandora’s box shouldn’t have been opened in the first place.”
 Kuthubul Zaman agreed that the High Court ruling contravened the constitutional right to freedom of religion.
 “A company is governed by the Companies Act. A fatwa cannot override an act of Parliament or the
constitution, the supreme law of the land.”
 Shariah’s lawyer Nizam Bashir said it is premature to conclude the ruling.
 He said the ruling only means that the judicial review of the fatwa against SIS was not successful.
 “Of course, as a matter of law, just as much as companies can’t profess the religion of Islam, companies
similarly can’t profess to hold liberal beliefs or any other belief for that matter,” Nizam told FMT.
 He said there seems to be little or no legal basis to argue that state religious authorities can act against a
company, its officers, and its employees if a shareholder or director is Muslim.
 But Nizam said the ruling would indirectly affect corporate employment policies where Muslim employees or
directors are concerned, and corporate decisions when one party is Muslim and the other is not.
 “The corporate vehicle may be required to effectively be shariah-compliant,” he noted.
 While no one is suggesting that shariah authorities cannot utilize their power to pass fatwas, he said, questions
must be asked on whether the fatwas are within constitutional and legal parameters.
 “That is exactly the issue that SIS is taking with the present 2014 Selangor fatwa.”

TUTORIAL 3: THE COMPANY CONSTITUTION

i. Section 32(3) CA 2016
- The constitution adopted under subsection (1) shall be binding on the company, its directors, and its
members
 - A company’s constitution has the effect of a contract between the company and each member. A
member and each other member and the company and each director and company secretary, under which
each person agrees to observe the provisions of the constitution so far as they apply to that person.
- If a company has no constitution, the company, each director, and each member of the company shall
have the rights, powers, duties, and obligations as set out in the Act.
- If the company has a constitution, the company, each director, and each member of the company shall
also have the rights, powers, duties,s, and obligations as set out in the Act
- Under section 619(3) of the Companies Act 2016, for existing companies already registered under the
previous law, their MA & AA remains valid and enforceable under the Companies Act 2016, unless
otherwise resolved by the company (unless the company changes it).
ii. Section 33 (1) & (2) CA 2016
- The constitution of a company has a legal impact besides being a contract between:
- The company and each member; and
- Each member with the others
- When a constitution is adopted and registered, it binds the company and the members as if it was a contract
under seal.
- A company may sue a member and a member may sue the company to enforce or restrain breaches of
the constitution or new CA.
- Since the constitution constitutes a contract among members of the company, outsiders who are not privy
to the contract cannot enforce any rights conferred on them by the provisions of the constitution.
- All monies payable by any member to the company under the memorandum or articles shall be a debt
due from him to the company (Section 32 (2)) – If a member owes money to a company, it’s a debt to the
company owed by the member.
iii. Section 36 (1) & (2) CA 2016
- Following section 36, a company may alter its constitution by passing a special resolution.
- Section 36 of the CA 2016 prescribes only one restriction for the alteration of the company’s
constitution, that is, where it is prohibited by the constitution itself.
- SSM will have to be notified of any amendment within 30 days from the date of the passing of the
special resolution. a copy of the amended constitution and a fee of RM30 must accompany the notification.
- Fines on the company and every officer who contravenes this are up to RM10,000 upon conviction, and
in the case of a continuing offense, there is a further fine of up to RM500 for each day during which
the offense continues after conviction (an example of statutory veil lifting)…
iv. Royal British Bank v. Turquand (1856) 6 E&B 327
- People transacting with companies are entitled to assume that internal company rules are complied
with, even if they are not.
- The Articles of the Company empowered the Directors to borrow money provided they were authorized by
a special resolution passed at the General Meeting of the company.
- The company had given a bond for £2,000 to the Royal British Bank. This transaction did not comply with
the specifics of the Articles
- The Bank sued Turquand (the liquidator appointed as the Company had gone insolvent). Turquand argued
that the bank can’t sue because the bond issued by the company was not valid for non-compliance with the
AA.
- Held: Sir John Jervis CJ, ruled that the bond was valid, so the Royal British Bank could enforce the
terms. The bank could not be deemed to know which ordinary resolutions passed, because these were not
registrable. The bond was valid because there was no requirement to investigate the company's
internal workings. This is the indoor management rule.
v. Greenhalgh v. Ardene Cinemas Ltd. [1946] 1 All ER 512; [1951] Ch 286
- Mr. Greenhalgh was a minority shareholder in Arderne Cinemas and was involved in a battle to prevent the
majority shareholder, Mr. Mallard from selling control.
- The company changed its articles by special resolution in a general meeting which had the effect that Mr.
Greenhalgh was no longer in a position of control.
 - A company’s constitution has the effect of a contract between the company and each member. A
member and each other member and the company and each director and company secretary, under which
each person agrees to observe the provisions of the constitution so far as they apply to that person.
- If a company has no constitution, the company, each director, and each member of the company shall
have the rights, powers, duties, and obligations as set out in the Act.
- If the company has a constitution, the company, each director, and each member of the company shall
also have the rights, powers, duties,s, and obligations as set out in the Act
- Under section 619(3) of the Companies Act 2016, for existing companies already registered under the
previous law, their MA & AA remains valid and enforceable under the Companies Act 2016, unless
otherwise resolved by the company (unless the company changes it).
vi. Section 33 (1) & (2) CA 2016
- The constitution of a company has a legal impact besides being a contract between:
- The company and each member; and
- Each member with the others
- When a constitution is adopted and registered, it binds the company and the members as if it was a contract
under seal.
- A company may sue a member and a member may sue the company to enforce or restrain breaches of
the constitution or new CA.
- Since the constitution constitutes a contract among members of the company, outsiders who are not privy
to the contract cannot enforce any rights conferred on them by the provisions of the constitution.
- All monies payable by any member to the company under the memorandum or articles shall be a debt
due from him to the company (Section 32 (2)) – If a member owes money to a company, it’s a debt to the
company owed by the member.
vii. Section 36 (1) & (2) CA 2016
- Following section 36, a company may alter its constitution by passing a special resolution.
- Section 36 of the CA 2016 prescribes only one restriction for the alteration of the company’s
constitution, that is, where it is prohibited by the constitution itself.
- SSM will have to be notified of any amendment within 30 days from the date of the passing of the
special resolution. a copy of the amended constitution and a fee of RM30 must accompany the notification.
- Fines on the company and every officer who contravenes this are up to RM10,000 upon conviction, and
in the case of a continuing offense, there is a further fine of up to RM500 for each day during which
the offense continues after conviction (an example of statutory veil lifting)…
[Link] British Bank v. Turquand (1856) 6 E&B 327
- People transacting with companies are entitled to assume that internal company rules are complied
with, even if they are not.
- The Articles of the Company empowered the Directors to borrow money provided they were authorized by
a special resolution passed at the General Meeting of the company.
- The company had given a bond for £2,000 to the Royal British Bank. This transaction did not comply with
the specifics of the Articles
- The Bank sued Turquand (the liquidator appointed as the Company had gone insolvent). Turquand argued
that the bank can’t sue because the bond issued by the company was not valid for non-compliance with the
AA.
- Held: Sir John Jervis CJ, ruled that the bond was valid, so the Royal British Bank could enforce the
terms. The bank could not be deemed to know which ordinary resolutions passed, because these were not
registrable. The bond was valid because there was no requirement to investigate the company's
internal workings. This is the indoor management rule.
ix. Greenhalgh v. Ardene Cinemas Ltd. [1946] 1 All ER 512; [1951] Ch 286
- Mr. Greenhalgh was a minority shareholder in Arderne Cinemas and was involved in a battle to prevent the
majority shareholder, Mr. Mallard from selling control.
- The company changed its articles by special resolution in a general meeting which had the effect that Mr.
Greenhalgh was no longer in a position of control.
 - The company had two classes of shares; one class was worth ten shillings a share and the other class was
worth two shillings a share.
- The ten shillings were divided into two shilling shares, and all carried one vote. Mr. Greenhalgh had the
previous two shilling shares and lost control of the company.
- The articles of association provided by cl. 10 (a): "No shares in the company shall be transferred to a person
not a member of the company so long as a member of the company may be willing to purchase such shares
at a fair value to be ascertained by sub-clause (b) hereof".
- The company changed its articles by special resolution in a general meeting allowing existing shareholders
to offer any shares to persons/members outside the company.
- Mr. Mallard, the majority shareholder, wished to transfer his shares for 6 shillings each to Mr. Sol
Sheckman in return for £5000 and his resignation from the board.
- The issue before the Court was whether the alterations were valid or fraudulent on the minority.
- Held: The alteration of the articles was legitimate, because t was done properly.
- Lord Evershed MR stated,
- When a man comes into a company, he is not entitled to assume that the articles will always remain in
a particular form, and so long as the proposed alteration does not unfairly discriminate, I do not think it
is an objection, provided the resolution is bona fide passed,…
x. Hickman v. Kent Sheep Breeders Association [1915] 1 Ch 881
- Article 9 of the Kent or Romney Marsh Sheep Breeders’ Association’s Articles of Association stated that
any disputes between the Association and a member should go to arbitration before the court.
- Mr. Hickman complained about the Association’s refusal to register his sheep in the “flock book”. He was
under threat of being expelled – he commenced proceedings in the High Court.
- Held: Hickman was restricted by Article 9 – he was contractually bound.
- The Articles of Association created a contract between members – Hickman was bound by its terms and
must refer the dispute to arbitration.
xi. Eley v. Positive Government Security Life Assurance Co. (1875) 1 Ex D 88
- Eley was a member who was also employed as the company’s solicitor. Article 118 of the company’s
constitution states “Mr. William Eley of 27 New Broad Street, City of London, shall be the solicitor to the
company…“. (In fact, it was Eley that drafted the AA).
- When the company ceased employing him as a solicitor, Eley brought an action claiming that the
company constitution had been infringed.
- Held: The Court of Appeal held that there was no infringement as Eley was not suing as a member.
- Eley had not been employed as a member and the termination of work as a solicitor did not affect Eley’s
status as a member of the company.
xii. Wong Kim Fatt v. Leong & Co Sdn. Bhd. (1976) 1 MLJ 140
- In this case the company had two members, A, and B. The Articles provided that a member, who held a
certain number of shares, could requisition the other member for the purchase of the other member’s shares.
- A held the required number of shares under the Articles and requisitioned for the purchase of B’s shares.
- B claimed the clause in the Articles was unfair.
- Held: The Articles created a contract between A and B, and B was compelled to sell his shares to A.
The Articles empowering the requisition of shares of the only other holder is not repugnant (not against) to
the Companies Act.
- It was purely a matter of contractual obligation, and the plaintiff must be held to the obligation he had
undertaken. Thus, the Articles of a company create a contract between one member and another
member of the company.
[Link] v. Hands [1960] Ch 1
- Article 11 of the company’s constitution stated that ‘Every member who intends to transfer shares shall
inform the directors who will take the said shares equally between them at a fair value.’
- The plaintiff (Mr. Rayfield) who was a member of the company approached the defendant who was a
director and a member, but the defendant refused to buy the shares.
- The plaintiff claimed that the defendant was bound by the provisions of the Articles to buy the shares.
- As the directors were refusing to follow this rule, Mr. Rayfield sought an injunction.
 - Held: The court granted the injunction (compels to do) and held the article imposed an obligation on
the directors, not as officers, but also in their capacity as members. Pearson J,..." I believe, therefore,
that this is in words a contract or quasi-contract between members, and not between members and
directors.
xiv. Allen v. Gold Reefs of West Africa Ltd. [1900] 1 Ch 656
- Gold Reefs altered its Articles by special resolution to create a lien (the right to retain possession)on all fully
paid shares to take control of the only fully paid-up shares issued by the company which was owned by Mr.
Zuccani .who died insolvent.
- Mr. Allen, one of the executors of Mr. Zuccani sued to get the fully paid shares’ value.
- Held: The alteration of the company's articles was valid. So long as the resolution was done bona fide
(good faith)for the benefit of the company as a whole, restrictions on the freedom of a company to
alter its articles are invalid.
2. The Companies Act 2016 has introduced changes to the concept of a company’s constitution. What are the legal
effects of the constitution today and how may rights be enforced based on a company’s constitution?
▶ Outline:
1. Explain what is the company constitution
2. Explain the position before the CA 2016 i.e. the MA and the AA.
3. Explain the current position (see slides 2 & 3 above)
4. Explain the legal effects of the constitution (see slide 4 above)
5. Explain with reference to the cases mentioned above.
6. Discuss the position concerning ultra vires and the objects clause (refer to section 21 CA 2016*).
- Company’s Objects
- Section 21 CA 2016 provides that a company shall have the capacity to carry on or undertake any
business or activity.
- Nonetheless, if the company has a constitution that states the company’s objects, s35(1) provides that
the company shall be restricted from carrying on any business or activity that is not within those
objects. (ultras vires)
- The CA 2016 does not prescribe the consequences of a transaction outside the company’s objects
clause. Thus, the consequences of an ultra vires transaction are uncertain.
- Drawing from the provisions in the Act, specifically s21 and 39, it is submitted that a third party
dealing with a company can assume that the company has full capacity to carry on or undertake any
business or activity.
- This is because s39 provides that: -
- the doctrine of constructive notice applies only to documents relating to instruments of charges.
- No person shall be deemed to have notice or knowledge of the contents of the constitution or any
document (other than charges) related to the company which has been registered by the ROC or
which is available for inspection at the company’s registered office.
- Thus, a third party dealing with a company can rely on s21 and 39 and assume that the transaction in
question is within the capacity of the company, for the company has full capacity to carry on or
undertake any business or activity.
Concluding matters:

- The company constitution essentially creates a contract between the company and all its members,
and between these members and today, these rights have been placed on a statutory footing. However,
the interpretation of these provisions is still subject to the cases considered above.
- The Act gives each member of the company a personal right to bring an action to enforce a regulation
of the constitution or to restrain its breach.

TUTORIAL 5: COMPANY DIRECTORS AND OTHER OFFICERS (2)

A. COMPANY MEETINGS
1. Nice Bhd, having its registered office in Kuala Lumpur, held its latest annual general meeting (AGM) on 15
October 2018. The meeting was held at the Discount Hotel in Johore Bahru. The notice calling for the meeting
was sent out by the company on 1 October 2018. At the meeting, a resolution was passed to appoint Abu, who
is 73 years old, as a director of the company. This resolution was passed by an 80% majority.
Advise Ahmad, a member of Nice Bhd, who seeks your advice on the following:

a. Whether the validity of the AGM can be challenged on the ground that it was not held in Kuala Lumpur;
- Section 327 (1) Subject to the constitution, a company may convene a meeting of members at more
than one venue using any technology or method that enables the members of the company to
participate and to exercise the members’ rights to speak and vote at the meeting.
- Section 327 (2) The main venue of the meeting shall be in Malaysia and the chairperson shall be
present at that main venue of the meeting.
b. Whether the validity of the AGM can be challenged on the ground that the duration of notice given to
members was insufficient; and
- Section 316 (2) CA 2016:
- (2) A meeting of members of a public company shall be called by notice -
- (a) in the case of an annual general meeting, at least twenty-one days or any longer period
specified in its constitution; and
- (b) in any other case, at least fourteen days or any longer period specified in its constitution.
- (3) An annual general meeting may be called by a notice shorter than the period referred to in
subsection
(2) if agreed by all the members entitled to attend and vote thereat.
c. Whether the resolution to appoint Abu as a director could be challenged on any ground, presuming that the
AGM had been validly convened.
- Previously, under section 129 of the Companies Act 1965, no person aged of 70 can be appointed as
the director of a company or the director of a related company.
- However, such a person may be appointed or reappointed to be director of the company by passing
ng special procedure laid down in section 129 (6) which states that notice of not less than 21 days
should be given to the meeting before the special resolution for r appointment is proposed and 75 % of
members present vote for the approval of the special resolution.
- Today, under the Companies Act 2016, the provision concerning the appointment of a peraged age
70 and above has been removed. There is no obstruction in appointing any person of what ever age
to the BOD as long as the person is 18 years of age and above.