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Litigation: Validity and/or regularity of a board of directors meeting convened to terminate the managing director

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The ZRP’s litigation team (Miss Idza Hajar Ahmad Idzam & Bailey Leong) acted for the Defendants i.e. Nationwide Express Holdings Berhad (1st Defendant) and 4 other individuals who are the directors of the 1st Defendant.

Brief Facts:

The Plaintiff’s claim against the Defendants is in relation to inter alia the validity and/or regularity of a board of directors’ meeting convened to terminate her position as the managing director of the 1st Defendant.
By way of a notice dated 27.04.2018, the Plaintiff and the directors of the 1st Defendant i.e. 2nd to 5th Defendants were informed of a board of directors meeting scheduled on 30.05.2018 in accordance to the 1st Defendant’s constitution (“Board Meeting”). The Board Meeting’s agenda was circulated to  the Plaintiff in her capacity as the director of the 1st Defendant (as she then was) and listed a number of matters to be discussed and resolved during the Board Meeting which included inter alia “to receive matters arising and to transact any other matters” of the 1st Defendant. During the Board Meeting, the 1st Defendant’s board of directors has unanimously resolved to terminate the Plaintiff’s contract of service as the managing director of the 1st Defendant with immediate effect (“Termination”). A termination notice dated 30.05.2018 was issued to the Plaintiff informing her of the reasons of her termination i.e. inter alia her mismanagement, poor management, non-management and gross negligence resulting in the poor performance of the 1st Defendant and the group.  

The Plaintiff then commenced a suit against the Defendants in relation to the board of directors’ decision to terminate her contract of service. The Plaintiff has alleged inter alia that the 1st Defendant’s failure to state and/or particularise the intended Termination in the notice and/or agenda of the Board Meeting had rendered the said Board Meeting wrongful, ineffective, invalid, null and/or void.  The Defendants then filed a striking out application to strike out the Plaintiff’s action.


Court’s Findings:

Having heard both parties, the presiding Judge, Justice Nantha Balan agreed with the solicitors for the Defendants that there is no requirement in law to mandate the particularisation of a particular agenda for a board meeting. The presiding judge further stated that while it may be a good practice in general for the meeting agenda to contain specifics of what will be discussed, it is not a necessity and/or requirement in law. The presiding judge further stated that a meeting agenda with insufficient particulars or notice will not invalidate a meeting. In this regard, it should also be borne in mind that the 1st Defendant’s constitution is silent on the need to furnish a meeting agenda and the Board Meeting was held in accordance to the constitution of the 1st Defendant.

For the reasons stated above, the presiding judge allowed that the Defendants’ striking out application and held inter alia that the Board Meeting was rightfully convened in law. The presiding judge further held that the Plaintiff’s relief of reinstatement is a relief which is confined to the purview of the Industrial Court and His Lordship’s decision does not affect the right of the Plaintiff to challenge her dismissal in the Industrial Court.