students manuals pdca lpm c06

Resolutions Made At General Meeting

CHAPTER SIX

RESOLUTIONS MADE AT GENERAL MEETING

6.0 In this Chapter you will notice that the decisions of a general meeting is expressed and

recorded as the passing of resolutions. There are different types of resolutions being passed at a

general meeting due to the nature and importance of the business being transacted in the meeting.

The Companies Act 1965 provides for two types of resolutions; namely: ordinary and special

resolutions. We should understand the mechanics involved in the passing of such resolutions and

their effects including the principles that are applied in amending an ordinary resolutions, the

rescission of resolutions, and expunging resolutions.

So called “Circular resolutions” are passed without actually having a physical sit-down meeting

as long as they follow the requirements of the body’s constitution of having all signatures of the

governing members or signed by a majority of the governing body. This method of passing

resolution is legally valid, and company law has been passed to legally accept a “Members

Circular Resolution” provided all members sign on documents containing the resolution. The

signing by the governing body or by members seems to be the important factor.

We shall also examine how minutes are kept and its effects of giving confirmation of meetings

being held as well as the validation of proceedings at meeting as to how members could ratify

prior actions purportedly made on their behalf so as to give effect to the original action as from

the date on which it was made.

MAICSA PDCA – Law and Practice of Meetings Version 2 Updated June 2006

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LEARNING OBJECTIVES

This chapter aims to help you to :-

• Gain an understanding of the different types of resolutions;

• How these resolutions are passed and amended;

• What are the effects of ordinary and special resolutions;

• What are circular resolutions;

• How minutes of meetings are kept and its effects;

• How the proceedings of meetings could be validated. 6.1 MOTIONS, PROPOSED RESOLUTION & RESOLUTION The term “motion” and “resolution” are frequently used indiscriminately as though they mean

the same thing. Traditionally, each has a distinct meaning. A motion is a proposition submitted to

a meeting with a view that it will be adopted by a majority vote. It is a proposal to do or

accomplish or arrange for something to be done. Whereas, a resolution is a motion that has been

carried by a requisite majority voting in its favour. It is possible for a meeting to decide to pass a

resolution which by the use of suitable words has the effect of affirming that the motion was not

carried, and thus recording this in a positive way in the minutes. A motion is usually described as

“carried at a meeting on a poll or by ballot, and thereby a resolution is “passed by: and is

recorded as such in the minutes. Thus it is usual to write in the minutes “Resolved

that……………………..” . If a motion is not carried it does not become a resolution and

therefore disappears into oblivion in a sense. In modern day recording, the word “resolution” is

used interchangeably with the word “proposal resolution” that is to be considered. We will be

using the modern approach in the latter paragraphs.


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6.2 CIRCULAR RESOLUTIONS For companies incorporated under the Companies Act 1965, the articles of association usually

regulate the manner in which business at the meetings is transacted. Both the directors and

members have authority to pass resolutions. Resolutions passed and recorded in minutes book

are legally accepted as evidence in the court of law, but the minutes must be signed by the

Chairman of the meeting according to section 156 of the CA 1965. The directors collectively

exercise their powers in management by passing board resolutions or circular resolutions as

prescribed by the company’s articles of association. (Article 90, Table A). In an actual meeting,

the members as a whole will express their decision via voting on the motions and once a decision

has been reached, a resolution will be passed at the meeting that is properly convened and held.

However, section 152A of the CA 1965 also permits a “members circular resolution” to be made,

if all members entitled to attend and vote at meetings, sign on documents containing the

resolution. This legal provision insists that all members’ signatures must be signed on the

circular, and further deemed that such members’ circular resolution has been held at the

company’s registered office address if so signed. This way of making a decision is most

convenient for companies that have small numbers of members and therefore commonly used in

small private companies, but not companies that have many members whose signatures may be

difficult to obtain. The date of the resolution shall be the date on which it was signed by the last

member.

6.3 BOARD OF DIRECTORS’ RESOLUTIONS The articles of association or Table A will usually provide how board of directors could make

decisions by passing resolutions. Table A, Article 80 provides that questions arising at any

directors’ meeting shall be decided by a majority of votes and a determination by a majority of

the directors, shall for all purposes be deemed to be the decision of the board. In this case, the

majority is counted on the basis of the majority that forms the board who are present at the board

meeting. And, in case of an equality of votes, the chairman of the meeting shall have a second or

casting vote. Table A, Article 82 also provides that any director with the approval of the board

may appoint an alternate director to represent him in his place at board meetings, during such

period as the principal who appointed him, failed or is unable to attending board meetings. As


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such the directors do not vote by proxy like the members do; they appoint alternates or substitute

directors to attend and vote on their behalf at meetings.

Apart from these physically sitting down meetings of the board, the above mentioned board

circular resolution may be used in the event that the board does not meet physically and the type

of resolution to be passed could be decided simply by signing on papers called directors circular

resolution.

6.4 MEMBERS’ RESOLUTIONS By section 152A of the Companies Act 1965, all members of a company may sign members

circular resolution in the manner authorised aforesaid by law. And because of this authority

given by law, most company’s articles do contain provisions that if a resolution is signed by all

members entitled to attend at vote, the resolution is deemed passed at the registered office

address of the company, regardless of where the resolution was signed.

Under normal circumstances, in particular annual general meetings and extraordinary general

meeting of large companies having numerous members are carried out by an actual physical

sitting down meeting where proper notices have been issued to all members. The articles of

association, the Companies Act 1965 and the Bursa Malaysia (formerly KLSE) Listing

Requirements will state that for a particular resolution to be effective, and depending on the type

of resolution proposed, it has to be voted upon by the members present at the meeting. The

number of votes to be obtained will depend on whether the resolution proposed is an ordinary or

special resolution.

6.5 SPECIAL RESOLUTIONS Section 152 (1) CA 1965 defines a special resolution to be a resolution that has been passed by a

majority or not less than three-fourths of all members entitled to vote in person or by proxy at a

general meeting of which not less than twenty-one days’ notice has been given and wherein the

notice has specify the intention to propose the resolution as a special resolution.


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The notice of a special resolution must be given in accordance with section 144 (5) and section

152 CA 1965. However, a shorter notice is deemed duly called under the following

circumstances:-

(a) if it is so agreed by not less than 95% of the total voting rights for passing a special

resolution in an EGM [section 145(3)(a) CA 1965];

(b) if it is agreed by 100% of members entitled to attend and voting for an annual general

meeting [section 145(3)(b) CA 1965].

6.6 SPECIAL NOTICE A special notice should not be confused with special resolution because they are entirely of

different nature. A special notice is used for removing a director or an auditor, and is sent to the

company by a proposing shareholder. The is defined by section 153 of the Companies Act 1965

as the intention to move a resolution given to the company not less than twenty-eight (28) days

before the meeting at which the resolution is moved.

6.7 REGISTRATION OF SPECIAL RESOLUTIONS As per section 154 (1) CA 1965, special resolutions resolved at meetings must be registered with

the Companies Commission of Malaysia (CCM) by lodging Form 11. For wholly-owned

subsidiary, Form 52 must be lodged with CCM if such resolution is required to be lodged for

filing and passed by virtue of signing by the Corporate Representative under section 147 (6) CA

1965.

These forms must be lodged with CCM within one month after the passing of the special

resolutions except for the following matters (see table below) which the Companies Act 1965

stipulates a specific timeframe for the lodgment of forms.


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6.8 PASSING OF SPECIAL RESOLUTIONS TO GIVE EFFECT TO THE MATTERS LISTED BELOW: The Companies Act 1965 requires the passing of special resolutions to give effect to the

following matters:

Sections in CA 1965

Passing of Special Resolution to give effect to the matters below:

Timeframe for lodgment of Form

s. 15 (4) Alteration of any restriction on the right to transfer the company’s shares or any limitation on the number of its members in the memorandum or articles of a private company

Within 1 month after the passing of the resolution – Form 11

s.21 (1A) Alteration or deletion of provisions in the memorandum which could lawfully have been contained in the articles of association.

Within 14 days after the passing of the resolution as per s.21 (2) – Form 11

s. 23 (1) & (3) Change of name of the company Within 14 days after the passing of the resolution as per s. 21 (2) & s. 23 (1) – Form 11

s. 24 (1) On application and to the satisfaction of the Minister of Trade, a licence may be issued for the word “Berhad” to be omitted from the name of the public company limited by guarantee

Within 1 month of the passing of the resolution Form11

s.25 (1) Re-registration (conversion) of an unlimited company as a limited company

Within 14 days of the passing of the resolution s. 21 (2) & s. 25 – Form 11

s.26(1) Re-registration (conversion) of a public company as a private company

Within 14 days of the passing of the resolution s. 21 (2) & s. 26 (2) – Form 11


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s.26(2) Re-registration (conversion) of a private

company as a public company Within 14 day of the passing of the resolution s. 21 (2) & s. 26 (1)- Form 11

s. 28 (1) Change of objects of the company Within 14 days after allowing a lapse of 21 days of the passing of the resolution s. 28 (9) – Form 11

s. 31 (1)

Alteration of the articles of association

Within 1 month of the passing of the resolution- Form 11

s. 56 (2) Creation of reserve liability Within 1 month of the passing of the resolution- Form 11

s. 64 (1) Reduction of share capital Within 1 month of the passing of the resolution-Form 11

s. 69 Approval for payment of interest out of capital

Within 1 month of the passing of the resolution- Form 11

s. 142 (5) Directors to cause a copy of statutory report and auditor’s report to be lodged

Within 7 days before date of statutory meeting.

s. 199 (1) Appointment of inspectors by resolution of the company

Within 1 month of the passing of the resolution – Form 11

s. 218 (1) (a) Winding-up by the court where the company has so resolved

Within 1 month of the passing of the resolution – Form 11

s. 254 (2) Members’ voluntary winding-up Within 7 days of the passing of the resolution s. 254 (2)-Form 11


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s. 258 (3) Removal of liquidator under a members’

voluntary winding-up Within 1 month of the passing of the resolution

s. 269 (1) (a) Exercise of certain powers by liquidator in a members’ voluntary winding-up

Within 1 month of the passing of the resolution

s.270 (1) Sanctioning liquidator to transfer property of company


s. 273 (1) Sanctioning arrangement entered into between a company and its creditors in the course of being wound-up


The verbiage of ordinary resolutions is not found in the Companies Act 1965. However, it could

be found in Table A, Article 36 and Article 40. All resolutions passed in a general meeting are

ordinary resolutions unless the articles of association or the Companies Act 1965 requires a

special resolution to be passed for that particular matter.

6.9 SIMPLE MAJORITY FOR PASSING ORDINARY RESOLUTION

Ordinary resolutions require a simple majority of those who are present and voting by a

show of hands or by a poll. It is the majority of those members who have voted and those

who have abstained from voting are not taken into account.

However, there are exceptions to this requirement. For example:

• section 129 (6) [appointment or re-election to office of a public company director

attaining an age of or over 70, requires a majority of at least ¾ votes]

• section 172 (7) (a) CA 1965 [removal of the auditor from office requires a

majority of ¾ votes]

Both provisions above require a majority of not less than three-fourths of such members

entitled to vote and voting in person or by proxy at a general meeting.


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6.10 REGISTRATION OF ORDINARY RESOLUTIONS

Most ordinary resolutions do not require lodgment of Form 11 although there are some

exceptions:

• section 132D which provides that in addition to obtaining an authority by

members to allow directors to issue shares, the ordinary resolution must be lodged

with the Registrar within 30 days of passing the resolution.

• section 62 (1) CA 1965 – the power of the company to increase its authorised

share capital, unless specified otherwise by the articles of the company.

6.11 EFFECTS OF RESOLUTIONS

Once a motion has been considered by the members, a resolution will be passed to give

effect to the matter. Resolutions are effective immediately upon being agreed up or

approved by the members of the meeting and are therefore binding for all purpose and

intent on the company and the third party.

However, there are certain resolutions which although passed by the members of a

company could not take effect because the provision of company law prohibits the

passing of such a resolution. For example, section 132G(2) CA 1965 states that an

arrangement or transaction to acquire shares or assets of another company in

contravention of subsection (1) shall be void and any consideration given for the shares

or assets shall be recoverable accordingly.

Resolutions may be permanently effective and not rescindable. An example of such a

resolution would be a special resolution passed by a limited company not to call up any

uncalled share capital under section 56 (2) CA 1965, the special resolution is binding on

the company and it cannot rescind its decision except in the event and for the purposes of

the company being wound up.


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However, some resolutions may be rescinded, for example, when a company passes a

special resolution to alter its article of association at a members’ meeting and at a

subsequent meeting, it passes another special resolution to rescind the first special

resolution.

6.12 RESCINDING A RESOLUTION PASSED

Once the motion has been passed it is minuted as having been resolved. But if the

company had not carried out the activity and later decides to nullify the effect of that

resolution, and depending on which level of authority, such resolution may be rescinded

by passing another resolution to change the previous one or superceding it. For a

resolution that was passed at a previous meeting to be rescinded at a subsequent meeting

it will depend on some of the following factors:

• The purpose and nature of the original resolution passed previously and whether it

is permitted by law to carry out a rescission.

• Which resolving body should the rescission be carried out i.e. board of directors

or members at general meeting.

• The regulations governing the proceedings – whether the company has adopted

Table A’s provisions governing proceedings at meeting or it has implemented its

own proceedings of meetings.

Once the notice of motion to rescind a resolution is issued, any action giving effect to the

previous resolution must be immediately suspended. To rescind the previous resolution,

the subject matter or motion has to be moved, seconded, debated and voted according to

the rules and procedure of meetings.

If there is a prescribed procedure in the articles of association it has to be followed

strictly, otherwise, the rescission would be made ineffective. If there is no prescribed


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procedure for rescission, the company would still be able to rescind its previous

resolution based on the principles that if a body has been given the power to decide on a

matter then it would have the power to rescind its decision.

However, the subsequent resolution passed would only take effect provided that the

substance of the previous resolution has been wholly revoked.

6.13 AMENDMENTS TO WORDINGS OF RESOLUTION TABLED

If a motion or proposed resolution had been issued and circulated to members and the

meeting had proceeded to deliberate on the motion, an amendment that is proposed to

change the wordings of the motion or substituting words or deleting phrases or any of

these combinations, that would materially affect the original wordings, can be moved and

seconded after the original motion has been proposed but before voting has taken place. It

is usual for Articles that when the text of an ordinary resolution is set out in full in the

notice of meeting, the articles of association may provide that no amendment shall be

considered unless forty eight hours notice in writing of the proposed amendment has been

given to the company. Amendments to a motion or proposed resolution are possible

provided that:

• It is within the scope of the notice of the meeting;

• It should not be onerous or :

- redundant (re-open business already settled);

- inconsistent (incompatible with a previous decision of the meeting);

- obstructive, vexatious, dilatory or irrelevant;

• It must not negate the substantive resolution;

• It is a minor one.

A vote should be taken to ascertain whether or not the meeting would accept the

amendment. If accepted, it would have to be voted on separately.


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It is of the better view that the chairman should accept an amendment proposed by the

meeting and not to reject it. In the event that the chairman has improperly rejected an

amendment, the resolution carried could be challenged and made invalid, if brought to

the court. To prevent this from happening it would be prudent that the articles of

association should contain a provision of validating the resolution even though there is an

error or misjudgment on the part of the chairman.

Voting on an amendment should be in the order in which they affect the original motion

and they should be disposed off one by one. If there is an equality of votes then the

amendment should be rejected unless the chairman has a casting vote and he exercises

that vote. The chairman may rely on Table A, Articles 51 and 52 or the articles of

association as the case may be, to defer the poll until the end of the meeting so as not to

disrupt the meeting. At the end of the meeting, three polls would have to be taken:

• A poll whether or not to accept the amendment

• A poll on the resolution as proposed to be amended

• A poll on the original resolution

If the amendment is accepted via the first poll then the second poll will determine the

results of the resolution, while the third poll becomes irrelevant. If the amendment is

rejected by the first poll, then the second and third poll becomes redundant.

6.14 DEMANDING FOR A POLL

A resolution lost on a show of hands may be reconsidered at that meeting or at the next

meeting by putting a request to the chairman for a vote by show of hands. This will again

depend on the company’s articles, because Table A, Article 51 states that a demand for a

poll can be carried if the result of the show of hand has not been declared, the chairman

or at least three members present in person or by proxy, or any member or members

representing not less that 10% of total voting rights.


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6.15 PASSING A RESOLUTION IN WRITING

For expediency and business efficacy purposes, the articles of association and the law has

devised provisions like Table A, Article 90 and Section 152A of the Companies Act 1965

where the holding of a physical meeting in order to manage the affairs of the company

and determining the wishes of the members may not be necessary. A circular resolution

or ‘paper resolution’ may be circulated amongst directors or members as the case may be

so as to obtain the determination of the matter concerned.

For the purpose of the directors circular resolution, Table A, Article 90 requires all

signatures of the directors to validate the resolution and in some other articles, a majority

of directors’ signature may validated the resolution.

However, for a members circular resolution to be valid all signatures of the members

must be obtained to validate the resolution passed.

6.16 CASE LAW ON DIRECTORS’ CIRCULAR RESOLUTION

These “paper meetings” are common and these informal decision making may be

justified on the principle of unanimous consent. However, informal decisions of the

board of directors must be unanimous: Runciman v Walter Runciman plc [1992] BCLC

1084, 1092 High Court England. If there are dissenting views from the directors, it will

be necessary to call for a meeting unless the articles of association allow for informal

decisions to be taken on a majority basis. Therefore, if a circular resolution is not signed

by all the directors, or as required by the articles, it will be invalid. A board of directors

meeting will then have to be called to consider the proposed resolution where the

directors who are present could discuss the matter face-to-face.

Table A, Article 90 provides that a resolution in writing, signed by all the directors for

the time being entitled to receive notice of a meeting of the directors, shall be as valid and


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effectual as if it had been passed at a meeting of the directors duly convened and

held.Such a board circular resolution must be signed by all directors in order for the

resolution to be valid, unless the articles of association provide otherwise (Kelapa Sawit

(Teluk Anson) Sdn Bhd v Yeoh Kim Leng [1991] 1 MLJ 301.

For example, the articles of association may provide that only a majority is required to

pass the resolution, hence, the resolution would become effective and valid upon getting

a majority of the directors’ signatures on the circular resolution.

However, it is important that the circular resolution be circulated to all directors and not

to certain majority directors in order that it can be signed accordingly. (Chan Choon

Ming v Low Poh Choon [1995] 1 CLJ 812). It is usual to assume that the date when the

circular resolution becomes effective would be the date stated on the circular resolution

that is returned and kept in the minute book.

6.17 WHERE DIRECTORS AND SHAREHOLDERS ARE SIMILAR

In companies where the directors and shareholders are identical, decisions are taken

without calling for a formal meeting and there is no distinction made between a decision

of the board and that of the shareholders.

However, Mohd Ghazali JC in Tan Tien Kok v Medical Specialist Centre (JB) Sdn Bhd

[1994] 3 MLJ 469 High Court Malaysia held that a resolution passed by the board of

directors could not be considered to be a shareholders’ resolution, even if the directors

and shareholders were the same persons.

In Jimat bin Awang v Lai Wee Ngen [1995] 3 SLR 769, 779 Court of Appeal Singapore,

Lai J doubted the correctness of the decision of Mohd Ghazali JC on the basis that the

judge had not considered the unanimous consent principle.


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6.18 CIRCUMSTANCES WHERE DIRECTORS’ CIRCULAR RESOLUTION WOULD NOT SUFFICE

It must be noted that directors circular resolution may be used for matters pertaining to

management of the company. However, where the Companies Act specifically requires a

meeting to be held as in Section 257 (1) CA 1965, “ … and that at a meeting of directors

have formed the opinion that the company will be able to pay its debts in full ….” the

directors must adhere to the requirement of the Act of holding the said meeting to make

the declaration of solvency. This equally applies to directors determining the solvency of

a public company that intends to buy back its own hares [Section 67A(2) and Companies

Regulations 1966, Reg. 18A & 18B]

6.19 MEMBERS CIRCULAR RESOLUTION

It is a common law ruling that there is no need to hold an actual physical general meeting

to determine the wishes of the members, provided that all the members, who are entitled

to attend and vote on the matters which a general meeting should carry into effect, assent

unanimously to such a course of action.

This principle was held in the case of Re Express Engineering Works Ltd [1920] 1 Ch

466 where the five directors who were also the sole members of the company were

attending a board of directors meeting to vote in respect of a contract in which they were

interested in, but was prohibited by the articles of association. The court held that since

all the five directors were present at the meeting which they treated as a shareholders

meeting instead of a directors’ meeting, the resolution passed could not be set aside

because the transaction was within the powers of the company.

The assent of the members need not be given at the same time (Parker & Cooper v

Reading [1926] Ch 975). The members may agree to a course of action at different times

and not simultaneously. Thus, it would be possible for decisions to be taken by

circulating a paper resolution to the members; if they all agree, their unanimous decision

would be as good as a resolution being passed at a meeting.


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However, there are circumstances whereby the law specifies that an actual meeting has

to be called to resolve certain matters. These are “meetings” that are preferably not

advisable to be carried out by way of mere signing on documents :-

• where a public company wishes to buy back its shares (Section 67A CA 1965).

The board of directors must hold a meeting as required by Regulation 18B of the

Companies Regulations 1966 as well as related provisions of the Bursa Malaysia

Securities Berhad Listing Requirements.

• Where a general meeting of every company to be called the “annual general

meeting” shall in addition to any other meeting be held once in every calendar

year and not more than fifteen months after the holding of the last preceding

annual general meeting. (Section 143 (1) CA 1965) In practice, small private

companies still “pass resolutions” in writing by all members to satisfy this

requirement.

• Where the directors of every company shall at some date not later than eighteen

months after the incorporation of the company and subsequently once at least in

every calendar year at intervals of not more than fifteen months lay before the

company at its annual general meeting, a profit and loss account for the period

since the preceding account made up to a date not more than six months before

the date of the meeting (Section 169 (1) CA 1965) In practice, newly

incorporated small private companies still “pass resolutions” in writing by all

members to satisfy this requirement.

• Where a director of a public listed company may be removed by ordinary

resolution. [Section 128 (2) and (3)] There must be opportunity for the affected

director the right to be heard and his written representation to be read out at the

meeting where the proposed resolution to remove him is to be tabled for

consideration.


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• Where the auditors are removed before their term of appointment. Section 172 (4)

provides that an auditor may be removed from office by a resolution of the

company at a general meeting of which special notice has been given. Section

172 (5) entitles the auditor concerned to make a written representation to be read

to the members prior to the meeting.

• Where the board of directors must inquire into the solvency of a company’s

financial position so that they can sign the declaration of solvency, before an

extraordinary general meeting can be called to table the motion to wind-up the

company by members voluntary winding-up.

6.20 LEGALISING “PAPER” MEETING

Section 152A (1) CA 1965 provides that notwithstanding anything to the contrary in this

Act or the articles of the company, a resolution in writing signed by or on behalf of all

persons for the time being entitled to receive notice of, and to attend to vote at general

meetings shall, be treated as a resolution duly passed at a general meeting and, where

relevant, as a special resolution so passed. This section also allows a special resolution

to be passed without the necessity of holding a meeting if a written resolution is signed

by all persons having the right to vote. Section 152A (2) CA 1965 provides that any such

resolution shall be deemed to have been passed at a meeting held at the registered office

on the date of which it was signed by the last member. This section determines the venue

of the meeting to be at the registered office in spite of the fact that no meeting has been

called except that the paper resolution is being circularized to members. Section 152A (3)

CA 1965 provides that this section shall not be construed as requiring that the persons

signing a resolution shall sign the same document containing the resolution; but where

two or more documents are used for the purpose of obtaining signatures in respect of any

resolution, each of such document shall be certified in advance by the secretary of the

company as containing the true and correct version of the proposed resolution.


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6.21 MIUNTES OF MEETING

The minutes of a meeting are written records of the proceedings of business transacted

at a particular meeting and recorded as the minutes by the company secretary. It is a

summary of the proceedings of a meeting and each item or heading is preferably

serially numbered with a column for action to be taken.

The minutes will usually include the following information:

• The name of the entity holding the meeting – ABC Sdn Bhd/XYZ Bhd. etc.

• The type of meeting – directors’ meeting or general meetings or class meetings;

• The place, day, date and time of holding the meeting;

• The names of the persons present, those attending as ex-officio or by invitation or

in attendance and those names of persons absent with apologies;

• The identity or name of the chairman;

• The reading of the notice of meeting or waiver as the case may be;

• The quorum as confirmed by the company secretary;

• A record of decisions that have been taken and resolutions passed;

• The records of items of business not requiring formal resolution (minutes of

narration);

• Closure of meeting by indicating the time; Names of proposers and seconders

where necessary;

• Signature of the chairman at the end of the minutes, usually written as

“Confirming or signed as Correct Record”. There is no legal requirement for such

wordings, but it is a mere practice.

Minutes should be concise and clear and are not verbatim transcripts of what was said at

the meeting. Therefore, only the conclusion and the exact wordings of each resolution

passed are to be recorded in the minutes. The reasons for the decision should not be

recorded unless directed to do so by the meeting.

Where issues that have been discussed and there are dissentions by certain members it is

best practice to record such dissentious statement made so as to reflect the way the


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decision came about. This is particularly important as evidence of the person making the

dissenting statement.

As per section 156(1) CA 1965, every company shall cause:

(a) minutes of all proceedings of general meetings and of meetings of its directors

to be entered in books kept for that purpose within fourteen days of the date

upon which the relevant meeting was held; and

(b) those minutes to maybe signed by the chairman of the meeting at which the proceedings were held or by the chairman of the next succeeding meeting.

6.22 ATTENDANCE RECORD

It is also a practice that the attendees of each meeting must sign an attendance list which

would assist in ascertaining whether the required quorum was present and the identity of

those present for future evidence and kept in the minutes book as part of the proceedings

of the meeting.

6.23 MINUTE BOOK & ITS STATUTORY REQUIREMENT

Two-minute books are to be kept, namely one to record the minutes of the board of

directors and the other to record the minutes of the members. It should be noted that the

minute book must be used specifically for recording minutes and no other purposes.

It was held in North Sydney–Apollo Printing Pty Ltd [1976] 1 ACLR 392, 399 Supreme

Court of New South Wales that the minute books are prima facie evidence of the

proceedings of the meeting.


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Generally minutes are kept in a bounded book. If loose-leaf book is used they should be

numbered and securely filed to prevent any tampering or removal of the pages. The

minutes have to be legible and it is usually in a typewritten form.

Section 358 (1) CA 1965 provides that any register, index, minute book or book of

account may be kept either by making entries in a bound book or by recording the matters

in question in any other permanent form.

Section 358 (2) CA 1965 provides that where any register, index, minute book or book of

account are to be kept and is not kept by making entries in a bound book, there must be :-

(a) reasonable precautions to be taken for guarding against falsification and for

facilitating the discovery of any falsification; and

(b) proper facilities to be provided to enable the register, index, minute book or book

of account to be inspected, and where default is made in complying with this, the

company and every officer of the company who is in default shall be guilty of an

offence and have to pay a penalty of two thousand ringgit and default penalty.

Pursuant to section 156 (2) CA 1965 any minute so entered that purports to be signed as

provided in section 156 (1) (b) CA 1965, shall be evidence of the proceedings to which it

relates.

Section 156 (3) CA 1965 provides that where minutes have been so entered and signed,

then, until the contrary is proved:-

(a) the meeting shall be deemed to have been duly held and convened,

(b) all proceedings relating to that meeting shall be deemed to have been complied

with; and


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(c) all appointments of officers or liquidators made during the meeting shall be

deemed to be valid.

6.24 DEFAULT & INACCURACY OF MINUTES

Should there be a default of not recording the minutes within 14 days of the date upon

which the relevant meeting was held, the company and every officer of the company who

is in default shall be guilty of an offence and have to pay a penalty of two thousand

ringgit and default penalty (section 156 (3) CA 1965)

Minutes of general meeting sometimes do not record everything that occurred and

evidence may be led to show that certain matters were not recorded in the minutes.

In Re Indian Zoedone Co [1884] 26 Ch 170 Court of Appeal England, Lord Selborne LC

held that the onus of proving that minutes were inaccurate lay on the person who

challenged the minutes. A member who had attended a meeting may give evidence that

the minutes did not adequately record what had occurred at the meeting. He may refer to

his written notes which he had taken down during the meeting, so as to justify his

allegations.

However, if the minutes which have been adopted, are found to be inaccurate in its

meanings and recording of the proceedings, a motion is put to amend the minutes. If the

amendment is carried, the alteration could be made. The amending resolution has to be

minuted. As per the case of Re Cawley & Co [1889] 42 Ch D 209 it was held that

minutes should not be altered unless an amending resolution had been passed and

minuted.

6.25 CONFIRMING MINUTES

In practice, with the consent of the meeting, the minutes are taken as read at the

succeeding meeting. A motion is put to recommend their confirmation as a true record of


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the previous meeting. This board procedure is to ensure that the other directors have no

objections or wish to raise any issue on the accuracy of the minutes. Once the chairman

has signed the minutes as a true and accurate record of the meeting, no alteration can be

made, unless another resolution to alter the minutes is made at a later date.

6.26 MEMBER MAKING NOTES OF MEETING

Unless there is a law prohibiting it, a member may make notes of the proceedings by

mechanical or electronic means like tape recording. In the case of PP v Gurbachan Singh

[1964] MLJ 141 High Court Malaysia held that a tape recording was admissible as

corroborative evidence in criminal proceedings. Likewise, the same would hold true in

civil proceedings.

6.27 INSPECTION OF MINUTE BOOKS

The books containing the minutes of proceedings of any general meeting shall be kept by

the company at the registered address of the office of the company, and shall be open to

the inspection of any member without charge as per section 157 (1) CA 1965.

It must be noted that only the minute book of proceedings of any general meeting shall be

open to inspection by members. However, members could not inspect the minute book

containing the minutes of proceedings of board of directors’ meeting.

Pursuant to section 157 (2) CA 1965 any member shall be entitled to be furnished within

fourteen days after he has made a request in writing to the company for a copy of any

minutes specified in section 157 (1) CA 1965, at a charge not exceeding one ringgit for

every hundred words.


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If any copy required by the member is not furnished, the company and every officer of

the company who is in default shall be guilty of an offence and have to pay a penalty of

five hundred ringgit and default penalty (Section 358 (1) CA 1965).

6.28 CONDITIONS FOR INSPECTION

Section 359 (1) CA 1965 provides that any register, minute book or document of a

corporation which is by this Act required to be available for inspection shall subject to be

available for inspection at the place it is kept during the hours in which the registered

office of the corporation is accessible to the public. This would mean that the minute

book could be inspected during officer hours at the registered office of the company.

Section 359 (2) CA 1956 provides that any person permitted by this Act to inspect any

register, minute book or document of a corporation may make copies of or take extracts

from it and any officer of the corporation who fails to allow any person so permitted

shall be guilty of an offence against this Act.

6.29 COURT MAY COMPEL COMPLIANCE & INVESTIGATION

Section 362 (1) CA 1965 provides that if any person in contravention of this Act, refuses

or fails to permit the inspection of any register, minute book or document or to supply a

copy of any register, minute book or document, the Court may by order compel an

immediate inspection of the register, minute book or document or order the copy to be

supplied.

Section 200(4) gives power to an inspector appointed by section 197 (At direction by

Minister) of section 199 (By special resolution of a general meeting) to require any

officer or agent of any corporation whose affairs is under investigation to surrender and

produce all books and documents for the inspector’s retention and have access at all

reasonable times to all books and documents.


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6.30 RATIFICATION BY GENERAL MEETING

Ratification is validation by the company of a prior action or decision which had been

purportedly made on its behalf by the board of directors without their authority, so as to

render the action or decision valid as from the date the original action or decision was

made. The effect of ratification is retrospective but the procedure to ratify a past action

must be by members at a general meeting that is held within a reasonable time and within

the permit of law.

If the directors purport to exercise a power that should properly have been exercised by

the general meeting, their action can be ratified by an ordinary resolution of the general

meeting. The shareholder-directors may use their votes as shareholders to effect the

ratification and the action becomes valid. The minority shareholders may argue on the

validity of the ratification, applying the exceptions in Foss v Harbottle [1843] 2 Hare

461.

For listed companies, para 17.10 of the Listing Requirements has added a new provision

that does not allow ratification of any transaction which requires shareholders’ approval

and the approval has to be obtained prior to the completion of the transaction. This would

apply to non-related party transactions which are open market transactions.

In law, ratification is rather complex, but it is clear that an act cannot be ratified if:-

• it is beyond the powers of the company to carry out the act;

• it is illegal;

• it amounts to fraud on the minority; or

• it involves a breach of directors’ duty to the company’s creditors


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6.31 COURT MAY ORDER A DEFECT UNDER SUBSTANTIAL INJUSTICE

The company or the board of directors may fail to observe the necessary procedural

requirements as required by the Companies Act 1965. Section 355 (1) CA 1965 provides

that no proceedings shall be invalidated by any defect, irregularity or deficiency of notice

or time unless the Court is of the opinion that substantial injustice has been or may be

caused thereby which cannot be remedied by any order of the Court.

This provision has the effect of allowing the decisions of the board or the general meeting

to stand notwithstanding the procedural irregularities, deficiency of notice or time unless

the Court thinks that these irregularities have caused or may cause substantial injustice

that cannot be remedied.

As per section 355 (2) CA 1965 which provides that the Court may, if it thinks fit, make

an order declaring that the proceeding is valid notwithstanding any such defect,

irregularity or deficiency. This provision can be applied where the defect or irregularity is

not a deliberate act. The word “proceeding” has been defined in the case of Lim Hean Pin

v Thean Seng Co Sdn Bhd & Ors [1992] 2 MLJ 10. The Court held that a general meeting

is included under the word “proceeding” and it should also be extended to the

proceedings of company meetings provided that they are required to be held under the

Companies Act 1965.

As per section 355 (3) CA 1965 procedural irregularities would include absence of

quorum, defects in notice, non-receipt of notice, short notice of general and creditors

meetings and accidental failure to give notice to a member. These irregularities would

not invalidate the meeting unless the member applies to the Court to have the meeting

declared null and void.

Section 355 (3) CA 1965 empowers the Court to validate procedural irregularity where

there has been a default in the observance of the memorandum and articles of association.

However, if it is within the powers of the Company to rectify the irregularity by holding a

meeting of the members, then the court would refuse to validate the irregularity.


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As per section 355 (4) CA 1965, the Court (whether the company is in process of being

wound up or not) may enlarge or abridge time for doing an act, upon such terms as

justice of the case may require it.

Pursuant to section 355 (2) CA 1965, the Court could make an order declaring that the

proceeding of a company to be valid not withstanding any such defect, irregularity or

deficiency.

Pursuant to section 355 (3) (a) CA 1965, the Court could make an order as it thinks fit to

rectify; or to negative; or to modify the consequences of any such omission, defect, error

or irregularity; or validate any act which has been rendered invalid through omission,

defect, error or irregularity.

Prior to making this validation order, the Court has to consider whether such an order

would do injustice to the company or to any member or creditor. Blackburn J in the case

of Re Australia Continental Resources Ltd [1975] 1 ACLR 405, stated that the word

“injustice” would involve the consideration of the relative gains or losses of the parties

concerned. It was insufficient to show that there was prejudice to the company, its

members or creditors. The Court would have to balance the prejudices in relation to the

parties concerned before making such an order.

6.32 ELECTRONIC MEETINGS

Due to the advancement in technology, it is possible to hold meetings in more than one

place and to hold a meeting by way of telephone conferencing or by using video

conferencing facilities. Although there is no statutory provision in the Companies Act

1965 to provide for this at the moment, it may be possible for the members to include this

method of convening meeting in the articles of association.

What is required is that members are in communication simultaneously at the time of the

meeting. The physical presence of the members in the same venue is not a strict

requirement for holding the meeting.


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As per the case of Re Farnell Electronic Components Pty Ltd [1997] 25 ACSR 345

(NSW SC) held that what was required was a meeting of the minds; not a physical

meeting.

It is worthwhile noting that the Australian Corporations Act 2001 (Cth) section 249S

provides that a company may hold a meeting of its members at two or more venues using

any technology that gives the members as a whole a reasonable opportunity to participate.

This means the use of video conferencing and electronic communication and requires that

all those present be able to hear and be heard. If a member does not have a reasonable

opportunity to participate in a meeting of members held in two or more venues, the

meeting will only be invalid on that ground if the court declares the meeting or part of it

invalid. Such a declaration will only be made if a substantial injustice has been caused

and it cannot be otherwise remedied: s. 1322(3A).

According to the Explanatory Memorandum, the company does not have to permit each

member the opportunity but must provide a means for the members to communicate with

the person chairing the meeting and be heard by those participating at other venues. The

Explanatory Memorandum lists a number of factors that should be taken into account

such as:

• The ability of the chair to conduct and control proceedings;

• The number of persons attending;

• The nature of the business of the meetings;

• The voting processes available; and

• Whether persons at the meeting can communicate with the chair and follow

proceedings

In view of the above, if all the members agree to the use of technology to hold meetings

without the physical presence at one venue, it may be possible to conduct meetings in this


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manner. What happens if the technology fails during the meeting? Perhaps, we could

resort to section 355 Companies Act 1965 to validate the proceedings.

However, it would be prudent to note section 145A of the Companies Act 1965 which

provides that where any meeting (including an adjourned meeting) is required to be held,

it shall be held in the State where its registered office is situated.

The better view is to seek law reform of the Companies Act 1965 as it has not been

reviewed in tandem with modern information communication technology.


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MAICSA PDCA – Law and Practice of MeeVersion 2 Updated June 2006

1. What is a resolu

2. Explain the diffe

3. Briefly different

4. Describe the wa

directors.

5. How may electr

6. A private compa

(i) Mr. Cho

(ii) Ms. Jeni

(iii) Mr. Mic

(iv) Encik Ha

(v) Encik M

Explain – (a) Ho

(b) If

present at the EG

with sufficient m

(c) Ho

the board of dire

Practice Questions

tion?

rences between a minutes and resolution passed?

iate between a “motion” and a “resolution”.

ys for resolutions to be passed by the board of

onic meetings be made valid for company meetings?

ny has 5 shareholder; namely:-

ng (Holding 20,000 shares);

ffer Liew (Holding 10,000 shares);

hael Jackson (Honding 30,000 shares);

ssan bin Ali (Holding 20,000 shares); and

ahmud bin CheMat (Holding 20,000 shares)

w is the majority votes counted at an EGM held?

Ms Jeniffer and Mr. Michael Jackson were not

M, can they object to a resolution that was passed

ajority?

w could the shareholders requisite for an EGM, if

ctors persistently refuse to call for the meeting?

tings 108