Board Meetings and Minutes: The Third Schedule Is Your Default Rulebook

Most Malaysian Sdn Bhds have no constitution. Under the Companies Act 2016 they do not need one, and the vast majority of incorporations since 2017 never adopted one. Ask the directors of such a company what governs their board meetings and the usual answer is a shrug.

The answer is the Third Schedule, and it is a complete operating manual — 27 paragraphs covering the chairperson, notice, quorum, voting, minutes, written resolutions, committees and managing directors. It is binding on those companies in full, and almost nobody reads it.

Why the Third Schedule applies to your company

Section 211(1) puts the business and affairs of a company under the management of, or under the direction of, the Board. Section 212 then says:

Subject to the constitution, the provisions set out in the Third Schedule shall govern the proceedings of the Board.

“Subject to the constitution” is the whole hinge. If there is a constitution, its board provisions displace the Schedule to the extent of any inconsistency. If there is no constitution — the ordinary case for a Sdn Bhd — nothing displaces it, and the Schedule is the company’s board procedure.

This matters practically. A director arguing that a meeting was inquorate, or that a resolution was never validly passed, is arguing about the Third Schedule, whether or not anyone in the room has read it.

Convening a board meeting

Question	Third Schedule answer
Who can call one?	Any director, or the secretary if requested by a director (para 3)
What must the notice contain?	Date, time, place, and the matters to be discussed (para 4)
Who gets notice?	Every director who is in Malaysia (para 4)
How much notice?	Not specified
What if the notice is defective?	Irregularity is waived if all directors entitled to notice attend without objection (para 5)

Two features are unusual and worth flagging.

Notice goes only to directors in Malaysia. Paragraph 4 says so expressly. A company with a director abroad is not obliged to reach them, which is convenient and occasionally contentious. Where a company has a genuinely international board, address this in a constitution rather than relying on the default.

There is no minimum notice period. The Schedule sets none. Contrast this with members’ meetings, where s.316 sets 14 or 21 days. Reasonableness in the circumstances is the practical test, and a constitution or a board policy fixing a period is worth having.

Quorum, voting and the dissent trap

Paragraph 7 lets the Board fix its own quorum; if it has not, the quorum is a majority of the directors. Paragraph 8 bars any business without one.

Voting is straightforward: one vote per director (para 9), with the chairperson holding a casting vote (para 10). Under paragraph 11 a resolution passes if agreed to by all directors present without dissent, or if a majority of votes cast are in favour.

Then paragraph 12, which is the one to memorise:

A director present at a meeting of the Board is presumed to have agreed to, and to have voted in favour of, a resolution of the Board unless he expressly dissents from or votes to object against the resolution at the meeting.

Silence is a vote in favour. A director who sat quietly through a decision they disliked has, as a matter of statute, voted for it — and carries the corresponding exposure under ss.213 to 218. The only protection is an express dissent, recorded in the minutes at the meeting. Abstention is not dissent.

Paragraph 1 lets the directors elect a chairperson and fix the term; paragraph 2 provides that if none is elected, or the chairperson is absent 15 minutes after the appointed time, the directors present choose one of their number.

Meetings held by video or telephone

Paragraph 6 gives two methods of holding a board meeting: directors constituting a quorum assembled together at the appointed place, or by audio, or audio and visual, communication by which all participating directors constituting a quorum can simultaneously hear each other throughout the meeting.

Note what the wording requires — simultaneous hearing, for the whole meeting. A director dialling in for one item, or a chain of separate calls, does not satisfy paragraph 6(b).

There is no Malaysian-presence requirement for board meetings. Contrast s.327(2), which requires the main venue of a members’ meeting to be in Malaysia with the chairperson present there. The board is free of that constraint under the Act.

It is not, however, free of the tax consequence. Company residence under s.8 of the Income Tax Act 1967 turns on management and control being exercised in Malaysia, and LHDN’s Public Ruling 9/2019 Example 3 holds that a meeting convened in Malaysia but attended by directors from overseas by video conference is not management and control in Malaysia. Perfectly valid under the Companies Act; potentially fatal to Malaysian tax residence.

Directors’ written resolutions

Paragraph 15 is the board equivalent of a members’ written resolution, and the threshold is materially stricter:

A resolution in writing, signed or assented to by all directors then entitled to receive notice of meeting of the Board, is as valid and effective as if it had been passed at a meeting of the Board duly convened.

All directors, not a majority. A single non-signatory defeats it. Read together with paragraph 4, “entitled to receive notice” points to directors in Malaysia — which is a real interpretive question for a company with an overseas director, and one to settle in the constitution rather than in a dispute.

Paragraph 16 allows the resolution to consist of several counterpart documents, including by facsimile or similar communication, each signed by one or more directors. Paragraph 17 requires a copy to be entered in the minute book of Board proceedings.

Board minutes: what the law actually requires

This is the area where Malaysian guidance most often invents a rule.

Paragraph 13 requires the Board to ensure that minutes of all proceedings at Board meetings are kept. Section 47(1)(f) requires minutes of all meetings of directors to be kept at the registered office. That is the whole of the statutory content.

There is no deadline for entering board minutes. Two points routinely stated as law are not:

• Section 341 governs board minutes. It does not. Section 341(1) is limited to resolutions of members passed otherwise than at a meeting, minutes of proceedings of meetings of members, and details provided under s.344 by a sole member. The seven-year retention in s.341(2) and the inspection rights in s.342 run to those records, not to board minutes.
• Minutes must be entered within 60 days. That period is s.245(2), and it applies to entries in the accounting and other records, not to minutes.

None of this makes minutes optional. Paragraph 12’s dissent presumption means the minutes are the only place a director’s objection can live, and s.221 disclosures of interest are recorded there. A company that minutes badly loses arguments it should win.

Where the meeting is a members’ meeting rather than a board meeting, the position flips: s.330(2) makes the chairperson’s declaration of the result on a show of hands, together with an entry to that effect in the minutes, conclusive evidence of the result without proof of the votes.

Committees and managing directors

Paragraphs 19 to 21 allow the Board to delegate any of its powers to committees, on terms the Board imposes; a committee may elect its own chairperson and determine its own proceedings, with a casting vote for its chairman.

Paragraphs 22 to 25 allow the Board to appoint a managing director for such period and terms as it thinks fit, exclude that person from retirement by rotation, and confer on them any of the Board’s own powers — collaterally with or to the exclusion of the Board — revocable at any time. Paragraph 23 automatically terminates the appointment if the person ceases to be a director.

Paragraphs 26 and 27 cover associate directors, who may be appointed by the Board but have no right to attend or vote at a Board meeting except by invitation.

Delegation does not shed responsibility. Section 210 extends ss.213 to 218, 223 and 228 to the chief executive officer, chief financial officer and chief operating officer and to anyone primarily responsible for the management of the company, whether or not a director.

Common mistakes

Assuming no constitution means no rules. Section 212 supplies them, and they are detailed enough to decide most disputes.

Passing a directors’ written resolution with a majority. Paragraph 15 requires all directors entitled to notice. This is the single most common invalidity in Malaysian board paperwork, usually because members’ written resolutions run on majorities and the habit carries across.

Staying silent instead of dissenting. Paragraph 12 converts silence into support. Say it, and have it minuted.

Citing s.341 for board minutes. Wrong provision. Board minutes are s.47(1)(f) and paragraph 13, with no entry deadline and no s.342 member inspection right.

Running a board meeting in Malaysia by video with offshore directors and assuming Malaysian tax residence follows. PR 9/2019 Example 3 says otherwise.

Ignoring a director abroad because paragraph 4 permits it. Lawful, but it will be read as bad faith if the timing looks engineered, and s.213(1) duties apply to the decision to convene as much as to the decision taken.

What’s next

If your company has no constitution, print the Third Schedule and treat it as the board charter, or adopt a constitution that says what you actually want — especially on notice periods, quorum and whether overseas directors receive notice.

For retention periods and where records must be kept, see minute-books-and-records. For the members’ side of the same machinery, see written-resolutions and resolution-notice-periods. For the interest disclosures that belong in the board minutes, see disclosure-of-interest.