Written Resolutions of a Sdn Bhd: How They Work and What They Cannot Do

Most Sdn Bhd shareholder decisions in Malaysia never involve a meeting. Papers get signed, the secretary files them, and nobody thinks about it again. That works — until the one decision that legally cannot be made that way is made that way, and the removal of a director is later challenged as a nullity.

There are exactly two such decisions. Knowing which two, and why, is the whole value of understanding s.297.

What is a written resolution under the Companies Act 2016?

Section 290(1) gives a private company two routes to a members’ resolution: a written resolution, or a resolution at a meeting of members. Both are equally valid. Section 290(2) closes the first route to public companies — their members’ resolutions must be passed at a meeting, full stop.

Section 290(3) supplies a useful default: where the Act does not specify what type of resolution is required, and the constitution is silent, an ordinary resolution suffices.

A written resolution can be proposed by the Board or by any member of the private company (s.297(1)). There is no minimum shareholding to propose one — the 5% threshold in s.302 applies only to forcing the company to circulate one.

What cannot be passed by written resolution?

This is the part that matters, and the Act is unusually short about it. Section 297(2) reads:

The following shall not be passed as a written resolution: (a) a resolution under section 206 to remove a director before the expiration of his term of office; or (b) a resolution under section 276 to remove an auditor before the expiration of his term of office.

Two items. Nothing else. A good deal of Malaysian commentary treats the written resolution route as hedged about with unstated limits — it is not. Anything else a private company’s members may resolve, they may resolve in writing, including special resolutions, capital reductions, constitution amendments and voluntary winding up.

The logic behind the two exclusions is the same in each case: the person facing removal has a statutory right to be heard. Special notice is required of any resolution to remove a director under s.206 — including a private company removal under s.206(1)(a) — by s.206(3), and s.207 then gives that director the right to make oral or written representations. Section 277(3) gives an auditor seven days from receipt of the special notice to make written representations, and s.277(5) lets the auditor require the representation be read out at the meeting. Neither right can operate if there is no meeting. The exclusion protects the hearing, not the vote.

Note the consequence for a private company. Under s.206(1)(a) a private company may remove a director by ordinary resolution, subject to the constitution — a low bar. But it must still convene a meeting to do it. The threshold is easy; the procedure is not optional.

How is a written resolution circulated?

Step	Requirement	Section
Identify eligible members	Members entitled to vote on the circulation date	s.298(1)
Fix the circulation date	The date copies go out, or the first of those dates	s.299
Choose a medium	Hard copy or electronic form	s.300(1)
Send	Personally or by post to the address given, or to the electronic address given	s.300(2)
Attach the statement	The agreement procedure and the lapse date	s.301(2), s.303(4)

Where the Board proposes the resolution, s.301(1) requires copies to go to every eligible member at the same time, so far as practicable. Failure is an offence carrying a fine up to RM10,000 (s.301(3)) — but s.301(4) preserves the validity of the resolution if it passes anyway. The same split appears at s.303(5).

Section 298(2) handles the awkward case where the register changes during the day of circulation: eligibility is fixed at the moment the first copy goes out.

Can members force the company to circulate a resolution?

Yes, and this is the underused half of the subdivision. Under s.302(1), any member holding 5% of the total voting rights of all eligible members — or a lower percentage if the constitution says so — may require the company to circulate a resolution that could properly be moved as a written resolution. They may attach a statement of up to 1,000 words (s.302(3)).

The company may refuse only on the four grounds in s.302(2): the resolution would be ineffective for inconsistency with written law or the constitution, is defamatory, is frivolous or vexatious, or would not be in the best interest of the company.

Once the request bites, s.303(3) gives the directors 21 days to send the copies. If they do not, s.303(6) lets the requisitioning member circulate it instead, and s.303(7) makes the company reimburse the reasonable expenses — with s.303(8) allowing the company to claw that sum back out of the defaulting directors’ fees.

Costs run the other way by default. Under s.304 the requisitioning members pay the company’s circulation expenses, and the company need not comply unless a sufficient sum is deposited not later than one week before the obligation arises. Section 305 lets the company or an aggrieved person apply to court where the s.302 right is being abused.

When is a written resolution actually passed?

A member signifies agreement when the company receives an authenticated document that identifies the resolution and indicates agreement (s.306(1)). It may be sent in hard copy or electronic form (s.306(2)). Once signified, agreement cannot be revoked (s.306(3)).

The resolution is passed at the moment the required majority have signified agreement (s.306(4)) — not when the last signature is chased down, and not when the secretary compiles the file.

What counts as the required majority depends on the type:

• Ordinary resolution — more than half of the members entitled to vote on the written resolution (s.291(1)(b)).
• Special resolution — not less than 75% of such members (s.292(1)(b)), and the document must state that it is a special resolution and be passed as one (s.292(2)).

That last requirement is the most common technical defect in Malaysian written resolutions. A document that achieves 90% agreement but never says the words “special resolution” is, on the face of s.292(2), not a special resolution.

Does the 21-day special resolution notice apply to a written resolution?

Section 292(1) opens with the words “a resolution of which a notice of not less than twenty-one days has been given”. That notice requirement is directed at meetings — s.316(1) carves a special resolution meeting out of the ordinary 14-day notice period precisely because s.292 sets its own longer one.

For the written route, the operative controls are different: the s.303(3) 21-day circulation duty where members requisition, the s.307(1) 28-day lapse period, and the s.292(2) labelling requirement. Guides that assert a flat “21 days’ notice before a written special resolution can be signed” are importing a meeting rule into a mechanism that has no meeting.

What has to be kept afterwards?

Section 341(1)(a) requires the company to keep records of all resolutions of members passed otherwise than at a meeting — that is, every written resolution. Section 341(2) requires those records to be kept for at least seven years.

There is no statutory deadline for entering a written resolution into the records. Section 341 is a retention provision, not a drafting one. The 60-day rule frequently attributed to it is s.245(2), which governs accounting entries.

Section 343(1) makes a record of a written resolution signed by a director or the secretary sufficient evidence that it was passed, and s.343(2) deems the Act’s requirements complied with unless the contrary is proved. That evidential presumption is why a tidy, signed, dated file is worth more than a perfect procedure nobody recorded.

Common mistakes

Removing a director by circular resolution. The single most consequential error in this area, and it happens because s.206(1)(a) makes removal in a private company so easy that the procedure gets skipped. Section 297(2)(a) is unambiguous. Convene the meeting.

Not labelling a special resolution. Section 292(2) is a formality with real teeth. Where the resolution is one the Act requires to be special — a constitution amendment under s.36(1), a capital reduction under s.115 — the label is load-bearing.

Assuming a public company can use the written route. Section 290(2) blocks it. This bites companies that converted from private to public and kept their old secretarial habits.

Treating the 5% in s.302 as a threshold to propose. It is not. Section 297(1) lets any member propose a written resolution; s.302 is about compelling the company to circulate one against the Board’s wishes.

Circulating to the wrong list. Eligibility is fixed by the register on the circulation date (s.298), not on the date the last signature arrives. A transfer registered mid-circulation does not retrospectively change who was eligible.

Letting a requisitioned resolution drift past 28 days. Section 307(2) makes late agreement ineffective. There is no cure short of re-circulating.

What’s next

Check your constitution first — several of the rules above are expressed as defaults that the constitution can vary, including the s.302 percentage and the s.307 lapse period. If your Sdn Bhd has no constitution, the Act’s defaults are your rulebook.

If the decision on the table is a director removal, read remove-a-director for the meeting procedure and the special notice rules. For every other notice period in one table, see resolution-notice-periods. For what the Board does in parallel, see board-meetings-and-minutes.