Can a Directors’ Meeting without an Agenda be Valid?

by Lavinia Kumaraendran ~ 25 April 2019

Can a Directors’ Meeting without an Agenda be Valid?

Must an Agenda be prepared and circulated before a directors’ meeting?

In the event that such an agenda is not prepared and issued, would an individual have sufficient grounds in law to challenge the validity of the said meeting?

This article aims to clarify the current position of the law with regard to the requirement of an agenda.

Let us begin...

According to Section 316 of the Companies Act 2016, generally, before a meeting of members within a private company can be held, a notice has to be issued to all members entitled to attend and vote at the meeting. The time period concerning the issuing of this notice is a minimum of 14 days before the meeting. However, such a time period may differ if specified in the constitution of the company. Further, according to Section 317 of the Act, notice of the meeting shall state the place, date and time of the meeting as well as the general nature of the business of the meeting. At this juncture, it is crucial to note that the Companies Act makes no mention of the distribution / issuing of an agenda as a requirement prior to a meeting. Therefore, the analysis below as to this said requirement will be with regard to the common law position taken by the Courts in Malaysia.

Generally, before a meeting of members within a private company can be held, a notice has to be issued to all members entitled to attend & vote at the meeting.

The case of Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ 770 in the Court of Appeal of Malaysia was one of the first cases to make a notable development in the law pertaining to the requirement of an agenda prior to a directors’ meeting.  The relevant details of this case consist mainly of the fact that the plaintiff, a director in the company, was not provided with any notice whatsoever about a meeting where the plaintiff was removed from his position as director. Gopal Sri Ram JCA (as he then was) held that in line with the notion of corporate fairness, no meeting of the board is valid unless reasonable notice of it and the relevant agenda that is to be discussed at the meeting is given to the directors. However, this principle would only apply if the article of the said company does not provide to the contrary.

Gopal Sri Ram JCA referred to the dicta in the case of Young v Ladies Imperial Club Ltd [1920] 2 KB 523 that was subsequently applied in the case of PP v Datuk Hj Harun bin Hj Idris & Ord [1977] 1 MLJ 180. The relevant portions of the dicta stated as follows:

“Where a special meeting of a committee or any other body has to be specially convened for a particular purpose, every member of that body ought to have notice of and a summons to the meeting, and accordingly the omission to summon one member of a committee and the fact that the notice did not state the object of the meeting with sufficient particularity vitiated the proceedings of that body.”

According to the above passage, the omission to provide the object of the meeting with sufficient particularity affected the legal validity of the meeting. The above phrase was applied by Gopal Sri Ram JCA to include an agenda for the said meeting as well.

The main justification to such a principle that can be inferred from the case of Aik Ming is that in accordance with corporate fairness, every member of a particular body has the right to have notice of the convening and purpose of a special meeting i.e. a directors’ meeting, in order to ensure just proceedings at the said meeting.

Explicitness of the Agenda

Another contention that has been derived from case law in Malaysia concerns the requirement that an agenda may need to be explicit and specific. A recent High Court decision in Rozilawati bt Hj Basir v Nationwide Express Holdings Bhd & Ors [2019] 8 MLJ 8 clarified the current position of the law on this issue. In this cast, the gist of the Plaintiffs claim was that the agenda issued concerning the disputed meeting did not indicate that the Plaintiff’s performance and conduct was to be discussed at the meeting.

The court held that although it was in line with prudent business practices, corporate transparency and fairness to a targeted individual, that an agenda should provide sufficient notice of what to expect at a meeting, such a meeting could not be invalidated merely because the matters to be discussed were not explicitly stated.

The basis to the decision in Rozilawati was that there was no requirement in company law, or in the law of meetings that the notice or agenda of a meeting had to contain the exact details going to be discussed. The dicta in Aik Ming concerned the omission to issue a notice or agenda to the director altogether and could therefore be distinguished from the case of Rozilawati which concerned the explicitness of such a notice.

However, it is also important to note that the case of Lee Nyuk Heng & Anor v Pembangunan Ladang Hassan Sdn Bhd & Others [2002] MLJU 684 applied the dicta in Aik Ming and held that a directors’ meeting was invalid as the notice did not contain the fact that a proposal appointing the fifth defendant as chairman was going to be put forth.

Therefore, it would be in the interest of all directors in companies to ensure that an agenda is prepared and basic issues to be discussed are stated on agendas to be circulated for purposes of a meeting.