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CASE LAW HIGHLIGHTSSANJUNG SELAMAT SDN BHDv C L CHIN & ASSOCIATESHIGH COURT (KUALA LUMPUR)– CIVIL NO D4–22–67 OF 2005ABDUL WAHAB PATAIL J24 MAY 2005Companies & Corporations – Directors – Authority – Directorssupposedly authorised and who signed the resolution hadbeen rejected by the registrar of companies as directors –Whether they were persons actually occupying the position ofdirector – Whether the position takes precedence over theadministrative refusal of the registrar of companies to registerthem as directors – Companies Act 1965 s 4Enclosure 25 is the defendant C L Chin & Associatesapplication to challenge to plaintiff solicitors to act for theplaintiff on the grounds that the two directors whosupposedly authorised and signed the resolutionauthorising Lim & Hoh have been rejected by the registrarof companies as directors. Enclosure 17 is intendedintervener’s application. The plaintiff objected to theapplication on the grounds only commercial rights areinvolved, not legal rights. There were no sales and purchaseagreement with interveners, and their right is only under adeed of guarantee – where deal or arrangement and powerof attorney were given only as security. The plaintiffsubmitted their only right was to sue the plaintiff formoney.Held, dismissing the application with costs:(1) Enclosure 17 is allowed for the reason that it is unsafeto reject the application at this stage unless the issueof those rights of the proposed intervener is lookedinto. That could without inconvenience be disposedoff more safely together with the plaintiff’s application.Since it is apparent that the proposed intervener hassome interest, there can be no objection to theproposed intervener being heard in the plaintiff’sapplication.(2) Section 4 of the Companies Act 1965 withconsiderable foresight set out that the term director‘includes any person occupying the position of adirector’ for the reason that a company cannot haveno director. In this case the previous directors are saidto have all resigned. The persons actually occupyingthe position of director carry the responsibilitiesincluding the fiduciary duties of a de jure orundisputed director, and must account to thecompany. These duties and responsibilities as defacto directors occupying the position of a directormust take precedence over the administrative refusalof the registrar of companies to register them asdirectors. The function of registration is for publicnotification and does not affect their appointment asdirectors, the authority of which emanates from theshareholder’s resolutions. This conclusion isconsistent with s 107 of the Companies Act 1965 thatthe directors remain valid notwithstanding anysubsequent finding that they are not valid directors.The nature of the applications in this case are primafacie in the interest of the plaintiff company. There isnothing shown at this point that those orders are tothe detriment of the plaintiff company. For thesereasons the application at encl 25 was dismissed withcosts.Source: Malayan Law Journal [2007] 1 MLJProduced with kind permissionwww.micpa.com.myJune/August 2007 | The Malaysian Accountant |53