The 4th issue :

Whether Okid can be remove from her position as a director in the company (Good Hope Sdn. Bhd) due to her constant questioning over the actions of the rest of the directors .

In common law, where a director is appointed under the articles for a definite period, there is no inherent power to remove him before the expiration of the period without first altering the articles; even a special resolution to remove him may be held to be ineffective. This common law position has been modified by the Act at least in relation to a public company.

Section 128(1) only applies to a public company and not to a private company. It will be very exceptional for the articles of a private company not provide for the removal of a director before the expiration of his office. If the memorandum or articles of a private company do not provide for the removal of a director or the removal of a director before the expiration of his office, it would appear that the company may not have power to remove a director. If it desires to do so, it must first alter its articles to give the company the necessary power.

Since the mode of removing directors is left to the articles, it is possible to entrench directors by including suitably drafted articles. For instance, it may be provided that a director may not be removed without a special resolution or that a particular director will hold office for life. Having done it so, it can then remove the director subject to any contractual rights the director may have against the company. If the interpretation is correct, then a private company may by its memorandum or articles require the removal of a director to be made of a special resolution.

Section 152(1) defines a special resolution as a resolution that has been passed by a majority of not less than three-fourths of such members as being entitled so to do vote in person or, where proxies are allowed, by proxy at general meeting of which not less than twenty-one days notice specifying the intention to propose the resolution as a special resolution has been duly given.

The articles of a company may stipulate that a person is to be appointed as a director for life unless he is disqualified on certain specified grounds. The presence of such a stipulation, however, does not prevent the company from altering the articles by adding a new ground and then subsequently removing the director on that new ground. Such alteration will be valid if it is made bona fide and for the benefit of the company as a whole.

In the case of private company, a power granted to the board to remove directors is a fiduciary power which must be exercised in the interest of the company. However, the fact that the power is exercised with ulterior motives does not invalidate the removal of the director; the breach of fiduciary duty can only be redressed by an action by the company. There is English authority to the effect that a director of a company who is wrongfully removed from office can sue for relief by injunction or by declaration and injunction. Such relief may be refused by the court where the members of the company in general meeting resolve not to have the particular director in their company; the director may nevertheless claim damages, if any, to which he is entitled.

Samuel Tak Lee v. Chou Wen Hsien & Ors [1984], 1 WLR 1202 (Privy Council on appeal from Hong Kong) :-The Privy Council held that if a director of a company was removed from office by his fellow directors in line with the articles and challenged their decision on the ground that it had been made in breach of their fiduciary duty, the wrongly expelled director would be subject to the ordinary principles of Foss v. Harbottle and would be precluded from maintaining an action in his own name to restore himself to office. In that case, a director of a company was removed pursuant to article 73(d) of the companys articles which provided that the office of a director should be vacated, inter alia, if he is requested in writing by all his co-directors to resign. Lord Brightman in delivering the judgment of the board stated that the power given by the article 73(d) to directors was fiduciary, in the sense that each director concurring in the expulsion must act in accordance with what he believed to be the best interest of the company, and that he could not properly concur for ulterior reasons of his own.

Bersel Manufacturing Co. v. Berry [1968] :-the power was given to two permanent life directors to terminate forthwith the directorship or any of the ordinary directors of the company by notice in writing. Their Lordships found it not intended for the benefit of the company, but for the benefit of the two life directors themselves in order that it might serve their own interests in preserving their position in the company. As Diplock L.J. had apparently observed in the Court of Appeal the special powers given to the two directors are not directors powers in the ordinary sense. They are not exercised in directors meetings but as special powers simply to appoint and dismiss other directors.

In applying the law to the fourth issue, according to the Section 128(1) of the Act, only a public company has the authority to remove the director before the expiration of his office. However, the private company like Good Hope Sdn Bhd, in the situation given still may do so, in the condition that there shall be provision provided in memorandum or articles about this matter. If there is no provision, then there shall be an alteration of memorandum or articles to insert this matter. Furthermore, there shall be special resolution to remove the director. However, there is nothing in the situation given that told about the provision provided in memorandum or articles of Good Hope Sdn Bhd regarding to the removal of the director. It is only stated that Okid has been threatened with removal from her position as a director by Rose, Mawar and Teratai due to the constant questioning of their actions that breach the duties of directors.

Although, the provision provided in memorandum or articles, or the alteration have been made to insert this matter but the power granted to Rose, Mawar and Teratai regarding to the removal of Okid is a fiduciary power which they must be exercise in the interest of the company. The authority in the memorandum or articles of the company on the issue of removal which confers on the directors is a fiduciary power which can only be exercised bona fide by Rose, Mawar and Teratai in the best interests of the company. In this case, if Rose, Mawar and Teratai decide to remove Okid due to the constant questioning of their actions which breach the duties of directors, the removal is not intended for the benefit of the company, but for the benefit of themselves, in order that it might serve their own interests in preserving their position in the company. As a consequence, in such situation, according to English authority, in the issue of removal, Okid may sue the company for relief by injunction, or by declaration and injunction, or else if the members of the company in general meetings constantly refuse to have Okid as the director, Okid may claim for the damages to which she is entitled.

In conclusion, Okid can not be remove from her position as a director of Good Hope Sdn Bhd by the other directors (Rose, Mawar and Teratai) due to the constant questioning of their actions which breach the duties of directors because the removal is not intended for the benefit of the company, but for the benefit of themselves, even though the provision provided in memorandum or articles because the authority in the memorandum or articles of the company on the removal of director is a fiduciary power which they must be exercise in the interest of the company and can only be exercised bona fide, for the best interests of the company.