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Resignation as Director

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asked on Feb 15, 2015 at 18:07
by   goodboy123
I am planning to resign from a company (Sdn Bhd) as a director and shareholder. Here I have some questions need to ask:

1. Am I able to resign as guarantor for all the loan of the company to other shareholder and director? If can, what should I do to properly remove the guarantor role?
2. As the company currently owe to me large amount of money, and I personally don't think the company afford to return me all the money in short term. What is my right to ensure the money will be returned in the future as soon as the company has the money? Am I able to charge reasonable interest?
3. What else should I do to protect myself & properly remove myself from the company?

Thanks.
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answered on Feb 15, 2015 at 19:07
by   vkpc
I am planning to resign from a company (Sdn Bhd) as a director and shareholder.
You cannot resign as a shareholder.  You can only sell or transfer your share to another willing shareholder.
If there is currently only 2 directors in a Sdn Bhd company, you can only resign after a new director is found, because by law minimum is 2 directors.

1. Am I able to resign as guarantor for all the loan of the company to other shareholder and director? If can, what should I do to properly remove the guarantor role?
You can only remove yourself as guarantor after the loan if fully paid up.

2. As the company currently owe to me large amount of money, and I personally don't think the company afford to return me all the money in short term. What is my right to ensure the money will be returned in the future as soon as the company has the money?
Unless you control majority shares, or can influence the management, everything is out of your control.

Am I able to charge reasonable interest?
No, unless there is a contract which specifies the interest rate.
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answered on Feb 16, 2015 at 03:17
by   goodboy123
edited Mar 27, 2017 at 06:07
 
@vkpc,

Thanks a lot for your reply.

1. Regarding the guarantor role, if someone willing to replace me as new guarantor, can it be transferred?
2. Regarding the money owe to me, can I make a contract about when they need to return the money to me and also get someone as the guarantor? The contract has to be legally effective.
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answered on Feb 16, 2015 at 04:00
by   vkpc
1. Regarding the guarantor role, if someone willing to replace me as new guarantor, can it be transferred?
Normally the bank will not allow it. It is a non-revenue work load to the bank.

2. Regarding the money owe to me, can I make a contract about when they need to return the money to me and also get someone as the guarantor? The contract has to be legally effective.
Most likely they will not sign now.
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answered on Feb 16, 2015 at 04:48
by   Steve
edited Mar 27, 2017 at 06:07
 
Thanks vkpc.

So, from all your replies, is that mean there is nothing I can do about for better protecting me after I resign as director & sell of the share?
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answered on Feb 16, 2015 at 15:04
by   vkpc
is that mean there is nothing I can do about for better protecting me after I resign as director & sell of the share?
Yes.
It is safer for you to continue as Director to try ensure that the bank loan is settled.
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answered on Feb 16, 2015 at 16:50
by   LowyerBorak
edited Mar 27, 2017 at 06:24
 
Personal opinion - non legal..

It is actually not the end of the world. It actually depends on a lot of other factors. Tons of it...
1. Is the ongoing business profitable? If yes, why are you leaving?
2. Is it is going to be a failure, you can "force" a voluntary winding up of the business to cut "losses". A lot depends on whether you are the "Brains" of the business or Sleeping financier of the business. If you have notable assets and other businesses, this guarantor issue can/may drag you down. It depends alot on who are the other shareholders, the nature of the business, how up-to-date are the Audited Accounts file with ROB and the transparency of keeping the books of accounts.

Before you take the next course of action to sell or transfer your shareholding, can you share
1. What is the paid up capital?
2. What is the Authorise Share Capital?
3. What is the your shareholding? How many directors appointed annually?
4. How much is the guarantor amount?
5. Date of the last Audited Accounts submitted? The Company Secretary appointed by you, other shareholder, or joint decision? The Auditors is also the Company Secretary?
6. How much was the "running capital/loans" extended to the company. Was it properly "minuted" by the company secretary as required by the Company Act with regards to "Loans made TO/BY Directors". If the "loans moneys" made is not properly documented, you can almost say goodbye to the moneys if the company fails..
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answered on Feb 17, 2015 at 02:50
by   Steve
edited Mar 27, 2017 at 06:26
 
Hi LowyerBorak,

1. Is the ongoing business profitable? If yes, why are you leaving?

Yes, the business is extremely good in the account, but has huge cash flow issue all the time for over expanding. The reason I want to leave is mainly because of political issue. I prefer to have a slow down to take care of cash flow and have different direction to others. But others were team up that nothing much I can do, except follow them. Whenever company has the money, they will expand it. From what I see if cash flow issue doesn't take care, no matter how good profitable it is in the account, business is in high risk to fail anytime soon. I am very tired with it and want to pull the plug and be my own.

1. What is the paid up capital?
2. What is the Authorize Share Capital?
RM40,000

3. What is the your shareholding? How many directors appointed annually?
35%, 3 directors

4. How much is the guarantor amount?
I am guarantor about RM300,000. Others guarantor about RM100,000.

5. Date of the last Audited Accounts submitted? The Company Secretary appointed by you, other shareholder, or joint decision? The Auditors is also the Company Secretary?
About to submit last year account. Company Secretary appointed by other shareholder. Yes, Auditors is also company secretary.

6. How much was the "running capital/loans" extended to the company.
About RM180,000 from me. It is clearly written in account "money due to director (me)"

So, you got any suggestions?
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answered on Feb 17, 2015 at 04:28
by   Steve
I have some more questions:

1. If the original debtor cannot perform their obligations, how does guarantor pay the debts? All at one time? Or continue pay like installment? If it is the leasing loan, who will own that thing? Original debtor or guarantor? Can guarantor sell that thing out and use the money to pay for the remaining debts?

2. If a company bankrupt, what will happen to shareholder (not director)?
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answered on Feb 17, 2015 at 04:56
by   LowyerBorak
edited Mar 27, 2017 at 06:28
 
Not enough info to make any worthwhile suggestions.

1. What is the paid-up capital?
2. Can you list how may shareholders ABCDE and their shareholdings?
3. There should be multiple Loans. Can you itemise them according to amounts and who are the guarantors for them. It is important to note whether those loans "jointly and severally" responsible. If there is, read on the liabilities on "Guarantors". If you are the richest among all, you would be the first target by banks.
4. "Money due to Directors", how much are is due to directors ABCDE? Did your company secretary pass any resolutions on the "loans" and is minuted in the company minutes books and filed with ROB. In the event of any creditors petition of winding up, this is the last account that can be realised. It can be trade creditors and creditor banks petition.
5. How many years the business is ongoing?

Comments.. non legal..
1. Surprised the banks gave a RM400,000 total loans based on RM40,000 Authorised Capital. 10x.. Crazy bankers..
2. Surprised that your Auditors never "up" the Authorised Share Capital and Paid-up Capital. It can be done via capitalisation from the "Money due to Directors".
3. It is so obvious that it is undercapitalised and definitely in a very dangerous situation for the "main financier". Cash flow is sure bad in time to come for overtrading. Risk is very high.
4. The best time for risky business is when the business is profitable. The ACE card is with the main financier.
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answered on Feb 17, 2015 at 05:26
by   LowyerBorak
edited Mar 27, 2017 at 06:31
 
If the original debtor cannot perform their obligations, how does guarantor pay the debts? All at one time? Or continue pay like installment?
Guarantors are liable for the full sum upon made Judgement Debtor for the debt. In the event of multiple guarantors, the ones who have the moneys and can be found/traced are the first targets. No qualms..

If it is the leasing loan, who will own that thing?
The Sdn Bhd Company. All realisation goes back to the company. Even if the guarantor pays up, the "title deed" belongs to the company. For a motor vehicle, if a guarantor pays the "shortfall" upon lelong, who owns the car? The guarantor? Hirer? Bank? New owner?

Can guarantor sell that thing out and use the money to pay for the remaining debts?
The Sdn Bhd can sell that thing and should use the money to pay other debts.

If a company bankrupt, what will happen to shareholder (not director)?
A company cannot go "bankrupt". A Creditor Petition will windup the Sdn Bhd. Any person who are guarantors for any loans will be subjected to pay for any remaining amounts. If unable to pay, can/may be made bankrupt in the personal capacity if total amounts exceed RM30,000..

If a company bankrupt, what will happen to shareholder (not director)?
Ordinary shareholder liabilities are limited to the shareholdings in the company. For example, if a shareholder owns RM2k, only RM2K. Whoever signs personal guarantees for loans is liable for the whole loan balance singly, jointly and or severally, be it director or non director.. If an appointed director did not sign as guarantor, nothing happens to him/her.
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