The age limit for foreign directors in incorporated companies (sendiran berhad) has been reduced from 68 to 60 years, an announcement that came suddenly, with no prior warning. Unfortunately, it has caused a lot of disruptions to many local establishments. As such, I believe it is essential to highlight the negative consequences of this change to our country’s business landscape.
Foreign directors who were previously allowed to serve until the age of 68 had made long-term plans and commitments based on the established regulations. The sudden reduction of the age limit has disrupted these plans, resulting in the premature closure of many companies, loss of significant investments and the redundancy of local jobs.
Such disruptions erode the trust and confidence of both local and foreign investors in our country’s regulatory stability as it sends a negative message to investors and professionals who are considering establishing businesses or contributing to existing companies in our country. The suddenness of the change and lack of consultation diminish the predictability and fairness that investors seek, creating an environment of uncertainty and reluctance to engage in long-term business commitments, especially if you use the example of those directors and investors currently below 68 but above 60 who are now forced to pack up and leave.
Additionally, the reduction in the age limit fails to acknowledge the continued value and expertise that experienced directors bring to the table. These directors often possess deep industry knowledge, extensive networks and strategic insights gained over decades of service. By prematurely forcing them out of their roles, we miss out on their contributions, hinder success planning, and risk losing the continuity and stability that seasoned directors provide to businesses that are especially vital to our national interests.
Most of these foreign directors are now forced to close their businesses due to the rather unexpected regulation change. The resultant closures have caused significant disruptions and economic losses, affecting not only the directors themselves but also their local employees, suppliers and partners. In addition, there is significant disruption to the supply chains and reduced tax revenues to the government. The resulting redundancy of local staff and the termination of service offered by the business can have far-reaching consequences for the industry and the local communities they serve, especially in specialisation sectors which are difficult to compensate.
It would be beneficial for the economic interests of our country if we reconsider the reduction in the age limit for foreign directors of private companies, and carefully weigh the potential negative consequences it would have on our country’s business environment and job market.
A decision to either revert to the previous age limit or provide a decent extension of succession planning could be considered. Factors such as the tax revenues generated by the company, the number of local jobs they contribute to the economy, and perhaps how a particular company contributes to the critical interests of our nation could be reviewed prior to decision.
By promoting stability, predictability and fairness in our legal framework, we can create an attractive environment for foreign investment, nurture economic growth, growth in local jobs and ensure a thriving business ecosystem that benefits all stakeholders.
SKL
