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Q：
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What is director fee?
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A：
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Director fee is a yearly payment made to a director for their service on the company’s board of directors, including retainer fees and meeting fees and it is normally paid to non-executive director.
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Q：
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What is director remuneration?
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A：
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Director remuneration consists of the salaries, allowances and bonuses provided to directors and it is normally paid to executive director monthly.
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Q：
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Do director fee and director remuneration require approval by the Board of Directors or shareholder?
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A：
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Pursuant to Section 230 of the Company Act 2016, a public or listed company and its subsidiaries must obtain approval from the members at a general meeting before paying director fees. In the case of private companies, the Board can approve the director fees, subject to the company’s constitution, and shareholders must be informed of this decision within 14 days of approval.
On the other hand, the director’s remuneration does not require Board approval, as it is determined by the employment contract signed between the company and the director concerned.
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Q：
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Are director fee and director remuneration subject to any statutory contribution to the government authorities?
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A：
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Both director fee and director remuneration are subject to monthly tax deductions (PCB). In addition, director remuneration is also subject to Employee Provident Funds (KWSP), Social Security Organisation (PERKESO), Employment Insurance System (EIS) and Human Resource Development Fund (HRDF).
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Q：
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Are directors who receive director fee and director remuneration subject to personal tax?
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A：
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Yes, directors who receive director fee and director remuneration are subject to personal tax in Malaysia. Both forms of compensation are considered taxable income and must be reported for tax purposes.
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FAQ
