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Director Remuneration - Fee or Salary

First, lets make sure we have same understanding, Director here mean the person named in Section 58 as Officer of the Company under the Companies Act 2016 (#CA2016) (or Form 49 under Companies Act 1965)

What is Director Remuneration?

* Anything paid/payable to Director or benefits given to Director for his/her enjoyment, e.g. motor vehicle, accommodation.

* Salary

* Fee

What is Director Fee ?

Some of the definition of Director Fee ...


Companies Act 2016 did not define Director Fee but Section 230 stipulates the approval procedure.

So, how is Director Fee different from Salary payable to Director?

  • Some Director sits in the Board (Section 210, 211 CA2016) but may not be involve in day to day operation.

    • Director fee is appropriate as he/she provide service as Board member, attending meeting and participating the Board decision.

  • Some Director involves in day to day operation as "employee" of the company.

    • Salary would be appropriate as he/she employed to serve the company.

PCB (income tax) ?

  • Regardless Fee or Salary, income received by Director is subject to Income Tax (PCB)


  • Fee - not subject to EPF Contribution

  • Salary - subject to EPF Contribution as other employees

Socso & EIS

  • Fee - not subject to Socso / EIS Contribution

  • Salary - subject to Socso / EIS Contribution as other employees


  • Salary - Employment Contract; Payslip; EA Form

  • Fee - Director Resolution; Member Resolution; EA Form


Can Director Fee be paid on monthly basis ?

  • If qualify as Fee, approved by Board and by Member, it is up to the company to pay in one lump sum or monthly (like installment);

  • If full Fee can be received in Jan, why would Director agree to have it paid over next 12 months? (usually won't be due to cash flow issue)

  • If paid monthly before approval of Board and Member via resolution, EPF might impose penalty for non-compliance. (i.e. salary in-nature but name it as Fee to avoid EPF contribution)

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