Recently, a former director came to us with one question.

He had resigned as director.
Sold all his shares.
New shareholders already took over the company.

To him, this company was already history.
No more board meeting.
No more signing documents.
No more company headache.

Then one day, he suddenly remembered something.

The SME loan.
A few years ago, when the company needed bank financing, he signed as personal guarantor.

He asked us,

“Since I already resigned and sold all my shares, can I be released from the personal guarantee?”

This is the part many SME bosses may not like to hear.

Your resignation does not automatically cancel your personal guarantee.
Your share transfer does not automatically cancel your personal guarantee.
Your “I already got nothing to do with this company” also does not automatically cancel your personal guarantee.

Why?

Because personal guarantee is not between you and the company.
It is between you and the bank.

When you resign as director, SSM record changes.
When you sell your shares, shareholder record changes.

But the bank may still be holding one very powerful document.
A document with your signature.
That signature may say, if the company cannot pay, the bank can come after you.

Painful, right?
You can divorce the company.
But the bank may still treat you like you are married to the loan.

This is why personal guarantee is one of the most underestimated documents signed by SME owners.

When applying loan, many bosses sign very fast.
“Where to sign?”
“Here ah?”
“Okay lah, sign first. Need the loan to grow business.”

Five minutes sign.
But the responsibility can follow you for many years.

Most SME loan guarantees are continuing guarantees.

That means the guarantee may continue even after changes in directors, shareholders, management or ownership.

So even if the company is now run by people you no longer know, if the loan later goes bad, the bank may still look for you.

Can the new shareholder replace you as guarantor?

Can.
But only if the bank agrees.

Normally, there are three clean ways.

First, substitute you with a new guarantor, subject to bank approval.
Second, refinance the loan and settle the old facility.
Third, fully settle the loan and get the discharge.

And please remember this.

The bank has no duty to release you just because you resigned.

From the bank’s point of view, releasing one guarantor means weakening their security.

So the bank will look at the loan record, company repayment history, replacement guarantor’s financial strength, CCRIS, CTOS, income and net worth.

If the new guarantor is weaker than you, don’t be surprised if the bank says no.

And if the bank says yes, please get it in writing.

You need proper release letter or Deed of Release.

Read the full content in our blog
https://www.ktp.com.my/blog/personal-guarantor-upon-director-transfer/16june2026