1MDB may be breaching the Companies Act 1965 if it fails to appoint new directors into the board after May 31, says lawyer Razlan Hadri Zulkifli.

"1MDB would be in breach of certain provisions of the Companies Act. The company cannot function if there is no board of directors," Razlan told Malaysiakini.

"Then it will be illegal and the company may face penalty under the Companies Act," he added.

However, Razlan noted that 1MDB has plenty of time to fill in the vacancies to prevent itself from functioning illegally.

He was responding to a statement that Minister of Finance Incorporated (MoF Inc) had accepted the board's resignation.

MoF Inc said the resignation would come into effect on May 31 and it will appoint new board members in due course.

The company needs to have at least two directors, at all times, under the Companies Act.

When contacted, Treasury secretary-general Irwan Serigar Abdullah (photo) claimed ignorance about the recent development.

"I am in a meeting now. Can you call 1MDB president? You know, I don't know the details and everything yet," Irwan curtly replied.

1MDB president Arul Kanda Kandasamy declined to comment.

"I am really not sure why you call me because that was the announcement issued by MoF. So you should direct all your queries to MoF," Arul Kanda said.

Following the release of the Public Accounts Committee’s (PAC) report on its 1MDB investigation last month, the 1MDB board of directors collectively offered to resign.

The PAC, in its 106-page report, had identified a number of weaknesses in the governance and decision-making of 1MDB.

Among PAC's recommendations were for 1MDB director Shahrol Azral Ibrahim Halmi – who is the former 1MDB chief executive officer – and other relevant officials to be investigated.

MoF Inc also agreed to fully implement the various recommendations contained in the PAC report.