Snapshots of Companies Act 2016

Malaysia company laws have become truly modernized when the changes made to the Companies Act 2016 (Act 777). The changes came into effect since Jan 31 and comprise of 620 provisions for Act 777 compared with 350 provisions previously. The main aim of the changes is to examine the whole process and simplify or remove some of the procedures to ensure a speedy incorporation process. According to experts, it gives positive move for entrepreneurs as well as small medium enterprise (SME) owners because the new provisions will lower costs and improve the ease of doing business.


1. Incorporation of Companies

a. Easier process for companies to be incorporated

b. Introduction of single shareholder and single director companies
Only one person and one director are required for incorporating a private company, compared with at least two directors and two shareholders previously.
That person can also serve as the director. The provisions are also intended to protect shareholders in private companies and public-listed firms.
For example, a company that wants to restructure its share composition via capital reduction is required to make a solvency statement to be approved by
shareholders before the exercise can be carried out.

c. Common seal and share certificate becomes optional

d. Particulars required

e. Effect of CA 2016 on M&A (No more Memorandum and Articles of Association)

f. Effect of CA 2016 on Company Secretary at formation stage
It allows individuals to complete the incorporation without requiring a company secretary to do so.

g. No Annual General Meeting for private companies
The companies will enjoy the abolition of the mandatory requirement to hold an AGM for private companies.

h. Abolishing the unanimity rule for written shareholder resolutions


The above changes will reduce the administration cost incurred by the company.

2. Share Capital and No Par Value regime

a. CA 2016 impact on share capital
b. Introduction to No Par Value Regime
c. Implications on accounting
d. Double entry effects
e. Share premium account

3. Duties and responsibilities of Directors

a. Brief on Duties and responsibilities of Directors
It ensures that the directors’ responsibilities have been carried out and that their fiduciary duties are met. This also ensures that there are no passive directors.

b. Enhanced corporate governance requirements
Officers and company directors will be held to a much higher standard of governance and accountability.

shareholders stand to benefit from the liberalisation of proxy requirements, as well as new provisions to account for related-party transactions made by company executives and discloure principles to avoid conflicts of interest.

c. Effects on audit


4. Impact on Accounting – Financial Statements and Report
a. Requirements on Approved Accounting Standards and its effect on Financial Statements
b. System of internal control
c. Disclosure requirements in financial statements
d. Contents of Directors’ Report
e. Time allowed for sending out copies of financial statements and reports


5. Impact on Auditors

a. Provisions relating to Private Company
b. Appointment of auditors
c. Terms of office
d. Provisions relating to Public Company
e. Appointment of auditors
f. Terms of office
g. Auditor’s remuneration
h. Procedure to appoint auditor
i. Removing auditor from office
j. Resignation of auditor (including rights of resigning auditor)
k. Attendance of auditors where financial statements are laid
l. Audit exemption clause in CA2016






The changes will benefit those aspiring to start a company where they enjoy
A template has been introduced to allow
According to the Companies Commission of Malaysia
The new laws are on par with global standards and ensure that the route for starting a business in Malaysia is more competitive, which, in turn, will attract more investments and promote the growth of SMEs in the country, it added.
“We welcome the move, as it means our company laws have become truly modernised. It is easier to start a company and we foresee a lot of entrepreneurs and SMEs benefitting from this,” said Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) deputy secretary-general II Michael Chai.
Under the new provisions,
Moreover,
Another major shift for Malaysian corporations is that
“dded Chai, who is also ACCCIM’s legal affairs committee chairman.
According to the Companies Commission (Amendment) Malaysia Act 2015 (Act A1478), which also came into force since Jan 31, potential penalties for corporate malfeasance include a fine of up to RM5mil, as well as a prison sentence of up to 10 years.
Criminal sanctions can also be imposed on officers responsible instead of the company.
Another legal expert noted that the issue of personal liabilities in regard to the Companies Act 2016 provisions was a challenging one.
“Shareholders often complain that if an officer commits a misconduct, it is the company that is fined. When this is the case, shareholders are the ones being punished, as the shareholders’ funds would be depleted.
“The move to make directors or officers-in-charge liable is a dramatic one, as how do you make a decision between someone who intentionally commits a wrongdoing and those who are negligent? You must also balance the fact that if this is overdone, then good people may not want to serve on the board due to the exposure to personal liabilities,” said Mah-Kamariah & Philip Koh senior partner Philip Koh Tong Ngee.
However, he noted that the core provisions under the Companies Act 2016 would enhance shareholders’ engagement with the management. The new laws also took into account new technological developments to reflect the realities of doing business in the 21st Century, he added.

Read more at http://www.thestar.com.my/business/business-news/2017/02/02/doing-business-with-ease/#ABrherIs08mIQErE.99