OVERVIEW:

COMPANIES ACT 2016

&
COMPANIES REGULATIONS

Norhaiza Jemon
Acting Director
Regulatory & Legal Services Division
 OBJECTIVES

Background

Companies Act 2016

Subsidiary Legislations
 MODERNISING THE CORPORATE LEGAL
FRAMEWORK

COMPANIES ACT 2016

MODERNISING THE CORPORATE LEGAL
FRAMEWORK
• COMPANIES ACT 2016
 COMPANIES ACT 2016: AN OVERVIEW

ENTRANCE INTO MANAGEMENT

CORPORATE AND DISSOLUTION
SECTOR ADMINISTRATION
 ENTRANCE INTO CORPORATE SECTOR
FORMATION AND INCORPORATION

All Companies

Minimum
shareholder/member

Private Companies Public Companies

Minimum director(s)
 ENTRANCE INTO CORPORATE SECTOR

FORMATION AND INCORPORATION

• Application of incorporation
through “Superform” via
MyCoID
• Information required:
– Proposed name of company
– Status as private or public co
Name
– Nature of business MyCoID 2016 Approval +
Notice of
Registration
– Proposed registered address Incorporation

– Name, identity, address of

shareholder(s)
– Name, identity, address of
director(s)
– Details of shares
 ENTRANCE INTO CORPORATE SECTOR

EVIDENCE OF INCORPORATION
Notice of Registration

• Date of registration
• Name of company
• Registration number
• Type of company

8
 ENTRANCE INTO CORPORATE SECTOR

EFFECT OF INCORPORATION
A body corporate with separate legal personality and capable
of—
• exercising all functions of a body corporate and have full
capacity;
• suing and be sued;
• acquiring, owning, holding and developing property;
• doing any act which it may do or to enter into transactions.

The company will remain in register until removed.

 ENTRANCE INTO CORPORATE SECTOR

OPTIONAL
• Constitution (M&A) becomes
optional (except in cases of CLBG)
– Old companies: M&A still applicable
unless otherwise resolved
• Common seal becomes optional
– If companies decide to have a
common seal, the provisions of the
law must be observed.

• Share certificates no longer

• Non application of doctrine of
mandatory
constructive notice of
– Register of Members becomes prima
constitutions or other documents facie evidence
lodged with the Registrar except
for documents relating to
charges.
 ENTRANCE INTO CORPORATE SECTOR

NO PAR VALUE REGIME

• Shares to be issued without par value
• Shares will be issued at a price
• Share premium account, CRR and the concept of authorized
capital will no longer be applicable.
• Transitional period of 24 months will be given for companies
to utilise the amount standing in credit in the company’s
share premium accounts.
 ENTRANCE INTO CORPORATE SECTOR

NO PAR VALUE REGIME

• Shares to be issued without par value

• Shares will be issued at a price
• Share premium account, CRR and the concept of authorized
capital will no longer be applicable.
• Transitional period of 24 months will be given for companies
to utilise the amount standing in credit in the company’s
share premium accounts.
 MANAGEMENT AND ADMINISTRATION

ANNUAL RETURN AND FINANCIAL STATEMENTS

• Decoupling of submission of AR and financial statements

• Submission of AR: 30 days from the anniversary of date of

incorporation

• Submission of FS:
– In the case of private company, financial statements are to be lodged
within 30 days from the time the financial statements were
circulated to members.
– In the case of public company, within 30 days from its AGM.
 MANAGEMENT AND ADMINISTRATION

ANNUAL GENERAL MEETING

• Public companies: are required to hold AGM every calendar
year.

• Private companies: no requirement to hold AGM in every

calendar year.
– Meetings of private companies are known as meeting of members.
– The main method for private companies to make decisions will be by
way of written resolution.
 MANAGEMENT AND ADMINISTRATION
DISQUALIFICATION OF DIRECTORS
• Undischarged bankrupts
• Convicted of offence
relating to formation or
management of corporation
• Convicted of offence
involving bribery, fraud or
dishonesty
• Convicted of offences
relating to directors duties
• Disqualified by Court:
– Due to his conduct resulting
to companies being insolvent
– Due to habitual contravention
of the Act/his duties under
the Act.
• Power of Registrar to
remove name of
disqualified director from
registers
 MANAGEMENT AND ADMINISTRATION

APPROVALS FOR FEES OF DIRECTORS

• Fees and benefits of directors of public companies or its

subsidiaries must be approved at general meetings

• For directors of private companies, the Board may approve

but shareholders must be notified accordingly. Shareholders
may object on the basis that the payment is not fair to the
company.
 MANAGEMENT AND ADMINISTRATION

RIGHTS TO INSPECT DIRECTORS’ SERVICE CONTRACTS

• Members of public company may inspect director’s service

contract (5% of members in holding paid up shares or 10%
in cases of CLBG.)
• Service contracts include a contract under which—
– A director undertake personally to perform the service for the public
company or its subsidiary
– Services that the director undertake to personally performed or
otherwise made available to third party
 MANAGEMENT AND ADMINISTRATION

CONTRACT WITH SOLE MEMBER/DIRECTOR

• When a single member/director company enter into a

contract with that director and the contract is not in the
ordinary business of the company.
• If the contract is not in writing, the contract must be
recorded in the minutes of the board meeting following the
making of the contract.
 MANAGEMENT AND ADMINISTRATION

SOLVENCY STATEMENTS FOR CERTAIN CORPORATE EXERCISES

Redemption of
Reduction of share
preference shares out of
capital
capital

Provision of financial
assistance for the Share buyback
purposes of buying
shares
 MANAGEMENT AND ADMINISTRATION

MEMBERS’ RIGHTS FOR MANAGEMENT REVIEW

• Members must be given reasonable opportunity at a

meeting to question, discuss, comments or make
recommendation on the management of a company.
• Directors are only obliged to carry out the recommendation
if it is passed as special resolution and is in the best interest
of the company.
 MANAGEMENT AND ADMINISTRATION
CORPORATE RESCUE MECHANISMS
CORPORATE VOLUNTARY ARRANGEMENT

“a binding compromise or • Can be proposed by the

arrangement with creditors
WITHOUT the need for the
compromise or arrangement to
be approved by the Court”
• Not available to public
company, companies licensed
by BNM or regulated by SC or
company which has a charge
over its property.
directors or judicial manager
• Moratorium is 28 days from
the day the notification is
presented to the Court.
• Managed by nominee
• Meeting must be called within
the moratorium period to
approve the proposals by
members and creditors.
 MANAGEMENT AND ADMINISTRATION
CORPORATE RESCUE MECHANISMS
JUDICIAL MANAGEMENT
“a temporary court-supervised • Can be proposed by
rescue plan, the appointed company or creditors
judicial manager to prepare • Moratorium is 6 months
and implement the (plus 6 months).
rehabilitation plan without any • Managed by judicial
potential threat of winding up” manager

• Not available to companies

licensed by BNM or
regulated by SC;
 DISSOLUTION
STRIKING OFF
Grounds for striking off
• No longer carrying on business
• Contravention of CA 2016
• Unlawful purpose
• Where a company is being wound up:
– no liquidator is acting;
– Affairs have been fully wound up and liquidator failed to filed
returns required to be made by him; or
– Affairs have been fully wound up and assets not sufficient to
obtain Court order
 DISSOLUTION
WINDING UP
• Commencement of winding up is at the date of adjudication
order by Court

• Inability to pay debts –if the company is indebted in a sum

exceeding an amount to be prescribed by the Minister
(RM10,000)

• Power of Court to terminate winding up on the application of

the liquidator or of any creditor or contributory.
 DISSOLUTION
WINDING UP
• Changes in the provision relating to unsecured creditors to be
paid in priority –

– Wages or salary of any employee not exceeding RM15,000 ;

– all amounts due in respect of contributions relating to employees

social security contribution (SOCSO) and superannuation or provident
fund (EPF)
COMPANIES ACT 2016: SUBSIDIARY
LEGISLATIONS
 LIST OF SUBSIDIARY LEGISLATIONS
• Companies Regulations
2017
• Prescription of amount of
indebtedness
• Direction of Minister under
paragraph 26(1)(d) and
section 564
• Practice Directive 1/20017
• Practice Directive 2/2017
• Practice Directive 3/2017
• Guidelines on names
• Guidelines on CLBG
• Guidelines for Striking Off
• Guidelines for Asset
Management
Companies Regulations 2017 [P.U. (A) 37]

• Came into effect on 31 January 2017

• Covers matters relating to:
(i) Lodgement of documents: how, who and how
much.
(ii) Affidavit and statutory declaration
(iii) Information or document certified by Registrar
 Lodgement of Documents
How Who How Much

• Using electronic filing • One or more secretaries • Refer to Schedule

system provided by the of company may have • Failure to pay fees shall
Registrar access to the electronic render the lodgement
• Covers all types of filing system of documents,
lodgements, • The secretary who has application or appeal to
applications and been given access shall be void.
appeals lodge the document on • No refund if withdrawn
• Exception: where it is behalf of the company • Registrar may reduce or
not possible, the or directors of the waive, partly or wholly,
Registrar may allow the company. any fees specified in the
documents, • Exception: other person Schedule.
applications or appeal may also be allowed to
to lodged or made in have access to the
such other manner as electronic filing system
he thinks fit. if the Registrar allows.
• Registrar may also
require additional info
 Companies Regulations 2017

Affidavit and statutory declaration

• Affidavit or SD made by a company must be sworn or
declared by the directors or persons authorized by the
company.
• If affidavit or SD declared outside Malaysia, must be
declared in accordance with the laws of that place.

Information or document certified by Registrar

• Registrar may certify, electronically or otherwise, any
information, document, extract of any document, to be
true information, true copy or extract from document.
 Prescription of Amount of Indebtedness
of a Company [P.U. (B) 58]
– Prescribed for the purposes of paragraph 466(1)(a) of the
Companies Act 2016 (w.e.f 31 January 2017).

– A company is deemed to be unable to pay debts if it is

indebted to an amount exceeding the amount prescribed by
the Minister and has neglected to pay or secure payment to
the satisfaction of a creditor.

– The amount prescribed is RM10,000

 Direction of Minister under para 26(1)(d)
and section 564 [GN No. 4620]
• The Minister has directed the Registrar not to accept certain names for
registration under the CA 2016 UNLESS prior approval of the Minister has
been obtained.
(i) Names suggesting connection with a member of a Royal family or Royal
Patronage
(ii) Names suggesting connection with Federal or State Government
(iii) Names suggesting connection with ASEAN, foreign government
(iv) Names suggesting connection with political party, society, trade
associations, cooperatives, building society
(v) Names containing certain words relating to banking, insurance,
investments, etc
(vi) Names which are misleading as to the identity, nature, objects, of the
company
(vii) Names which are blasphemous or offensive to the public
 Practice Directive 1/2017: Documents under the CA
2016, Lodgement Requirements and Related Matters

• Comes into operations on 31 January 2017

• Objectives:

(a) to specify the documents which are referred to in the Companies Act
2016 for the purposes of lodgement with the Registrar or for the
execution by the directors, officers, members or company; and

(a) to determine the general requirements for the lodgement of the

documents and related matters.
 Lodgement of Documents
What How Fee

• Schedule A: Documents • All particulars which are • Statutory must be paid.

which are to be lodged necessary to be • Late lodgement – 7 days
using the electronic completed, acted upon grace period.
filing system or executed before the • If Registrar is satisfied
• Schedule B: Documents documents are lodged that the omission to
which are to be lodged with the Registrar must lodge the document
OTC have been duly within the time limit
• Schedule C: Documents completed, acted upon was accidental or due
which are to be or executed, as the case to inadvertence, or that
executed but kept at may be it is just and equitable
the registered office. • If lodged electronically, to do so, the Registrar
must comply with the may remit wholly or
relevant direction. partly the fee payable in
• If lodged OTC, must respect of the late
comply with lodgment of the
documentations document.
requirements.
 Practice Directive 2/2017: Notification of Changes in
the Business Address and/or Nature of Business

• Comes into effect on 18 April 2017

• Objective is to specify the mechanism which companies can

notify Registrar on changes in nature of business or business
address subsequent to incorporation

• Changes must be notified within 14 days of event date.

 Practice Directive 3/2017: Qualifying Criteria for Audit
Exemption for Certain Categories of Private Companies

• Issued on 4 August 2017

• Sets out the qualifying criteria for private companies from

having to appoint an auditor in a financial year (audit
exemption).
 Practice Directive 3/2017: Qualifying Criteria for Audit
Exemption for Certain Categories of Private Companies

• Issued on 4 August 2017

• Sets out the qualifying criteria for private companies from

having to appoint an auditor in a financial year (audit
exemption).
 Audit Exemption
CATEGORIES OF COMPANIES IMPLEMENTATION
Dormant Companies
• Has been dormant from the time of incorporation; Incorporated under CA2016:
OR FY beginning 31.1.2017
• Has been dormant throughout the current FY and in Incorporated under CA1965:
the immediate preceding FY. FY beginning 1.9.2017
Zero-revenue companies
• Does not have any any revenue during the current FY beginning 1.1.2018
FY;
• Does not have any revenue in the immediate past
two FY; AND
• Total assets in the current FY and immediate past
two FY does not exceed RM300,000
Threshold Qualified Companies
• Revenue not exceeding RM100,000; FY beginning 1.7.2018
• Total Assets not exceeding RM300,000; and
• Having not more than 5 employees.
*Applicable for current FY and immediate past two FY
 Terms and Conditions for
Audit Exemption
• Companies qualified for audit exemption are required:

– to prepare FS in compliance with approved accounting

standards and lodge unaudited FS with Registrar

– to audit the FS if receive a notice from any member

holding at least 5% of issued shares or at least 5% of total
number eligible to vote or if the company receives
direction from the Registrar.
 Guidelines on Company Limited By Guarantee

• Sets out the registration procedures for CLBG and related

matters.

• CLBG can only be incorporated for not for profit purposes –

section 45 of the CA 2016

• All procedures must be approved by the Registrar except for

obtaining licence to omit the word “Berhad” or licence to hold
land.
 Matters Requiring Registrar’s Approval

Application Constitution Others

• If CLBG is to be • Constitution and any • Appointment of new

incorporated by
Ministry/Govt Agency
etc, approval letter must
be submitted together
with application
• Registrar will assess
experience, qualification,
competency of founder
member/director
• Registrar must approve
appointment of director
amendments to director
constitution • Payment of
fees/salaries/allowances
to directors
• If income is to be used for
other than the objects
• If the company intends to
solicit donation
• If the company intends to
set incorporate subsidiary
 Guidelines on Company Names

• Sets out the requirements relating to the use of names for

companies and foreign companies

• For the purposes of incorporating a company or changing a

name, confirmation of availability from the Registrar must be
obtained.
 General Requirements on Company Names

General Rules Naming Principles Unacceptable names

• Names should not be: • Correct spelling, proper • Contains words which are
• Undesirable or grammar • Obscene in nature
unacceptable • No mixture of BM/Eng • Contrary to public
• Identical to an existing except the use is to policy
business entities describe type of business • Misleading as to the
• Identical to a reserved • Not blasphemous, not objects, nature or
name resemble elements of purpose of a company
• Name of a kind the religion
Minister has directed • Not using words which
the Registrar not to are too general
accept for registration • Use of individual name –
allowed in certain
circumstances
 Guidelines on Application for Registrar to Act on
Behalf of Dissolved Companies

• Sets out the circumstances and procedures to apply for

Registrar to act on behalf of dissolved companies pursuant to
section 556 of the CA 2016

• Allows the Registrar to either execute or sign any relevant

instrument or document stating that he has done so in
pursuance of this section, and the execution or signature shall
have the same force, validity and effect as if the company if
existing had duly executed such instrument or document.
 Guidelines on Striking Off a Company

• Guidance for members or directors of a company to apply for

a striking off procedure pursuant to section 550 of the
Companies Act 2016 (CA 2016).

• Limited to the application to strike a company off the register

under section 549 (a) of the CA 2016 when the company is
not carrying on business or is not in operation.
 Guidelines on Striking Off a Company – General
Requirements
• The resolution of the shareholders have been passed for the initiation of the
application to strike off the name of the company from the register on the basis
that the company is not carrying on business or not in operation
• The company has no assets and liabilities at the time when the application is made
• The company has no outstanding charges in the Register of Charges
• The company has no outstanding penalties or offer of compounds under the CA
2016
• The company has no outstanding tax or other liabilities with any Government
Department or Agency
• The information of the company with the Registrar is up to date
• The company is not involved in any legal proceeding within or outside Malaysia
• The company has not made any return of capital to the shareholders
• The company is not a holding company
• The company is not a “Guarantor Corporation”
 Guidelines on Striking Off a Company

• Right to withdraw – applicant may withdraw the application

• Right to object – by third party

– Registrar will not strike off a company unless the objection has been
withdrawn, basis of objection is not correct or no longer correct or the
objection was vexatious or frivolous.
THANK YOU