From 31st January 2017 onwards, all companies in Malaysia will operate under the Companies Act (CA) 2016.
If you have your own business, you may want to learn about the key changes brought by CA 2016 and how they might affect your company:
(1) Single director/shareholder
Under the new Act, a single shareholder can also be the sole director of a private company.
(2) How to set out New Companies
Applications for incorporation of company are now made online via the MyCOID portal by Suruhanjaya Syarikat Malaysia, using an electronic template. Note that the ‘notice of registration’ is the conclusive evidence of the incorporation of a company, a common seal is no longer mandatory.
(3) Optional Constitution
For private company, you can choose to operate without a constitution as all the rights and duties of the company, directors and shareholders are governed by the CA 2016. For companies with an existing constitution, you may want to consider amending your constitution in line with the CA 2016 to make use of the administration ease.
(4) No-Par Value Regime
Under the new Act, issued shares will no longer tied with the concept of a par/nominal (ie: minimum) value per share. A company will no longer have to state its authorised share capital. A company may issue shares at any price depending on the relevant needs and circumstances of the company. As such, concepts prohibiting shares issued at a discount or shares issued at a premium are now made redundant.
(5) Annual General Meeting
For private limited companies, it is no longer compulsory to hold an AGM. Decisions could be made via written resolution and the passing of the written resolution need not be unanimous. If you have express requirements contained in your constitution that resolutions must be passed unanimously or that annual general meetings must be held, you may want to consider amending this requirement to take advantage of the relaxation.
(5) Filing of Annual Return
Annual return must be lodged within 30 days from the anniversary of the company’s incorporation date. Failure to lodge annual return for more than 3 consecutive years is a ground for being struck off the register.
(6) Dividends
When declaring dividends, the directors must make sure that the company is solvent both at the time of declaration as well as 12 months after the pay-out of the dividends. A breach of this new solvency requirement exposes the directors to the risk of personal liability, under both criminal and civil.
(7) Heavier Sanctions
There are increased sanctions on directors for breaches of duties, including heavier fines up to RM3million and longer terms of imprisonment up to 5 years.
(8) New Corporate Rescue Mechanisms
A Moratorium (Voluntary Arrangement) or Judicial Management may help financially distressed companies to avoid winding-up.
These are a few of the highlights to the changes made in general which hopefully may enlighten your awareness!
