Faq Transitional Issues Companies Act 2016 - Technical 2 2 2017 PDF
Faq Transitional Issues Companies Act 2016 - Technical 2 2 2017 PDF
Faq Transitional Issues Companies Act 2016 - Technical 2 2 2017 PDF
Answer:
Once enforced on 31 January 2017, all provisions in the Companies Act 2016
will take effect except section 241 and Division 8 of Part III. The six services
under MyCoID is to facilitate the incorporation of companies under the new
Act and related matters.
Answer:
(a) For companies having AGM before 31 January 2017, the companies
are required to submit the AR in accordance with the requirements
under the Companies Act 1965.
Answer:
Companies are still required to fully comply with the provisions under section
169 of the Companies Act 1965 in line with the transitional provision under
subsection 620(4) of the Companies Act 2016.
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4. What is the correct format for lodgement of Annual
Returns/Financial Statements for companies having FYE before the
commencement of the Companies Act 2016?
Answer:
Date of AGM State the date of These Audited Statement of These Audited Statement of
before 31 AGM; Accounts of the Company with Accounts of the Company with
January 2017 Qualified/ Unqualified Auditors Qualified/ Unqualified Auditors
(Lodgement Report for the year ended Report for the year ended
format: dd/mm/yyyy were tabled at the dd/mm/yyyy were tabled at the
Companies Act Annual General Meeting held Annual General Meeting held on
1965) on dd/mm/yyyy dd/mm/yyyy
(Directory/ Secretary) (Directory/ Secretary)
Circulation of State the date of These financial statements and These financial statements and
Financial circulation of reports of the company with reports of the company with
Statements Financial Qualified/ Unqualified Auditors Qualified/ Unqualified Auditors
before 31 Statements and Report for the financial year Report for the financial year end
January 2017, AGM; end dd/mm/yyyy were dd/mm/yyyy were tabled at
AGM held on or circulated on dd/mm/yyyy and AGM held on dd/mm/yyyy
after 31 January (Lodgement tabled at AGM held on
2017 format: dd/mm/yyyy
Companies Act
1965)
(Directory/ Secretary) (Directory/ Secretary)
Circulation of State the date of These financial statements and These financial statements and
Financial circulation of reports of the company with reports of the company with
Statement after Financial Qualified/ Unqualified Auditors Qualified/ Unqualified Auditors
or on 31 January Statements for Report for the financial year Report for the financial year end
2017, private end dd/mm/yyyy were dd/mm/yyyy were tabled at
AGM held after companies. circulated on dd/mm/yyyy AGM held on dd/mm/yyyy
31 January 2017
(Lodgement
format:Companies
Act 2016) (Directory/ Secretary) (Directory/ Secretary)
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CONSTITUTION (MEMORANDUM & ARTICLES OF ASSOCIATION)
Answer:
Under section 619(3) of the Companies Act 2016, for existing companies
already registered under the previous law, their M&A remains valid and
enforceable under the Companies Act 2016, unless otherwise resolved by the
company. The company may decide whether to revoke entirely the
Constitution or amend certain clauses.
If the existing company decides to revoke the existing M&A and NOT to have
a specific constitution, the company must pass a resolution to that effect. In
that scenario, under section 31(3) of the Companies Act 2016, the company,
each director and member shall have the rights, powers, duties and
obligations as set out in the Companies Act 2016.
Similarly, a company must also pass a resolution to amend any part of its
constitution should the company wish to harmonise its constitution with the
provisions of the Companies Act 2016. For example, a private company may
want to amend provisions relating to minimum directorships from current 2
to 1.
Answer:
Except for a company limited by guarantee, a public company has the option
of whether to have a constitution or not. As such, in cases where an existing
public company (other than a company limited by guarantee) opts to do away
with its constitution, it must obtain approval from its shareholders.
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7. With no constitution how can the public be assured when
dealing with companies. Companies can start new businesses
anytime.
Answer:
Answer:
Answer:
Answer:
In cases where a company does not a constitution, the company may rely on
the following:
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11. If a company opted to adopt a constitution, does the
constitution need to be lodged?
Answer:
Yes, the constitution must be lodged with the Registrar. Similarly, any
amendment/alteration to the constitution must also be lodged.
Answer:
INCORPORATION
Answer:
Answer:
Yes, a person who is a single director (who is also the single member) can
act as the secretary of the company. However, the Companies Act 2016
prohibits acts in dual capacity i.e. where the act is required to be done by
both a director and a secretary, that act must be executed by two different
persons.
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15. Under the new Act can a foreigner in Malaysia i.e non-citizens
/non-residents be allowed to form a company as sole
shareholder/director?
Answer:
Answer:
Yes.
17. For directorship under the new Companies Act, why does the
residential status still being required?
Answer:
Under the Companies Act 2016, section 196(4) provides the requirement for
a director that he must ordinarily reside in Malaysia by having a principal
place of residence in Malaysia. This requirement is only applicable to the
minimum number of directors (in the case of a private company, at least one.
In the case of a public company, at least two).
Answer:
Answer:
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In the event a single director who is also the single director passed away, the
company secretary has the duty under section 209(3) to call a meeting of
next of kin for the purposes of appointing a new director. If the next of kin
failed to appoint a director within 6 months of the death of the director, the
Registrar may direct the company to be struck off the register.
Answer:
The next of kin referred to under section 209(3) is not defined in the
Companies Act 2016. However, for the purposes of the section, a Practice
Note will be issued to address the definition.
Answer:
Besides limited liability status, a company is required to fully comply with the
provisions of the Companies Act 2016. The Companies Act provides a more
structured approach which codifying the requirements of establishing,
managing and dissolving a company. Such requirements include the keeping,
preparing and auditing of its financial statements and other corporate
governance provisions (disclosures, rules of conflict, reporting, etc.)
contained in the Companies Act 2016.
The super form is an electronic template which will replace the various form
currently required for incorporation process (i.e. Form 6, Form 48A and M&A
under the previous Companies Act 1965). The form is accessible through the
MyCoID 2016 Portal.
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Section 14 of the Companies Act 2016 provides for the incorporation process.
Amongst others, a person is required to provide a set of information as
follows:
Nature of business;
Answer:
EXECUTION OF DOCUMENTS
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i.e 2 directors may sign off a transaction without the Board's
approval?
Answer:
The fact that common seal requirement is optional under the law is irrelevant
as the directors still have a duty to act within their proper authority. Sections
210 234 of the Companies Act 2016 provide for directors duties and
responsibilities. Directors who breach these requirements may face civil
and/or criminal enforcement actions.
Answer:
The fact that the company opted not to have a common seal does not override
the provisions of such requirement under any other written laws. As such,
the company may adopt a common seal when it becomes necessary to
comply with the requirements of other written laws, for example when dealing
with the Land Office.
Answer:
Under section 255 (3) of the Companies Act 2016, the Registrar may exempt
certain class of companies from compliance with requirements relating to
financial statements. The categories for such exemptions shall be released
soon.
Answer:
Generally, the law requires every company to appoint an auditor for each
financial year. However, under section 267(2) of the Companies Act 2016,
the Registrar is empowered to exempt certain categories of private
companies from having to appoint an auditor for a financial year. However,
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the Registrar has yet to invoke this provision and therefore, the audit
requirement is still mandatory for all companies.
Answer:
Answer:
(b) In the case of public companies, within 1 month after the audited
financial statements have been tabled at the AGM.
The Annual Returns are required to be lodged with SSM within 30 days of the
anniversary of a companys incorporation date.
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31. Under Section 68(6) of the Companies Act 2016, the company
is allowed to lodge a statement stating that there is no change in any
of the matters stated from previous years. Is this a substitution to
the companys annual return for that particular year?
Answer:
The statement issued under section 68(6) of the Companies Act 2016 means
that there is no change to the matters required to be disclosed under section
68(3). The statement itself, which is signed by the director or company
secretary, is sufficient as a substitute for the annual return for that particular
year.
32. For change of business during the financial year. Any rules that
company need to comply with before the change? I believe
shareholders resolution is needed. Any forms need to be filed with
SSM?
Answer:
A company must notify any change of the nature of its business within
fourteen (14) days after such change.
33. What is the rationale for migration to the new par value
regime?
Answer:
Nominal or par value is only applicable at the point of issuance of shares. The
actual value of shares in a company varies in accordance with the current
situation faced by the company;
The issued price of shares will be determined by the current value of the
company, factors affecting the business of the company and the capital that
the company is seeking to raise;
The nominal value, per se, does not accord protection to the shareholders.
Instead the rights of shareholders are attached to the shares, which are the
right to attend, speak and vote at meetings of shareholders and the right to
receive dividends; and
The rights of shareholders depend on the number of shares held and not the
value of shares when it was first purchased.
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34. In a no par value regime, how would the Board of Directors
determine the pricing for issuance of shares?
Answer:
The valuation method to determine the share price would vary between
companies. One way could be based on the financial performance of the
company. Using the financial statements as the guide, the Board may perform
a quantitative analysis to determine a proportionate share pricing. At the
same time, there are also some qualitative analysis that a company may want
to use. The prospects, the risks associated with the company, issue of control
etc.
In determining the share pricing, the Board must also consider all issues and
act in the best interest of the company.
Answer:
Under the Companies Act 2016, the requirement for Annual General Meeting
for private companies has been done away with. This means that a private
company is no longer required to hold AGM in every calendar year. All
meetings of a private company are known as meeting of members.
Answer:
Under the Companies Act 2016, the procedures for written resolutions are
provided under sections 297 308.
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The written resolution procedures are applicable only to private companies.
The written resolutions are passed in accordance to the required majority as
though it is passed at an actual meeting.
BOARDROOM EXCELLENCE
Answer:
The provision of the law allows a shareholder holding at least 10% of the total
voting rights to object to the decision of the Board in so far as directors fees
are concerned. This is in line with the general principle that the shareholders
are a different body to that of the Board. The objection must also be for the
reasons that the payment is not fair for the company.
The position of the law clearly allows a shareholder who is also a director to
object to the decision of the Board. This will allow scenarios where that
director/shareholder may not be present at the Board meeting and he now
wishes to object, albeit on a different capacity.
Answer:
The prohibitive policy is premised on the fact that companies should not be
transacting with an interested party unless it has been approved at a general
meeting.
The prohibitive policy is lifted for private companies where shareholders who
are interested in the transaction could also take part in approving the
transaction.
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In changing the policy, the Government has taken into considerations that
there are many genuine transactions that could not be effected by the current
prohibitive policy.
In particular, the private companies could not have access to the available
resources because such resources are held by interested parties and could
not be utilised due the requirements that the resolution must be passed by
uninterested shareholders only.
As such, the Government is of the view that whilst the policy requiring prior
shareholders approval should be maintained, the shareholders should be
given the option to proceed with the transactions with full knowledge that the
transactions would involve related party, and there should have the full
responsibility in approving such transactions.
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