For the individual shareholder, any person who has attained minimum age of 18 and he or she is not a bankrupt and has not been convicted and imprisoned.

For body corporate shareholder, any company can hold share in any other company except sole proprietorship and partnership.

Minor is a person who is under the age of 18 years old. Although the Companies Act 2016 is silent on this matter, the prohibition for minors to enter into contracts under Section 11 of the Contracts Act 1950, has been interpreted to expand to the holding of shares in a company.

A shareholder (can also be called as a member) possess a company by owning its shares whilst the Directors are appointed by shareholders to sit on the board to manage the operation of a company. An individual person can assume both positions as director and shareholder of a company at the same time.

Director

  • An officer of the company.
  • Can also be a shareholder by subscribing to the shares of the company.
  • Appointed by shareholders to sit on the board.
  • Responsible for managing a company lawfully and ethically in accordance with the Companies Acts and the Constitution and/or Memorandum and Articles of Association.
  • Required to run a business within their powers.
  • Promote the company’s businesses with a view to make a profit for the benefit of the company and its shareholders.
  • Entitle to receive a salary if the director is an Executive Director or Managing Director.
  • Their rights and powers are assigned by the shareholders.
  • Their duties and responsibilities are binds legally.
  • Responsible for ensuring that company adheres to all corporate compliance requirements whenever it’s fall due such as filing of Annual Audited Accounts, Annual Returns and Company Tax Returns within the deadlines as well as to ensure all required taxes are paid on time.
  • Have authority to issue shares if approval is so granted by shareholders and approve the transfer of shares in a company.
  • Can be removed and disqualified if they are not acting in good faith and in the best interest of the Company.
  • Can be prosecuted should they fail to uphold their legal responsibilities and duties.

Shareholders

  • A Members of the Company.
  • If they are the first shareholders of the company, their name will be indicated as subscribers in the statutory records of the company.
  • Can either be a natural person or a corporate body.
  • Own partial or all of the Company’s shares.
  • Their liability is limited to the nominal value of their shares invested in the company. If the company is indebted, they are only responsible for the amount that they have invested in the company.
  • Can also at the same time be a director in the company.
  • Possess the power to appoint and remove directors and company secretaries at any time.
  • Not involved in the daily operation of the company.
  • Ownership in the company depends on the number, value and class of shares held.
  • Their voting rights, capital rights and dividend rights depend on the Prescribed Particulars of their shares in Constitution or Memorandum and Articles of Association.
  • Assign the powers and rights to the company directors.
  • Entitle to make decisions on significant matters such as change of the company name or structure, investment opportunities, issue of shares, appointment of an auditor to inspect the accounts, appoint or remove a director, change in the director’s powers, amendment in the Articles of Association or Shareholders’ Agreement.
  • Entitle to any surplus of capital in the event the company is wound up.

The rights of the shareholders are accorded by the Companies Act 2016, Constitution, Memorandum & Articles of Association and shareholders’ agreement (if any). The rights and powers available to them are as follow:

  • Rights to speak and vote on a resolution at shareholders’ meetings.
  • Right to vote out and vote down directors.
  • Right to dispose of their shares.
  • Right to receive a dividend payment.
  • Right to restrain the company from acting beyond legal power or authority.
  • Right to approve the company’s change of name.
  • Right to approve and against the company’s change of object clause.
  • Right to appoint and remove the company’s auditor.
  • Right to entitle to capital return in the event the company is wind up.
  • Right to call for a shareholder meeting.
  • Right to appoint proxy/proxies to attend shareholders’ meeting
  • Right to ensure due observance of the company’s Constitution or Memorandum & Articles of Association.
  • Right to receive the audited financial statement.
  • Right to inspect the register of members, minutes book and register of directors, managers and secretary.

The liability of a shareholder in a company limited by shares regardless whether it is a private limited company (SDN BHD) or a public limited company (BHD), is only limited to the amount that they are contributed at the point of subscription of shares. If the liabilities amount is greater than the amount contributed, there will be no surplus capital to return to them.

In the case where shares are not fully paid, the shareholder is liable to pay the remaining amount in settlement of the company’s debt.

Paid-up capital is the subscription monies paid by shareholders to the company to purchase a particular company’s shares. Shares represent ownership in the company. This amount of money is to fund the cash flow of the company in its daily operation such as to pay off company expenses and staff salary.

The issued share capital must be paid up as soon as the company is incorporated. Therefore, our incorporation packages only allow paid up share capital of RM2 to RM2,500 as we deemed such paid up to the company is done by shareholders via cash.

In case if the proposed paid up capital is more than RM2,500, clients are advised to set up the Company with a minimum paid up capital of RM2. Upon the company is incorporated, a bank account is to be opened and the shareholders who subscribe to shares to bank in their subscription monies into the company’s bank account. Thereafter, furnish the payment proof to facilitate the increase of paid up capital.

There is no liability to a shareholder if the amount of subscribed shares is fully paid. In the event, if the shares are not fully paid up, the shareholder is responsible for settling the remainder balance whenever is instructed by the board.

The paid up capital monies paid by shareholders can be used as soon as your company is incurring expenses or start to invest or commence business.

  • According to the statutory requirement, the minimum number of individual shareholders and corporate shareholder is one each.
  • At any one time, the number of shareholders should not reduce to below one.