Wednesday, 8 February 2017
THE Companies Act 2016 that came into force in stages from Jan 31 this year is intended to increase the ease of doing business in Malaysia.
Companies Commission of Malaysia (CCM) chairman Datuk Seri Jamil Salleh (pic) says the initiative to modernise the legal framework is to cultivate the spirit of entrepreneurship among the public, as there are various policies that will have a positive impact on companies.
Among the policies is the introduction of the concept of the establishment of a company by just one shareholder and one director for ease of doing business.
Under the new Act, various deregulatory measures are introduced to allow companies to operate more efficiently. For example, annual general meetings are no longer required to be held by private companies; instead resolutions can be made via circulation.
To improve the implementation of the Companies Act, the Companies Regulations 2017 was also enforced on Jan 31.
CCM chief executive officer Datuk Zahrah Abd Wahab Fenner, who is also the Registrar of Companies, says that this regulation sets out the mechanism for companies to lodge documents with the commission and their related fees.
The commission also enforced the Interest Scheme Act 2016 on the same date. This Act is an alternative platform for fundraising by companies through interest schemes.
With the enforcement of the first phase of the CA 2016, the Companies Act 1965 is repealed. Policies under the new Act in effect include:
Introduction of single member/director company: A company may be incorporated by or have only one member, and that single member can also be the sole director of the company. For public companies, the Companies Act 2016 still retains the minimum requirement of two directors.
Change of “certificate of registration” to “notice of registration”: CCM will issue a notice of registration for the incorporation of a new company to confirm that provisions relating to the requirements for registration have been complied with.
Abolition of the authorised capital concept: A company is no longer required to state its authorised capital. Instead, a company is required to notify its issued share capital and paid-up capital and the related changes through the return of allotments.
Abolition of concept of shares with nominal value: Any newly-issued share will no longer be tied with the nominal value when the company was incorporated. A company may issue shares at a price depending on the factors affecting the current circumstances and needs of the company.
Companies are no longer required to have constitution or memorandum and articles of association. A company that is incorporated beginning Jan 31, 2017, has the option to adopt a constitution or otherwise. For a company which was incorporated before the Companies Act 2016 came into effect, the existing constitution (memorandum and articles of association) will continue to be applicable to such companies until the companies resolve otherwise. However, it is still mandatory for a company limited by guarantee to have a constitution.
Companies are not required to have a common seal: A company has the option to have a common seal. Execution of documents must comply with the procedures outlined under Division 9 of Part II including situations when a company decides to have a common seal.
Abolition of the requirement for annual general meeting for private companies: All private companies are no longer required to hold annual general meetings. Instead, all decisions of private companies can be fully made through circular resolutions.
Decoupling of lodgement of annual return and financial statements: The requirement to lodge annual returns is based on the anniversary of the incorporation of a company, and the date for the lodgment of financial statements is no later than seven months from the financial year end of the company.
The Interest Schemes Act 2016 regulates the offering of interest schemes as an alternative to fundraising activities for companies. The provisions in the Interest Schemes Act were previously contained in the Companies Act 1965.
Meanwhile, provisions in the Companies Act 2016 which have yet to be effected include Section 241 relating to the requirement for company secretaries to register with the Registrar, and Division 8 of Part III relating to corporate rescue mechanisms on corporate voluntary arrangement and judicial management.
The CCM seeks the cooperation of the public to take into account the changes to the Act when reviewing, formulating or implementing policies and procedures which may affect companies when dealing with the authorities. This is to ensure that the business-friendly policies in the Companies Act 2016 can be implemented efficiently and the benefits could be enjoyed by the business community.
Source from: The Star Online