2019 Amendments to Malaysia Companies Act Every Investor Should Know About
Change is inevitable for everyone. In fact, it’s the only permanent occurrence in the world. Business Laws are no exemptions to this. The Companies Amendment Bill 2019 brought some amendments to Malaysia Companies Act 2019. The following are the highlights:
The Formalities of Executing Business Documents Were Specified at Section 66
In the Companies Act 2016, all the business documents associated with the operation of the company have to be processed based on a certain standard. These documents have to carry their company seal.
Moreover, at least two people should sign them, one of which would be the Director. Business companies had problems with this because there were just so many “documents.”
The 2019 Amendments to Malaysia Companies Act has brought changes. From now, the documents are only the paperwork that you need to submit to the Government of Malaysia. Some include that have to be executed by written law, resolution, agreement, or constitution in accordance with Section 66.
The Requirements for Redemption of Preference Share Out of Capital Got Easier
The term “Redemption” is the process of repayment to the shareholders after the completion of the company’s yearly book of records. Of course, the company would know if they gain profit or loss.
There are two kinds of shares. These are the ordinary shares and preference shares. One of the advantages of ordinary shares is your right to vote in a company. It’s something you don’t have when your subscription is on preference shares. Your advantage, however, is that those people holding preference shares are the first in line to receive dividends. What happens when it’s already the day of giving dividends. Moreover, the company may decide to give dividends first to preference shareholders whenever the profit of the company is just small and didn’t reach its goal for profit.
The 2019 Amendments to Malaysia Companies Act changed Section 72 of the Malaysia Company Act 2016. It includes the requirement for Redemption of Preference Share out of Capital. With this, only shares redeemed out of profits would require a transfer of an equivalent sum into the share capital accounts. If the share is not redeemed out of profits, then, only the solvency statement would be required.
The Appointment and Remuneration for Auditors Were Explicitly Stated
The 2019 Amendments to Malaysia Company Act ratified Section 340 of the Companies Act 2016. From the old law, the word stated “the fee of directors” changed to “the remuneration of auditors.” It’s now clear that at every Annual General Meeting (AGM), one of the agenda should be the appointment and remuneration of auditors. There won’t be the problem of ambiguity anymore.
The Appointment of Receiver or Receiver and Manager Was Explicitly Stated
Winding up is the liquidation process for the business to pay its creditors. Whatever the company has left must be sold and a Receiver or Receiver and Manager is the one acting for that matter.
There are some technicalities in the old Companies Act 2016 that the new amendment, particularly Section 386 solved. It was made clear that the receiver or receiver and manager may continue to do their jobs under the debenture. What would this imply? It would mean that the receiver or receiver and manager doesn’t need consent from the liquidator or from the Court for them to sell the remaining property of the business that just recently closed where they serve.
The Dismissal of Judicial Management Order Was Introduced
The 2019 Amendments to Malaysia Company Act made changes to Section 409 of the Companies Act 2016. The word “and” changed to “or” which gives either the company or its creditor to apply for a qualified insolvency professional should these two oppose the process of appointment.
The Expansion to Cater to the Minister of Finance to Impose Limitations on Liquidator’s License
The 2019 Amendments to Malaysia Company Act ratified Section 433 of the Companies Act 2016. The new amendment made it clear that the Minister of Finance or its appointed delegation can now impose limitations or conditions to the license of the liquidator. Furthermore, they can extend their license for a period of two years.
The Re-introduction of the Provision for the Grant of Security of Costs
The 2019 Amendments to Malaysia Companies Act made a new section to the Companies Act 2016 to re-introduce some provisions for the grant of security costs. The amendment has given legal courts the power to order the company plaintiff for payment of security court if there are testimonies that they will be unable to pay the costs of the defendants.
If the 2019 Amendments to Malaysia Company Act seems too technical for you and you want some enlightenment, we at the 3E Accounting services would like to help you by explaining these matters. You can also contact us for any type of Corporate Services; we are a leading Malaysia Incorporation Service Providers.