PETALING JAYA: The new Companies Bill, which will replace the existing Companies Act 1965, aims to ease and cheapen the cost of doing business in Malaysia, but will give strong emphasis on corporate governance.
The Companies Commission of Malaysia (CCM) has targeted to further reduce the number of days for setting up a business from three days to one. Hence, going e-centric will be a huge feature for the formation of companies.
Other significant features include having a flat and cheaper fee for public and private companies to be formed as well as including corporate social responsibility into the act.
There are 19 policy statements that will form the general parameter of the new Companies Bill that will be introduced in 2011.
The committee to spearhead the review on the new Bill included 25 members from the Securities Commission, Bursa Malaysia, Bank Negara, accounting bodies and law practitioners, among others. Of the 188 recommendations given, 183 have been accepted.
On the issue of corporate governance, the Bill will clarify the definition of “shadow directors”, the minimum and maximum age of directors, as well as enhancing the rules relating to appointment, resignation and removal of directors, among others.
“This is a milestone for corporate Malaysia. We are making it easier for companies to be set up, as well as for more companies to list.
“We want to encourage the growth of small and medium companies. We want to increase the level of competitiveness in our companies,” said CCM chief executive officer Datuk Azmi Ariffin.
Currently, there are some 900,000 companies in Malaysia, of which 99.2% are SMEs. Azmi sees 40,000 more companies joining this fray by the year-end.
“SMEs are an important engine of growth for Malaysia. If we can cheapen and make it less cumbersome for companies to be formed, I believe we will have more people interested to start companies, and this will result in a vibrant economy,” he said.
On measures to enable businesses to be formed with more ease, Azmi said businessmen would have greater flexibility in incorporating their companies.
Companies can also be formed by a single member. Certificates of incorporation and company seals will be be optional, moving forward.
Meanwhile, a company looking to float on Bursa Malaysia will no longer be required to have a fixed authorised share capital. This means its shares will no longer be pegged to a par value.
A public-listed company will also no longer require a court declaration to either reduce its share capital or enact share buybacks.
According to a recent report by Institute for Management Development, Malaysia has leaped to become the 10th most competitive country within a year.
“The aim is to be among the top five by 2015, and the Companies Bill is meant to facilitate that target,” said CCM director of corporate development and policy division Azryain Borhan.
Azryain added that an act on limited liability partnerships would be tabled in Parliament soon. This will be a “hybrid creature” for smaller companies. For instance, there is no requirement for board of directors while auditing of accounts will be optional.
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