Phase one of Companies Act 2016 comes into effect

KUALA LUMPUR: The Companies Act 2016 (CA 2016) will be implemented over several stages, starting with phase one which came into effect on Jan 31.

The Companies Commission of Malaysia (SSM) said on Wednesday that with the enforcement of the first phase, the Companies Act 1965 is hereby repealed.

However, it pointed out that several provisions in the CA 2016 which have yet to be effective are:

Section 241 – provision relating to the requirement for company secretaries to register with Registrar; and

Division 8 of Part III – provisions relating to corporate rescue mechanisms on corporate voluntary arrangement and judicial management.

SSM said a company may be incorporated by or have only one member and that single member can also be the sole director of the company. However, for public companies, the CA 2016 still retains the minimum requirement of two directors.

The CA 16 also sees the change of “certificate of registration” to “notice of registration”

SSM 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 in line with the requirement of the law. 

Under the CA 2016, a company does not have to state its authorized 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.

It said from Jan 31, 2017, 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.

SSM also pointed out that a company incorporated from Jan 31, 2017, has the option whether to adopt a constitution or otherwise. 

For a company which was incorporated before the CA 2016 came into effect, the existing constitution (memorandum & 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.

Effective from Jan 31,  2017, 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.

Beginning from Jan 31, 2017, 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.

Under the CA 2016, the requirement to lodge Annual Returns is based on the anniversary of the incorporation of a company, and the date for the lodgement of Financial Statements is no later than seven months from the financial year end of the company.

SSM advised the owners of the company to take into account of the changes when reviewing, formulating or implementing policies and procedures which may affect companies when dealing with the ministry/department/agency/organisation. 

It also said this was to ensure that the business friendly policies which are contained in the CA 2016 can be implemented efficiently and the benefits could be enjoyed by the business community in general.

Apart from the CA 2016, SSM will also enforce the Interest Schemes Act 2016 from Jan 31, 2017. 

The Interest Schemes Act regulates the offering of interest schemes as an alternative to fund raising activities for companies. The provisions in the Interest Schemes Act were previously contained in the Companies Act 1965.

For details click on http://www.ssm.com.my/ or contact SSM's hotline at 03-7721 4000 or email to [e-mail]