the companies bill 2013- revamping the companies act · pdf filet! d 1 1 the companies bill...

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

1 1

The Companies Bill 2013- Revamping the Companies Act 1965

17 December 2013 - LEE SHIH & SHEBA GUMIS

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

2

SUMMARY OF PART TWO

Malaysian Law Firm of the Year 2008, 2009, 2010, 2011 & 2013, Who’s Who Legal Awards

• Company Secretaries

• Meetings and Written Resolutions

• Issues Relating to Directors

• Issues Relating to Auditors

• Changes to the capital reduction process

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

3

COMPANY SECRETARIES


• Mandatory appointment of company secretary

maintained.

• New requirement: must register with CCM [cl.

237]

[cl. 234-239]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

4

MEETINGS OF MEMBERS


Summary

1. Snapshot of present AGM provisions.

2. Move to No-AGM regime for private cos.

3. AGMs maintained for public cos.

4. Changes to how meetings will be held.

5. If all else fails, Court Order for convening a

meeting.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

5

SNAPSHOT: PRESENT AGM


• Requirement to hold AGMs

• AGM matters:

1. Laying of accounts

2. Appointment of auditors

3. Retirement / election directors

4. Lodgment of accounts and annual returns

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

6

NEW: NO-AGM REGIME FOR PRIVATE COS


• Rationale behind this change.

• Four things that flow from this.

1. Circulation of accounts: Within 6 months of

financial year-end and lodged with CCM

within 1 month after circulation [cl. 254, 255,

256]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

7



2. Appointment auditors: First round

appointment by Board [cl. 262(3)] and

subsequently by members ordinary reso [cl.263(4)].

NB: Useful provision allowing Registrar to

appoint auditor to fill vacancy upon

application by member. [cl.263]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

8



3. Retirement of directors: Up to the members

to decide by way of written resolution [cl.204(2)]. (also see later section on appointment

and removal of directors)

4. Lodgment of annual returns: To lodge with

CCM an annual return for each calendar year

not later than 30 days from incorporation date

[cl. 67(1)].

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

9



• Protection for shareholders: Members

holding at least 5% of paid-up capital can

request directors to hold a physical meeting [cl.306(3)]

• Requirements:

1. More than 12 months since last meeting

(convened under this section); and

2. Proposed resolution not vexatious or

frivolous.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

10

AGM MAINTAINED FOR PUBLIC COS


• AGM regime still maintained for public

companies.

• E.g. see clauses 338-341.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

11

CHANGES TO HOW MEETINGS ARE HELD


• Venue requirement: Not mandatory that venue(s)

must be in M’sia. But Chairman shall be at the main

venue which must be in M’sia [cl.323].

• Quorum: For single-member company, quorum can

be one [cl.324].

• Corporate representative: No need for certificate [cl.329]

• Proxies: Not limited to categories of proxies [cl.330]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

12



What about requisitioning or convening general

meetings? [almost similar to present s.144]

• Members holding 10% of paid-up (or where no share

capital, members with 5% voting rights) can request

directors to hold a meeting. [cl.306]

• Directors must issue notice within 14 days and

meeting to be held within 28 days of the notice [cl.307]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

13



• If directors fail to hold the general meeting, then the

members who requested the meeting (or any of them

of at least ½ of the requestors) can call such a

meeting [cl.308]

• This meeting to be held not more than 3 monthsafter

date directors were required to call such a meeting [cl.308(3)]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

14

IF ALL ELSE FAILS


• Power of Court to order meeting [cl.309] [similar to the

present s.150]

• “if for any reason it is impracticable to call a meeting

of members in any manner in which meetings may be

called”

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

15

QUESTIONS


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

16

SHIFT TO WRITTEN RESOLUTIONS REGIME


PRIVATE COMPANIES

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

17

SHIFT TO WRITTEN RESOLUTIONS REGIME


• Unanimous written resolution [s.152A] cast aside.

• Ordinary and special resolutions can be passed as

written resolutions, with the same threshold (simple

majority and more than 75%).

• A written resolution can be proposed by a director

or a member [cl.292].

• Cannot involve removal of director [cl.205] or auditor

[cl.271] see [cl.292]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

18

PROPOSED BY DIRECTORS


Query: Single director

[cl.292(1)(a)] or the Board of

Directors [cl. 296(1)]?

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

19

PROPOSED BY MEMBER(S)


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

20 Malaysian Law Firm of the Year 2008, 2009, 2010, 2011 & 2013, Who’s Who Legal Awards

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

21

PROCEDURE FOR WRITTEN RESOS


1. Company must receive an authenticated document

identifying member’s agreement to which resolution.

Can be sent in hard copy or electronic form [cl.301(1)].

2. Member’s agreement once signified cannot be

revoked [cl.301(3)].

3. Written resolution passed once required majority have

signified agreement [cl.301(4)].

4. Will lapse after 28 days of circulation date [cl.302]

5. Circulation date [cl.294]: date all circulated or on the

first of the days of circulation.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

22

QUESTIONS?


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

23

ISSUES RELATING TO DIRECTORS


Summary

1. Appointment & Removal

2. Present Principles on Removal of Directors

3. Future: Removing Directors in a Private and

Public Company

4. Board Meetings.

5. Remuneration of Directors.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

24

DIRECTORS: APPOINTMENT & REMOVAL


• For private cos: 1 (resident) director [cl.195]

• For public cos.: 2 (resident) directors [cl.195]

• Removal of directors [cl.205]

1. Private companies

2. Public companies

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

25

PRINCIPLES ON REMOVAL OF DIRECTORS


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

26

PRESENT: REMOVAL OF DIRECTORS


• Section 128: public and private companies.

• Does section 128(2) apply to private

companies? i.e. need to give special notice

and hold a general meeting?

• Case of Dato’ Low Tuck Choy and Anor v Chong

Kok Weng and Others [2009] MLJU 826

• Further reading: Tien Ik [1992] 2 MLJ 689 (SC),

Kow Kek Leong [1998] 5 CLJ 328 (HC) and Chow

Chi Hong [2009] 6 MLJ 555 (HC)

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

27

BILL: REMOVAL DIRECTORS PRIVATE COMPANY


• Must hold a physical general meeting

[cl.292(2)(a) and cl.205].

• Special notice required [cl.205(3)].

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

28

BILL: REMOVAL DIRECTORS PUBLIC COMPANY


• Must hold a physical general meeting

[cl.292(2)(a) and cl.205].

• Special notice required [cl.205(3)].

• Director has right to be heard, right to make

oral or written representation [cl.206].

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

29

BOARD MEETINGS


• A new Fourth Schedule of the Bill: default procedure

unless constitution states otherwise.

• Quorum: Fixed by Board. If not, majority of directors.

• Chairperson has casting vote.

• Director present presumed to have agreed to

resolution unless expressly dissents or votes

against.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

30

REMUNERATION OF DIRECTORS


• Public cos: remuneration and any benefits shall be

approved at a general meeting [cl. 229(1)].

• Private cos: Subject to constitution, Board may

approve remuneration and benefits but:

1. Approval to be recorded in Board minutes and notified to

members within 14 days [cl.229(3)].

2. Members holding at least 10%, within one month of

knowing, can require directors to obtain a written

resolution or ordinary reso at general meeting [cl.229(4)].

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

31

QUESTIONS


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

32

AUDITORS


Summary

1. Appointment.

2. Term of Office.

3. Removal.

4. Replacement.

5. Resignation.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

33

AUDITORS: APPOINTMENT


Private Cos Public Cos

(i) Board (at time of incorporation) [cl. 262(3)]

(i) Board (at time of incorporation) [cl. 267(3)]

(ii) Members by ordinary reso [cl. 262(4)]

(ii) Members at the AGM [cl. 267(4)]

(iii) Registrar if the company

fails to appoint [cl. 263]

(iii) Registrar if the company

fails to appoint [cl. 267]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

34

AUDITORS: TERM OF OFFICE PRIVATE CO.


Will continue and deemed

reappointed [cl.264(1)]

UNLESS 1. Appointed by Board

2. Constitution 3. Members prevent

4. Members resolve no re-appointment

Notice from 5% voting members can block re-appointment [cl. 265]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

35

AUDITORS: REMOVAL


• Members can remove by way of ordinary reso [cl.

271(1)] and special notice required.

• Almost similar procedure: [cl. 272]

1. Auditor can make written representations of reasonable

length. Copy to be circulated.

2. Copies need not be circulated and read out if, on

application of Company or other aggrieved person, the

Registrar is satisfied that there is “needless publicity” or

matter is defamatory or on some other reasonable

grounds.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

36

AUDITORS: REPLACEMENT


• Written resolution [cl. 274]

• General meeting of members [cl. 275]

• Almost similar procedure of allowing written

representations and Registrar may prevent

circulation and reading out of representations.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

37

AUDITORS: RESIGNATION


• Auditor can now deposit notice in writing of

resignation at company’s registered office.

Resignation effective after 21 days [cl.276]

• Upon receipt of resignation notice, company shall

notify Registrar within 7 days [cl.277

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

38

AUDITORS: RESIGNATION (PUBLIC CO.)


• In addition, in a public co., auditor can also [cl.278(2),

(3)]:

1. Deposit with the resignation notice, a signed requisition

calling on directors to convene general meeting.

Explanation on the resignation.

2. May request company to circulate auditor’s statement.

• Within 21 days or receipt of requisition, directors to

convene a general meeting within 28 days [cl.278(5)].

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

39

QUESTIONS


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

40

CAPITAL REDUCTION


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

41

CAPITAL REDUCTION


Court Process Route

[cl. 115]

Solvency Statement

Route [cl.116]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

42

CAPITAL REDUCTION: COURT PROCESS


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

43

CAPITAL REDUCTION: SOLVENCY STATEMENT


• Statutory test for solvency: [cl.111]

• Offences: If no reasonable ground to make the

solvency statement, maximum of 5 years

imprisonment or RM500,000.00 fine or both.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

44

CAPITAL REDUCTION PROCESS


Stage 1

1. Circulate proposed special resolution (either

by WR or at meeting) with the solvency

statement [cl.116(5)] and pass the resolution.

2. Company sends to IRB and CCM a notice

(within 7 days) that the special resolution

passed, text of the resolution and that

solvency test met [cl.116(1)]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

45



Stage 1

• Solvency requirements need not be met if

purely cancellation of accumulated losses [cl.116(3)]

• Solvency statement made available for

inspection by any creditors for 6 weeks from

date of resolution [cl.116(5),(6)]

• NB: Advertisement?

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

46



"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

47



Stage 2: Six-week Wait

• 6 weeks from date of reso, any creditor can

apply to Court for reso to be cancelled [cl.117(2)]

• Test: debt or claim not secured or inadequate

safeguards [cl.119(2)]

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

48



Stage 3: Beyond the Wait

• If no objections, then between 6-8 weeks,

company shall lodge with CCM:

1. Copy of the resolution;

2. Copy of solvency statement (if applicable);

3. Statement confirming all requirements complied

with and no application for cancellation made; and

4. Notice containing reduction information.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

49



Stage 3: Beyond the Wait

• If there were objections, then within 14 days of the

end of legal proceedings:

1. Statement confirming all requirements complied

with and application for cancellation brought to an

end;

2. Copy of the Court Order dismissing the application;

and

3. Notice containing the reduction information.

"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

50

FINAL QUESTIONS?


"A4

rb_

sta

nd

ard

_b

an

d_p

ho

to" –

20

10

07

01 –

do

no

t d

ele

te th

is te

xt o

bje

ct!

co

lore

d

51

THANK YOU


LEE SHIH

[email protected]

www.leeshih.com

SHEBA GUMIS

[email protected]

mailto:[email protected]

http://www.leeshih.com/

mailto:[email protected]

the companies bill 2013- revamping the companies act · pdf filet! d 1 1 the companies bill...

Documents