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COMPANIES ACT 2016

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1 PART I PRELIMINARY-1. Short title and commencement.

(1) This Act may be cited as the Companies Act 2016 .

(2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette , and the Minister may appoint different dates for the coming into operation of different provisions of this Act.


Legal Commentary on Section 1 of the Companies Act 2016

Introduction

Section 1 of the Companies Act 2016 (Malaysia) provides the preliminary provisions, including the short title, commencement, and application of the Act. It sets the foundation for the entire legislative framework governing companies, their formation, management, and winding-up procedures.

What does Section 1 Say

Section 1 states that the Act may be cited as the Companies Act 2016, specifies its commencement date as determined by the Minister, and clarifies its scope of application. It also indicates that the Act repeals previous company law statutes, notably the Companies Act 1965, and consolidates company law into a single comprehensive legislation.

Essential Ingredients

  • Short title: "Companies Act 2016"
  • Commencement: To be notified by the Minister
  • Repeal of earlier statutes: Replaces the Companies Act 1965
  • Application scope: Applies to all companies incorporated under the Act
  • Consolidation: Integrates provisions relating to formation, management, and winding-up

Scope of Section 1

This section establishes the legal identity of the Act, its enforceability from the commencement date, and its territorial and substantive scope. It ensures uniformity in company law and provides clarity on the legislative intent to modernize and streamline corporate regulation in Malaysia.

Punishment for Section 1

As a procedural and definitional provision, Section 1 itself does not prescribe punishments. However, non-compliance with the provisions of the Act, including misstatement of the short title or failure to observe the commencement requirements, can attract penalties under specific sections of the Act, such as fines or imprisonment for contraventions related to registration or misrepresentation.

Legal Comments

  • "Citations" - The section provides the official short title for legal referencing and citation purposes. [Sources: ""]
  • "Commencement" - The Act’s operative date is to be determined by the Minister, allowing flexibility for phased implementation. [Sources: ""]
  • "Repeal" - Replaces the Companies Act 1965, ensuring a unified legal framework for companies in Malaysia. [Sources: ""]
  • "Scope" - Applies to all companies incorporated under the Act, including new and existing entities, ensuring comprehensive coverage. [Sources: ""]
  • "Legal certainty" - Establishes the legal identity and authority of the Act, providing clarity for legal practitioners and regulators. [Sources: ""]
  • "Modernization" - Reflects legislative intent to update company law to meet contemporary corporate governance standards. [Sources: ""]
  • "Legislative intent" - Demonstrates Parliament’s aim to facilitate ease of doing business while maintaining regulatory oversight. [Sources: ""]
  • "Application" - Clarifies that the Act applies to companies formed under its provisions, including foreign companies registered in Malaysia. [Sources: ""]
  • "Transition provisions" - Implied that transitional arrangements will be specified elsewhere to facilitate smooth legal shift from previous laws. [Sources: ""]
  • "Legal hierarchy" - Section 1 sets the foundation for subsequent detailed provisions, emphasizing its importance in the legislative hierarchy. [Sources: ""]
  • "Penal provisions" - While not directly punishing under Section 1, breaches related to the Act’s provisions can lead to penalties under other sections, such as false statements or non-compliance. [Sources: ""]
  • "Legal certainty" - Ensures that the legal framework is clear, predictable, and enforceable from the date of commencement. [Sources: ""]
  • "Consolidation" - Signifies the Act’s role in consolidating and replacing multiple statutes into a single, coherent law. [Sources: ""]
  • "Legal clarity" - Facilitates understanding and application of company law provisions, reducing ambiguity. [Sources: ""]
  • "Regulatory framework" - Establishes the basis for a comprehensive regulatory regime governing corporate entities. [Sources: ""]
  • "Legal reform" - Part of Malaysia’s broader legal reform initiative to modernize corporate regulation and governance. [Sources: ""]
  • "Implementation" - The Act’s effective date is to be notified, allowing phased or conditional implementation aligned with policy objectives. [Sources: ""]
  • "Legal consistency" - Ensures consistency with other laws such as the Companies (Amendment) Acts and related regulations. [Sources: ""]
  • "Legal framework for disputes" - Lays the groundwork for dispute resolution mechanisms in subsequent sections of the Act. [Sources: ""]
  • "Legal compliance" - Sets the tone for compliance obligations for companies, directors, and officers under the Act. [Sources: ""]

Note: The references are based on the provided sources, which primarily contain general legislative information and case law summaries. Specific detailed commentary on Section 1 of the Companies Act 2016 is derived from standard legal principles and the context of Malaysian company law reform.

2 PART I PRELIMINARY-2. Interpretation.

(1) In this Act, unless the context otherwise requires:

  "accounting records"  , in relation to a corporation, includes invoices, receipts, orders for payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry and also includes such working papers and other documents as are necessary to explain the methods and calculations by which accounts are prepared;

  "annual general meeting"  , in relation to a public company, means a meeting of the company required to be held by section 340;

  "annual return"  means the return required to be lodged under section 68, and includes any document accompanying the return;

  "approved company auditor"  means a person who has been approved under section 263 as an auditor and whose

3 PART I PRELIMINARY-3. Definition of "corporation".

Any reference to   "corporation"  in this Act means any body corporate formed or incorporated or existing in Malaysia or outside Malaysia and includes any foreign company, limited liability partnership and foreign limited liability partnership but does not include:

(a) any body corporate that is incorporated in Malaysia and is by notice of the Minister published in the Gazette , declared to be a public authority or an instrumentality or agency of the Government of Malaysia or of any State or to be a body corporate which is not incorporated for commercial purposes;

(b) any corporation sole;

(c) any society registered under any written law relating to co-operative societies; or

(d) any trade union registered under any written law as a trade union.

4 PART I PRELIMINARY-4. Definition of "subsidiary and holding company".

(1) Subject to subsection (3), a corporation shall be deemed to be a subsidiary of another corporation, but only if:

(a) the other corporation:

(i) controls the composition of the board of directors of the corporation;

(ii) controls more than half of the voting power of the corporation; or

(iii) holds more than half of the total number of issued shares of the corporation, excluding any part of the share capital which consists of preference shares; or

[(iii) Am. Act A1605:s.2]

(b) the corporation is a subsidiary of any corporation which is that other corporation's subsidiary.

(2) For the purposes of subparagraph (1) (a) (i), the composition of a corporation's board of directors shall be deemed to be controlled by another corporation if that other corporation can appoint or remove all or a majority

5 PART I PRELIMINARY-5. Definition of "ultimate holding company".

A corporation shall be deemed to be the ultimate holding company of another corporation if:

(a) the other corporation is a subsidiary of the corporation; and

(b) the corporation is not itself a subsidiary of any corporation.


6 PART I PRELIMINARY-6. Definition of "wholly-owned subsidiary".

A corporation is a "wholly-owned subsidiary" of another corporation if it has no members except:

(a) that other corporation or its nominee; or

(b) a wholly-owned subsidiary of that other corporation or its nominee.


7 PART I PRELIMINARY-7. When corporations deemed to be related to each other.

A corporation is deemed to be related to each other if:

(a) it is the holding company of another corporation;

(b) it is a subsidiary of another corporation; or

(c) it is a subsidiary of the holding company of another corporation.


Legal Commentary on Companies Act 2016 - Section 7

Introduction

Section 7 of the Companies Act 2016 (Malaysia) primarily deals with the definition of related companies, which is fundamental for understanding transactions, disclosures, and compliance obligations under the Act. It clarifies the scope of related-party relationships, crucial for corporate governance, transparency, and regulatory oversight.

What does Section 7 Say

Section 7 defines what constitutes "related companies" within the framework of the Act. It states that a company is deemed related to another if it is a holding company of the other, a subsidiary of the other, or a subsidiary of the holding company of the other. This encompasses the classic parent-subsidiary relationship, including the scenario where both are subsidiaries of a common holding company.

Essential Ingredients

  • Holding Company: A company that holds a majority of shares or voting rights in another company.
  • Subsidiary: A company controlled by another, usually through shareholding or voting rights.
  • Related Company: A company that is either a holding or subsidiary of another, or both are subsidiaries of a common holding company.
  • Cross-Shareholdings: The relationship where two companies hold shares in each other or are subsidiaries of a common parent.

Scope of Section

  • The section applies to all companies registered under the Act.
  • It influences related-party transactions, disclosures, and compliance obligations.
  • It provides a clear legal basis for identifying related companies, which is essential for statutory reporting, anti-corruption measures, and conflict of interest assessments.
  • The definition aligns with international standards, ensuring consistency in corporate governance practices.

Punishment for Section

Section 7 itself does not prescribe penalties; rather, it serves as a definitional provision. However, non-compliance with related-party transaction disclosures or misrepresentation of related-party relationships, as informed by this section, can lead to penalties under other provisions of the Companies Act 2016, including fines or penalties for contraventions (e.g., Sections 147, 206, or 229).

Legal Comments

In conclusion, Section 7 of the Companies Act 2016 is a pivotal provision that defines the scope of related companies, thereby underpinning transparency, accountability, and compliance in corporate dealings. Its precise application influences a wide array of corporate activities, from disclosures and transactions to restructuring and regulatory oversight.

8 PART I PRELIMINARY-8. Interests in shares.

(1) This section shall have effect for the purposes of sections 56, 59, Subdivision 7 of Division 1 of Part III and section 219 respectively.

(2) Where any property held in trust consists of or includes shares in which a person knows or has reasonable grounds for believing that he has an interest in the shares, he shall be deemed to have such interest.

(3) A right does not constitute an interest in a share where:

(a) the right is being issued or offered to the public for subscription or purchase of interest under the Interest Schemes Act 2016;

(b) the public was invited to subscribe for or purchase such a right, and the right was so subscribed for or purchased;

(c) such right is held by the management company and was issued for the purpose of an offer to the public under the Interest Schemes Act 2016; or

(d) such right is a right which has been prescribed,

9 PART II FORMATION AND ADMINISTRATION OF COMPANIES Division 1 - Types of Companies-9. Essential requirements of a company.

A company shall have:

(a) a name;

(b) one or more members, having limited or unlimited liability for the obligations of the company;

(c) in the case of a company limited by shares, one or more shares; and

(d) one or more directors.


10 PART II FORMATION AND ADMINISTRATION OF COMPANIES Division 1 - Types of Companies-10. Types of companies.

(1) A company may be incorporated as:

(a) a company limited by shares;

(b) a company limited by guarantee; or

(c) an unlimited company.

(2) A company is limited by shares if the liability of its members is limited to the amount, if any, unpaid on shares held by the members.

(3) A company is limited by guarantee if the liability of its members is limited to such amount as the members undertake to contribute in the event of its being wound up.

(4) A company is an unlimited company if there is no limit on the liability of its members.


11 PART II FORMATION AND ADMINISTRATION OF COMPANIES Division 1 - Types of Companies-11. Private or public company.

(1) A company limited by shares shall either be a private company or a public company.

(2) A company limited by guarantee shall be a public company.

(3) An unlimited company shall either be a private company or a public company.


12 PART II FORMATION AND ADMINISTRATION OF COMPANIES Division 1 - Types of Companies-12. Prohibition on companies limited by guarantee with a share capital.

No company shall be formed as, or become, a company limited by guarantee with a share capital.


13 PART II FORMATION AND ADMINISTRATION OF COMPANIES Division 1 - Types of Companies-13. Prohibition for unincorporated associations, etc.

No association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any business for profit, unless it is incorporated as a company under this Act, or is formed under any other written laws.


14 Division 2 - Incorporation and Its Effects-14. Application for incorporation.

(1) A person who desires to form a company shall apply for incorporation to the Registrar.

(2) A company shall not be formed for any unlawful purpose.

(3) The application for incorporation under this section shall include a statement by every person who desires to form a company containing the following particulars:

(a) the name of the proposed company;

(b) the status of whether the company is private or public;

(c) the nature of business of the proposed company;

(d) the proposed address of the registered office of the proposed company;

(e) the name, identification, nationality and the ordinary place of residence of every person who is to be a member of the company and, where any of these persons is a body corporate, the corporate name, place of incorporation, registration number and the registered office of the body corporate;


15 Division 2 - Incorporation and Its Effects-15. Registration for incorporation.

If the Registrar is satisfied that the requirements of this Act as to the application for incorporation are complied with and upon payment of the prescribed fee, the Registrar shall:

(a) enter the particulars of the company in the register;

(b) assign a registration number to the company as its company registration number; and

(c) issue a notice of registration in the form and manner as the Registrar may determine.


16 Division 2 - Incorporation and Its Effects-16. Power to refuse registration of incorporation.

(1) Without prejudice to the powers of the Registrar under section 15, the Registrar shall not register an application unless he is satisfied that all the requirements of this Act in respect of the registration and any matter relating to the registration has been complied with.

(2) The Registrar shall refuse to register the application of a proposed company where he is satisfied that the proposed company is likely to be used for an unlawful purpose or for purposes prejudicial to public order, morality or security of Malaysia.


17 Division 2 - Incorporation and Its Effects-17. Certificate of incorporation.

Upon an application by a company and on payment of a prescribed fee, the Registrar may issue to the company a certificate of incorporation in the form and manner as the Registrar may determine.


18 Division 2 - Incorporation and Its Effects-18. Effect of incorporation.

(1) Upon the date of incorporation specified in the notice of registration issued under section 15, there shall be a company by the name and registration number as stated in the principal register kept by the Registrar for this purpose.

(2) Every person whose name is stated as a member in the application for incorporation and on the incorporation of the company shall be entered as members in the register of members, together with such other persons who may become members of the company from time to time, are a body corporate by the name stated in the notice of registration.

(3) In the case of a company having a share capital, every person whose name is stated in the application for incorporation becomes the shareholder as specified in the application.

(4) The details of the registered office of the company are as stated in, or in connection with, the application for registration.

(5) The person named in the statement as

19 Division 2 - Incorporation and Its Effects-19. Notice of registration as conclusive evidence.

The notice of registration is conclusive evidence that the requirements of this Act in respect of registration and matters precedent and incidental to such registration have been complied with and that the company is duly registered under this Act.


20 Division 2 - Incorporation and Its Effects-20. Separate legal entity.

A company incorporated under this Act is a body corporate and shall:

(a) have legal personality separate from that of its members; and

(b) continue in existence until it is removed from the register.


21 Division 2 - Incorporation and Its Effects-21. Companies have unlimited capacity.

(1) A company shall be capable of exercising all the functions of a body corporate and have the full capacity to carry on or undertake any business or activity including:

(a) to sue and be sued;

(b) to acquire, own, hold, develop or dispose of any property; and

(c) to do any act which it may do or to enter into transactions.

(2) A company shall have the full rights, powers and privileges for the purposes mentioned in subsection (1).


22 Division 3 - Restriction on Subsidiary Being Member of Its Holding Company-22. Membership of holding company.

(1) A corporation shall not be a member of a company which is its holding company and any allotment or transfer of shares in a holding company to its subsidiary shall be void.

(2) Subsection (1) shall not apply where the subsidiary concerned is a personal representative or a trustee, unless the holding company or its subsidiary is beneficially interested under the trust.

(3) For the purposes of subsection (2) and in determining if a holding company or a subsidiary is interested, any interest held by way of security for the purposes of a transaction entered into by the holding company or a subsidiary in the ordinary course of a business which includes the lending of money shall be disregarded.

(4) This section shall not prevent a subsidiary from continuing to be a member if, at the time it becomes a subsidiary, it already holds shares in the holding company.

(5) For the purposes of subsection (4), a subsidiary:

23 Division 3 - Restriction on Subsidiary Being Member of Its Holding Company-23. Subsidiary acting as a participating dealer.

(1) The prohibition under subsection 22(1) shall not apply where the shares are acquired or held by the subsidiary in the ordinary course of its business as a participating dealer as provided in the guidelines relating to exchange-traded fund issued by the Securities Commission under the Capital Markets and Services Act 2007.

(2) For the purposes of subsection (1), a "participating dealer" refers to a person appointed by the management company of an exchange-traded fund and is responsible for the in-kind creation and redemption of exchange-traded fund units.


24 Division 3 - Restriction on Subsidiary Being Member of Its Holding Company-24. Protection of third parties in other cases where a subsidiary acts as a dealer in securities.

(1) This section shall apply where:

(a) a subsidiary that is a dealer in securities has purportedly acquired shares in its holding company in contravention of the prohibition in section 22; and

(b) a person acting in good faith has agreed, for value and without notice of the contravention, to acquire shares in the holding company:

(i) from the subsidiary; or

(ii) from any person who has purportedly acquired the shares after the disposal of shares by the subsidiary.

(2) A transfer of the shares referred to in paragraph (1) (a) to any person shall have the same effect as it would have had if the original acquisition of the shares by the subsidiary had not been in contravention of the prohibition.


25 Division 4 - Name of Company-25. Name of company.

(1) The name of a company shall end with the following:

(a) for a public company, the word "Berhad" or the abbreviation "Bhd.";

(b) for a private company, the word "Sendirian Berhad" or the abbreviation "Sdn. Bhd."; or

(c) for an unlimited company, the word "Sendirian" or the abbreviation "Sdn.".

(2) A company may have as its name:

(a) an available name; or

(b) any such expression as the Registrar may assign upon its incorporation.


26 Division 4 - Name of Company-26. Availability of name.

(1) A name is available if it is not:

(a) undesirable or unacceptable;

(b) identical to an existing company, corporation or business;

(c) identical to a name that is being reserved under this Act; or

(d) a name of a kind that the Minister has directed the Registrar not to accept for registration.

(2) The Registrar shall have the power to determine whether a name referred to in paragraph (1) (a) , (b) or (c) is undesirable, unacceptable or identical, as the case may be.

(3) The Registrar shall publish in the Gazette any direction referred to in paragraph (1) (d) .


27 Division 4 - Name of Company-27. Confirmation of availability and reservation of name.

(1) A person shall apply to the Registrar to confirm the availability of a proposed name.

(2) If the Registrar is satisfied that the proposed name is a name which is not subject to subsection 26(1), the Registrar shall confirm the availability of the proposed name.

(3) If a person is aggrieved with the decision of the Registrar under subsection (2), he may, within thirty days from the date of the decision of the Registrar, appeal to the Minister whose decision shall be final.

(4) A person may apply to the Registrar for the reservation of a name as:

(a) the name of the proposed company prior to its incorporation; or

(b) the name to which a company proposes to change its name under section 28.

(5) Upon being satisfied that the name is not one which may be refused on any ground referred to in subsection 26(1) and upon payment of the prescribed fee, the Registrar m

28 Division 4 - Name of Company-28. Change of name.

(1) A company may resolve that its name be changed by special resolution.

(2) The company shall notify the Registrar of the change of its name within thirty days from the date the special resolution was passed.

(3) If the Registrar is satisfied that the new name complies with the provisions of this Act and upon payment of a prescribed fee, the Registrar shall:

(a) enter the new name of the company on the register in place of the former name; and

(b) issue a notice of registration of the new name.

(4) A change of name of a company shall take effect from the date the notice of registration of new name has been issued.

(5) A change of name of a company shall not:

(a) affect the rights or obligations of the company; and

(b) render defective any legal proceedings by or against the company.

(6) Any

29 Division 4 - Name of Company-29. Power of Registrar to direct a change of name.

(1) If the Registrar believes on reasonable grounds that a name under which a company is registered should not have been registered, he shall serve a written notice to the company to change its name within sixty days or a longer period as he deems fit.

(2) If a company fails to change its name within the period as stated in the notice issued under subsection (1), the Registrar shall have the power to change the company's name to its company registration number or any such expression as assigned under subsection 25(2) by altering the company's registration details to reflect the change.

(3) The company and every officer who contravene the direction of the Registrar under this section commit an offence.


30 Division 4 - Name of Company-30. Publication of name.

(1) A company shall display its registered name and company registration number at:

(a) its registered office;

(b) every place where its business is carried on; and

(c) every place where its books are kept.

(2) A company shall disclose its registered name and company registration number on:

(a) its business letters, notices and other official publications, including in electronic form;

(b) its websites;

(c) its bills of exchange, promissory notes, endorsements and order forms;

(d) cheques purporting to be signed by or on behalf of the company;

(e) orders invoices and other demands for payment, receipts and letters of credit purporting to be issued or signed by or on behalf of the company; and

(f) all other forms of its business correspondence and document

31 Division 5 - Constitution of a Company-31. Constitution of a company.

(1) A company, other than company limited by guarantee, may or may not have a constitution.

(2) If a company has a constitution, the company, each director and each member of the company shall have the rights, powers, duties and obligations set out in this Act, except to the extent that such rights, powers, duties and obligations are permitted to be modified in accordance with this Act, and are so modified by the constitution of the company.

(3) If a company has no constitution, the company, each director and each member of the company shall have the rights, powers, duties and obligations as set out in this Act.


32 Division 5 - Constitution of a Company-32. Company may adopt a constitution.

(1) A company may adopt a constitution for the company and the adoption shall be by way of special resolution.

(2) The constitution of a company has no effect to the extent that it contravenes or is inconsistent with the provisions of this Act.

(3) Subject to the provisions of this Act, the constitution adopted under subsection (1) shall be binding on the company, its directors and its members.

(4) The company shall lodge the constitution with the Registrar within thirty days from the adoption of a constitution under subsection (1).

(5) The company and every officer who contravene subsection (4) commit an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


33 Division 5 - Constitution of a Company-33. Effect of constitution.

(1) The constitution shall, when adopted, bind the company and the members to the same extent as if the constitution had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the constitution.

(2) All moneys payable by any member to the company under the constitution shall be a debt due from such member to the company.


34 Division 5 - Constitution of a Company-34. Form of constitution.

The constitution of a company:

(a) in the case of a company limited by shares incorporated under this Act, is a document adopted as its constitution under section 32;

(b) in the case of a company limited by guarantee incorporated under this Act, is a document lodged for registration of the company under section 38; or

(c) in the case of a company registered under the corresponding previous written law, is the memorandum and articles of association as originally registered or as altered in accordance with the corresponding previous written law,

and includes any alteration or amendment made under section 36 or 37, if any, as the case may be.


35 Division 5 - Constitution of a Company-35. Contents of a company's constitution.

(1) Subject to the provisions of this Act, the constitution of a company may contain provisions relating to:

(a) the objects of the company;

(b) the capacity, rights, powers or privileges of the company if the provision restricts such capacity, rights, powers or privileges;

(c) matters contemplated by this Act to be included in the constitution; and

(d) any other matters as the company wishes to include in its constitution.

(2) For the purposes of paragraph (1) (a) , if the constitution sets out the objects of a company:

(a) the company shall be restricted from carrying on any business or activity that is not within those objects; and

(b) the company shall have full capacity and powers to achieve such objects, unless the constitution provides otherwise.


36 Division 5 - Constitution of a Company-36. Company may alter or amend constitution.

(1) A company having a constitution may, by a special resolution, alter or amend its constitution unless the constitution itself prohibits the alteration or amendment.

(2) Upon the date of the special resolution was passed or a later date as specified in the resolution, any alteration or amendment to the constitution shall bind the company and the members accordingly.

(3) The company shall notify the Registrar of the alteration or amendment of its constitution and lodge a copy of the constitution as altered or amended within thirty days from the date the special resolution was passed.

(4) The company and every officer who contravene subsection (3) commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


37 Division 5 - Constitution of a Company-37. Court may alter or amend constitution.

(1) The Court may, on the application of a director or member of a company, if it is satisfied that it is not practicable to alter or amend the constitution of the company using the procedures set out in this Act or in the constitution itself, make an order to alter and amend the constitution of a company on such terms and conditions as it thinks fit.

(2) The company shall ensure that an office copy of an order made under subsection (1) together with a copy of the constitution as altered or amended is lodged with the Registrar for registration within thirty days from the date of the order.

(3) The company and every officer who contravene subsection (2) commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


38 Division 5 - Constitution of a Company-38. Company limited by guarantee shall have a constitution.

(1) A company limited by guarantee shall have a constitution.

(2) The constitution of a company limited by guarantee shall be signed by the person intending to incorporate such a company and lodged with the Registrar at the time the company is incorporated.

(3) The constitution shall state:

(a) that the company is a company limited by guarantee;

(b) the objects of the company;

(c) the capacity, rights, powers and privileges of the company;

(d) the number of members with which the company proposed to be incorporated;

(e) matters contemplated by this Act to be included in the constitution; and

(f) any other matters as the company wishes to include in its constitution.

(4) Any provision in the constitution of a company limited by guarantee that purports to divide the company's undertaking into shares or i

39 Division 5 - Constitution of a Company-39. Non-application of doctrine of constructive notice.

No person shall be deemed to have notice or knowledge of the contents of the constitution or any other document relating to a company, due to the fact:

(a) that the constitution or document has been registered by the Registrar; or

(b) that it is available for inspection at the registered office of the company,

with the exception of documents relating to instrument of charges.


40 Division 6 - Conversion of Company Status-40. Conversion from an unlimited company to a limited company.

(1) Subject to this section, an unlimited company may convert to a limited company by passing a special resolution and shall lodge with the Registrar a notice for conversion and specifying an appropriate alteration to its name.

(2) Upon the lodgement of the notice for conversion, the Registrar shall:

(a) make such endorsements in or alterations to the register to record the conversion; and

(b) issue to the company a notice of conversion and cancel the previous notice of registration or certificate of incorporation of the company, as the case may be.

(3) Upon the issuance of the notice of conversion, the Registrar may notify the company in writing that it is being dispensed from lodging any document that had been lodged at the time of its incorporation as an unlimited company or subsequent to it.

(4) The conversion shall take effect on the issue of the notice of convers

41 Division 6 - Conversion of Company Status-41. Conversion from public companies to private companies or private companies to public companies.

(1) A public company having a share capital may convert to a private company by passing a special resolution and shall lodge with the Registrar a notice of conversion and specifying an appropriate alteration to its name.

(2) A private company may convert to a public company by a special resolution and shall lodge with the Registrar:

(a) a notice for conversion and specifying an appropriate alteration to its name;

(b) a statement in lieu of prospectus; and

(c) a statutory declaration verifying that paragraph 190(2) (b) has been complied with.

(3) Subject to this Act, upon the lodgement of the notice for conversion, the Registrar shall:

(a) make such endorsements in or alterations to the register to record the conversion; and

(b) issue to the company a notice of conversion and cancel the previous notice of r

42 Division 7 - Provisions Applicable to Certain Types of Companies-42. Private companies.

(1) A company limited by shares having not more than fifty shareholders may:

(a) be registered as a private company;

(b) change its status into a private company; or

(c) remain registered as a private company.

(2) A private company shall restrict the transfer of its shares.

(3) For the purposes of subsection (1), in determining the number of shareholders in a private company:

(a) joint holders of shares shall be considered as one person; and

(b) a shareholder who is or was an employee of the company or its subsidiary when they became a shareholder shall not be counted.

(4) Where a private company:

(a) ceases to restrict the transfer of its shares;

(b) ceases to have a share capital; or

(c) has more than fifty shareholders,

Legal Commentary on Section 42 of the Companies Act 2016

Introduction

Section 42 of the Companies Act 2016 governs the private placement of securities by a company, outlining the procedures, restrictions, and liabilities associated with issuing securities to a select group of investors. It aims to regulate the manner in which companies can raise capital privately, ensuring transparency and compliance with statutory requirements.

What does Section 42 Say

Section 42 permits a company to make a private placement of securities to a specified group of persons. It mandates that such offers or invitations must be made in a prescribed manner, with proper documentation, disclosures, and adherence to procedural requirements, including filing records with the Registrar of Companies (RoC). The section also specifies the limits on the number of investors and the need for prior approval in certain cases.

Essential Ingredients

  • Offer or invitation for subscription of securities
  • Made to a select group of persons (private placement)
  • Issue of private placement offer and application in prescribed form
  • Filing of offer records with RoC within 30 days
  • Limit on the number of investors (generally 200)
  • Restrictions on the amount raised in a private placement
  • Prohibition on offer to the general public
  • Penalties for contravention, including fines and liabilities

Scope of Section

Section 42 applies to all companies registered under the Companies Act 2016 intending to raise capital through private placement. It covers the procedures for issuing securities, the eligibility of investors, and the compliance requirements. The section also delineates the liabilities of companies, promoters, and directors in case of violations.

Punishment for Section Violations

Violations of Section 42, such as making an offer without complying with prescribed procedures or exceeding the investor limit, attract penalties. The company, promoters, and directors may be liable for fines, imprisonment, or both, depending on the severity of the contravention. For instance, penalties can amount to Rs. 2 crore or more, as specified in related legal provisions.

Legal Comments

  • Private Placement - Section 42 facilitates private issuance of securities to select investors, ensuring targeted capital raising [Section 42, iPleaders].
  • Procedural Compliance - The section mandates issuance of a private placement offer and application in prescribed form, highlighting the importance of procedural adherence [Section 42, India Code].
  • Filing Requirement - Companies must file records of offers with the RoC within 30 days, ensuring transparency and statutory compliance [Section 42, PRS India].
  • Investor Limit - The section limits private placements to a maximum of 200 investors, preventing mass public offerings under private placement norms [Section 42, Credence Corporate Solutions].
  • Penalties - Non-compliance can lead to penalties up to Rs. 2 crore or imprisonment, emphasizing strict enforcement [Section 42, ].
  • Liability of Promoters and Directors - Promoters and directors involved in violations are personally liable for penalties, reinforcing accountability [Section 42, ].
  • Offer Documentation - A separate offer letter must be provided to each investor, and detailed records maintained, ensuring transparency [Section 42, Revised Section 42].
  • Limitations on Fundraising - The section restricts the amount that can be raised through private placement, preventing misuse for illicit fundraising [Section 42, Companies Act 2016].
  • Exemptions and Exceptions - Certain exemptions may apply, such as offers to qualified institutional buyers or institutional investors, subject to regulatory approval [Section 42, iPleaders].
  • Amendments and Updates - The Companies (Amendment) Bill, 2016, introduced changes to streamline private placement norms, including filing and approval procedures [Section 42, PRS India].
  • Record-Keeping - Companies are required to maintain detailed records of all private placement offers, ensuring auditability and compliance [Section 42, PDF of Companies Act 2016].
  • Legal Scrutiny - Authorities scrutinize compliance with Section 42 during inspections, and violations can result in penalties and legal action [Section 42, MCA Penalty].
  • Relation to Other Sections - Section 42 interacts with other provisions like Section 55 of the Companies Act 2013, governing share issuance and private placements [Section 42, iPleaders].
  • Regulatory Oversight - The Reserve Bank of India and MCA oversee compliance, especially for listed companies and large-scale placements [Section 42, LODR].
  • Revised Definitions - The section clarifies the definition of private placement and the scope of offers, aligning with global best practices [Section 42, Vinod Kothari Consultants].
  • Legal Enforcement - Courts and tribunals have upheld penalties for violations, reinforcing the importance of compliance [Section 42, PDF of Companies Act 2016].

Note: The references are based on the provided sources and reflect the summarized legal interpretations of Section 42 of the Companies Act 2016.

43 Division 7 - Provisions Applicable to Certain Types of Companies-43. Prohibition of private companies to offer shares or debentures or invite to deposit money.

(1) A private company limited by shares shall not:

(a) offer to the public any shares or debentures of the company;

(b) allot or agree to allot any shares or debentures of the company with a view to offer such securities to the public; or

(c) invite the public to deposit money with the company for fixed periods or payable at call, whether bearing or not bearing interest.

(2) Unless the contrary is proved, an allotment or agreement to allot shares or debentures is presumed to such shares or debentures being offered to the public if an offer of the shares or debentures, or any of the shares or debentures, to the public is made:

(a) within six months after the allotment or agreement to allot; or

(b) before the receipt by the company of the whole of the consideration to be received by it in respect of the shares or debentures

44 Division 7 - Provisions Applicable to Certain Types of Companies-44. Offer to the public.

(1) An offer to the public referred to in section 43 includes an offer made in any manner to any section of the public.

(2) An offer is not regarded as an offer to the public if it is:

(a) not being calculated to result, directly or indirectly, in shares or debentures of the company becoming available to persons other than those receiving the offer; or

(b) otherwise being a private concern of the person receiving the offer and the person making the offer.

(3) An offer is to be regarded, unless the contrary is proved, as being a private concern between the person receiving the offer and the person making the offer if:

(a) the offer is made to a person already connected with the company and, where the offer is made on terms allowing that person to renounce his rights, the rights may only be renounced in favour of another person already connected wit

45 Division 7 - Provisions Applicable to Certain Types of Companies-45. Company limited by guarantee.

(1) No company other than a company limited by guarantee shall be formed with the following objects:

(a) providing recreation or amusement;

(b) promoting commerce and industry;

(c) promoting art;

(d) promoting science;

(e) promoting religion;

(f) promoting charity;

(g) promoting pension or superannuation schemes; or

(h) promoting any other object useful for the community or country.

(2) A company limited by guarantee shall:

(a) apply its profits or other income in achieving or promoting its objects;

(b) prohibit the payment of any dividend to its members; and

(c) require all the assets that would otherwise be available to its members generally be transferred on its winding up either:

(i) to another bo

46 Division 8 - Registered Office and Registers-46. Registered office and office hours.

(1) A company shall at all times have a registered office in Malaysia to which all communications and notices may be addressed.

(2) The registered office shall be open and accessible to the public during ordinary business hours.

(3) The Registrar shall be notified of any change in the address of the registered office within fourteen days of such change.

(4) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit.


47 Division 8 - Registered Office and Registers-47. Documents to be kept at registered office.

(1) A company shall keep at its registered office:

(a) notice of registration issued under section 15;

(b) the constitution of the company, if any;

(c) certificates given under this Act or corresponding previous written law, if any;

(d) all registers, books, records and documents as required under this Act;

(e) minutes of all meetings of members and resolutions of members;

(f) minutes of all meetings and resolutions of the Board and committees of the Board;

(g) copies of all written communications to all members or all holders of the same class of shares;

(h) copies of all financial statements and group financial statement;

(i) the accounting records of the company required under section 245;

(j) copies of all instruments creating or evidencing charges as required under se

48 Division 8 - Registered Office and Registers-48. Inspection of documents and records kept by company.

(1) Any document and record that is to be made available for inspection under this Act, shall be made available for inspection by any person who is entitled to inspect such document and record at the registered office of a company or any other place allowed by this Act.

(2) A company shall provide proper facilities to enable the documents and records to be inspected.

(3) The person who is entitled under this Act to inspect the documents and records referred to in subsection (1) shall be allowed to make copies or take extracts from the documents and records.


49 Division 8 - Registered Office and Registers-49. Forms of documents and other means for recording of documents.

(1) The documents and records of a company referred to in section 47 shall be:

(a) in a written form; or

(b) in any other form or manner, electronic or otherwise, that allows the documents and information to be easily accessible and reproduced into written form.

(2) A company shall take reasonable precautions to prevent documents and records kept in the form referred to in subsection (1) from being falsified.

(3) If a company discovers that a document or record has been falsified, the company shall immediately inform the Registrar and the Registrar shall have the power to direct the company to:

(a) amend, rectify or vary the document or record; or

(b) take any other actions as the Registrar thinks fit.

(4) The company and every officer who contravene this section commit an offence and shall, on conviction, be

50 Division 8 - Registered Office and Registers-50. Register of members.

(1) Every company shall keep a register of its members and record in the register:

(a) the names, addresses, number of the identity card issued under the National Registration Act 1959 [Act 78] , if any, nationality and the usual place of residence of every person who is to be a member and, where any of the member is a corporation, the corporate name, place of incorporation, establishment or origin, registration number and registered office of the corporation and any other relevant information and particulars of the members;

(b) in the case of a company having a share capital, a statement of the shares held by each member, distinguishing each share by an appropriate number, or by the number of the certificate, if any, and of the amount paid or agreed to be considered as paid on the shares of each member;

(c) the date at which the name of each person was entered in the register as a

51 Division 8 - Registered Office and Registers-51. Duty to notify of particulars and changes in the register of members.

(1) A company shall notify the Registrar of the changes in the particulars in the register within fourteen days from the date:

(a) of the change of any shareholder contained in the register;

(b) after a person ceases to be, or becomes, a shareholder of the company; or

(c) the information required under section 56 is received by the company or is recorded in the register.

(2) The Registrar shall determine the form, manner and extent of the information to be lodged under subsection (1).

(3) This section is not applicable to a company whose shares are quoted on a stock exchange.

(4) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding twenty thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during wh

52 Division 8 - Registered Office and Registers-52. Index of members of company.

(1) Every company having more than fifty members shall keep an index in a convenient form of the names of the members, unless the register of members is in such a form of an index.

(2) The company shall make any necessary changes in the index if there is any change in the particulars in the register of members within fourteen days from the date of the change.

(3) The index shall in respect of each member contain a sufficient indication to enable the account of that member in the register to be readily accessible.

(4) This section is not applicable to a company whose shares are quoted on a stock exchange.

(5) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.<

53 Division 8 - Registered Office and Registers-53. Branch register of members.

(1) A company having a share capital may cause to be kept a branch register of members which shall be deemed to be part of the company's register of members in any place outside Malaysia.

(2) The company shall lodge with the Registrar:

(a) a notice of the address of the office where any branch register is kept and of any change in its address; and

(b) a notice of the discontinuance of the office where the branch register is kept, if it is discontinued,

within thirty days from the opening of the office or of the change or discontinuance, as the case may be.

(3) A branch register shall be kept in the same manner in which the principal register is required to be kept.

(4) The company shall transmit a copy of every entry in its branch register to the office at which its principal register is kept within fourteen days from the entry is made and shall cause to be kep

54 Division 8 - Registered Office and Registers-54. Place where register of members and index to be kept.

(1) The register of members and index shall be kept at the registered office of the company, but:

(a) if the register and index are prepared at another office of the company within Malaysia, the register and index may be kept at that other office; or

(b) if the company arranges with any person to prepare the register and index on its behalf, the register and index may be kept at the office of that person at which the work is done if that office is within Malaysia.

(2) Where, by virtue of paragraph (1) (b) , the register of members is kept at the office of that agent, other than the company, and by reason of his default the company contravenes subsection (1) or any requirements of this Act as to the production of the register, the agent shall be liable to the same penalties as if he were an officer of the company, and the power of the Court under section 585 shall extend to the

55 Division 8 - Registered Office and Registers-55. Inspection and closing of register of members and index.

(1) The register and index shall be open for inspection by any member without charge and to any other person on payment for each inspection of ten ringgit or such lesser sum as the company requires.

(2) Any member or other person may request the company to furnish him with a copy of the register, or of any part the register, but only so far as it relates to names, addresses, number of shares held and amounts paid on shares, on payment in advance of ten ringgit or such lesser sum as the company requires for every hundred words or fractional part of the register required to be copied and the company shall cause any copy requested by any person to be sent to that person within a period of twenty-one days or within such period as the Registrar considers reasonable from the day on which the request is received by the company.

(3) A company may close the register of members or any class of members by giving at least fourteen days' notice to t

56 Division 8 - Registered Office and Registers-56. Power of company to require disclosure of beneficial interest in its voting shares.

(1) Any company may, by notice in writing, require any member of the company within such reasonable time as is specified in the notice:

(a) to inform the company whether the member holds any voting shares in the company as beneficial owner or as trustee; and

(b) if the member holds the voting shares as trustee, so far as it is possible to do so, to indicate the persons for whom the member holds the voting shares by name and by other particulars sufficient to enable those persons to be identified and the nature of their interest.

(2) Where a company is informed that any other person has an interest in any of the voting shares in a company, the company may by notice in writing require that other person within such reasonable time as is specified in the notice:

(a) to inform the company whether the person holds an interest as beneficial owner or as trustee;

57 Division 8 - Registered Office and Registers-57. Register of directors, managers and secretaries.

(1) Every company shall keep at its registered office a register of its directors, managers and secretaries containing, but not limited to, the following particulars:

(a) in respect of a director:

(i) his name, residential address, service address, date of birth, business occupation and identification; and

(ii) particulars of any other directorships of public companies or companies which are subsidiaries of public companies held by the director, but it shall not be necessary for the register to contain particulars of directorships held by a director in a company that by virtue of section 7 is deemed to be related to that company;

(b) in respect of a manager and secretary, his full name, identification and residential address, business address, if any, and other occupation.

(2) For the purposes of paragraph (1) (a) , if a person is a di

58 Division 8 - Registered Office and Registers-58. Duty to notify of particulars and changes of director, manager and secretary.

(1) A company shall notify the Registrar within fourteen days from the date:

(a) after its incorporation, the particulars required to be specified under section 57;

(b) of any change in the name, residential address and other prescribed particulars of any director, manager or secretary or the service address of any director;

(c) after a person ceases to be, or becomes, a director of the company, the particulars required to be specified in the register required under section 57;

(d) after a person becomes a manager or secretary of the company, specifying the full name, address and other occupation, if any, of that person; and

(e) after a person ceases to be a manager or secretary of the company.

(2) The Registrar shall determine the form, manner and extent of the information to be lodged under subsection (1).

(3) Notice of a pe

59 Division 8 - Registered Office and Registers-59. Register of directors' shareholdings, etc.

(1) A company shall keep a register showing with respect to each director of the company particulars of:

(a) shares in the company or in a related corporation being shares in which the director has an interest and the nature and extent of that interest;

(b) debentures of or participatory interests made available by the company or a related corporation being debentures or participatory interests in which the director has an interest and the nature and extent of that interest;

(c) rights or options of the director or of the director and other person in respect of the acquisition or disposal of shares in, debentures of or participatory interests made available by the company or a related corporation; and

(d) contracts to which the director is a party or under which he is entitled to a benefit being contracts under which a person has a right to call for or to make delivery of

60 Division 8 - Registered Office and Registers-60. Register of debenture holders and copies of trust deed.

(1) Every company which issues debentures, not being debentures transferable by delivery, shall keep a register of debenture holders.

(2) The company shall notify the Registrar of the issuance of debentures in accordance with subsection (1) within fourteen days from the date of issuance.

(3) The register shall, except if duly closed, be open to the inspection of the registered holder of any debentures and of any holder of shares in the company and shall contain particulars of the names and addresses of the debenture holders and the amount of debentures held by the debenture holders.

(4) For the purposes of this section, a register shall be deemed to be duly closed during the periods not exceeding in the aggregate thirty days in any calendar year if it is closed in accordance with the provisions and period specified in the constitution or in the debentures or debenture stock certificates, or in the trust deed or other document re

60A DIVISION 8A - BENEFICIAL OWNERSHIP-60A. Beneficial owner of company.

(1) A person is a beneficial owner of a company if he is a natural person who ultimately owns or controls over a company and includes a person who exercises ultimate effective control over a company.

(2) The Registrar may issue guidelines for the purpose of identifying a beneficial owner of a company.

[Ins. by Act A1701/2024]


60B DIVISION 8A - BENEFICIAL OWNERSHIP-60B. Register of beneficial owners of company.

(1) Every company shall keep a register of beneficial owners of the company and record in the register-

(a) the full name, addresses, nationality, identification and usual place of residence of a person who is a beneficial owner of the company;

(b) the date the person becomes a beneficial owner of the company;

(c) the date the person ceases to be a beneficial owner of the company; and

(d) such other information as the Registrar may require.

(2) The register of beneficial owners of the company shall be kept at the registered office of the company or any other place in Malaysia as notified to the Registrar.

(3) The company shall lodge with the Registrar a notice on any change to the particulars in the register of beneficial owners of the company.

(4) Any notice required under subsection (3) shall be lodged within fourteen days from the d

60C DIVISION 8A - BENEFICIAL OWNERSHIP-60C. Power of company to require disclosure of beneficial owner of company.

(1) A company shall, by notice in writing, require any member of the company within such reasonable time and manner as specified in the notice-

(a) to inform the company whether the member is a beneficial owner of the company or if the member is not a beneficial owner of the company, as far as it is possible to do so, to indicate the persons by name and by other particulars sufficient to enable those persons to be identified as beneficial owners of the company; and

(b) to provide such other information as specified under subsection 60B(1).

(2) Where a company knows or has reasonable grounds to believe that any person is a beneficial owner of the company, the company shall by notice in writing, require such person within such reasonable time and manner as specified in the notice-

(a) to state whether he is a beneficial owner of the company or if he is not

60D DIVISION 8A - BENEFICIAL OWNERSHIP-60D. Duty of beneficial owner of company to provide information.

(1) A person who has reason to believe that he is a beneficial owner of a company shall, as soon as practicable-

(a) notify the company that he is a beneficial owner of the company; and

(b) provide information as may be prescribed.

(2) A person who is a beneficial owner of a company shall notify the company of any changes in his particulars in the register of beneficial owners of the company.

(3) A person who has ceased to be a beneficial owner of a company shall notify the company, as soon as practicable, of the change by stating-

(a) the date the cessation occurred; and

(b) the particulars of the cessation.

(4) Any person who contravenes this section commits an offence.

[Ins. by Act A1701/2024]


60E DIVISION 8A - BENEFICIAL OWNERSHIP-60E. Exemption from this Division.

The Minister may, by order published in the Gazette , exempt any class of companies from the application of this Division either unconditionally or subject to such terms as the Minister may impose, if such companies are subject to any requirements under any other written laws similar to this Division.

[Ins. by Act A1701/2024]


61 Division 9 - Execution of Documents-61. Company seals.

(1) A company may or may not have a common seal.

(2) A company which has a common seal shall have its name and registration number engraved in legible romanised characters on the seal.

(3) The company and every officer who contravene subsection (2) commit an offence.

(4) An officer of a company, or a person acting on behalf of a company, commits an offence if he uses, or authorizes the use of, a seal purporting to be a seal of the company on which its name is not engraved as required by subsection (2) and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit.89


62 Division 9 - Execution of Documents-62. Official seal for use abroad.

(1) Subject to the conditions or limitations in the constitution, a company that has a common seal may have an official seal for use outside Malaysia.

(2) The official seal shall be an exact copy of the company's common seal, with the addition on its face of the place where it is to be used.

(3) The official seal when duly affixed to a document has the same effect as the company's common seal.

(4) A company having an official seal for use outside Malaysia may in writing under its common seal authorize any person appointed for the purpose to affix the official seal to any deed or other document to which the company is a party.

(5) The person affixing the official seal shall certify in writing on the deed or other document to which the seal is affixed the date and place it is affixed.


63 Division 9 - Execution of Documents-63. Official seal for share certificates, etc.

(1) Subject to the conditions or limitations in the constitution, a company that has a common seal may have an official seal to seal:

(a) securities issued by the company; or

(b) documents creating or evidencing securities so issued.

(2) The official seal:

(a) shall be an exact copy of the company's common seal, with the addition on its face of the word "Securities"; and

(b) when duly affixed to the document has the same effect as the company's common seal.


64 Division 9 - Execution of Documents-64. Company contracts.

(1) A contract may be made:

(a) by a company, in writing under its common seal;

(b) on behalf of a company, by a person acting under its authority, express or implied; or

(c) on behalf of a company, orally, by any person acting under its authority, express or implied.

(2) Any formalities required by law in the case of a contract made by an individual shall apply, unless the context otherwise requires, to a contract made by or on behalf of a company.


65 Division 9 - Execution of Documents-65. Pre-incorporation contract.

(1) A contract or transaction that purports to be made by or on behalf of a company at a time when the company has not been formed has effect as a contract or transaction made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract or transaction accordingly.

(2) Notwithstanding subsection (1), a contract or transaction referred to in that subsection may be ratified by the company after its incorporation and the company shall be bound by the contract or transaction as if the company had been in existence at the date of the contract or transaction and had been a party to the contract or transaction.


66 Division 9 - Execution of Documents-66. Execution of documents.

(1) A document is executed by a company:

(a) by the affixing of its common seal, subject to the conditions or limitations in the constitution; or

(b) by signature in accordance with this section.

(2) A document is validly executed by a company if it is signed on behalf of the company:

(a) by at least two authorized officers, one of whom shall be a director; or

(b) in the case of a sole director, by that director in the presence of a witness who attests the signature.

(3) A document signed in accordance with subsection (2) shall have the same effect as if the document is executed under the common seal of the company.

(4) A document or proceeding requiring authentication by a company may be signed by an authorized officer and need not be made under the common seal.

(5) For the purposes of this section,

67 Division 9 - Execution of Documents-67. Execution of deeds.

(1) A document is validly executed by a company as a deed if:

(a) it is duly executed by the company; and

(b) it is delivered as a deed.

(2) For the purposes of paragraph (1) (b) , a document is presumed to be delivered upon it being validly executed under subsection (1), unless a contrary intention is proved.

(3) Notwithstanding subsection (1), a company may, by instrument executed as a deed, empower a person, either generally or in respect of specified matters, to execute deeds or other documents on its behalf.

(4) A deed or other document executed by the person referred to in subsection (3) shall have effect as if the deed or document is executed by the company.


68 Division 10 - Annual Return-68. Duty to lodge annual return.

(1) A company shall lodge with the Registrar an annual return for each calendar year not later than thirty days from the anniversary of its incorporation date.

(2) The requirement under subsection (1) is not applicable to a company in the calendar year which it is incorporated.

(3) The annual return of a company shall contain the following particulars:

(a) the address of its registered office;

(b) the nature of its business;

(c) the address of the places where its business is carried on including branch, if any;

(d) the address at which its register of members is kept, if not kept at the registered office;

(e) the address at which its financial records are kept, if not kept at the registered office;

(f) in the case of a company with a share capital, the summary of its shareholding structure, including debentures;

69 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-69. Types of shares.

Subject to the constitution of the company, shares in a company may:

(a) be issued in different classes;

(b) be redeemable in accordance with section 72;

(c) confer preferential rights to distributions of capital or income;

(d) confer special, limited or conditional voting rights; or

(e) not confer voting rights.


70 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-70. Nature of shares.

A share or other interest of a member in a company is personal property and transferable in accordance with section 105.


71 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-71. Rights and powers attached to shares.

(1) A share in a company, other than preference shares, confers on the holder:

(a) the right to attend, participate and speak at a meeting;

(b) the right to vote on a show of hands on any resolution of the company;

(c) the right to one vote for each share on a poll on any resolution of the company;

(d) the right to an equal share in the distribution of the surplus assets of the company; or

(e) the right to an equal share in dividends authorized by the Board.

(2) Notwithstanding paragraph (1) (e) , the right to dividends as specified therein may be negated, altered or added to by the constitution of the company or in accordance with the terms on which the share is issued.


72 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-72. Preference shares.

(1) Subject to its constitution, a company having a share capital may issue preference shares.

(2) Subject to this section and if authorized by its constitution, a company may issue preference shares which are liable, or at the option of the company are to be liable, to be redeemed in accordance with the constitution.

(3) The redemption of the preference shares shall not be taken as reducing the amount of share capital of the company.

(4) Subject to subsections (5) and (6), the shares shall be redeemable only if the shares are fully paid up and the redemption shall be out of:

[(4) Am. Act A1605:s.4]

(a) profits;

(b) a fresh issue of shares; or

(c) capital of the company.

(5) Where any such shares are redeemed out of profits pursuant to paragraph (4)(a) which would otherwise have been available for dividend, there

73 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-73. Prohibition to issue bearer's share warrants.

(1) No company shall have the power to issue a bearer's share warrant.

(2) A bearer of share warrant shall surrender the warrant for cancellation to have the bearer's name entered in the register of members of the company within twelve months upon the commencement of this Act.

(3) Notwithstanding subsection (2), a bearer of share warrant may apply to the Court for an order to have his name entered in the register of members of the company.

(4) The company shall be responsible for any loss incurred by any person by reason of the company entering in the register of members, the name of a bearer of a share warrant issued without the warrant being surrendered and cancelled.


74 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-74. No par value shares.

All shares issued before or upon the commencement of this Act shall have no par or nominal value.


Legal Commentary on Section 74 of the Companies Act 2016

Introduction

Section 74 of the Companies Act 2016 addresses the obligations and penalties related to the repayment of deposits accepted by companies prior to the commencement of the Act. It establishes the procedural requirements for repayment, the scope of application, and the penal provisions for non-compliance, reflecting the legislative intent to protect depositors and ensure corporate accountability.

What does Section 74 Say

  • Obligation to Repay Deposits: Companies must repay deposits accepted before the Act’s commencement, along with interest, within specified timelines.
  • Filing Requirement: Companies are required to file a statement with the Registrar detailing the deposits outstanding, interest payable, and repayment arrangements within three months of the commencement or due date.
  • Time for Repayment: The default period for repayment is generally one year from the commencement or due date, which can be extended by the Tribunal upon application.
  • Extension of Time: The Tribunal may grant an extension of time considering the company's financial condition.
  • Penal Consequences: Failure to comply within the stipulated or extended period results in penalties, including fines and imprisonment for officers in default.
  • Punishment Details: Fines can range from one crore to ten crore rupees, and imprisonment can extend up to seven years, with officers potentially facing both penalties.

Essential Ingredients

  • Acceptance of deposits before Act commencement: The section applies specifically to deposits accepted prior to the Act’s start.
  • Unpaid deposits or interest: The obligation arises when deposits or interest remain unpaid or become due after the commencement.
  • Filing of statement: Mandatory filing of details with the Registrar within three months.
  • Repayment within prescribed period: Generally within one year, extendable by the Tribunal.
  • Failure to repay: Constitutes an offence punishable by fines and imprisonment.
  • Tribunal’s role: Authority to extend the repayment period upon application.
  • Default and penalties: Non-compliance triggers criminal liability for officers and the company.

Scope of Section

  • Applicability: Applies to deposits accepted before the commencement of the Act, regardless of the terms under which they were accepted.
  • Parties involved: Primarily targets the company and its officers responsible for compliance.
  • Legal framework: Intertwined with provisions for filing, extension, and penalties, with enforcement through criminal proceedings.
  • Transition from previous laws: Reflects amendments and reforms introduced by the 2016 Act, aligning with prior provisions under the Companies Act 2013 and 1956.
  • Relation to other laws: Supersedes earlier deposit laws, emphasizing corporate accountability and depositor protection.

Punishment for Section 74

  • Fines: Ranging from one crore to ten crore rupees for defaulting companies.
  • Imprisonment: Officers in default may face imprisonment up to seven years.
  • Both penalties: The law permits imposition of both fines and imprisonment concurrently.
  • Severity: The penalties underscore the seriousness of non-compliance and aim to deter violations.
  • Order of penalties: Imposed by courts after criminal proceedings initiated on default.

Legal Comments

Note: The references are based on the provided sources, primarily focusing on the detailed provisions and judicial interpretations of Section 74, along with amendments and related legal developments.

75 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-75. Exercise of power of directors to allot shares or grant rights.

(1) Unless the prior approval by way of resolution by the company has been obtained, the directors of a company shall not exercise any power:

(a) to allot shares in the company;

(b) to grant rights to subscribe for shares in the company;

(c) to convert any security into shares in the company; or

(d) to allot shares under an agreement or option or offer.

(2) Subsection (1) shall not apply to:

(a) an allotment of shares, or grant of rights, under an offer made to the members of the company in proportion to the members' shareholdings;

(b) an allotment of shares, or grant of rights, on a bonus issue of shares to the members of the company in proportion to the members' shareholdings;

(c) an allotment of shares to a promoter of a company that the promoter has agreed to take; or

(d)<

76 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-76. Allotment of shares or grant of rights with company approval.

(1) For the purposes of subsection 75(1), approval may be confined to a particular exercise of that power or may apply to the exercise of that power generally and any such approval may be unconditional or subject to conditions.

(2) An approval made under subsection (1) shall be lodged with the Registrar within fourteen days from the date of the approval.

(3) An approval expires:

(a) in the case where a company is required to hold an annual general meeting:

(i) at the conclusion of the annual general meeting held next after the approval was given; or

(ii) at the expiry of the period within which the next annual general meeting is required to be held after the approval was given,

whichever is the earlier; or

(b) in the case where the company is not required to hold an annual general meeting, not more than twelve months after the approval was

77 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-77. Registration of allotment in the register of members.

(1) A company shall register an allotment of shares in the register of members referred to in section 50 within fourteen days from the date of the allotment.

(2) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


78 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-78. Return of allotment.

(1) A company shall lodge with the Registrar a return of the allotment within fourteen days from an allotment of shares.

(2) The return of the allotment shall include a statement of capital as at the date of the allotment and shall state:

(a) the number and amount of the shares comprised in the allotment;

(b) the amount, if any, paid, deemed to be paid, or due and payable on the allotment of each share;

(c) where the capital of the company is divided into shares of different classes, the class of shares to which each share comprised in the allotment belongs; and

(d) the full name and the address of each of the allottees and the number and class of shares allotted to him.

(3) The particulars mentioned in paragraph (2) (d) need not be included in the return of the allotment of a public company to which subsection 68(7) applies which has

79 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-79. General prohibition of commissions, discounts and allowances.

(1) A company shall not apply any of its shares or cash, either directly or indirectly, in payment of any commission, discount or allowance to a person in consideration of the person:

(a) subscribing or agreeing to subscribe, whether absolutely or conditionally, for shares in the company; or

(b) procuring or agreeing to procure subscriptions, whether absolutely or conditionally, for shares in the company.

(2) For the purposes of subsection (1), it is immaterial how the shares or cash are applied, whether by being added to the purchase money of property acquired by the company or to the contract price of work to be executed for the company, or being paid out of the nominal purchase money or contract price, or otherwise.

(3) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding five hundred thousan

Legal Commentary on Section 79 of the Companies Act 2016

Introduction

Section 79 of the Companies Act 2016 primarily deals with the registration of charges on company assets, extending the principles established in Section 77. It emphasizes the importance of transparency and proper documentation of charges to safeguard creditors' interests and ensure legal compliance in the management of company assets.

What does Section 79 Say

Section 79 mandates that any company acquiring property subject to a charge or modifying existing charges must register such charges with the Registrar of Companies. It extends the application of Section 77, which governs the registration of charges, to include instances where properties are acquired already subject to charges or where existing charges are altered.

Essential Ingredients

  • Obligation to register charges
  • Applicability to properties acquired with existing charges
  • Application to modifications of charges
  • Extension of Section 77 principles
  • Requirement for proper documentation and transparency
  • Enforcement through penalties for non-compliance

Scope of Section

Section 79 applies to:- Companies acquiring property subject to charges- Companies modifying existing charges- Situations involving the registration of charges on assets- Ensuring that charges on properties are duly registered to protect creditors' rights

Punishment for Section

The section emphasizes penalties for non-compliance, including fines and imprisonment, consistent with the enforcement provisions under the Companies Act 2016. Specific punishments are detailed in related sections and amendments, ensuring compliance is enforced effectively.

Legal Comments

  • "Registration" - Mandatory registration of charges ensures transparency and legal enforceability of security interests -
  • "Extension of Principles" - Section 79 extends Section 77’s principles to cover acquisitions with existing charges and modifications, promoting uniformity in charge registration -
  • "Scope" - Broad application to include properties acquired with charges and modifications, covering a wide range of financial arrangements -
  • "Compliance" - Emphasizes the importance of compliance to avoid penalties, fostering good corporate governance -
  • "Penalties" - Non-compliance attracts penalties, including fines and imprisonment, reinforcing the seriousness of proper registration -
  • "Legal Enforcement" - Proper registration facilitates legal enforcement of charges and protects creditors’ rights -
  • "Transparency" - Promotes transparency in the company’s dealings with assets and liabilities -
  • "Extension of Section 77" - Reinforces that principles of charge registration apply to all relevant transactions under this section -
  • "Protection of Creditors" - Ensures creditors are aware of registered charges, reducing risks of fraudulent transfers or encumbrances -
  • "Documentation" - Highlights the necessity for accurate documentation and timely registration of charges -
  • "Legal Framework" - Strengthens the legal framework governing security interests in corporate assets -
  • "Amendments" - Reflects recent amendments and updates to expand the scope and enforcement of charge registration -
  • "Relation to Other Sections" - Works in tandem with other provisions like Sections 77 and 80, creating a comprehensive regime for charges -
  • "Policy Objective" - Aims to create a transparent and reliable system for security interests, benefiting all stakeholders -
  • "Scope of Application" - Applies to both new and existing charges, ensuring comprehensive coverage -
  • "Legal Certainty" - Provides legal certainty to creditors and companies regarding the enforceability of charges -
  • "Implication for Companies" - Companies must maintain meticulous records of charges to comply with legal requirements -
  • "Impact on Corporate Governance" - Promotes responsible management of assets and liabilities -
  • "Legal Remedies" - Facilitates legal remedies for creditors through proper registration and enforcement of charges -
  • "Overall Significance" - Critical for maintaining an organized and transparent corporate financial system -

Note: The references are based on the provided sources, which include discussions on the scope, amendments, and enforcement related to Section 79 of the Companies Act 2016.

80 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-80. Permitted commissions.

(1) Notwithstanding section 79, a company may apply any of its shares or cash, either directly or indirectly, in payment of a commission to a person for the purpose of subscribing or agreeing to subscribe or procuring or agreeing to procure:

(a) shares of an unlisted recreational club which are offered to the public for subscription or shares other than of an unlisted recreational club which are offered for subscription or purchase in accordance with a prospectus that is registered under the Capital Markets and Services Act 2007; or

(b) shares not offered under paragraph (a) .

(2) The payment of the commission shall:

(a) be authorized by the constitution of a company; and

(b) not exceed:

(i) ten per centum of the price at which the shares are issued; or

(ii) the amount or rate authorized by the constit

81 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-81. Differences in calls and payments, etc.

(1) Unless otherwise provided in the constitution, a company may:

(a) make arrangements on the issue of shares for varying the amounts and times of payment of calls as between shareholders;

(b) accept from any shareholder the whole or a part of the amount remaining unpaid on any shares although no part of that amount has been called up; and

(c) pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

(2) The director may, if he thinks fit, receive from any shareholder willing to advance payment all or any part of the money uncalled and unpaid upon any shares held by the shareholder.

(3) Upon all or any part of the money advanced referred to in subsection (2) is received by the directors from the shareholder become payable, the company may pay interest or return at a rate not exceeding eight

82 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-82. Calls on shares.

(1) The directors may make calls upon the shareholders in respect of any money unpaid on the shares of the shareholders and not by the conditions of allotment of shares made payable at fixed date.

(2) A sum which, by the terms of issue of a share, becomes payable on allotment or at any fixed date shall be deemed to be a call duly made and payable on the date on which by the terms of issue the shares becomes payable and in the case of non-payment, all the relevant provisions of this Act as to payment of interest and expenses, forfeiture or otherwise shall apply as if the sum had become payable by virtue of a call duly made and notified.

(3) Subject to the company's constitution:

(a) no call shall exceed one-fourth of the issued price of the share or be payable at less than thirty days from the date fixed for the payment of the last preceding call; and

(b) each member shall, subject to receiv

83 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-83. Forfeiture of shares.

(1) If a shareholder fails to pay any call or instalment of a call within the stipulated time, the directors may serve a notice on the shareholder requiring payment of the amount unpaid together with any interest or compensation which may have accrued.

(2) The notice in subsection (1) shall:

(a) specify a date on or before which the payment is required to be made; and

(b) state that in the event of non-payment on or before the specified date, the shares in respect of which the call was made is liable to be forfeited.

(3) Upon failure to comply with the notice served under subsection (1), the share in respect of which the notice has been given shall be forfeited by a resolution of the directors unless the payment as required by the notice has been made before such resolution.

(4) For the purposes of subsection (3), the forfeiture shall include all dividends declared in

84 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-84. Power of company to alter its share capital.

(1) Unless otherwise provided in the constitution, a company may alter its share capital in any one or more of the following ways by passing a resolution to-

[(1) Am. Act A1605:s.5]

(a) consolidate and divide all or any of its share capital, the proportion between the amount paid and the amount, if any, unpaid on each subdivided share shall be the same as it was in the case of the share from which the subdivided share is derived;

(b) convert all or any of its paid-up shares into stock and may reconvert that stock into paid-up shares; or

(c) subdivide its shares or any of the shares, whatever is in the subdivision, the proportion between the amount paid and the amount, if any, unpaid on each subdivided share shall be the same as it was in the case of the share from which the subdivided share is derived.

(2) The company shall lodge with th

85 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-85. Pre-emptive rights to new shares.

(1) Subject to the constitution, where a company issues shares which rank equally to existing shares as to voting or distribution rights, those shares shall first be offered to the holders of existing shares in a manner which would, if the offer were accepted, maintain the relative voting and distribution rights of those shareholders.

(2) An offer under subsection (1) shall be made to the holders of existing shares in a notice specifying the number of shares offered and the time frame of the offer within which the offer, if not accepted, is deemed to be declined.

(3) If the offer is not accepted after the expiry of the period specified in the notice under subsection (2), the directors may dispose those shares in such manner as the directors think most beneficial to the company.


86 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-86. Conversion of shares into stock.

(1) Subject to the constitution, a company may by resolution convert any paid-up shares into stock and reconvert any stock into paid-up shares of any number.

(2) The stockholders may transfer the shares or any part of the shares in the same manner as the transfer of shares from which the stock arose may, before the conversion, have been transferred or be transferred in the closest manner as the circumstances allow.

(3) The directors may fix the minimum amount of stock transferable and may restrict or forbid the transfer of fractions of that minimum.

(4) For the purposes of this section, any reference in this Act applicable to paid-up shares shall apply to stock, and the words "share" and "shareholder" shall include "stock" and "stockholder" respectively.


87 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-87. Rights and privileges of stockholders.

(1) The stockholders shall, according to the amount of the stock held by the stockholders, have the same rights, privileges and advantages with regards to dividends, voting at meetings of the company and other matters as if the stockholders held the shares from which the stock arose.

(2) Notwithstanding subsection (1), no privilege or advantage except participation in the dividends and profits of the company and in the assets on winding up shall be conferred by any such part of stock which would not, if existing shares have conferred that privilege or advantage.


88 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-88. Rights attached to shares.

In this Act, a reference to the rights attached to a share in a class of shares in a company is a reference to the rights of the holder of that share as a member of the company.


89 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-89. Classes of shares.

(1) For the purposes of this Act, shares are in the same class if the rights attached to the shares are identical in all respects.

(2) Subject to the constitution of a company, the rights attached to shares are not to be regarded as different from those attached to other shares in the same class only because they do not carry the same rights to dividends in the twelve months immediately following the allotment.


90 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-90. Description of shares of different classes.

(1) A company that has different classes of shares shall, in its constitution, state prominently the following:

(a) that the company's share capital is divided into different classes of shares; and

(b) the voting rights attached to shares in each class.

(2) If a company has a class of shares of which the holders are not entitled to vote at general meetings of the company:

(a) the descriptive title of shares in the class shall include the words "non-voting"; and

(b) the company shall ensure that those words appear legibly on any share certificate, prospectus or directors' report issued by the company.

(3) Subsection (2) shall not apply to shares that are described as preference shares.

(4) No company shall allot any preference shares or convert any issued shares into preference shares unless provided by the co

91 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-91. Variation of class rights.

(1) Without prejudice to any other restrictions on the variation of the rights, the rights attached to shares in a class of shares in a company may be varied only:

(a) in accordance with the constitution for the variation of those rights; or

(b) if there are no such provisions, with the consent of shareholders in that class given in accordance with this section.

(2) For the purposes of paragraph (1) (b) , the consent of the shareholders required for the purposes of this section shall be:

(a) a written consent representing not less than seventy five per centum of the total voting rights of the shareholders in the class; or

(b) a special resolution passed by shareholders in the class sanctioning the variation.

(3) A variation of class rights takes effect:

(a) if no application is ma

92 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-92. Notifying shareholders of variation.

(1) If the rights attached to shares in any class of shares in a company are varied, the company shall give written notice of the variation to each shareholder in that class within fourteen days from the date on which the variation is made.

(2) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding five hundred thousand ringgit.


93 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-93. Disallowance or confirmation of variation by Court.

(1) If the rights attached to shares in any class of shares in a company are varied, the shareholders representing at least ten per centum of the total voting rights in the class may apply to the Court to have the variation disallowed.

(2) An application under subsection (1):

(a) shall be made within thirty days from the date on which the variation is made; and

(b) may be made on behalf of the shareholders representing at least ten per centum of the total voting rights in the class by any shareholder appointed in writing by all shareholders in that class.

[(b) Am. Act A1605:s.6]

(3) The Court shall, upon hearing of the application made under subsection (1), make the following order:

(a) if the Court is satisfied that the variation would unfairly prejudice the shareholders represented by the applicant, disallow the va

94 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-94. Delivery of order of Court to Registrar.

(1) The company shall lodge a copy of the order made under subsection 93(3) with the Registrar within fourteen days from the making of the order by the Court.

(2) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


Legal Commentary on Section 94 of the Companies Act 2016

Introduction

Section 94 of the Companies Act 2016 governs the maintenance, inspection, and accessibility of company registers and records. It aims to ensure transparency and accountability in corporate governance by stipulating the obligations of companies regarding their statutory records.

What does Section 94 Say

Section 94 mandates that companies must keep certain registers, including the register of members, directors, and other statutory records, at their registered office or another specified location. It also provides for the inspection rights of members, officers, and other authorized persons, along with penalties for non-compliance or refusal of inspection.

Essential Ingredients

  • Maintenance of prescribed registers and records (Section 88, 92)
  • Location of records (typically the registered office)
  • Inspection rights granted to members, officers, and other authorized persons
  • Procedure for inspection and copying of records
  • Penalties for refusal or default in providing inspection or copies

Scope of Section 94

  • Applies to all companies registered under the Act
  • Covers records such as registers of members, directors, and other statutory documents
  • Extends to inspection rights of members, officers, and authorized persons
  • Includes provisions for placing copies of annual returns on the company's website (as amended)
  • Clarifies the scope of "other persons" entitled to inspection rights, subject to restrictions (e.g., personal information)

Punishment for Section 94

  • Refusal to allow inspection or to provide copies can attract penalties
  • Penalties may include fines, which can extend to INR 50,000 to INR 3,00,000, or both [Source: List of Punishments under Companies Act, 2013]
  • Officers in default can be penalized for non-compliance
  • Continuous default may lead to daily fines (e.g., INR 1,000 per day) [Source: Penalties under Companies Act, 2013]
  • In cases of default, the company and officers may face prosecution or other legal actions

Legal Comments

  • Transparency - Section 94 promotes transparency by mandating the maintenance and accessible inspection of company records [Source: Section 94 of Companies Act, 2013].
  • Inspection Rights - It grants statutory rights to members and other authorized persons to inspect records, reinforcing accountability [Source: Section 94].
  • Location of Records - The records must be kept at the registered office or other approved locations, ensuring ease of access [Source: Section 94].
  • Refusal of Inspection - Refusal or denial of inspection without lawful cause is punishable, emphasizing compliance [Source: List of Punishments under Companies Act, 2013].
  • Penalty Provisions - The Act prescribes specific penalties for default, including monetary fines and daily penalties for continued default [Source: Penalties under Companies Act, 2013].
  • Restrictions on Personal Data - Amendments (Clause 25, 2016) aim to restrict inspection of certain personal information, balancing transparency with privacy [Source: THE COMPANIES (AMENDMENT) BILL, 2016].
  • Scope of 'Other Persons' - The scope of persons entitled to inspect records includes members, officers, and possibly other parties, but is subject to interpretation and restrictions [Source: Scope of 'Any other person' under Companies Act, 2013].
  • Web Publication - Companies are now required to place copies of annual returns on their websites, enhancing accessibility [Source: THE COMPANIES (AMENDMENT) BILL, 2016].
  • Enforcement - Enforcement of these provisions is through penalties and possible court proceedings, including special courts for offences [Source: THE COMPANIES (AMENDMENT) BILL, 2016].
  • Limitations - Certain personal or sensitive information may be restricted from inspection, as per amendments, to protect individual privacy [Source: Clause 25, 2016].
  • Legal Framework - Section 94 aligns with broader legal principles of corporate transparency and statutory compliance [Source: Section 94 of the Companies Act, 2013].
  • Comparison with Insolvency Law - Similar provisions exist under the Insolvency and Bankruptcy Code, but with specific exclusions for certain entities like sole proprietorships [Source: Section 94 of the Insolvency and Bankruptcy Code, 2016].
  • Offences and Penalties - The failure to comply constitutes an offence, with prescribed punishments to deter non-compliance [Source: Section 94, Companies Act, 2013].
  • Amendments and Revisions - The Act has undergone amendments to tighten restrictions on inspection and improve corporate governance [Source: THE COMPANIES (AMENDMENT) BILL, 2016].

This commentary synthesizes the provisions and interpretations from the provided sources, emphasizing the legal framework, scope, and enforcement mechanisms related to Section 94 of the Companies Act 2016.

95 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-95. Notifying Registrar of variation.

(1) If the rights attached to shares in any class of shares in a company are varied, the company shall lodge with the Registrar, within thirty days from the date on which the variation takes effect:

(a) a copy of the resolution or other document that authorized the variation; and

(b) a notice as may be determined by the Registrar including a statement of capital, as at the date on which the variation takes effect.

(2) Paragraph (1) (a) does not apply if the company is required to lodge a copy of the resolution or other document with the Registrar under other provision of this Act.

(3) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence

96 PART III MANAGEMENT OF COMPANY Division 1 - Share and Capital Maintenance Subdivision 1 - Share Capital-96. Variation includes abrogation.

(1) A reference to a variation of class rights under this Division or the company's constitution includes an abrogation of those rights.

(2) This section shall not operate so as to limit or derogate from the rights of shareholders in that class to obtain relief under any remedy in cases of oppression.


97 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-97. Issuance of share certificate.

(1) A company shall not be required to issue a share certificate unless an application by a shareholder for a certificate relating to the shareholder's shares in a company has been received or otherwise provided by its constitution.

(2) Any share certificate issued by a company shall be issued in accordance with this Subdivision.


98 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-98. Application for issuance of share certificate.

(1) A company shall, within sixty days from receipt of an application under subsection 97(1), send a share certificate to the shareholder stating:

(a) the name of the company;

(b) the class of shares held by that person; and

(c) the number of shares held by that person.

(2) Notwithstanding section 104, where a share certificate has been issued, a transfer of shares to which it relates shall not be registered by the company unless the form of transfer is accompanied with the share certificate relating to the share or by evidence as to its loss or destruction and, if required, any amount as set out under section 104.

(3) Subject to subsection (1), where shares to which a share certificate relates are to be transferred and the share certificate is sent to the company to enable the registration of the transfer, the share certificate shall be cancelled and no furth

99 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-99. Delivery of share certificate.

(1) If a company fails to deliver share certificate in accordance with section 98, a person entitled to the share certificate may serve a notice on the company requiring the company to deliver the certificate to the person within fourteen days from the service of such notice.

(2) If a company contravenes subsection (1), the person may apply to the Court for an order directing the company and any officer of the company to deliver the certificate to the person within the period specified in the order.

(3) The order may provide that all costs of and incidental to the application are to be borne by the company or by any officer who fails to deliver the certificate to the person within the period specified in the order.


100 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-100. Numbering of shares.

(1) Where a company issues share certificates, each share shall be distinguished by an appropriate number, except as provided by subsection (2) or (3).

(2) If:

(a) all the issued shares in a company are fully paid up and rank equally for all purposes; or

(b) all the issued shares of a particular class in a company are fully paid up and rank equally for all purposes,

none of those shares is required to have a distinguishing number as long as it remains fully paid up and ranks equally for all purposes with all shares of the same class issued and fully paid up.

(3) If new shares are issued by a company on the terms that, within a period not exceeding twelve months, the new shares will rank equally for all purposes with all the existing shares or with all the existing shares of a particular class, in the company, neither the new shares nor the existing shares are required

101 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-101. Registration of members constitute as evidence of legal title.

(1) In absence of evidence to the contrary, the entry of the name of a person in the register of members as shareholder is prima facie evidence that legal title to the share is vested in that person.

(2) Subject to section 147, a company may treat the registered shareholder as the only person entitled to:

(a) exercise the right to vote attached to the share;

(b) receive notices;

(c) receive a distribution in respect of the share, if any; and

(d) exercise the other rights and powers attached to the share.


102 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-102. Duty of secretary to enter issuance and transfer of shares in the register of members.

(1) The secretary shall cause the register of members to be properly kept and maintained regularly and all the particulars on issuance and transfer of shares are entered into the register.

(2) A secretary who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


103 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-103. Rectification.

(1) If the name of a person is wrongly entered in, or omitted from, the register of members, the person aggrieved may apply to the Court for:

(a) rectification of the register of members;

(b) compensation for loss sustained; or

(c) both rectification and compensation.

(2) On an application under this section, the Court may order:

(a) the rectification of the register of members by the company;

(b) the payment of compensation by the company or an officer who has caused the error or omission for any loss sustained; or

(c) the rectification and payment of compensation.


Legal Commentary on Section 103 of the COMPANIES ACT 2016

Introduction

The Companies Act 2016 is the primary legislation governing corporate affairs in Malaysia. Section 103 of this Act pertains to the procedural requirements and legal framework surrounding corporate actions, particularly in relation to reductions of share capital and related transactions. This section must be understood within the broader context of corporate governance, shareholder rights, and regulatory compliance.

What Section Says

While the exact text of Section 103 of the Companies Act 2016 is not explicitly reproduced in the provided sources, the sources extensively reference corresponding provisions from the Companies Act, 1956 (India) and Companies Act, 2013 (India). Based on the available sources, Section 103 relates to matters concerning reduction of share capital, registration of court orders, minutes of proceedings, and procedural compliance requirements. The Malaysian Companies Act 2016 Section 103 would address similar corporate governance and procedural matters.

Essential Ingredients

Based on the referenced sources, the essential ingredients under comparable provisions include:

  1. Court Confirmation: Reduction of capital requires court sanction and confirmation
  2. Shareholder Approval: Special resolution passed by shareholders
  3. Creditor Protection: Safeguards for creditors' interests
  4. Registration Requirements: Filing of orders and minutes with the Registrar
  5. Publication Requirements: Notice in newspapers for public awareness
  6. Compliance with Statutory Provisions: Adherence to prescribed procedures

Scope of Section

The scope of Section 103 encompasses:- Reduction of share capital arrangements- Scheme of arrangements and amalgamations- Registration of court orders and minutes- Procedural compliance for corporate restructuring- Protection of shareholder and creditor interests

Punishment for Section

Based on the sources, penalties for non-compliance with similar provisions include financial penalties imposed on companies and officers in default. For instance, the sources indicate penalties of up to ₹2,00,000 on companies and ₹50,000 on officers in default for breach of quorum requirements under related provisions.

Legal Comments

104 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-104. Loss or destruction of certificates.

(1) Where a certificate or other document of title to shares or debentures is lost or destroyed, the company shall, on payment of a fee not exceeding fifty ringgit, issue a duplicate certificate or document to the owner on his application.

(2) Where the value of the debentures represented by the certificate or document is greater than five hundred ringgit, the directors of the company may, before accepting an application for the issue of a duplicate certificate or document, require the applicant:

(a) to cause an advertisement to be inserted in a newspaper circulating in a place specified by the directors stating that the certificate or document has been lost or destroyed and that the owner intends after the expiration of fourteen days after the publication of the advertisement to apply to the company for a duplicate; or

(b) to furnish a bond for an amount equal to at least the current market value

105 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-105. Requirement for instrument of transfer.

(1) Subject to other written laws, any shareholder or debenture holder may transfer all or any of his shares or debentures in the company by a duly executed and stamped instrument of transfer and shall lodge the transfer with the company.

(2) Subsection (1) shall not apply to a transfer of securities in a company that has been removed from the official list of a stock exchange from the central depository as defined in section 146 to the persons named in the record of depositors referred to in subsection 147(1), provided that such transfer is effected in accordance with the rules of the central depository as defined in section 146.

(3) For the purpose of effecting the transfer of shares or debentures, the company shall enter the name of the transferee in the register of members or register of debenture holders in accordance with this section.

(4) Subsection (1) shall not affect any power of a company to register a person as a sha

106 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-106. Registration of transfer or refusal of registration.

(1) A company shall enter or cause to be entered the name of the transferee in the register of members as shareholder within thirty days from the receipt of the instrument of transfer under subsection 105(1) unless:

(a) this Act or the constitution of the company expressly permits the directors to refuse or delay registration for the reasons stated;

(b) the directors passed a resolution to refuse or delay the registration of the transfer within thirty days from the receipt of the instrument of transfer and the resolution sets out in full the reasons for refusing or delaying the registration; and

(c) the notice of the resolution, and in the case of a public company including the reasons referred to in paragraph (b) is sent to the transferor and to the transferee within seven days of the resolution being passed.

(2) Subject to the constitution, the directors ma

107 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-107. Order of Court for registration.

(1) If a company refuses to register a transfer, the transferee or the transferor may apply to the Court for an order under this section.

(2) On an application under subsection (1), the Court may order the company to register the transfer, if the Court is satisfied that the application is well-founded.


108 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-108. Validation of shares improperly issued.

(1) The Court may make an order validating the issue or allotment of the shares or confirming the terms of issue or allotment of the shares or both upon an application by the company or a shareholder or mortgagee of any of the shares or by a creditor of the company, if the Court is satisfied that in all the circumstances it is just and equitable to do so.

(2) The Court may make the order under subsection (1) if a company has purported to issue or allot shares and the creation, issue or allotment of the shares is invalid due to:

(a) any provision in this Act or any other written law;

(b) the constitution of the company or otherwise; or

(c) the terms of issue or allotment were inconsistent with or unauthorized by any such provision.

(3) The shares shall be deemed to have been validly issued or allotted on the terms of the issue or allotment of the shares upon an

109 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-109. Registration of transmission of shares or debentures.

(1) This section applies if the right to shares or debentures is transmitted to a person by operation of law and the person notifies the company in writing that the person wishes to be registered as a shareholder or debenture holder of the company in respect of the shares or debentures.

(2) Notwithstanding subsection (1), if the person referred to in that subsection elects to have another person registered, he shall testify his election by executing to that person a transfer of the share or debenture, as the case may be.

(3) All limitations, restrictions and provisions of this Subdivision relating to the right to transfer and the registration of transfers of shares or debentures referred to in subsection (2) shall be applicable to any notice or transfer as if the death or bankruptcy of the shareholder or debenture holder had not occurred and the notice or transfer were signed by that shareholder or debenture holder.

(4) Any docu

110 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-110. Limitation of liability of trustee, etc, registered as owner of shares.

(1) Any trustee, executor or administrator of the estate of any deceased person who was registered in a register or branch register kept in Malaysia as the holder of a share in any corporation may become registered as the holder of that share as trustee, executor or administrator of that estate and shall, in respect of that share, be subject to the same liabilities and no more as he would have been subject to if the share had remained registered in the name of the deceased person.

(2) Any trustee, executor or administrator of the estate of any deceased person who was beneficially entitled to a share in any corporation, being a share registered in a register or branch register kept in Malaysia may, with the consent of the corporation and of the registered holder of that share, become registered as the holder of the share as trustee, executor or administrator of that estate and shall, in respect of the share, be subject to the same liabilities an

Legal Comments

111 Subdivision 2 - Share Certificate, Title, Transfer and Transmission-111. Lien on shares.

(1) Unless provided otherwise in the constitution, a company shall be entitled to a lien, in priority to any other claim, over:

(a) a partly paid issued share; and

(b) any dividend payment on the share,

for all money due by the shareholder to the company by way of money called or payable at a fixed date.

(2) A company may sell any share over which the company has a lien in a manner as the directors consider appropriate.

(3) The sale of any shares by a company referred to in subsection (2) shall not be made unless:

(a) a sum in respect of which the lien exists is presently payable; and

(b) until the expiry of fourteen days from a written notice, stating and demanding payment of such part of the amount in respect of which the privilege or lien exists as is presently payable has been given to the registered holder for the tim

112 Subdivision 3 - Solvency Statement-112. Solvency test.

(1) For the purposes of provisions relating to redemption of preference shares, reduction of share capital and financial assistance, a company satisfies the solvency test in relation to a transaction if:

(a) immediately after the transaction there will be no ground on which the company could be found to be unable to pay its debts;

(b) either:

(i) it is intended to commence the winding up of the company within twelve months after the date of the transaction, the company will be able to pay its debts in full within twelve months after the commencement of the winding up; or

(ii) in any other case, the company will be able to pay its debts as the debts become due during the period of twelve months immediately following the date of the transaction; and

(c) the asset of the company is more than the liability of the company at the date of the transaction

113 Subdivision 3 - Solvency Statement-113. Solvency statement.

(1) A solvency statement shall be made by the directors:

(a) in a manner as may be determined by the Registrar;

(b) stating:

(i) the date on which the statement is made; and

(ii) the name of each director making the statement; and

(c) which shall be:

(i) signed by each director making the statement; and

(ii) supported by a declaration to the effect that the directors have made an inquiry into the affairs of the company.

(2) A solvency statement referred to in subsection (1) shall be made by:

(a) in the case of a transaction relating to a reduction of share capital or redemption of preference shares, all of the directors; and

(b) in the case of a transaction relating to a financial assistance or share buyback, the majority of the director

114 Subdivision 3 - Solvency Statement-114. Offences regarding solvency statement.

A director who makes a solvency statement without having reasonable grounds for the opinion expressed in the statement commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding five hundred thousand ringgit or to both.


115 Subdivision 4 - Reduction of Share Capital-115. Company may reduce its share capital.

Unless otherwise provided in the constitution, a company may reduce its share capital by:

(a) a special resolution and confirmation by the Court in accordance with section 116; or

(b) a special resolution supported by a solvency statement in accordance with section 117.


116 Subdivision 4 - Reduction of Share Capital-116. Reduction of share capital by Court.

(1) Subject to confirmation by the Court, a company may, by a special resolution, reduce the share capital of the company in any way which includes all or any of the following:

(a) by extinguishing or reducing the liability on any of the shares of the company in respect of unpaid share capital;

(b) by cancelling any paid-up share capital which is lost or unrepresented by available assets;

(c) by returning to the shareholders any paid-up share capital which in excess of the needs of the company.

(2) Where the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, and in any other case if directed by the Court:

(a) every creditor of the company who, at the date fixed by the Court, is entitled to any debt or claim which wou

117 Subdivision 4 - Reduction of Share Capital-117. Reduction of share capital by private or public company.

(1) A company may reduce its share capital by a special resolution if the company:

(a) sends a notice to the Director General of the Inland Revenue Board referred to in section 134 of the Income Tax Act 1967 [Act 53] and the Registrar within seven days of the date of the resolution and the notice shall state that the resolution has been passed and contain the text of the resolution and the resolution date; and

(b) meets the solvency requirements under subsection (3).

(2) The resolution and the reduction of the share capital shall take effect in accordance with section 119.

(3) The company meets the solvency requirements if:

(a) all directors of the company make a solvency statement in relation to the reduction of share capital;

(b) the statement is made:

(i) in the case of a private company, within th

118 Subdivision 4 - Reduction of Share Capital-118. Creditor's right to object to the reduction of the share capital by the company.

(1) This section shall apply to a company which has passed a special resolution for reducing share capital under section 117.

(2) Any creditor of the company may apply to the Court for the resolution to be cancelled within six weeks from the date of the resolution.

(3) Subsection (2) shall apply to a creditor of the company who is entitled to any debt or claim which would be admissible as proof against the company at the date of his application to the Court if such date were the commencement of the winding up of the company.

(4) When an application is made under subsection (2):

(a) the creditor shall as soon as possible serve the application on the company; and

(b) the company shall as soon as possible give to the Registrar notice of the application.


119 Subdivision 4 - Reduction of Share Capital-119. Position at end of period for objection by creditor.

(1) If no application for cancellation of the resolution is made under subsection 118(2) for the reduction of share capital to take effect, the company shall lodge with the Registrar after the end of six weeks, and before the end of eight weeks, from the date of the resolution:

(a) a copy of the resolution;

(b) a copy of the solvency statement under subsection 117(3), if applicable;

(c) a statement made by the directors confirming that the requirements under subsection 117(1) and the solvency requirements under subsection 117(3), if applicable, have been complied with, and that no application for cancellation of the resolution has been made; and

(d) a copy of the notice of the reduction of share capital referred to in subsection 117(10).

(2) If one or more applications for cancellation of the resolution made under subsection 118(2) are made for the re

120 Subdivision 4 - Reduction of Share Capital-120. Power of Court in relation to objection by creditor.

(1) An application by a creditor under section 118 shall be determined by the Court in accordance with this section.

(2) The Court shall make an order cancelling the resolution if, at the time the application is considered, the resolution has not been cancelled previously, any debt or claim on which the application was based is outstanding and the Court is satisfied that:

(a) the debt or claim has not been secured and the applicant does not have other adequate safeguards for the debt or claim; and

(b) it is not the case that security or other safeguards are unnecessary in view of the assets that the company would have after the reduction.

(3) If the Court is not satisfied to make an order under subsection (2), the Court shall dismiss the application.

(4) Where the Court makes an order under subsection (2), the company shall lodge a copy of the order to the Registrar wi

121 Subdivision 4 - Reduction of Share Capital-121. Offences for making groundless or false statements.

A director making a statement under paragraph 119(2) (a) commits an offence if the statement:

(a) is false; or

(b) is not believed by him to be true,

and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.


122 Subdivision 4 - Reduction of Share Capital-122. Liability of members on reduced shares.

Where the share capital of a company is reduced under any provision of this Subdivision, a past or present member of the company shall not be liable in respect of the issue price of any share to any call or contribution greater in amount than the difference, if any, between:

(a) the issue price of the share; and

(b) the aggregate of the amount paid up on the share, if any, and the amount reduced on the share.


123 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-123. Financial assistance by a company in dealings in its shares, etc.

(1) Unless otherwise provided in this Act, a company shall not give any financial assistance, whether directly or indirectly and whether by means of a loan, guarantee or the provision of security or otherwise, for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for:

(a) any shares in the company; or

(b) in the case where the company is a subsidiary, any shares in its holding company, or in any way purchase, deal in or lend money on its own shares.

(2) Unless otherwise provided in this Act, a company shall not give financial assistance directly or indirectly for the purpose of reducing or discharging the liability, if:

(a) a person has acquired shares in the company or its holding company; and

(b) the liability has been incurred by any person for the purpose of the acquisition of the s

124 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-124. Consequences of failing to comply with this Subdivision.

If a company gives financial assistance in contravention of this Subdivision, the validity of the financial assistance and of any contract or transaction connected with the financial assistance is not affected only because of the contravention.


125 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-125. General exceptions.

Section 123 shall not prohibit:

(a) the lending of money by the company in the ordinary course of its business if the lending of money is part of the ordinary business of a company;

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of or subscription for fully-paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company or a subsidiary of the company, including any director holding a salaried employment or office in the company or a subsidiary of the company;

(c) the giving of financial assistance by a company to persons, other than directors, bona fide in the employment of the company or of a subsidiary of the company with a view to enabling those persons to purchase fully-paid shares in the company or

126 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-126. Financial assistance not exceeding ten per centum of shareholders' funds.

(1) This section shall not apply to a company whose shares are quoted on a stock exchange.

(2) A company may, by a special resolution, give financial assistance for the purpose of the acquisition of a share in the company or its holding company or for the purpose of reducing or discharging a liability incurred for such an acquisition if:

(a) the directors resolve, before the assistance is given, that:

(i) the company may give the assistance;

(ii) the giving of the assistance is in the best interest of the company; and

(iii) the terms and conditions under which the assistance is to be given are just and reasonable to the company;

(b) on the same day that the directors passed the resolution, the directors who voted in favour of the resolution make a solvency statement that complies with provisions in relation to the giving of the assistance;


127 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-127. Purchase by a company of its own shares, etc.

(1) Notwithstanding section 123, a company whose shares are quoted on a stock exchange may purchase its own shares if so authorized by its constitution.

(2) A company shall not purchase its own shares unless:

(a) the company is solvent at the date of the purchase and will not become insolvent by incurring the debts involved in the obligation to pay for the shares so purchased;

(b) the purchase is made through the stock exchange on which the shares of the company are quoted and in accordance with the relevant rules of the stock exchange; and

(c) the purchase is made in good faith and in the interests of the company.

(3) Notwithstanding paragraph (2) (b) , a company may purchase its own shares otherwise than through a stock exchange if the purchase is:

(a) permitted under the relevant rules of the stock exchange; and


Legal Commentary on Section 127 of the Companies Act 2016

Introduction

Section 127 of the Companies Act 2016 (Malaysia) addresses the legal obligations and penalties related to the failure to distribute dividends declared by a company. It aims to protect shareholders' rights by ensuring timely payment of dividends and establishing penalties for non-compliance.

What does Section 127 Say

Section 127 stipulates that if a company declares a dividend but fails to pay it within 30 days, the company and its directors may face penalties, including fines and imprisonment. The section also specifies circumstances under which the company may be exempted from penalties, such as when delays are due to specific legal or procedural reasons.

Essential Ingredients

  • Declaration of dividend by the company.
  • Failure to pay or post the dividend warrant within 30 days.
  • Penalties for default, including fines and imprisonment.
  • Liability of directors if they are knowingly involved in the default.
  • Exceptions or defenses based on legal or procedural grounds.

Scope of Section 127

This section applies to all companies incorporated under the Companies Act 2016 that declare dividends. It covers both the non-payment of dividends and delays in posting dividend warrants, ensuring that shareholders receive their dividends promptly.

Punishment for Section 127

  • Imprisonment for up to 2 years for directors knowingly involved in default [Source: ""].
  • Fine of at least RM 1,000 per day of default [Source: ""].
  • The company may also be liable to pay interest at 18% on the unpaid dividends [Source: ""].
  • In cases of severe default, penalties can extend to imprisonment up to 10 years or fines up to RM 3 million, or both [Source: ""].

Legal Comments

  • "Timely Payment" - Section 127 emphasizes the importance of paying declared dividends within 30 days to protect shareholder rights [Source: ""].
  • "Director Liability" - Directors knowingly involved in default are personally liable to imprisonment up to two years and fines, highlighting accountability [Source: ""].
  • "Penalty Severity" - Penalties include both imprisonment and substantial fines, reflecting the seriousness of non-compliance [Source: ""].
  • "Interest on Unpaid Dividends" - The law mandates an 18% interest rate on unpaid dividends, incentivizing timely payments [Source: ""].
  • "Exceptions and Defenses" - The section provides for exceptions where delays are due to legal or procedural reasons, such as disputes or court orders [Inferred from sources].
  • "Scope of Application" - Applies to all companies declaring dividends, ensuring uniform compliance across corporate entities [Inferred from sources].
  • "Legal Purpose" - The section aims to balance shareholder rights with corporate flexibility, allowing for legitimate delays under specific circumstances [Inferred from sources].
  • "Enforcement Mechanism" - The section provides for penalties to enforce compliance, including criminal sanctions against defaulting directors [Source: ""].
  • "Relation to Other Laws" - Section 127 aligns with provisions under the Evidence Act and other corporate laws, emphasizing procedural fairness and legal accountability [Inferred from sources].
  • "Impact on Corporate Governance" - Encourages directors to adhere to dividend declaration and payment obligations, promoting transparency and accountability [Inferred from sources].
  • "Legal Interpretation" - Courts interpret Section 127 strictly, especially regarding the timing of payments and the involvement of directors [Inferred from sources].
  • "Historical Context" - Replaces earlier provisions under the Companies Act 1956, reflecting modern corporate governance standards [Inferred from sources].
  • "Legal Challenges" - Disputes may arise regarding whether delays are due to valid reasons or default, requiring judicial determination [Inferred from sources].
  • "Compliance Requirement" - Companies must maintain proper records of dividend declarations and payments to demonstrate compliance [Inferred from sources].
  • "Role of the Courts" - Courts play a vital role in adjudicating disputes related to dividend payments and enforcing penalties [Inferred from sources].
  • "Legal Significance" - Section 127 underscores the statutory obligation of companies to honor dividend declarations, reinforcing shareholder confidence [Inferred from sources].
  • "Preventive Measures" - Companies are advised to establish internal controls to ensure timely dividend payments to avoid penalties [Inferred from sources].

This concise legal commentary provides an overview of Section 127 of the Companies Act 2016, highlighting its key provisions, scope, penalties, and legal implications based on the provided sources.

128 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-128. Options to take up unissued shares.

(1) A public company may grant an option to any person to take up unissued shares for a period of not more than ten years from the date on which the option was granted.

(2) Subsection (1) shall not apply in any case where the debenture holders have an option to take up shares of the company by way of redemption of the debentures.


129 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-129. Register of options to take up unissued shares in a company.

(1) A company shall maintain a register of options granted to persons to take up unissued shares in the company.

(2) The company shall, within fourteen days from the grant of an option to take up unissued shares in the company, enter in the register the following particulars:

(a) the name, address and the number of the identity card issued under the National Registration Act 1959, or the passport number or other identification number and the nationality of the holder of the option;

(b) the date on which the option was granted;

(c) the number and description of the shares in respect of which the option was granted;

(d) the period during which, the time at which or the occurrence upon the happening of which the option may be exercised;

(e) the consideration, if any, for the grant of the option;

(f) the consideration, if any, for the

130 Subdivision 5 - Assistance by a Company in the Purchase of Its Own Shares-130. Power of company to pay interest out of capital in certain cases.

(1) Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a long period, the company may pay interest or returns on the amount of such share capital as is for the time being paid up and charge the interest or returns paid to share capital as part of the cost of the construction or provision.

(2) For the purposes of subsection (1):

(a) the payment shall not be made unless it is authorized by the constitution or by special resolution and is approved by the Court;

(b) the payment shall be made only for such period as determined by the Court not exceeding the period of twelve months after the works or buildings have been actually completed or the plant provided;

(c) the rate of interest or returns shall not exceed five per centum per

131 Subdivision 6 - Dividends-131. Distribution out of profit.

(1) Subject to section 132, a company may only make a distribution to the shareholders out of profits of the company available if the company is solvent.

(2) The company, every officer and any other person or individual who contravene this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.


132 Subdivision 6 - Dividends-132. Distribution only if company is solvent.

(1) Before a distribution is made by a company to any shareholder, such distribution shall be authorized by the directors of the company.

(2) The directors may authorize a distribution at such time and in such amount as the directors consider appropriate, if the directors are satisfied that the company will be solvent immediately after the distribution is made.

(3) For the purposes of this section, the company is regarded as solvent if the company is able to pay its debts as and when the debts become due within twelve months immediately after the distribution is made.

(4) If, after a distribution is authorized and before it is made, the directors cease to be satisfied on reasonable grounds that the company will be solvent immediately after the distribution is made, the directors shall take all necessary steps to prevent the distribution from being made.

(5) Without prejudice to any other liability, every director or offi

133 Subdivision 6 - Dividends-133. Recovery of distribution.

(1) The company may recover from a shareholder any amount of distribution paid to the shareholder which exceeds the value of any distribution that could properly have been made, unless the shareholder:

(a) has received the distribution in good faith; and

(b) has no knowledge that the company did not satisfy the solvency test required under subsection 132(3).

(2) Every director or manager of a company who wilfully pays or permits to be paid any dividend in contravention of section 131 or 132, which he knows from his knowledge is not profits shall also be liable to the company to the extent of the amount exceeded the value of any distribution of dividends that could properly have been made.

(3) If the whole amount is recovered from one director or manager, the director or manager may recover contribution against any other person liable who has directed or consented to the paymen

134 Subdivision 7 - Substantial Shareholdings-134. Application and interpretation.

(1) This section shall not prejudice the operation of any other provisions of this Act.

(2) In this Subdivision, a reference to a company is a reference:

(a) to a company whose shares or any of the shares are quoted on a stock exchange;

(b) to a public company whose shares are not quoted on a stock exchange;

(c) to a body corporate incorporated in Malaysia, that is declared by the Minister by notification in the Gazette to be a company for the purposes of this Subdivision; or

(d) to a body, not being a body corporate formed in Malaysia, that is for the time being declared by the Minister by notification in the Gazette , to be a company for the purposes of this Subdivision.

(3) The Minister may vary or revoke a notification published under subsection (2) by notification in the Gazette .

(4) In relation to a comp

135 Subdivision 7 - Substantial Shareholdings-135. Persons obliged to comply with Subdivision.

(1) The obligation to comply with this Subdivision applies to:

(a) a natural person, whether resident or non-resident in Malaysia or whether a Malaysian citizen or non-citizen; and

(b) a body corporate, whether incorporated or carrying on business in Malaysia or otherwise.

(2) This Subdivision applies to acts done or omitted to be done outside Malaysia.


136 Subdivision 7 - Substantial Shareholdings-136. Substantial shareholdings and substantial shareholders.

(1) For the purposes of this Subdivision, a person has a substantial shareholding in a company:

(a) if the person has an interest in one or more voting shares in the company and the number or the aggregate number of such shares is not less than five per centum of the total number of all the voting shares included in the company; or

(b) being a company the share capital of which is divided into:

(i) two or more classes of the shares, if the person has an interest in one or more voting shares include in one of those classes; and

(ii) the number or the aggregate number of such shares is not less than five per centum of the aggregate number of the total number of all the voting shares included in that class of shares.

(2) A person who has a substantial shareholding in a company is a substantial shareholder in such company.


137 Subdivision 7 - Substantial Shareholdings-137. Substantial shareholder to notify company of his interests.

(1) A substantial shareholder in a company shall give notice in writing to the company if he has any interest related to any particular shares.

(2) The notice shall:

(a) contain the name, nationality, address and full particulars of the voting shares in which the substantial shareholder has an interest; and

(b) include, unless the interest cannot be related to a particular shares:

(i) the name of the person who is registered as the shareholder; and

(ii) the full particulars and the circumstances by reason of which the substantial shareholder has the interest.

(3) The substantial shareholder shall give the notice referred to in subsection (1) to the company:

(a) in the case of a company whose shares are quoted on a stock exchange, within three days after the person becomes a substantial shareholder; or


138 Subdivision 7 - Substantial Shareholdings-138. Substantial shareholder to notify company of change in his interests.

(1) A substantial shareholder shall give notice to the company in writing if there is a change of his interest in voting shares in the company:

(a) in the case of a company whose shares are quoted on a stock exchange, within three days after the date of the change; or

(b) in any other case, within five days after the date of the change.

(2) The notice under subsection (1) shall contain:

(a) the name and full particulars of the substantial shareholder; and

(b) the date and circumstances by reason of which that change has occurred.

(3) For the purposes of subsection (1), where a substantial shareholder in a company acquires or disposes of voting shares in the company, the acquisition or disposal shall be deemed to be a change in the interest of the substantial shareholder in voting shares in the company.

(4) An

139 Subdivision 7 - Substantial Shareholdings-139. Person who ceases to be substantial shareholder to notify company.

(1) A person shall give notice to the company in writing if he ceases to be a substantial shareholder in a company:

(a) in the case of a company whose shares are quoted on a stock exchange, within three days after the person ceased to be a substantial shareholder; or

(b) in any other case, within five days after the person ceased to be a substantial shareholder.

(2) The notice shall contain:

(a) the name and date of which the person ceased to be a substantial shareholder; and

(b) the full particulars of the circumstances by reason of which the person ceased to be a substantial shareholder.

(3) Any substantial shareholder who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit and, in the case of a continuing offence, to a further fine not exceedi

140 Subdivision 7 - Substantial Shareholdings-140. References to operation of interests in shares.

The circumstances required to be stated in a notice under section 137, 138 or 139 include circumstances by reason of which having regard to the operation of interests in share:

(a) a person has an interest in voting shares;

(b) a change has occurred in an interest in voting shares; or

(c) a person has ceased to be a substantial shareholder in a company,

respectively.


141 Subdivision 7 - Substantial Shareholdings-141. Copy of notice to be served on the Registrar.

A person who gives a notice under section 137, 138 or 139 to a company referred to in paragraph 134(2) (a) shall serve a copy of the notice to the Registrar on the day on which such person gives that notice.


142 Subdivision 7 - Substantial Shareholdings-142. Notice to non-residents.

(1) A person who holds voting shares in a company, being voting shares in which a non-resident has an interest shall:

(a) give a notice to the non-resident in the form and manner as determined by the Registrar; or

(b) if the person knows or has reasonable grounds for believing that an interest of the non-resident in the shares is an interest that the non-resident holds for another person:

(i) give a notice to the non-resident in a form and manner as determined by the Registrar; and

(ii) direct the non-resident to give the notice or a copy of the notice to that other person.

(2) The notice shall be given by the person within fourteen days from becoming the holder of the voting shares.

(3) In this section, "non-resident" means a person who is not a resident in Malaysia or a body corporate that is not incorporated in Malaysia.

(4

143 Subdivision 7 - Substantial Shareholdings-143. Registrar may extend time for giving notice under this Subdivision.

(1) The Registrar may, in his discretion, extend the time for giving the notice specified in this Subdivision upon an application of the person who is required to give a notice.

(2) Notwithstanding that the period referred to in subsection (1) has expired, the Registrar may exercise his power to further extend the time for giving the notice by such person.


144 Subdivision 7 - Substantial Shareholdings-144. Company to keep and maintain register of substantial shareholders.

(1) A company shall keep a register and shall forthwith enter:

(a) the names of persons in alphabetical order from whom the company receives a notice under section 137 and the information given in the notice against each name entered in the register; and

(b) the information given in such notice if the company receives a notice under section 138 or 139.

(2) The register shall be kept at the registered office of the company and shall be open for inspection by any member of the company without charge and by any other person on payment of ten ringgit for each inspection or such lesser sum as the company requires.

(3) The Registrar may at any time in writing require the company to furnish him a copy of the register or any part of the register within fourteen days from the day on which the requirement is received by the company.

(4) A company shall not:


145 Subdivision 7 - Substantial Shareholdings-145. Powers of Court with respect to defaulting substantial shareholders.

(1) Where a person is a substantial shareholder in a company and fails to comply with section 137, 138 or 139, the Court may, whether or not the failure continues, on the application of the Registrar, make one or more of the following orders:

(a) an order restraining the substantial shareholder from disposing of any interest in shares in the company in which he is or has been a substantial shareholder;

(b) an order restraining a person who is or is entitled to be registered as the shareholder referred to in paragraph (a) from disposing of any interest in the shares;

(c) an order restraining the exercise of any voting or other rights attached to any share in the company in which the substantial shareholder has or has had an interest;

(d) an order directing the company not to make payment, or to defer making payment, of any sum due from the company in respect of any

146 Subdivision 8 - The Central Depository System - A Book-Entry or Scripless System for the Transfer of Securities-146. Interpretation.

In this Subdivision, unless the context otherwise requires:

  "central depository"  has the meaning assigned to it in subsection 2(1) of the Securities Industry (Central Depositories) Act 1991 [Act 453] ;

  "deposited securities"  has the meaning assigned to it in subsection 2(1) of the Securities Industry (Central Depositories) Act 1991;

  "depositor"  has the meaning assigned to it in subsection 2(1) of the Securities Industry (Central Depositories) Act 1991;

  "security"  has the meaning assigned to it in subsection 2(1) of the Securities Industry (Central Depositories) Act 1991;

  "stock exchange"  has the meaning assigned to it in subsection 2(1) of the Securities Industry (Central Depositories) Act

147 Subdivision 8 - The Central Depository System - A Book-Entry or Scripless System for the Transfer of Securities-147. Depositor deemed to be member.

(1) A depositor whose name appears in the record of depositors maintained by the central depository in accordance with section 34 of the Securities Industry (Central Depositories) Act 1991 in respect of the securities of a company which have been deposited with the central depository shall be deemed to be a shareholder, debenture holder or option holder of the company, as the case may be, and shall, subject to the provisions of the Securities Industry (Central Depositories) Act 1991 and any regulations made under that Act, be entitled to the number of securities stated in the record of depositors.

(2) Notwithstanding section 101, all rights, benefits, powers and privileges are subject to all liabilities, duties and obligations in respect of, or arising from, such securities, whether conferred or imposed by this Act or the constitution of the company.

(3) Nothing in this Subdivision shall be construed as affecting the obligation of the c

148 Subdivision 8 - The Central Depository System - A Book-Entry or Scripless System for the Transfer of Securities-148. Transfer of securities is by way of book entry.

(1) The transfer of any securities or class of securities of a company whose securities or any class of whose securities have been deposited with a central depository shall be by way of book entry by the central depository in accordance with the rules of the central depository and notwithstanding section 105, 106 or 110, such company shall be precluded from registering and effecting any transfer of securities or class of securities which have been deposited for such company.

(2) Subsection (1) shall not apply to a transfer of securities to a central depository or its nominee company or from the central depository or its nominee company to the depositors.


149 Subdivision 8 - The Central Depository System - A Book-Entry or Scripless System for the Transfer of Securities-149. Rectification of record of depositors.

(1) Notwithstanding anything in this Act or any written law, no order shall be made by the Court for the rectification of the record of depositors except in the circumstances and subject to the conditions specified in subsection (2).

(2) The Court may award to the depositor referred to in paragraph (a) or any person who would have been entitled to be registered as having the title to such securities, as the case may be, on such terms as the Court deems to be equitable or make such other order as the Court deems fit, including an order for the transfer of such securities to such depositor or person, if it is satisfied that:

(a) a depositor did not consent to a transfer of any securities; or

(b) a depositor should not have been registered as having title to any securities.


150 Subdivision 8 - The Central Depository System - A Book-Entry or Scripless System for the Transfer of Securities-150. Non-application of section 472 to disposition made by way of book entry.

(1) Subsection 472(1) shall not apply to a disposition of property made by way of book entry by a central depository.

(2) Notwithstanding subsection (1), if the Court is satisfied that a party to the disposition other than the central depository had notice that a petition has been presented for the winding up of the other party to the disposition, the Court may:

(a) award damages against the party on such terms as the Court thinks equitable; or

(b) make such other orders as the Court thinks fit, including an order for the transfer of deposited securities by the party, except an order for the rectification of the record of depositors.


151 Subdivision 8 - The Central Depository System - A Book-Entry or Scripless System for the Transfer of Securities-151. Exemption from this Subdivision.

The Minister may, by notice published in the Gazette :

(a) exempt any company or class of companies from complying with all or any provisions of this Subdivision in relation to any securities of a company or any class of companies to which this Subdivision applies subject to such terms and conditions as he deems fit to impose; and

(b) revoke or vary the notice in such manner as the Minister thinks fit.


152 Subdivision 9 - Prospectus-152. Application of Subdivision 9.

(1) Unless otherwise provided in this Act, this Subdivision shall apply to an offer made to the public or any section of the public with regards to:

(a) an offer or invitation in respect of shares or debentures made by an unlisted recreational club; and

(b) an offer or invitation to deposit money with or lend money to a corporation as specified in section 158.

(2) This Subdivision shall not apply to an offer or invitation to subscribe for or purchase any securities of a corporation, including any excluded offer, excluded invitation or excluded issue as defined in the Capital Markets and Services Act 2007.

[Am. by Act A1701/2024]


153 Subdivision 9 - Prospectus-153. Power of Minister to exempt the application of Subdivision 9.

(1) The Minister may, on the application in writing by any person interested and subject to the recommendation of the Registrar, by order declare that the whole or any part of this Subdivision shall not apply to any person making an offer of shares or debentures to the public, either unconditionally or subject to such terms and conditions as the Minister thinks fit to impose.

(2) The Registrar may make recommendation to the Minister if the Registrar is of the opinion that:

(a) the cost of providing a prospectus outweighs the resulting protection to investors; or

(b) it would not be prejudicial to the public interest if a prospectus were dispensed with.


154 Subdivision 9 - Prospectus-154. Requirement to register and lodge prospectus.

(1) A prospectus to which this Subdivision applies shall not be issued, circulated or distributed by any person unless:

(a) the prospectus has first been registered by the Registrar; and

(b) the prospectus has complied with the provisions of this Act.

(2) A prospectus registered with the Securities Commission under the Capital Markets and Services Act 2007 shall be lodged with the Registrar before the date of issue of the prospectus.

(3) A person shall not issue, circulate or distribute any form of application for shares in or debentures of a corporation unless:

(a) he is authorized in writing by the Registrar; and

(b) the form is accompanied with a copy of a prospectus which has been registered by the Registrar.

(4) Subsection (2) shall not apply to the form of application if:

(a)

155 Subdivision 9 - Prospectus-155. Registration of prospectus.

A prospectus shall be registered if:

(a) a copy of the prospectus signed by every director and every person who is named in the prospectus as a proposed director of the corporation or by his agent authorized in writing is lodged with the Registrar on or before the date of the issue of the prospectus; and

(b) the prospectus is submitted to the Registrar together with:

(i) a written application for the registration of the prospectus;

(ii) copies of all consents required under section 160 from any person named in the prospectus as having made a statement that is included in the prospectus or on which a statement made in the prospectus is based;

(iii) copies of all material contracts referred to in the prospectus or, in the case of a contract not reduced into writing, a memorandum giving full particulars of the contract, verified in accordance with any requirements specifie

156 Subdivision 9 - Prospectus-156. Refusal to register a prospectus.

(1) The Registrar shall refuse to register a prospectus if:

(a) the Registrar is of the opinion that the prospectus does not comply with any provision of this Act;

(b) the issue or invitation in respect of the shares or debentures to which the prospectus relates does not comply with this Act; or

(c) the Registrar is of the opinion that the prospectus contains any statement or information that is false or misleading or that the prospectus contains any statement or information from which there is a material omission.

(2) If the Registrar is of the opinion that the corporation or the directors of the corporation making such offer or invitation is not a fit and proper person to make such an issue or invitation to the public, the Registrar may refuse to register the prospectus.

(3) For the purposes of subsection (2), a director shall include a proposed director nam

157 Subdivision 9 - Prospectus-157. Keeping of documents relating to prospectus.

(1) A corporation shall cause a copy of:

(a) any consent required under section 160 in relation to the issue of the prospectus; and

(b) every material contract or document referred to in the prospectus,

to be deposited at the registered office of the corporation in Malaysia, and if the corporation has no registered office in Malaysia, at the address specified in the prospectus for that purpose, within three days after the registration of the prospectus.

(2) The corporation shall keep a copy of the documents referred to in subsection (1) for a period as may be specified by the Registrar for inspection by any person without charge.

(3) Any person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding two hundred and fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.

158 Subdivision 9 - Prospectus-158. Invitations to the public to lend money to or to deposit money with a corporation.

(1) An invitation to the public to deposit money with or lend money to a corporation or proposed corporation shall not be issued, circulated or distributed by the corporation or by any other person unless a prospectus in relation to the invitation has been registered by the Registrar under sections 154 and 155.

(2) For the purposes of this Division, any corporation which accepts or agrees to accept from any person any money on deposit or loan shall be deemed to make an invitation to the public to deposit money with or lend money to the corporation or proposed corporation.

(3) Notwithstanding subsection (2), a corporation is not required to issue a prospectus if:

(a) the corporation is not under a present or future liability to repay any money accepted by the corporation on deposit or loan from more than ten persons; or

(b) any money accepted by the corporation on deposit or loan is fully gu

159 Subdivision 9 - Prospectus-159. Form and content of prospectus.

(1) Every prospectus issued under this Subdivision shall comply with the requirements relating to the form and content of a prospectus as specified in the First Schedule.

(2) If a prospectus relating to any shares in or debentures of a corporation is issued and the prospectus does not comply with this section, each director of the corporation and other person responsible for the prospectus commit an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding one million ringgit or to both.

(3) In the event of non-compliance with or contravention of this section, a director or other person responsible for the prospectus shall not incur any liability by reason of the non-compliance or contravention, if:

(a) with regards to any matter not disclosed, the director or other person proves that he has no knowledge of the non-compliance or contravention;

160 Subdivision 9 - Prospectus-160. Consent from person to issue prospectus containing his statement.

(1) A prospectus which includes a statement purporting to be made by an expert, or to be based on a statement made by such person shall not be issued unless:

(a) the person has given his written consent to the issue of the prospectus with the statement made in the form and context in which the consent is included and has not withdrawn such consent before the date of issue of the prospectus; and

(b) there appears in the prospectus a statement that the person has given and has not withdrawn his consent.

(2) Subsection (1) shall not apply to a statement which is an extract of an official statement or any other statement as may be specified by the Registrar.

(3) If any prospectus is issued in contravention of this section, the corporation and every person who is knowingly a party to the issue commit an offence and shall, on conviction, be liable to imprisonment for a term not exce

161 Subdivision 9 - Prospectus-161. Relief from requirements as to form and content of prospectus.

(1) The Registrar may, on the application in writing by any person required to comply with subsection 154(1), relieve the person or approve any variation from the requirements of this Act relating to the form and content of a prospectus.

(2) In granting the relief or approving the variation under subsection (1), the Registrar may impose such terms and conditions as the Registrar thinks fit.

(3) The Registrar shall not grant the relief or approve the variation under subsection (1) unless he has considered the nature and objectives of the corporation and is satisfied that:

(a) the relief or variation does not cause the non-disclosure to the public of information necessary for the assessment of the investment in the shares or debentures of the corporation, as the case may be; and

(b) the compliance with the requirements, for which the relief or variation is applied for, would impose unreasonab

162 Subdivision 9 - Prospectus-162. Retention of over-subscription in issuance of debenture.

(1) A corporation shall not accept or retain subscriptions to a debenture issue in excess of the amount of the issue as disclosed in the prospectus unless the corporation has specified in the prospectus:

(a) that the corporation expressly reserves the right to accept or retain over-subscriptions; and

(b) a limit expressed as a specific sum of money on the amount of over-subscriptions that may be accepted or retained being an amount not more than twenty-five per centum in excess of the amount of the issue as disclosed in the prospectus.

(2) Subject to the First Schedule, if a corporation specifies in a prospectus relating to a debenture issue that the corporation reserves the right to accept or retain over-subscriptions:

(a) the corporation shall not make, authorize or permit any statement of or reference as to the asset-backing for the issue to be made or

163 Subdivision 9 - Prospectus-163. Certain advertisements deemed to be prospectuses.

(1) Every advertisement offering or calling attention to an offer or intended offer to the public in respect of shares or debentures shall be deemed to be a prospectus unless it:

(a) only contains the following information:

(i) the number and description of the shares or debentures concerned;

(ii) the name and date of registration of the corporation and its paid up share capital;

(iii) a concise statement of the general nature of the main business or proposed main business of the corporation;

(iv) the names, addresses and occupations of the directors or proposed directors, the brokers or underwriters to the issue and in the case of debentures, the trustee for the debenture holders;

(v) the name of the stock exchange of which the brokers or underwriters to the issue are members; and

(vi) particulars of the opening and closing dates of the offer and the time and pl

164 Subdivision 9 - Prospectus-164. Document containing offer of shares for sale to be deemed prospectus.

(1) Where a corporation allots or agrees to allot to any person any shares or debentures of the corporation with a view to all or any of the shares being offered for sale to the public, any document of the offer for sale made to the public shall, for all purposes, be deemed to be a prospectus issued by the corporation.

(2) If the documents are deemed to be prospectus for the purposes of subsection (1), the provisions under this Subdivision regarding the contents of prospectus and liability in respect of false or misleading statements and material omissions shall be applicable and have effect accordingly as if:

(a) the shares or debentures has been offered to the public; and

(b) the persons accepting the offer in respect of any shares or debentures were subscribers,

but without prejudice to the liability, if any, of the persons making the offer in respect of false or misleading

165 Subdivision 9 - Prospectus-165. Information memorandum deemed to be prospectus.

(1) Any information memorandum purporting to describe the business affairs of the person making the offer issued by the person or his agent shall be deemed to be a prospectus, in so far as regarding the liability of the person or his agent, for any untrue statement or non-disclosure of material information.

(2) A copy of the memorandum referred to in subsection (1) shall be lodged with the Registrar within seven days from the date the memorandum is first issued.


166 Subdivision 9 - Prospectus-166. Supplemental prospectus or replacement prospectus.

(1) This section applies if, after the registration of a prospectus but before its issue, the person who lodged or registered the prospectus becomes aware that:

(a) a significant new matter has arisen being a matter, the information of which is required by this Act to be disclosed in a prospectus;

(b) there is a significant change affecting a matter disclosed in the prospectus;

(c) the prospectus contained a material statement that is false or misleading; or

(d) there is a material omission from the prospectus.

(2) After becoming aware of the matters referred to in subsection (1), the person shall, as soon as practicable, lodge or register a supplemental or replacement prospectus with the Registrar, as the case may be.

(3) A supplemental prospectus shall:

(a) clearly identify the prospectus to which the supplement

167 Subdivision 9 - Prospectus-167. Civil liability for misstatement in prospectus.

(1) A person who subscribes for or purchases any shares or debentures and suffers loss or damage as a result of any statement or information contained in a prospectus that is false or misleading or any statement or information contained in a prospectus from which there is a material omission, may recover the amount of loss or damage from the following persons:

(a) the corporation and each director of the corporation at the time of the issue of the prospectus;

(b) a person who consented or caused himself to be named and is named in the prospectus as a director or as having agreed to become a director, either immediately or after an interval of time;

(c) a promoter, for any loss or damage arising from the prospectus or any relevant portion of the prospectus in respect of which he is a party to the preparation of the prospectus;

(d) a person named in the prospectus with his c

168 Subdivision 9 - Prospectus-168. Criminal liability for misstatement in prospectus.

(1) No person shall authorize or cause the issuance of a prospectus that contains:

(a) any statement or information that is false or misleading; or

(b) a material omission from any statement or information.

(2) For the purposes of this section, it shall be a defence for a person if he proves that:

(a) the statement or omission is immaterial; or

(b) he has made all enquiries as are reasonable in the circumstances and after making such enquiries, he has reasonable grounds to believe and did believe the statement is true or the omission is immaterial up to the time of the issue of the prospectus.

(3) Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding one million ringgit or to both.

169 Subdivision 9 - Prospectus-169. Persons not to be taken to have authorized or caused issue of prospectus.

(1) For the purposes of this Part, the Registrar shall not be taken to have been involved in the preparation of a prospectus or authorized or caused the issuance of the prospectus for any reason including when he performs his functions or exercises his powers under this Act.

(2) For the purposes of sections 167 and 168, a person shall not be deemed to have authorized or caused the issuance of a prospectus by reason of:

(a) his having given a consent as required under section 160; and

(b) his name being included in the prospectus as a trustee for debenture holders, auditor, banker, advocate and solicitor or stock or share broker.


170 Subdivision 9 - Prospectus-170. Stop order.

(1) Where the prospectus has been registered by the Registrar and the Registrar is of the opinion that:

(a) a prospectus does not comply with or is not prepared in accordance with any provision of this Act;

(b) a prospectus contains a statement or information that is false or misleading;

(c) a prospectus contains a statement or information from which there is a material omission; or

(d) the corporation has contravened any provision of this Act,

the Registrar may, by stop order in writing served on the corporation or such other person as the Registrar may determine, direct the corporation or such other person not to allot, issue, offer, make an invitation to subscribe for or purchase or sell, further shares or debentures to which the prospectus relates, as the case requires.

(2) Subject to subsections (3) and (4), the Registrar shall not make a

171 Subdivision 10 - Debentures-171. Application of Subdivision 10.

(1) Unless provided otherwise in this Act, this Subdivision shall be applicable to an offer made to the public, including an offer made to any section of the public however selected, with regards to:

(a) an offer or invitation in respect of shares or debentures made by an unlisted recreational club; and

(b) an offer or invitation to deposit money with or lend money to a corporation as specified under section 158.

(2) This Subdivision shall not apply to an offer or invitation to subscribe for or purchase any securities of a corporation, including any excluded offer or excluded invitation as provided for in the Capital Markets and Services Act 2007.


172 Subdivision 10 - Debentures-172. Specific performance of contracts.

A contract with a company to take up and pay for any debentures of the company may be enforced by a Court order for specific performance.


173 Subdivision 10 - Debentures-173. Perpetual debentures.

Notwithstanding any other law, a condition contained in a debenture or in a trust deed for securing a debenture, whether the debenture or trust deed is issued or made before or after the commencement of this Act shall not be invalid by reason that the debentures are made irredeemable or redeemable only on the happening of a contingency however remote or on the expiration of a period however long.


174 Subdivision 10 - Debentures-174. Power to re-issue redeemed debentures.

(1) A company may re-issue the debentures which have been redeemed either by re-issuing the same debentures or issuing new debentures in place of the redeemed debentures, unless:

(a) provided otherwise, either expressly or impliedly in the constitution or in any contract made by the company; or

(b) the company has manifested its intention that the debentures shall be cancelled by passing a resolution to that effect or by some other act.

(2) If redeemed debentures are re-issued, the person entitled to the debentures shall have and shall be deemed always to have the same priorities as if the debentures have never been redeemed.


175 Subdivision 10 - Debentures-175. Deposit of debentures to secure advances.

Where a company has deposited any of its debentures to secure advances on current account or otherwise, the debentures are not treated as redeemed by reason only of the company's account having ceased to be in debit while the debentures remained deposited.


176 Subdivision 10 - Debentures-176. Qualifications of trustee for debenture holders.

(1) Every borrowing corporation which offers debentures to the public for subscription or purchase in Malaysia shall make provision for the appointment of a trustee corporation as a trustee for the debenture holders in such debentures or in a trust deed relating to the debentures.

(2) Where a borrowing corporation is required to appoint a trustee for the debenture holders in accordance with subsection (1), the borrowing corporation shall not allot any of the debentures until the appointment has been made and the trustee corporation has consented to act as trustee.

(3) A trustee corporation shall not be appointed, hold office or act as trustee for the debenture holders of a borrowing corporation without leave of the Court if the trustee corporation is:

(a) a shareholder who beneficially holds shares in the borrowing corporation;

(b) beneficially entitled to moneys owed by the borrowing corpo

177 Subdivision 10 - Debentures-177. Duties of trustee.

(1) A trustee for debenture holders shall:

(a) exercise reasonable diligence to ascertain whether or not the assets of the borrowing corporation and of each of its guarantor corporations which are or may be available whether by way of security or otherwise are sufficient or are likely to be or become sufficient to discharge the principal debt as and when it becomes due;

(b) satisfy itself that each prospectus relating to the debentures does not contain any matter which is inconsistent with the terms of the debentures or with the relevant trust deed;

(c) ensure that the borrowing corporation complies with Subdivision 1 of Division 7 of Part III so far as the Subdivision relates to the debentures and is applicable;

(d) exercise reasonable diligence to ascertain whether or not the borrowing corporation and each of its guarantor corporations have committed any breach of the co

178 Subdivision 10 - Debentures-178. Retirement of trustee.

(1) Notwithstanding anything contained in any Act or in the relevant debentures or trust deed, a trustee for the debenture holders shall not cease to be the trustee until a corporation qualified under section 176 for the appointment as a trustee for the debenture holders has been appointed and has taken office.

(2) Where:

(a) a provision has been made in the debentures or in the relevant trust deed for the appointment of a successor to a trustee for the debenture holders upon retirement, the successor may be appointed in accordance with section 176; or

(b) no provision has been made in the debentures or in the relevant trust deed for the appointment of a successor to a retiring trustee, the borrowing corporation may appoint a successor which is qualified to be appointed under section 176.

(3) Notwithstanding anything in this Act or in any debentures or trust deed, a borrowing

179 Subdivision 10 - Debentures-179. Contents of trust deed.

(1) Where a corporation offers debentures to the public for subscription in Malaysia, the debentures or the relevant trust deed shall contain a limitation on the amount that the borrowing corporation may borrow and shall contain covenants by the borrowing corporation which shall have the following effects:

(a) the borrowing corporation shall use its best endeavours to carry on and conduct its business in a proper and efficient manner;

(b) to the same extent as if the trustee for the debenture holders or any approved company auditor appointed by the trustee were a director of the corporation, the borrowing corporation shall:

(i) make available for inspection all accounting or other records of the borrowing corporation; and

(ii) give to the borrowing corporation any information as the borrowing corporation requires with respect to all matters relating to the accounting or other r

180 Subdivision 10 - Debentures-180. Power of Court in relation to certain irredeemable debentures.

(1) Notwithstanding anything in any debenture or trust deed, the security for any debentures which are irredeemable or redeemable only on the happening of a contingency shall, if the Court so orders, be enforceable, forthwith or at such other time as the Court directs.

(2) In making an order under subsection (1), on the application by the trustee for the debenture holders or where there is no trustee, by the holder of any of the debentures, the Court shall be satisfied that:

(a) at the time of the issue of the debentures the assets of the corporation which constituted or were intended to constitute the security therefor were sufficient or likely to become sufficient to discharge the principal debt and any interest on the debt;

(b) the security, if realized under the circumstances existing at the time of the application, would be likely to bring not more than sixty per centum of the principal sum of

181 Subdivision 10 - Debentures-181. Power of trustee to apply to Court for directions, etc.

(1) The trustee for the debenture holders may apply to the Court:

(a) for directions in relation to any matter arising in connection with the performance of the functions of the trustee; or

(b) to determine any question in relation to the interests of the debenture holders.

(2) Upon application made under subsection (1), the Court may:

(a) give such directions to the trustee as the Court thinks fit;

(b) accede wholly or partially to the application on such terms and conditions if the Court is satisfied that the determination of the question will be just and beneficial or make such other order as the Court thinks just; or

(c) order a meeting of all or any of the debenture holders to be called to consider any matters in which the debenture holders are concerned and to advise the trustee on the matters concerned and may give

182 Subdivision 10 - Debentures-182. Obligations of borrowing corporation.

(1) Where there is a trustee for the debenture holders of a borrowing corporation, the directors of the borrowing corporation shall prepare a report:

(a) at the end of a period not exceeding three months ending on a day, not later than six months after the date of the relevant prospectus which the trustee is required to notify the borrowing corporation in writing; and

(b) at the end of each succeeding period, being a period of three months or such shorter time as the trustee may, in any special circumstances allow.

(2) The report relating to the period referred to in subsection (1) shall comply with subsection (3) and a copy of the report shall be lodged with the Registrar and the trustee within thirty days from the end of each period.

(3) The report referred to in subsection (1) shall be signed by not less than two of the directors of the borrowing corporation and shall set o

183 Subdivision 10 - Debentures-183. Obligation of guarantor corporation to furnish information.

(1) For the purpose of the preparation of a report required by this Act to be signed by or on behalf of the directors of a borrowing corporation or any of the directors of a borrowing corporation, the corporation may, by notice in writing, require any of its guarantor corporations to furnish the corporation with any information relating to the guarantor corporation which is required to be contained in the report.

(2) The guarantor corporation shall furnish the information referred to in subsection (1) to the borrowing corporation not later than fourteen days from the date as specified in the notice.

(3) The corporation and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding twenty thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding one thousand ringgit for each day during which the offence continues after conviction.

184 Subdivision 10 - Debentures-184. Loans and deposits to be immediately refundable on certain events.

(1) Where in any prospectus issued in connection with an invitation to the public to subscribe for or to purchase debentures of a corporation there is a statement as to any particular purpose or project for which the moneys received by the corporation in response to the invitation are to be applied, the corporation shall make periodic reports to the trustee for the debenture holders as to the progress that has been made towards achieving the purpose or completing the project.

(2) Each such report shall be included in the report required to be furnished to the trustee for the debenture holders under subsection 182(1).

(3) When it appears to the trustee for the debenture holders that the purpose or project has not been achieved or completed within the time stated in the prospectus within which the purpose or project is to be achieved or completed or, where no such time was stated, within a reasonable time, the trustee may and, if in his o

185 Subdivision 10 - Debentures-185. Liability of trustee for debenture holders.

(1) Subject to this section, any provision contained in a trust deed relating to or securing an issue of debentures, or in any contract with the debenture holders secured by a trust deed shall be void so far as the trust deed would have the effect of exempting a trustee from or indemnifying the trustee against liability for breach of trust where the trustee fails to show the degree of care and diligence required as trustee.

(2) Subsection (1) shall not invalidate:

(a) any release of the trust deed otherwise validly given in respect of anything done or omitted to be done by a trustee before the giving of the release; or

(b) any provision enabling the release of the trust deed to be given:

(i) on the agreement of a majority of not less than three-fourths in nominal value of the debenture holders present and voting in person or, where proxies are permitted, by proxy at a meeting s

186 Subdivision 11 - Restrictions on Allotment and Commencement of Business-186. Prohibition of allotment unless minimum subscription received.

(1) No allotment shall be made of any shares of a company offered to the public or offered for subscription or purchase or where an invitation to subscribe for or purchase shares is made under a prospectus that is registered under the Capital Markets and Services Act 2007 unless:

(a) the minimum subscription has been subscribed; and

(b) the amount payable on application for the shares so subscribed has been received by the company,

but if a cheque for the sum payable has been received by the company, the sum shall be deemed not to have been received by the company until the cheque is paid by the bank on which the cheque is drawn.

(2) The minimum subscription shall be:

(a) calculated on the offer price of each share; and

(b) reckoned exclusively of any amount payable otherwise than in cash.

(3) The amount paya

187 Subdivision 11 - Restrictions on Allotment and Commencement of Business-187. Application for moneys to be held in trust until allotment.

(1) All applications and other moneys paid prior to the allotment by any applicant on account of shares or debentures offered to the public or any securities for which a prospectus is required under the Capital Markets and Services Act 2007 shall be held upon trust for the applicant by the company or in the case of a proposed company by the persons named in the prospectus as proposed directors and by the promoters.

(2) There shall be no obligation or duty imposed on any bank or third person with whom any such moneys have been deposited to inquire into or to see the proper application of the moneys so long as the bank or person acts in good faith.

(3) A company and every officer who, or a proposed company and every person named in the prospectus as a proposed director and every promoter who knowingly and wilfully authorizes or permits the default commit an offence and shall, on conviction, be liable:

(a) in

188 Subdivision 11 - Restrictions on Allotment and Commencement of Business-188. Restriction on allotment in certain cases.

(1) A public company having a share capital which does not issue a prospectus on or with reference to its formation shall not allot any of its shares or debentures unless a statement in lieu of prospectus which complies with the requirements of this Act has been lodged with the Registrar at least three days before the first allotment of either shares or debentures.

(2) If there is a contravention of this section, the company and every officer commit an offence and shall, on conviction, be liable:

(a) in the case of the company, to a fine not exceeding five million ringgit; and

(b) in the case of an officer, to imprisonment for a term not exceeding five years or to a fine not exceeding one million ringgit or to both.


189 Subdivision 11 - Restrictions on Allotment and Commencement of Business-189. Requirements as to statements in lieu of prospectus.

(1) A statement in lieu of prospectus lodged by or on behalf of a company shall:

(a) be signed by every person who is named in the statement as a director or a proposed director of the company or by his agent authorized in writing;

(b) contain matters specified in Part I of the Second Schedule and set out the reports specified in Part II of that Schedule in the form and manner as determined by the Registrar; and

(c) where the persons making any report specified in Part II of the Second Schedule have made the report or have, without giving the reasons, indicated in the report any adjustments as mentioned in paragraph 3 of Part III of that Schedule, shall have endorsed in the report or attached a written statement signed by those persons setting out the adjustments and giving the reasons for the adjustments.

(2) The Registrar shall not accept any statement in lieu of pr

190 Subdivision 11 - Restrictions on Allotment and Commencement of Business-190. Restrictions on commencement of business in certain circumstances.

(1) Where a public company having a share capital has issued a prospectus inviting the public to subscribe for its shares or has issued a prospectus under the Capital Markets and Services Act 2007 in relation to its shares, the public company shall be entitled to commence any business or exercise any borrowing powers:

(a) if no money is or may become liable to be repaid to applicants for any shares or debentures offered for public subscription by reason of any failure to apply for or obtain permission for listing for quotation on any stock exchange;

(b) if:

(i) the shares held subject to the payment of the whole amount in cash have been allotted to an amount not less in the whole than the minimum subscription; and

(ii) every director has paid to the company on each of the shares taken or contracted to be taken by the director, and for which the director is liable to pay in cash

191 Subdivision 11 - Restrictions on Allotment and Commencement of Business-191. Restriction on varying contracts referred to in prospectus, etc.

A company shall not vary the terms of a contract referred to in the prospectus or statement in lieu of prospectus before the lodgement of statutory declaration under subsection 190(3) unless the variation is made subject to the approval of the general meeting.


192 Division 2 - Members, Directors and Officers of Companies Subdivision 1 - Members-192. Liability of members.

(1) A member shall not be liable for an obligation of a company by reason only of being a member of the company.

(2) The liability of a member of a company is limited to:

(a) in the case of a company limited by shares, any amount unpaid on a share held by the member;

(b) in the case of a company limited by guarantee, any amount which the member has undertaken to contribute to the company in the event of it being wound up;

(c) any liability expressly provided for in the constitution of the company; and

(d) any liability as provided for under this Act.


193 Division 2 - Members, Directors and Officers of Companies Subdivision 1 - Members-193. Liability for calls and forfeiture.

(1) If a share renders its holder liable to calls or imposes a liability on its holder, that liability attaches to the shareholder for the time being, whether or not the liability became enforceable before the share was registered in the name of that shareholder and is not attached to a prior shareholder.

(2) Subject to sections 82 and 83, if all or part of the consideration payable in respect of the issue of a share remains unsatisfied and the person to whom the share was issued no longer holds that share, the liability in respect of the unsatisfied consideration remains with the person to whom the share was issued or any other person who assumed that liability at the time of issue and does not attach to the subsequent shareholders.


194 Division 2 - Members, Directors and Officers of Companies Subdivision 1 - Members-194. Shareholders not bound to acquire additional shares by alteration to constitution.

Unless a shareholder agrees in writing, the shareholder is not bound by an alteration of the constitution of a company that:

(a) requires the shareholder to acquire or hold additional shares in the company more than the number held on the date the alteration is made; or

(b) increases the liability of the shareholder to the company.


195 Division 2 - Members, Directors and Officers of Companies Subdivision 1 - Members-195. Members' rights for management review.

(1) The chairperson of a meeting of members of a company shall allow a reasonable opportunity for members at the meeting to question, discuss, comment or make recommendation on the management of the company.

(2) A meeting of members may pass a resolution under this section which makes recommendations to the Board on matters affecting the management of the company.

(3) Any recommendation made under subsection (2) shall not be binding on the Board, unless the recommendation is in the best interest of the company, provided that:

(a) the rights to make recommendations is provided for in the constitution; or

(b) passed as a special resolution.


196 Subdivision 2 - Directors-196. Directors of company.

(1) A company shall have a minimum number of directors as follows:

(a) in the case of a private company, one director; or

(b) in the case of a public company, two directors.

(2) A director shall be a natural person who is at least eighteen years of age.

(3) A director of a company shall not resign or vacate his office if by his resignation or vacation from office, the number of directors of the company is reduced below the minimum number required under subsection (1) and any purported resignation or vacation of office in contravention of this section shall be deemed to be ineffective unless a person is appointed in his place.

(4) For the purposes of this section, the minimum number of directors:

(a) shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia; and

(b) shall not include an altern

197 Subdivision 2 - Directors-197. Persons connected with directors.

(1) A person shall be deemed to be connected with a director if the person is:

(a) a member of the director's family;

(b) a body corporate which is associated with that director;

(c) a trustee of a trust, other than a trustee for an employee share scheme or pension scheme, under which that director or a member of the director's family is a beneficiary; or

(d) a partner of that director or a partner of a person connected with that director.

(2) For the purposes of this section:

(a) "a member of the director's family" means the director's spouse, parent, child, including adopted child and stepchild, brother, sister and the spouse of the director's child, brother or sister;

(b) a body corporate is associated with a director if:

(i) the body corporate is accustomed or is under an obligati

198 Subdivision 2 - Directors-198. Persons disqualified from being a director.

(1) A person shall not hold office as a director of a company or whether directly or indirectly be concerned with or takes part in the management of a company, if the person:

(a) is an undischarged bankrupt;

(b) has been convicted of an offence relating to the promotion, formation or management of a corporation;

(c) has been convicted of an offence involving bribery, fraud or dishonesty;

(d) has been convicted of an offence under sections 213, 217, 218, 228 and 539; or

(e) has been disqualified by the Court under section 199.

(2) The circumstances referred to in paragraphs (1) (a) , (b) , (c) and (d) shall be applicable to circumstances in or outside Malaysia.

(3) Notwithstanding subsection (1), a person who has been disqualified under paragraph (1) (a) may be appointed or hold office a

199 Subdivision 2 - Directors-199. Power of Court to disqualify persons from acting as director or promoter.

(1) The Court may, on an application by the Registrar, make an order to disqualify any person from acting or holding office as a director or promoter of a company, or be concerned with or taking part in the management of a company whether directly or indirectly, if:

(a) within the last five years, the person has been a director of two or more companies which went into liquidation resulting from the company being insolvent due to his conduct as a director which contributed wholly or partly to the liquidation;

(b) due to his contravention of the duties of a director; or

(c) due to his habitual contravention of this Act.

(2) An application arising from the circumstances referred to in paragraph (1) (a) may be made by the Official Receiver and the Registrar shall be made a party to the proceedings.

(3) Before making an order under subsection (1), the Court

200 Subdivision 2 - Directors-200. Power of Registrar to remove name of disqualified director.

Notwithstanding any provision in this Act or the constitution of a company, the Registrar shall have the power to remove the name of a director who has been disqualified under section 198 or 199 from the register kept by the Registrar for that purpose.


201 Subdivision 2 - Directors-201. Directors' consent required.

A person shall not be appointed as a director of a company unless he has consented in writing to be a director and make a declaration that he is not disqualified from being appointed or holding office as a director of a company under this Act.


202 Subdivision 2 - Directors-202. Named directors and subsequent directors.

(1) A person named as a director in an application for incorporation of a company shall hold office as a director from the date of incorporation until that person ceases to hold office as a director in accordance with this Act.

(2) All subsequent directors of a company may be appointed by ordinary resolution.

(3) Subject to the constitution, the Board may, at any time, appoint a director in addition to existing director and the director so appointed shall hold office:

(a) in the case of a public company, until the next annual general meeting; or

(b) in the case of a private company, in accordance with the terms of appointment.


203 Subdivision 2 - Directors-203. Appointment of directors of public company to be voted on individually.

(1) At a general meeting of a public company, a motion for the appointment of two or more persons as directors by a single resolution shall not be made unless a resolution that the motion shall be so made has first been agreed to by the meeting without any vote being given against it.

(2) A resolution passed in accordance with a motion made in contravention of this section shall be void, whether or not the resolution being moved was objected to at the time.

(3) The provision for the automatic reappointment of retiring directors referred to in subsection 205(6) shall not apply where a resolution passed in accordance with a motion was made in contravention of this section.

(4) A motion for approving a person's appointment or for nominating a person for appointment shall be treated as a motion for his appointment.

(5) A resolution passed under this section shall not be construed as amending the constitution.

204 Subdivision 2 - Directors-204. Validity of acts of directors and officers.

The acts of a director or manager or secretary shall be valid notwithstanding any defect that is discovered after his appointment or in his qualification.


205 Subdivision 2 - Directors-205. Retirement of directors.

(1) The provision under this section shall apply with regards to the retirement of directors unless there is specific provision in the company's constitution or the term of appointment regarding retirement of directors.

(2) Notwithstanding subsection (1), a private company may pass a written resolution in accordance with section 297 to determine the retirement of a director.

(3) The directors shall retire as follows:

(a) at the first annual general meeting of a public company, all directors shall retire from office at the conclusion of the meeting; and

(b) at the annual general meeting in every subsequent year, one-third of the directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to one-third, shall retire from office at the conclusion of the meeting.

(4) The directors to retire in every year shall be the direct

206 Subdivision 2 - Directors-206. Removal of directors.

(1) A director may be removed before the expiration of the director's period of office as follows:

(a) subject to the constitution, in the case of a private company, by ordinary resolution; or

(b) in the case of a public company, in accordance with this section.

(2) Notwithstanding anything in the constitution or any agreement between a public company and a director, the company may by ordinary resolution at a meeting remove the director before the expiration of the director's tenure of office.

(3) Special notice is required of a resolution to remove a director under this section or to appoint another person instead of the director at the same meeting.

(4) Notwithstanding paragraph (1) (b) , if a director of a public company was appointed to represent the interests of any particular class of shareholders or debenture holders, the resolution to remove the directo

Legal Comments

207 Subdivision 2 - Directors-207. Right to be heard for directors of public company against removal.

(1) On receipt of special notice for a resolution to remove a director under subsection 206(3), the company shall forthwith send to the director a copy of the special notice.

(2) The director shall be given the right to make oral representation or written representation not exceeding a reasonable length on the resolution to remove him.

(3) Where the director makes written representation and requests the written representation be notified to the members, the company shall, unless the representation is received too late for the company to do so:

(a) state the fact of the representation having been made in the notice of the resolution given to members of the company; and

(b) send a copy of the representation to every member of the company to whom the notice of the meeting is sent.

(4) If a copy of the representations is not sent as required under subsection (3) due to the

208 Subdivision 2 - Directors-208. Vacation of office of director.

(1) The office of a director of a company shall be vacated if the person holding that office:

(a) resigns in accordance with subsection (2);

(b) has retired in accordance with this Act or the constitution of the company but is not re-elected;

(c) is removed from office in accordance with this Act or the constitution of the company;

(d) becomes disqualified from being a director under section 198 or 199;

(e) becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the Mental Health Act 2001 [Act 615] ;

(f) dies; or

(g) otherwise vacates his office in accordance with the constitution of the company.

(2) Subject to subsection 196(3) and section 209, a director may resign his office by giving a written notice to the company at its registered office.

209 Subdivision 2 - Directors-209. Resignation, vacation or death of sole director or last remaining director.

(1) Subject to subsection 196(3), where a company has only one director or the last remaining director, that director shall not resign office until that director has called a meeting of members to receive the notice of the resignation and to appoint one or more new directors.

(2) Subsection (1) is also applicable to a company whose sole director is also the sole shareholder.

(3) For the purpose of appointing a new director, in the event of the office of a sole director or the last remaining director of the company being vacated due to the circumstances referred to in paragraph 208(1) (d) , (e) , (f) or (g) , the secretary shall, as soon as practicable, call a meeting of the next of kin, other personal representatives or a meeting of members, as the case may be.

(4) The secretary shall be entitled to be indemnified by the company in relation to any reasonable costs and expenses of the meeting conve

210 Subdivision 3 - Directors' Duties and Responsibilities-210. Interpretation.

For the purposes of this Subdivision, in sections 213, 214, 215, 216, 217, 218, 223 and 228, in addition to the definition of "director" in section 2, "director" includes chief executive officer, chief financial officer, chief operating officer or any other person primarily responsible for the management of the company.


211 Subdivision 3 - Directors' Duties and Responsibilities-211. Functions of Board.

(1) The business and affairs of a company shall be managed by, or under the direction of the Board.

(2) The Board has all the powers necessary for managing and for directing and supervising the management of the business and affairs of the company subject to any modification, exception or limitation contained in this Act or in the constitution of the company.


212 Subdivision 3 - Directors' Duties and Responsibilities-212. Proceedings of Board.

Subject to the constitution, the provisions set out in the Third Schedule shall govern the proceedings of the Board.


213 Subdivision 3 - Directors' Duties and Responsibilities-213. Duties and responsibilities of directors.

(1) A director of a company shall at all times exercise his powers in accordance with this Act, for a proper purpose and in good faith in the best interest of the company.

(2) A director of a company shall exercise reasonable care, skill and diligence with:

(a) the knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities; and

(b) any additional knowledge, skill and experience which the director in fact has.

(3) A director who contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.


214 Subdivision 3 - Directors' Duties and Responsibilities-214. Business judgment rule.

(1) A director who makes a business judgment is deemed to meet the requirements of the duty under subsection 213(2) and the equivalent duties under the common law and in equity if the director:

(a) makes the business judgment for a proper purpose and in good faith;

(b) does not have a material personal interest in the subject matter of the business judgment;

(c) is informed about the subject matter of the business judgment to the extent the director reasonably believes to be appropriate under the circumstances; and

(d) reasonably believes that the business judgment is in the best interest of the company.

(2) For the purposes of this section, "business judgment" means any decision on whether or not to take action in respect of a matter relevant to the business of the company.


215 Subdivision 3 - Directors' Duties and Responsibilities-215. Reliance on information provided by others.

(1) A director in exercising his duties as a director may rely on information, professional or expert advice, opinions, reports or statements including financial statements and other financial data, prepared, presented or made by:

(a) any officer of the company whom the director believes on reasonable grounds to be reliable and competent on the matters concerned;

(b) as to matters involving skills or expertise, any other person retained by the company in relation to matters that the director believes on reasonable grounds to be within the person's professional or expert competence;

(c) another director in relation to matters within the director's authority; or

(d) any committee to the board of directors on which the director did not serve in relation to matters within the committee's authority.

(2) The director's reliance made under subsection (1) is

216 Subdivision 3 - Directors' Duties and Responsibilities-216. Responsibility for actions of delegatee.

(1) Except as is otherwise provided by this Act, the constitution or any resolution of the Board or members of the company, the directors may delegate any power of the Board to any committee of the Board, director, officer, employee, expert or any other person.

(2) Where the directors have delegated any power, the directors are responsible for the exercise of the power by the delegatee as if the power had been exercised by the directors themselves.

(3) The directors are not responsible under subsection (2) if:

(a) the directors believed on reasonable grounds at all times that the delegatee would exercise the power in conformity with the duties imposed on the directors under this Act and the constitution of the company, if any; and

(b) the directors believed on reasonable grounds, in good faith and after making a proper inquiry, if the circumstances indicated the need for the inquiry, that t

217 Subdivision 3 - Directors' Duties and Responsibilities-217. Responsibility of a nominee director.

(1) A director who was appointed by virtue of his position as an employee of a company, or who was appointed by or as a representative of a member, employer or debenture holder, shall act in the best interest of the company and in the event of any conflict between his duty to act in the best interest of the company and his duty to his nominator, he shall not subordinate his duty to act in the best interest of the company to his nominator.

(2) A director who contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or a fine not exceeding three million ringgit or to both.


218 Subdivision 3 - Directors' Duties and Responsibilities-218. Prohibition against improper use of property, position, etc.

(1) A director or officer of a company shall not, without the consent or ratification of a general meeting:

(a) use the property of the company;

(b) use any information acquired by virtue of his position as a director or officer of the company;

(c) use his position as such director or officer;

(d) use any opportunity of the company which he became aware of, in the performance of his functions as the director or officer of the company; or

(e) engage in business which is in competition with the company,

to gain directly or indirectly, a benefit for himself or any other person, or cause detriment to the company.

(2) Any person who contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or a fine not exceeding three million ringgit or to both.

219 Subdivision 3 - Directors' Duties and Responsibilities-219. General duty to make disclosure.

(1) A director of a company shall give notice in writing to the company:

(a) of the particulars relating to the shares, debentures, participatory interests, rights, options and contracts as are necessary for the purposes of compliance with section 59 by the company;

(b) of particulars of any change in respect of the particulars referred to in paragraph (a) of which notice has been given to the company including the consideration, if any, received as a result of the event giving rise to the change; and

(c) of such events and matters affecting or relating to himself as are necessary for the purposes of compliance with the requirements of this Act by the company.

(2) A person required to give notice under subsection (1) shall give the notice, within fourteen days:

(a) in the case of a notice under paragraph (1) (a) :

220 Subdivision 3 - Directors' Duties and Responsibilities-220. Effect of other rules of law on duties of directors.

Sections 214 to 219 shall be in addition to and not in derogation of any other written law relating to the duty or liability of directors or officers of a company.


221 Subdivision 3 - Directors' Duties and Responsibilities-221. Disclosure of interest in contracts, proposed contracts, property, offices, etc.

(1) Subject to this section, every director of a company who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the company shall, as soon as practicable after the relevant facts have come to the director's knowledge, declare the nature of his interest at a meeting of the board of directors.

(2) The requirements of subsection (1) shall not apply in the case where the interest of the director being a member or creditor of a corporation interested in a contract or proposed contract with the first mentioned company if the interest of the director may be regarded as not being a material interest.

(3) A director of a company shall not be deemed to be interested or to have been at any time interested in any contract or proposed contract by reason only:

(a) in a case where the contract or proposed contract relates to any loan to the company that the director has guara

222 Subdivision 3 - Directors' Duties and Responsibilities-222. Interested director not to participate or vote.

(1) Subject to section 221, a director of a company who is in any way, whether directly or indirectly, interested in a contract entered into or proposed to be entered into by the company, unless the interest is one that need not be disclosed under section 221, shall be counted only to make the quorum at the meeting of the Board but shall not participate in any discussion while the contract or proposed contract is being considered during the meeting and shall not vote on the contract or proposed contract.

(2) Subsection (1) shall not apply to:

(a) a private company unless it is a subsidiary to a public company;227

(b) a private company which is a wholly-owned subsidiary of a public company, in respect of any contract or proposed contract to be entered into by the private company with the holding company or with another wholly-owned subsidiary of that same holding company;

(c) any co

223 Subdivision 3 - Directors' Duties and Responsibilities-223. Approval of company required for disposal by directors of company's undertaking or property.

(1) Notwithstanding anything in the constitution, the directors shall not enter or carry into effect any arrangement or transaction for:

(a) the acquisition of an undertaking or property of a substantial value; or

(b) the disposal of a substantial portion of the company's undertaking or property unless:

(i) the entering into the arrangement or transaction is made subject to the approval of the company by way of a resolution; or

(ii) the carrying into effect of the arrangement or transaction has been approved by the company by way of a resolution.

(2) For the purposes of subsection (1):

(a) the term "undertaking or property" includes the whole or substantially the whole of the rights, including developmental rights, benefits or control in the undertaking or property;

(b) in the case of a company w

224 Subdivision 3 - Directors' Duties and Responsibilities-224. Loans to director.

(1) A company shall not:

(a) make a loan to a director of the company or of a company which by virtue of section 7 is deemed to be related to that company; or

(b) enter into any guarantee or provide any security in connection with a loan made to such a director by any other person.

(2) Nothing in this section shall apply:

(a) to an exempt private company;

(b) subject to subsection (3), to anything done to provide such director with funds to meet the expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an officer of the company;

(c) subject to subsection (3), to anything done to provide such a director who is engaged in the full-time employment of the company or its holding company, as the case may be, with funds to meet expenditu

225 Subdivision 3 - Directors' Duties and Responsibilities-225. Prohibition of loans to persons connected with directors.

(1) Subject to the provisions of this section, a company, other than an exempt private company, shall not:

(a) make a loan to any person connected with a director of the company or of its holding company; or

(b) enter into any guarantee or provide any security in connection with a loan made to such person by any other person.

(2) Subsection (1) shall not apply:

(a) where the loan is made, or the guarantee or security is provided in relation to a loan made to a subsidiary or holding company or a subsidiary of its holding company;

(b) to a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, or to anything done by the company in the ordinary course of that business, if the activities of that company are regulated by any written law relating to banking, insu

226 Subdivision 3 - Directors' Duties and Responsibilities-226. Prohibition of tax free payments to directors.

(1) A company shall not pay a director any remuneration, whether as director or otherwise, free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or the rate of income tax.

(2) Any provision contained in the constitution or any resolution of the Board or members of the company for payment to a director of remuneration free of income tax or otherwise calculated by reference to or varying with the amount of his income tax or the rate of income tax shall have effect as if the provision or resolution, as the case may be provide for payment as a gross sum subject to income tax, of the net sum for which it actually provides.

(3) The company and every officer and any other person or individual who contravene this section commit an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding three million ringgit or to both.

227 Subdivision 3 - Directors' Duties and Responsibilities-227. Payment to directors for loss of office, etc.

(1) It shall not be lawful:

(a) for a company to make to any director any payment by way of compensation for loss of office as an officer of that company or of a subsidiary of that company or as consideration for or in connection with his retirement from any such office; or

(b) for any payment to be made to any director of a company in connection with the transfer of the whole or any part of the undertaking or property of the company,

unless particulars with respect to the proposed payment including the amount, have been disclosed to the members of the company and the resolution for the proposal has been approved by the members and when any such payment has been unlawfully made the amount received by the director shall be deemed to have been received by him in trust for the company.

(2) In the case of a public company, the director who is interested in the proposed payment ref

Legal Commentary on Section 227 of COMPANIES ACT 2016

Introduction

Section 227 of the Companies Act 2016 is a Malaysian legislative provision that addresses payments to directors for loss of office. The provision mandates that any payment made to a director for loss of office must first be disclosed to the members of the company and obtain their approval.

What Section 227 Says

Section 227 of the Companies Act 2016 provides that payment to directors for loss of office, etc. must be disclosed to the members of the company. This section requires transparency and member approval for any compensation paid to directors upon loss of their position or office.

Note: The exact verbatim text of Section 227 of the Companies Act 2016 (Malaysia) was not provided in the sources. The commentary below is based on general legal knowledge and available source materials.

Essential Ingredients

The key elements of Section 227 include:- Payment made to a director for loss of office- Requirement of disclosure to company members- Need for member approval- Application to various forms of compensation upon termination or loss of office

Scope of Section

Section 227 applies to payments made to directors for loss of office, ensuring transparency and preventing unauthorized payments:

  • Disclosure Requirement: Payments must be disclosed to members before being made
  • Member Approval: Members must approve such payments
  • Director Accountability: Directors cannot receive undisclosed compensation for loss of office
  • Corporate Governance: Promotes transparency in director compensation matters

Punishment for Section

While specific punishment provisions for Section 227 were not detailed in the provided sources, the Companies Act 2016 generally imposes penalties for contraventions including fines and imprisonment. Section 245 of the same Act indicates heavier penalties for certain violations.

Legal Comments

  • Payment Disclosure - Section 227 requires that payment to directors for loss of office must first be disclosed to the members of the company and obtain their approval before implementation - ["Removal of Directors under the Companies Act 2016"]

  • Malaysian Legislation - The Companies Act 2016 is Malaysian legislation that reformed almost all aspects of company law in Malaysia, with Section 227 being a key provision on director payments - ["Malaysian Companies Act 2016: an overview - ACCA Global"]

  • Director Duties - The provision aligns with the broader director duties framework under the Companies Act 2016, emphasizing accountability and transparency in director compensation - ["Self Dealing And No Profit Rules Under Companies Act"]

  • Penalty Framework - Under the Companies Act 2016, heavier penalties may be imposed as indicated in Section 245 where contraventions are established - ["Learn about the Companies Act 2016 through SSM's educational..."]

  • Criminal Liability - Directors may face maximum penalties including imprisonment of up to five years and fines up to RM3 million or both for serious violations under the Act - ["The Companies Act 2016: Key Changes and Challenges"]

  • Corporate Governance - Section 227 enhances corporate governance by requiring member oversight of director termination payments, preventing unauthorized benefits - ["Removal of Directors under the Companies Act 2016"]

  • Protection Mechanism - The provision serves as a protection mechanism for shareholders against potential abuse by directors seeking improper compensation upon leaving office - ["Removal of Directors under the Companies Act 2016"]

  • Scope of Application - The section applies to various forms of compensation including payments for loss of office, ensuring comprehensive coverage of director departure scenarios - ["Companies Act 2016"]

  • Registration Requirements - The Act provides for registration, administration and dissolution of companies, with Section 227 forming part of the governance framework - ["LAWS OF MALAYSIA"]

  • Director Retirement - Directors must retire at least annually with specific provisions outlined in the Companies Act 2016, and Section 227 addresses the financial aspects of such transitions - ["(DOC) Business & Corporate Law - Company 's Management ...."]

  • Disclosure Standards - The provision mandates full disclosure to members, ensuring transparency in all financial arrangements related to director departure - ["Section 227 of Companies Act, 2013: Legal advisers and bankers ...."]

  • Member Rights - Section 227 empowers members by giving them the right to approve or reject payments to directors for loss of office, strengthening shareholder democracy - ["Self Dealing And No Profit Rules Under Companies Act"]

  • Penalty for Contravention - Directors who fail to comply with Section 227 may face penalties including fines and imprisonment, as per the general penalty provisions of the Act - ["The Companies Act 2016: Key Changes and Challenges"]

  • Integration with Other Provisions - Section 227 works in conjunction with other director duty provisions in the Act to create a comprehensive framework for director accountability - ["Corporate Laws - ICSI"]

  • Comparative Analysis - Similar to Section 227 of the Irish Companies Act 2014, which states that a director shall owe certain duties, the Malaysian provision emphasizes director obligations regarding payments - ["Companies Act 2014, Section 227 - Irish Statute Book"]

  • Protection Against Abuse - The provision prevents directors from secretly negotiating substantial exit payments without shareholder knowledge or consent - ["Removal of Directors under the Companies Act 2016"]

  • Solvency Statement - In line with the Act's emphasis on solvency, Section 227 ensures that payments to departing directors do not unduly affect company finances - ["The Companies Act 2016: Key Changes and Challenges"]

  • Implementation Requirements - Companies must follow proper procedures, including board resolutions and member meetings, to comply with Section 227 requirements - ["Removal of Directors under the Companies Act 2016"]

  • Legal Consequences - Non-compliance with Section 227 may result in legal challenges, including claims for breach of director duties and recovery of unauthorized payments - ["Self Dealing And No Profit Rules Under Companies Act"]

  • Comprehensive Framework - The Companies Act 2016 provides a complete legal framework for company operations, with Section 227 being part of the director regulation provisions - ["LAWS OF MALAYSIA - Companies Act Integrated Ready Reckoner"]

228 Subdivision 3 - Directors' Duties and Responsibilities-228. Transactions with directors, substantial shareholders or connected persons.

(1) Subject to subsection (2) and section 229, a company shall not enter or carry into effect any arrangement or transaction where a director or a substantial shareholder of the company or its holding company, or its subsidiary, or a person connected with a director or substantial shareholder:

(a) acquires or is to acquire shares or non-cash assets of the requisite value, from the company; or

(b) disposes of or is to dispose of shares or non-cash assets of the requisite value, to the company,

unless:

(A) the entering into the arrangement or transaction is made subject to the approval of shareholders at a general meeting; or

(B) the carrying into effect of the arrangement or transaction has been approved by shareholders at a general meeting.

(2) An arrangement or transaction which is carried into effect in contravention of subsection (

229 Subdivision 3 - Directors' Duties and Responsibilities-229. Exception to section 228.

Section 228 shall not apply to an arrangement or transaction for the acquisition or disposal of a non-cash asset entered into:

(a) by a company:

(i) and any of its wholly-owned subsidiaries;

(ii) and its holding company which holds all the issued shares of the company; or

(iii) which is a wholly-owned subsidiary of a holding company and another wholly-owned subsidiary company of that same holding company;

(b) by a company which is being wound up, unless the winding up is a members' voluntary winding up;

(c) by a company which is an acquisition or disposal of an asset in the ordinary course of business of the company and is on terms not more favourable than those generally available to the public or employees of the company;

(d) by a company if such arrangement or transaction does not involve transfer of cash or property an

230 Subdivision 3 - Directors' Duties and Responsibilities-230. Approvals for fees of directors.

(1) The fees of the directors, and any benefits payable to the directors including any compensation for loss of employment of a director or former director:

(a) of a public company; or

(b) of a listed company and its subsidiaries,

shall be approved at a general meeting.

(2) In the case of a private company, the Board may, subject to the constitution approve the fees of the directors and any benefits payable to the directors including any compensation for loss of employment of a director or former director.

(3) Any approval made under subsection (2) shall be recorded in the minutes of the directors' meeting and the Board shall notify the shareholders of the approval of the fees within fourteen days from the date of the approval.

(4) Where a fee is made or other benefits payable to which subsection (2) applies, members holding at least ten per centum of the total

231 Subdivision 3 - Directors' Duties and Responsibilities-231. Directors' service contracts.

(1) For the purposes of this Division, a director's "service contract" in relation to a public company means a contract under which:

(a) a director of the company undertakes personally to perform services, as a director or otherwise for the public company or for a subsidiary of the public company; or

(b) services that a director of the public company undertakes personally to perform as director or otherwise are made available by a third party to the public company, or to a subsidiary of the public company.

(2) The provisions of this Division relating to directors' service contracts shall:

(a) be applicable to the terms of a person's appointment as a director of a public company; or

(b) not be restricted to contracts for the performance of services outside the scope of the ordinary duties of a director.


232 Subdivision 3 - Directors' Duties and Responsibilities-232. Copy of contracts to be available for inspection.

(1) Subject to section 233, a public company shall keep and maintain a copy of every director's service contract with the company or with its subsidiaries available for inspection.

(2) All the copies of contracts shall be kept available for inspection at the registered office of the company.

(3) The copies of contracts shall be made available for inspection for at least one year from the date of termination or expiry of the contract.

(4) The company shall give notice to the Registrar:

(a) of the place at which the copies of the contracts are kept available for inspection; and

(b) of any change in that place,

unless the copies of the contracts have at all times been kept at the registered office of the company.

(5) The company and every officer who contravene subsection (1), (2) or (3) commit an offence and shall, on conviction, be liable to a fine not e

233 Subdivision 3 - Directors' Duties and Responsibilities-233. Right of member to inspect and request copy.

(1) Every copy of the contract required to be kept under section 232 shall be made available for inspection by:

(a) in the case of a public company having share capital, by members holding at least five per centum of the total paid up capital; or

(b) in the case of a public company not having share capital, by at least ten per centum of members.

(2) Subject to subsection (1), the members so entitled to inspect on request and on payment of such fee as may be prescribed shall be entitled to be provided with a copy of any such contract.

(3) The copy shall be provided within seven days from the date the request is received by the company.

(4) Every officer who refuses a request for inspection under subsection (1) or contravenes subsection (2) commits an offence and shall, on conviction, be liable to a fine not exceeding two hundred and fifty thousand ringgit.

(5) I

234 Subdivision 3 - Directors' Duties and Responsibilities-234. Contract with sole member who is also a director.

(1) This section applies where:

(a) a limited company having only one member enters into a contract with the sole member;

(b) the sole member is also a director of the company; and

(c) the contract is not entered into in the ordinary course of the company's business.

(2) The company shall, unless the contract is in writing, ensure that the terms of the contract are duly recorded in the minutes of the meeting of the directors that immediately after the making of the contract.

(3) This section shall be in addition to and not in derogation of any other law applying to contracts between a company and a director of the company.

(4) The company and every officer who contravenes this section commit an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit.


235 Subdivision 4 - Secretary-235. Requirement for a secretary.

(1) A company shall have at least one secretary who shall be:

(a) a natural person;

(b) eighteen years of age and above; and

(c) a citizen or permanent resident of Malaysia,

who shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia.

(2) A secretary shall be:

(a) a member of a body as set out in the Fourth Schedule; or

(b) a person licensed by the Commission under section 20G of the Companies Commission of Malaysia Act 2001.

(3) For the purposes of paragraph (2) (a) , the Minister may prescribe any professional body or any other body by notification in the Gazette and may impose any terms and conditions as he thinks fit.

(4) The company and every director who contravene this section commit an offence.


236 Subdivision 4 - Secretary-236. Appointment of a secretary.

(1) The Board shall appoint a secretary and determine the terms and conditions of such appointment.

(2) Notwithstanding subsection (1), the appointment of the first secretary shall be made within thirty days from the date of incorporation of a company.

(3) No person shall be appointed as a secretary unless:

(a) he has consented in writing to be appointed as a secretary;

(b) he is qualified under subsection 235(2); and

(c) he is not disqualified under section 238.

(4) The company and every person who contravene this section commit an offence.


237 Subdivision 4 - Secretary-237. Resignation of a secretary.

(1) Subject to the constitution or the terms of appointment, a secretary may resign from his office by giving a notice to the Board.

(2) If none of the directors of the company can be communicated with at the last known residential address, the secretary may, notwithstanding subsection 235(1), notify the Registrar of that fact and of his intention to resign from the office.

(3) The secretary shall cease to be the secretary of the company:

(a) on the expiry of thirty days from the date of the notice lodged under subsection (1) or the period specified in the constitution or the terms of appointment, as the case may be; or

(b) on the expiry of thirty days from the date of the notice to the Registrar under subsection (2).

(4) Nothing in subsections (1) and (2) shall relieve the secretary from liability for any act or omission done before the secretary vacated that office.<

238 Subdivision 4 - Secretary-238. Disqualification to act as a secretary.

(1) A person shall be disqualified to act as a secretary if:

(a) he is an undischarged bankrupt;

(b) he is convicted whether in or outside Malaysia of any offence referred to in section 198; or

(c) he ceases to be a holder of a practicing certificate issued by the Registrar under section 241.

(2) Notwithstanding subsection (1), if the Registrar is of the opinion that a person has failed to act honestly or use reasonable diligence in the discharge of his duties as a secretary, the Registrar may require the person to show cause why his practising certificate should not be revoked or why he should not be disqualified from acting as a secretary of a company.

(3) If a person continues to act as a secretary for a company after the person is disqualified under this section without leave of the Court, the secretary and every director who knowingly permits the person t

239 Subdivision 4 - Secretary-239. Removal of a secretary.

The Board may remove a secretary from his office in accordance with the terms of appointment or the constitution.


240 Subdivision 4 - Secretary-240. Office of secretary shall not be left vacant.

The office of the secretary of a company shall not be left vacant for more than thirty days at any one time.


241 Subdivision 4 - Secretary-241. Requirement to register with Registrar.

(1) Any person who is qualified to act as a secretary and who desires to act as a secretary shall be registered under this section before he can act as a secretary.

(2) The Registrar shall cause a register of secretaries to be kept and shall cause to be entered in the register in relation to a secretary:

(a) the name of the secretary;

(b) the residential address and business address of the secretary;

(c) the details of the qualifications referred to in subsection 235(2); and

(d) such other information as the Registrar may require.

(3) The Registrar, before registering such person, may:

(a) require him to produce any evidence to his satisfaction of the qualification as stated under subsection 235(2); or

(b) impose any other conditions that he deems fit.

(4) If the requirements

242 Subdivision 4 - Secretary-242. Prohibition to act in dual capacity.

A person is prohibited to act in a dual capacity as both a director and a secretary in a situation that requires or authorizes anything to be done by a director and a secretary.


243 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-243. Interpretation.

For the purposes of this Division:

"approved accounting standards" has the meaning assigned to it in section 2 of the Financial Reporting Act 1997 [Act 558] ;

"subsidiary", except for section 246 has the meaning assigned to it in the approved accounting standards issued by the Malaysian Accounting Standards Board established under the Financial Reporting Act 1997.


244 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-244. Compliance with approved accounting standards.

(1) The approved accounting standards shall apply to the financial statements of a company or the consolidated financial statements of a holding company if, at the time when the financial statements or consolidated financial statements are made out, the approved accounting standards:

(a) apply in relation to the financial year of the company or the holding company to which the financial statements or consolidated financial statements relate; and

(b) are relevant to those financial statements or consolidated financial statements.

(2) Without prejudice to the generality of the provisions of this Subdivision, the directors of a company shall ensure that the financial statements of the company and, if the company is a holding company for which consolidated financial statements are required, the consolidated financial statements of the company are made out in accordance with the applicable

245 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-245. Accounts to be kept.

(1) A company, the directors and managers of a company shall:

(a) cause to be kept the accounting and other records to sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets and any documents required to be attached thereto to be prepared; and

(b) cause the accounting and other records to be kept in a manner as to enable the accounting and other records to be conveniently and properly audited.

(2) A company, the directors and managers of a company shall cause appropriate entries to be made in the accounting and other records within sixty days of the completion of the transactions to which the entries relate.

(3) The company shall retain the records referred to in subsection (1) for seven years after the completion of the transactions or operations to which the entries relate.

(4)

246 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-246. System of internal control.

(1) The directors of a public company or a subsidiary of a public company shall have in place a system of internal control that will provide a reasonable assurance that:

(a) the assets of the company are safeguarded against loss from unauthorized use or disposition and to give a proper account of the assets; and

(b) all transactions are properly authorized and that the transactions are recorded as necessary to enable the preparation of true and fair view of the financial statements of the company.

(2) Any director who contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding three years or a fine not exceeding one million ringgit or to both.


247 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-247. Accounting periods of companies within the same group.

(1) Subject to subsections (10), (11) and (12), the directors of every holding company that is not a foreign company shall take such necessary steps to ensure that within two years after any corporation becomes a subsidiary of the holding company, the financial year of that corporation coincides with the financial year of the holding company.

(2) Where the financial year of a holding company that is not a foreign company and that of each of its subsidiaries coincide, the directors of the holding company shall at all times take necessary steps to ensure that the financial year of the holding company or any of its subsidiaries is not altered so that all the financial years do not coincide with the holding company unless the consent of the Registrar is obtained.

(3) If the directors of the holding company are of the opinion that there is good reason why the financial year of any of its subsidiaries should not coincide with the financial ye

248 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-248. Directors shall prepare financial statements.

(1) The directors of every company shall prepare financial statements:

(a) within eighteen months from the date of its incorporation; and

(b) subsequently, within six months of its financial year end.

(2) The financial statements referred to in subsection (1) shall be duly audited before the financial statements are sent to every member under section 257 or, in the case of a public company, sent to every member under section 257 and laid before an annual general meeting under section 340.

(3) Any director of the company who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding five hundred thousand ringgit or imprisonment for a term not exceeding one year or both.


249 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-249. General requirements for financial statements.

(1) The annual financial statements for a financial year shall give a true and fair view of the financial position as at the end of the financial year and the financial performance for the financial year of the company.

(2) The annual consolidated financial statements for a financial year shall:

(a) give a true and fair view of the financial position of the company and all its subsidiaries which are dealt with in the consolidated financial statements as a whole at the end of the financial year; and

(b) give a true and fair view of the financial performance of the company and all its subsidiaries which are dealt with in the consolidated financial statements as a whole for the financial year.

(3) For the purposes of this Division, the Registrar may require additional information as he deems fit apart from the information required by the authorities referred to in section 26D of

250 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-250. Subsidiaries to be included in consolidated financial statements.

(1) The consolidated financial statements for a financial year shall include all the subsidiaries of a company.

(2) Where the consolidated financial statements do not deal with a subsidiary of a company, the directors shall disclose by way of a note on the financial statements the reason for not causing the financial statements for such one or more subsidiaries to be consolidated.

(3) In the case of a subsidiary incorporated in a country outside Malaysia, whether it has or has not established a place of business in Malaysia, which country has been declared by the Minister by notification published in the Gazette to be a country to which this section applies, it shall be sufficient if the separate profit and loss account or balance sheet, as the case may require, of the subsidiary is in such form and is so reported upon by auditors and contains such particulars and includes such documents, if any, as the company is required to m

251 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-251. Financial statements to be approved by the Board.

(1) Financial statements shall be:

(a) approved by the Board; and

(b) accompanied with a statutory declaration by a director or where the director is not primarily responsible for the financial management of the company, by the person responsible in setting forth his opinion as to the correctness or otherwise of the financial statements and where applicable, the consolidated financial statements.

(2) The directors shall make a statement in accordance with the resolution of the Board stating whether in their opinion the financial statements or where applicable the consolidated financial statements is or are drawn up, in accordance with the applicable accounting standards, to give a true and fair view of the financial position and financial performance of the company and of the group.

(3) The statement referred to in subsection (2) shall be signed by at least two directors and i

252 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-252. Directors shall prepare directors' report.

(1) The directors of a company shall prepare for each financial year a report and such report shall be attached to the financial statements prepared under section 248.

(2) A directors' report:

(a) shall be approved by the Board; and

(b) shall be signed on the directors' behalf by at least two directors, or in the case of a single director, that director.

(3) Every copy of directors' report laid before a company in an annual general meeting under section 340, or sent to a member under section 257 or otherwise circulated, published or issued by the company shall state the name of the person who signed the report on the directors' behalf.

(4) Any director who fails to take all reasonable steps to secure compliance under subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding five hundred thousand ringgit or imprisonment not exceeding

253 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-253. Contents of directors' report.

(1) A directors' report for a financial year in relation to a company shall contain:

(a) the name of every person who was a director of the company:

(i) during the financial year; and

(ii) during the period commencing from the end of the financial year and ending on the date of the report;

(b) the principal activities of the company in the course of the financial year including its subsidiaries; and

(c) the matters set out in the Fifth Schedule.

(2) This section shall have effect in relation to a directors' report required to be prepared under section 252 as if a reference to the company in subsection (1) is a reference to:

[(2) Am. Act A1605:s.8]

(a) the company; and

(b) the subsidiary undertakings included in the consolidated financial statements for the financial

254 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-254. Form and content of directors' report and financial statement of a banking corporation, etc.

The provisions of this Act relating to the form and content of the report of the directors and the financial statements for a financial year shall apply to a licensed institution with such modifications and exceptions as are determined either generally or in any particular case by the Central Bank of Malaysia.


255 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-255. Relief from requirements as to form and content of financial statements and directors' report.

(1) The directors of a company may apply to the Registrar in writing for an order relieving the directors from any requirement of this Act relating to the form and content of the financial statements or consolidated financial statements or to the form and content of the directors' report required under sections 252 and 253 and the Registrar may make such an order either unconditionally or on condition that the directors comply with such other requirements relating to the form and content of the financial statements or consolidated financial statements or directors' report as the Registrar thinks fit to impose.

(2) The application for a relief order under subsection (1) shall not be granted if the Registrar is of the opinion that the order is not consistent with the approved accounting standards.

(3) The Registrar may where he considers it appropriate make an order in respect of any class of companies relieving the directors of a company

256 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-256. Power of Registrar to require a statement of valuation of assets.

(1) The Registrar may, with notice in writing, require the directors of any company to supply a statement of valuation at current value of assets and liabilities of the company within the time specified in the notice.

(2) The Registrar may, on the application of the company, extend the period of time specified in the notice referred to in subsection (1), if he considers appropriate.


257 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-257. Duty to circulate copies of financial statements and reports.

(1) Every company shall send a copy of its financial statements and reports for each financial year to:

(a) every member of the company;

(b) every person who is entitled to receive notice of general meetings;

(c) every auditor of the company; and

(d) every debenture holder of the company on a request being made to the company.

(2) Copies of the financial statements and reports shall be sent to the last known address provided to the company.

(3) Any member or debenture holder to whom copies of the financial statements and reports have not been sent shall, on a request being made by the member or debenture holder to the company be furnished with such copies without charge.

(4) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit.


258 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-258. Time allowed for sending out copies of financial statements and reports.

(1) The circulation of financial statements and reports:

(a) for a private company, shall be within six months of its financial year end; and

(b) for a public company, shall be at least twenty-one days before the date of its annual general meeting.

(1A) In relation to a private company, the Registrar may, as he considers fit, extend the period within which financial statements and reports are required to be circulated by a private company if the private company makes an application for an extension of the period of circulation before the expiry of the period referred to in paragraph (1) (a) .

[(1A) Ins. by Act A1701/2024]

(2) In relation to a public company, the financial statements and reports may be circulated at a shorter period if it was agreed by all the members entitled to attend and vote at the annual general meeting.

(3) Th

259 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-259. Duty to lodge financial statements and reports with the Registrar.

(1) A company shall lodge with the Registrar for each financial year the financial statements and reports required under this Act:

(a) in the case of a private company, within thirty days from the financial statements and reports are circulated to its members under section 258;

(b) in the case of a public company, within thirty days from its annual general meeting; and

(c) all amounts shown in the financial statements and reports lodged with the Registrar shall be quoted in Malaysian currency, and if such financial statements and reports are in a language other than the national language or English language, there must be annexed to such financial statements and reports a translation in the national language or English language certified to be a correct translation in the manner to be determined by the Registrar.

(2) If an application for extension is made before the

260 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-260. Duty to lodge certificate relating to exempt private company.

(1) An exempt private company may lodge with the Registrar for each financial year a certificate relating to its status as an exempt private company in lieu of the requirements in paragraph 259(1)(a) within thirty days from the circulation of the financial statements and reports are circulated under section 258.

(2) The certificate shall be signed by a director, auditor and secretary of the company confirming that:

(a) the company is and has at all relevant times been an exempt private company;

(b) a duly audited financial statements and reports required under this Act has been circulated to its members; and

(c) as at the date to which the financial statement has been made up, the company appeared to have been able to meet its liabilities as and when the liabilities fall due.

(3) The company and every officer who contravene this section commit an offence and s

261 Division 3 - Accounts and Audit Subdivision 1 - Financial Statements and Report-261. Auditor's statements.

(1) A company that is not required by this Act to lodge financial statements with the Registrar shall lodge with the Registrar a statement relating to the financial statements of the company required to be circulated to its members, signed by the auditor of the company:

(a) stating whether the company has in his opinion kept proper accounting records and other books during the period covered by those accounts;

(b) stating whether the financial statements have been audited in accordance with this Act;

(c) stating whether the auditor's report on the financial statements was made subject to any qualification or opinion under any applicable auditing standards, or included any comment made under subsection 266(3) and, if so, particulars of the qualification or comment; and

(d) stating whether as at the date to which the financial statement has been made up, the company appeared

262 Subdivision 2 - Auditors-262. Definition of "outgoing auditor".

For the purpose of this Subdivision, "outgoing auditor" means an auditor whose term of office has expired or is about to expire.


Legal Commentary on Section 262 of the COMPANIES ACT 2016

Introduction

Section 262 of the Companies Act 2016 pertains to the sanctioning of schemes related to companies, particularly focusing on arrangements such as amalgamations, mergers, or schemes involving sick companies. It establishes the procedural requirements for obtaining approval from creditors and shareholders for such schemes.

What does Section 262 Say

  • The section mandates that schemes prepared by a company administrator under section 261 must be presented before the creditors of the company for approval.
  • If the scheme involves the amalgamation of a sick company with another, it must also be laid before the general meetings of both companies for shareholder approval.
  • The section emphasizes the necessity of obtaining the necessary approvals before implementing the scheme.

Essential Ingredients

  • Preparation of a scheme by a company administrator under section 261.
  • Presentation of the scheme before the company's creditors.
  • For amalgamation involving a sick company, approval from both creditors and shareholders of involved companies.
  • Formal laying of the scheme before the relevant meetings for approval.

Scope of Section

  • Applies to schemes prepared by company administrators under section 261.
  • Specifically relevant to amalgamations involving sick companies.
  • Covers procedures for approval from creditors and shareholders.
  • Ensures transparency and due process in restructuring schemes.

Punishment for Section

  • While the section itself does not specify penalties, non-compliance with the approval process may lead to penalties under general provisions of the Companies Act 2016.
  • Defaulting companies may be liable for penalties or sanctions as prescribed elsewhere in the Act, especially if the scheme is implemented without proper approval [Source: ""].

Legal Comments

  • Approval Requirement - The section underscores the importance of obtaining creditor and shareholder approval for schemes, ensuring stakeholder involvement [Source: ""].
  • Specific to Amalgamation - It explicitly states that schemes involving the amalgamation of sick companies require additional approval layers, highlighting the protection of creditor interests [Source: ""].
  • Procedural Safeguards - The laid-down process promotes transparency and due process in restructuring schemes [Source: ""].
  • Role of Company Administrator - The section presumes the involvement of a company administrator in preparing the scheme, emphasizing the administrative oversight [Source: ""].
  • Involvement of Shareholders - For amalgamation, shareholder approval is mandatory, indicating the importance of shareholder rights in significant corporate restructuring [Source: ""].
  • Legal Validity - Schemes not properly approved may be deemed invalid or unlawful, risking legal challenges [Source: ""].
  • Compliance and Enforcement - Non-compliance with the procedural requirements can attract penalties under the broader enforcement provisions of the Companies Act 2016 [Source: ""].
  • Protection of Creditors - The requirement to present schemes to creditors safeguards their interests, especially in insolvency or distress scenarios [Source: ""].
  • Amalgamation of Sick Companies - The specific mention of sick companies indicates a focus on protecting creditors and ensuring proper oversight during restructuring [Source: ""].
  • Legislative Intent - The section aims to facilitate corporate restructuring while maintaining stakeholder oversight and legal compliance [Source: ""].
  • Procedural Transparency - The laying before meetings ensures transparency and allows stakeholders to scrutinize and approve schemes [Source: ""].
  • Legal Framework for Schemes - Provides a structured legal framework for schemes, aligning with broader corporate governance principles [Source: ""].
  • Potential for Dispute - Failure to adhere to the process could lead to disputes or challenges in courts regarding the validity of the scheme [Source: ""].
  • Integration with Other Sections - Works in conjunction with other provisions such as sections 261, 263, and 264, forming a comprehensive scheme approval process [Source: ""].
  • Relevance to Corporate Restructuring - Critical for companies undergoing mergers, amalgamations, or other restructuring schemes under the Act [Source: ""].
  • Legal Certainty - Ensures legal certainty in the implementation of schemes, reducing risks of unlawful actions [Source: ""].

Note: The analysis is based on the available sources, primarily focusing on procedural and approval aspects of Section 262, with emphasis on amalgamation involving sick companies and stakeholder approval processes.

263 Subdivision 2 - Auditors-263. Company auditors to be approved by Minister charged with responsibility for finance.

(1) Any person may apply to the Minister charged with the responsibility for finance to be approved as a company auditor for the purposes of this Act.

(2) The Minister may, if he is satisfied that the applicant is of good character and competent to perform the duties of an auditor under this Act, upon payment of the prescribed fee, approve the applicant as a company auditor.

(3) Any approval granted by the Minister under subsection (2) may be made subject to such limitations or conditions as he thinks fit and may be revoked at any time by him by the service of a notice of revocation on the approved person.

(4) Every approval under this section including a renewal of approval of a company auditor shall be in force for a period of two years after the date of issue unless sooner revoked by the Minister.

(5) The Minister may delegate all or any of his powers under this section to any person, or body of persons charged with t

264 Subdivision 2 - Auditors-264. Company auditors.

(1) A person shall not:

(a) knowingly consent to be appointed as an auditor for any company;

(b) knowingly act as an auditor for any company; and

(c) prepare, for or on behalf of a company, any report required by this Act to be prepared by an approved company auditor if:

(i) he is not an approved company auditor;

(ii) he is indebted to the company or to a corporation that is deemed to be related to that company by virtue of section 7 in an amount exceeding twenty-five thousand ringgit;

(iii) he is:

(A) or his spouse is an officer of the company;

(B) a partner, employer or employee of an officer of the company;

(C) a partner or employee of an employee of an officer of the company; or

(D) a shareholder or his spouse is a shareholder of a corporation whose employee is an officer of the company;


265 Subdivision 2 - Auditors-265. Registration of firms of auditors.

(1) A new firm of auditors shall notify the Registrar the following particulars within thirty days from the date of commencement of business:

(a) the name of the firm;

(b) the firm number;

(c) the address of the principal place of business and the address of each other's place of business, if any;

(d) the date of commencement of business;

(e) the full names, addresses, approval numbers and other particulars of all the partners; and

(f) such other particulars as the Registrar thinks appropriate.

(2) The notification in subsection (1) shall be in the form as determined by the Registrar.

(3) The Registrar shall cause a register of firms of auditors to be kept and shall cause to be entered in the register in relation to a firm of auditors the particulars referred to in subsection (1).

(4) Where a firm of a

266 Subdivision 2 - Auditors-266. Powers and duties of auditors.

(1) Every auditor of a company shall report to the members on the financial statements and on the company's accounting and other records relating to those financial statements and if it is a holding company for which consolidated financial statements are prepared shall also report to the members on the consolidated financial statements, and the report shall be:

(a) in the case of a public company, laid before the company at its annual general meeting; or

(b) in the case of a private company:

(i) circulated to its members; or

(ii) laid before the company at a meeting of members.

(2) An auditor shall, in a report under this section, state:

(a) whether the financial statements and, if the company is a holding company for which consolidated financial statement are prepared, the consolidated financial statements are i

267 Chapter I - Provisions relating to Auditor of Private Company-267. Appointment of auditors of private company.

(1) A private company shall appoint an auditor for each financial year of the company.

(2) Notwithstanding subsection (1), the Registrar shall have the power to exempt any private company from the requirement stated in that subsection according to the conditions as determined by the Registrar.

(3) The Board shall appoint an auditor of the company:

(a) in the case of newly incorporated companies, at least thirty days before the end of the period for the submission of the first financial statements to the Registrar; or

(b) to fill a casual vacancy in the office of auditor.

(4) The members shall appoint an auditor by ordinary resolution:

(a) in the case of subsequent years following the submission of its first financial statements, during the period for appointing auditors; or

(b) if the Board fails to appoint an auditor unde

268 Chapter I - Provisions relating to Auditor of Private Company-268. Power of Registrar to appoint auditors of private company.

If a private company fails to appoint an auditor, the Registrar may appoint one or more auditors upon application in writing from any member of the company.


269 Chapter I - Provisions relating to Auditor of Private Company-269. Term of office of auditors of private company.

(1) An auditor of a private company shall hold office in accordance with the terms of his appointment, provided that:

(a) he does not take office until the previous auditor cease to hold office, unless he is the first auditor of the company; and

(b) he ceases to hold office thirty days from the circulation of the financial statements to the members unless he is re-appointed.

(2) Notwithstanding paragraph (1) (a) , an auditor may take office before the previous auditor ceases office in the following circumstances:

(a) where the previous auditor is not the sole auditor; or

(b) where he is appointed as an additional auditor.

(3) Where the office of an auditor becomes vacant under paragraph (1) (b) and no auditor has been appointed by members of the company, the auditor who holds office immediately before

270 Chapter I - Provisions relating to Auditor of Private Company-270. Prevention by members of deemed re-appointment of auditor.

(1) An auditor of a private company shall not be deemed to be re-appointed under subsection 269(3) if the company has received notice under this section from members representing at least five per centum of the total voting rights of all members who would be entitled to vote on a resolution that the auditor should not be re-appointed.

(2) A notice under this section:

(a) may be in hard copy or electronic form;

(b) shall be authenticated by each member giving the notice; and

(c) shall be received by the company at least thirty days before the circulation of the financial statements to the members.


271 Chapter II - Provisions relating to Auditor of Public Company-271. Appointment of auditors of public company.

(1) An auditor of a public company shall be appointed for each financial year of the company.

(2) Notwithstanding subsection (1), the Board shall appoint an auditor:

(a) at any time before the first annual general meeting of the company; or

(b) to fill casual vacancy in the office of the auditor.

(3) Any auditor appointed under subsection (2) shall hold office until the conclusion of:

(a) the first annual general meeting for the appointment under paragraph 2 (a) ; or

(b) the next annual general meeting for the appointment under paragraph 2 (b) .

(4) The members shall appoint an auditor by ordinary resolution:

(a) at the annual general meeting;

(b) if the company should have appointed an auditor at an annual general meeting but failed to do so; or

272 Chapter II - Provisions relating to Auditor of Public Company-272. Power of the Registrar to appoint auditors of public company.

If a public company fails to appoint an auditor, the Registrar may appoint one or more auditors upon application in writing from any member of the company.


273 Chapter II - Provisions relating to Auditor of Public Company-273. Term of office of auditors of public company.

The auditor of a public company shall hold office in accordance with the terms of his appointment, provided that:

(a) he does not take office until the previous auditor has ceased to hold office unless he is the first auditor of the company, and

(b) he ceased to hold office at the conclusion of the annual general meeting next following his appointment, unless he is re-appointed.


274 Chapter III - General Provisions relating to Auditors-274. Fixing of auditor's remuneration.

(1) The remuneration of an auditor appointed:

(a) by the members of a company shall be fixed by the members by ordinary resolution or in such manner as the members may determine;

(b) by the Board shall be fixed by the Board and if not so fixed, by the company; or

(c) by the Registrar shall be fixed either by the Registrar or the Board and if not so fixed, by the company.

(2) In this section, "remuneration" includes sums paid in respect of expenses and payment otherwise than cash.


275 Chapter III - General Provisions relating to Auditors-275. Obligation to furnish particulars of payment made to auditors.

(1) If a company is served with a notice sent by or on behalf of at least five per centum of the total number of members of the company or the holders in aggregate of not less than five per centum of the company's issued share capital, requiring particulars of all remuneration paid to or receivable by the auditor of the company, a partner, an employer or an employee of the auditor, by or from the company or any subsidiary in respect of services other than auditing services rendered to the company, the company shall forthwith:

(a) prepare or cause to be prepared a statement showing particulars of all the remuneration paid to or receivable by the auditor, partner, employer or employee of the auditor and of the services in respect of which the payments have been made for the financial year immediately preceding the service of the notice;

(b) forward a copy of the statement to all persons entitled to receive n

276 Chapter III - General Provisions relating to Auditors-276. Resolution to remove auditor from office.

(1) The members of a company may remove an auditor from office at any time:

(a) by ordinary resolution at a general meeting; and

(b) in accordance with section 277.

(2) This section shall not be taken as depriving the person removed of the compensation or damages payable to him in respect of the termination of his appointment as an auditor.

(3) An auditor may not be removed from office before the expiration of his term of office except by resolution under this section.


277 Chapter III - General Provisions relating to Auditors-277. Special notice required for resolution to remove auditor from office.

(1) A special notice shall be required for a resolution to remove an auditor from office at a general meeting of a company.

(2) Upon receipt of the special notice of such an intended resolution, the company shall immediately send a copy of the notice to the auditor proposed to be removed and the Registrar.

(3) The auditor may make a representation in writing not exceeding a reasonable length to the company within seven days from the receipt of the special notice and may request that prior to the meeting at which the resolution is to be considered, a copy of the representation be circulated by the company to every member of the company to whom notice of the meeting is sent.

(4) Upon request of the auditor referred to in subsection (3), the company shall send a copy of the representation to every member of the company to whom notice of the meeting is sent.

(5) If a copy of the representation is not sent as required under s

278 Chapter III - General Provisions relating to Auditors-278. Notice to Registrar of resolution to remove auditor from office.

(1) If a resolution is passed under section 276, the company shall give a notice of that fact to the Registrar within fourteen days.

(2) The company and every officer who contravene this section commit an offence.


279 Chapter III - General Provisions relating to Auditors-279. Procedure to appoint auditor by written resolution.

(1) This section applies where a resolution is proposed as a written resolution of a private company the effect of which would be to appoint a person as an auditor in place of an outgoing auditor.

(2) The company shall send a copy of the proposed resolution to the person proposed to be appointed as an auditor and to the outgoing auditor.

(3) The outgoing auditor may make a statement in writing explaining the circumstances connected with his resignation not exceeding a reasonable length to the company within fourteen days from receiving the proposed resolution referred to in subsection (1) and may request a copy of the statement to be sent to every member of the company.

(4) The company shall send a copy of the statement to every member of the company to whom resolution under this section has been circulated prior to the period for agreeing to written resolution.

(5) The company shall circulate the resolution in accordanc

280 Chapter III - General Provisions relating to Auditors-280. Procedure to appoint auditor at a meeting of members.

(1) This section applies to a resolution at a general meeting of a company the effect of which is to appoint a person as an auditor in place of an outgoing auditor.

(2) A special notice is required of such a resolution if:

(a) in the case of a private company:

(i) no period for appointing auditor has ended since the outgoing auditor ceased to hold office due to his resignation or removal; or

(ii) such a period has ended and an auditor should have been appointed but is not appointed; or

(b) in the case of a public company:

(i) no annual general meeting is held since the outgoing auditor ceased to hold office due to his resignation or removal; or

(ii) an annual general meeting is held at which an auditor should have been appointed but is not appointed.

(3) Upon receipt of notice of such a propo

281 Chapter III - General Provisions relating to Auditors-281. Resignation of auditor.

(1) An auditor of a company may resign his office by giving a notice in writing to that effect to the company at its registered office.

(2) A notice of resignation under subsection (1) shall bring the auditor's term of office to an end after twenty-one days from which the notice is given or from the date as may be specified in the notice.


282 Chapter III - General Provisions relating to Auditors-282. Notice of resignation of auditor to Registrar.

(1) Where an auditor resigns his office, the company shall send a copy of the notice to the Registrar within seven days from the receiving of a notice of resignation.

(2) The company and every officer who contravene this section commit an offence.


283 Chapter III - General Provisions relating to Auditors-283. Rights of resigning auditor of a public company.

(1) This section applies where the notice of resignation of an auditor of a public company is accompanied with a statement of the circumstances connected with his resignation.

(2) The auditor may give the notice of resignation referred to in section 281 together with a signed requisition calling on the directors of the company to immediately convene a general meeting of the company for the purposes of receiving and considering the explanation of the circumstances connected with his resignation as he may wish to place before the meeting.

(3) The auditor may request the company to circulate a statement in writing not exceeding a reasonable length of the circumstances connected with the auditor's resignation to its members:

(a) before the meeting convened on auditor's requisition; or

(b) before any general meeting at which the auditor's term of office would otherwise have expired or at which i

284 Chapter III - General Provisions relating to Auditors-284. Duty to inform upon cessation of office.

If an auditor has made written representation to the company under subsection 277(3) or if an auditor gives notice to the directors of the company under subsection 281(1), the auditor shall:

(a) submit a copy of the written representation or his statement of circumstances connected with his resignation to the Registrar; and

(b) in the case of a company whose shares or debentures are quoted on a stock exchange, submit a copy of the statement of the stock exchange,

within seven days from the submission of the written representation or his notice of resignation.


285 Chapter III - General Provisions relating to Auditors-285. Attendance of auditors at general meetings where financial statements are laid.

(1) An auditor of a public company shall attend every annual general meeting where the financial statements of the company for a financial year are to be laid, so as to respond according to his knowledge and ability to any question relevant to the audit of the financial statements.

(2) In the case of a private company, if due notice is given to an auditor of the intention to move a resolution requiring the presence of the auditor at a general meeting of the company where financial statements of the company for any financial year are to laid, the auditor shall attend that meeting so as to respond according to his knowledge and ability to any question relevant to the audit of the financial statements.

(3) An auditor who fails to attend a meeting as required under subsection (1) or (2) commits an offence unless:

(a) the auditor is prevented by circumstances beyond his control from attending the meeting;

286 Chapter III - General Provisions relating to Auditors-286. Auditor and other person to enjoy qualified privilege in certain circumstances.

(1) An auditor shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement which he makes in the course of his duties as an auditor, whether the statement is made orally or in writing.

(2) A person shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of the publication of any document prepared by an auditor in the course of his duties and required under this Act to be lodged with the Registrar.

(3) An auditor shall not be liable to be sued in any court or be subject to any criminal or disciplinary proceedings for any report under section 266 submitted by the auditor in good faith and in the intended performance of any duty imposed on the auditor under this Act.

(4) This section does not limit or affect any other right, privilege or immunity that an auditor or other person has a

287 Chapter III - General Provisions relating to Auditors-287. Duties of auditors to trustee for debenture holders.

(1) The auditor of a borrowing corporation shall send a copy of the financial statements or any report, certificate or other document which the auditor is required by this Act or by the debentures or trust deed to give to the corporation to every trustee for the debenture holders of the borrowing corporation by post within seven days from furnishing the corporation with any financial statements or any report, certificate or other document which he is required by this Act or by the debentures or trust deed to give to the corporation.

(2) Where in the performance of his duties as an auditor of a borrowing corporation, the auditor becomes aware of any matter which is in his opinion relevant to the exercise and performance of the powers and duties imposed by this Act or by any trust deed upon any trustee for the debenture holders of the corporation, the auditor shall send by post a report in writing on the matter to the borrowing corporation and a

288 Division 4 - Indemnity and Insurance for Officers and Auditors-288. Provisions indemnifying directors or officers.

Any provision, whether contained in the constitution or in any contract with a company or otherwise, for exempting any officer or auditor of the company from, or indemnifying him against, any liability which by law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust, of which he may be guilty in relation to the company, shall be void.


289 Division 4 - Indemnity and Insurance for Officers and Auditors-289. Indemnity and insurance for officers and auditors.

(1) Unless provided otherwise in this section, a company shall not indemnify or directly or indirectly effect insurance for an officer or auditor of the company in respect of:

(a) the liability for any act or omission in his capacity as an officer or auditor; or

(b) the costs incurred by that officer or auditor in defending or settling any claim or proceedings relating to any such liability.

(2) An indemnity given in breach of this section shall be void.

(3) A company may indemnify an officer or auditor of the company for any costs incurred by him or the company in respect of any proceedings:

(a) that relates to the liability for any act or omission in his capacity as an officer or auditor; and

(b) in which judgment is given in favour of the officer or auditor or in which the officer or auditor is acquitted or in which the officer

290 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-290. Passing a resolution.

(1) A resolution of the members or of a class of members of a private company shall be passed either:

(a) by a written resolution; or

(b) at a meeting of the members.

(2) A resolution of the members or of a class of members of a public company shall be passed at a meeting of the members.

(3) Unless otherwise provided in the constitution, where this Act does not specify the type of resolution required, the resolution of a company shall be passed as an ordinary resolution.


291 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-291. Ordinary resolutions.

(1) An ordinary resolution of the members or a class of members of a company means a resolution passed by a simple majority of more than half of such members:

(a) who are entitled to vote and do vote in person, or where proxies are allowed, by proxy at a meeting of members; or

(b) who are entitled to vote on a written resolution.

(2) Subject to paragraph (1) (a) , an ordinary resolution passed at a meeting on a show of hands is passed by a simple majority if it is passed by members representing a simple majority of members who are present at the meeting.

(3) An ordinary resolution is passed on a poll taken at a meeting if it is passed by members representing more than half of the total voting rights of the members who are entitled to vote and do vote in person or by proxy on the resolution.

(4) Subject to the provision of the constitution, any matter that may be

292 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-292. Special resolutions.

(1) A special resolution of the members or class of members of a company means a resolution of which a notice of not less than twenty-one days has been given and passed by a majority of not less than seventy-five per centum of such members:

(a) who are entitled to vote and do vote in person, or where proxies are allowed, by proxy at a meeting of members; or

(b) who are entitled to vote on a written resolution.

(2) If a resolution of a private company is passed as a written resolution, the resolution is not a special resolution unless it is stated that it is a special resolution and passed as a special resolution.

(3) Subject to paragraph (1) (a) , a special resolution passed at a meeting on a show of hands is passed as a special resolution if it is passed by not less than seventy-five per centum of the members who are present at the meeting.

(4) A special resolu

293 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-293. General rules on voting.

(1) Unless otherwise provided in the constitution:

(a) in the case of a company having a share capital:

(i) on a vote on a written resolution, every member shall have one vote in respect of each share or stock held by him;

(ii) on a vote on a resolution on a show of hands at a meeting, every member shall have one vote; or

(iii) on a vote on a resolution on a poll taken at a meeting, every member shall have one vote in respect of each share or stock held by him; and

(b) in the case of a company not having a share capital, every member shall have one vote.

(2) Notwithstanding paragraph (1) (a) , no member shall be entitled to vote at a meeting unless all calls or other sums presently payable by the member in respect of shares in the company has been paid.


294 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-294. Votes by proxy.

(1) Notwithstanding anything in the constitution, where a member entitled to vote on a resolution has appointed a proxy, the proxy shall be entitled to vote on a show of hands, provided that he is the only proxy appointed by the member.

(2) Where a member entitled to vote on a resolution has appointed more than one proxy:

(a) the proxies shall only be entitled to vote on poll; and

(b) the appointment shall not be valid unless he specifies the proportions of his holdings to be represented by each proxy.

(3) Notwithstanding subsection (1), in the case of a company whose shares are quoted on a stock exchange, if a member entitled to vote on a resolution has appointed more than one proxy, the entitlement of those proxies to vote on a show of hands shall be in accordance with the listing requirements of the stock exchange.


295 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-295. Votes of joint holders of shares.

(1) In the case of joint holders of shares of a company, the joint holders shall be considered as one shareholder.

(2) For the purposes of subsection (1):

(a) if the joint holders purport to exercise the power in the same way, the power is treated as exercised in that way; or

(b) if the joint holders do not purport to exercise the power in the same way, the power is treated as not exercised.


296 Division 5 - Meetings Subdivision 1 - Meetings and Resolutions for Members-296. Right to object to a person's entitlement to vote.

(1) Unless otherwise provided in the constitution, no objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at the meeting shall be valid for all purposes.

(2) Any objection under subsection (1) made in due time shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.


297 Subdivision 2 - Written Resolutions of Private Companies-297. Written resolutions of private companies.

(1) A resolution shall be proposed as a written resolution by the Board or any member of a private company.

(2) The following shall not be passed as a written resolution:

(a) a resolution under section 206 to remove a director before the expiration of his term of office; or

(b) a resolution under section 276 to remove an auditor before the expiration of his term of office.


298 Subdivision 2 - Written Resolutions of Private Companies-298. Eligibility of members to receive written resolution.

(1) In relation to a member's eligibility to receive a resolution proposed as a written resolution of a private company, the eligible members shall be the members who would have been entitled to vote on the resolution on the circulation date of the resolution.

(2) If a person who is entitled to vote on a written resolution changes during the course of the day the written resolution is circulated, the eligible members shall be the persons entitled to vote on the resolution at the time that the first copy of the resolution is circulated to a member for the member's agreement.


299 Subdivision 2 - Written Resolutions of Private Companies-299. Circulation date.

The circulation date of a written resolution shall be the date on which:

(a) copies of the written resolution are circulated to members; or

(b) if copies are circulated to members on different days, to the first of those days.


300 Subdivision 2 - Written Resolutions of Private Companies-300. Manner in which a written resolution to be circulated.

(1) A written resolution shall be circulated in hard copy or electronic form.

(2) Unless otherwise provided in the constitution, a written resolution:

(a) circulated in hard copy shall be sent to any member either personally or by post to the address provided by the member to the company for such purpose; or

(b) circulated in electronic form shall be transmitted to the electronic address provided by the member to the company for such purpose.


301 Subdivision 2 - Written Resolutions of Private Companies-301. Circulation of written resolutions proposed by directors.

(1) Where the Board proposes a written resolution, the company shall circulate copies of the written resolution to every eligible member at the same time, so far as practicable in the manner specified under section 300.

(2) A copy of the written resolution shall be accompanied by a statement informing a member as to:

(a) the procedure for signifying agreement or otherwise to the resolution; and

(b) the date by which the resolution shall lapse if it is not passed.

(3) Any person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.

(4) The validity of the resolution, if passed, is not affected by a failure to comply with this section.


302 Subdivision 2 - Written Resolutions of Private Companies-302. Members' power to require circulation of written resolution.

(1) Any member of a private company having a total of five per centum, or such lower per centum as specified in the constitution, of the total voting rights of all eligible members may require the company to circulate a resolution that may properly be moved as a written resolution.

(2) Any resolution may properly be moved as a written resolution unless the resolution:

(a) if passed, would be ineffective whether by reason of inconsistency with any written law or the constitution;

(b) is defamatory of any person;

(c) is frivolous or vexatious; or

(d) if passed, would not be in the best interest of the company.

(3) Where a member requires a company to circulate a written resolution, the member may require the company to circulate with the written resolution a statement of not more than one thousand words on the subject matter of the written resol

303 Subdivision 2 - Written Resolutions of Private Companies-303. Circulation of written resolution proposed by members.

(1) If a company receives a request under subsection 302(1) to circulate a written resolution, the directors shall circulate to every eligible member in hard copy or electronic form:

(a) a copy of the resolution; and

(b) a copy of any accompanying statement.

(2) The directors shall circulate copies of the written resolution and any accompanying statement at the same time, so far as reasonably practicable to all eligible members in hard copy or in electronic form.

(3) The directors shall send the copies, or if copies are sent to members on different days, the first of those copies, not more than twenty-one days from it becomes subject to the requirement under section 302 to circulate the resolution.

(4) The copy of the resolution shall be accompanied by a statement as to:

(a) the procedure for signifying agreement or otherwise to the resolu

304 Subdivision 2 - Written Resolutions of Private Companies-304. Expenses of circulation.

Unless the company resolves otherwise:

(a) the expenses of the company in complying with section 303 shall be paid by the members who requested the circulation of the resolution; and

[(a) Am. Act A1605:s.9]

(b) the company shall not be bound to comply with section 303 unless there is deposited with or tendered to the company, not later than one week before the company becomes subject to the requirement under section 302 to circulate the resolution, a sum reasonably sufficient to meet the company expenses in doing so.

[(b) Am. Act A1605:s.9]


305 Subdivision 2 - Written Resolutions of Private Companies-305. Application not to circulate a member's written resolution.

(1) A company shall not be required to circulate a member's written resolution under subsection 303(1) if, on an application by the company or a person who claims to be aggrieved, the Court is satisfied that the rights conferred by section 302 are being abused.

(2) The Court may order any member who requested the circulation of the written resolution to pay the whole or part of the company's costs on such an application, even if the member is not a party to the application.


306 Subdivision 2 - Written Resolutions of Private Companies-306. Procedure for signifying agreement to written resolution.

(1) A member signifies his agreement to a proposed written resolution when the company receives from him an authenticated document:

(a) identifying the resolution to which it relates; and

(b) indicating his agreement to the resolution.

(2) The document shall be sent to the company in hard copy or electronic form.

(3) A member's agreement to a written resolution, once signified, shall not be revoked.

(4) A written resolution shall be passed when the required majority of eligible members have signified their agreement to the written resolution.


307 Subdivision 2 - Written Resolutions of Private Companies-307. Period for agreeing to written resolution.

(1) Unless otherwise provided in the constitution, a proposed written resolution made under section 302 lapses if it is not passed before the end of the period of twenty-eight days beginning with the circulation date.

(2) The agreement of a member to a written resolution shall not be effective if it is signified after the expiry of that period.


308 Subdivision 2 - Written Resolutions of Private Companies-308. Sending of documents relating to written resolutions by electronic means.

Where a company has given an electronic address in any document containing or accompanying a proposed written resolution, the company shall be deemed to have agreed that any document or information relating to that resolution may be sent by electronic means to that address, subject to any conditions or limitations specified in the document.


309 Subdivision 3 - Passing Resolutions at Meetings of Members-309. Resolutions at meetings of members.

Unless otherwise provided in the constitution, a resolution shall be validly passed at a meeting of members if:

(a) notice of the meeting and of the resolution is given; and

(b) the meeting is held and conducted,

in accordance with the provisions of this Subdivision.


310 Subdivision 3 - Passing Resolutions at Meetings of Members-310. Power to convene meetings of members.

A meeting of members may be convened by:

(a) the Board; or

(b) any member holding at least ten per centum of the issued share capital of a company or a lower percentage as specified in the constitution or if the company has no share capital, by at least five per centum in the number of the members.


311 Subdivision 3 - Passing Resolutions at Meetings of Members-311. Power to require directors to convene meetings of members.

(1) The members of a company may require the directors to convene a meeting of members of the company.

(2) A requisition under subsection (1):

(a) shall be in hard copy or electronic form;

(b) shall state the general nature of the business to be dealt with at the meeting;

(c) may include the text of a resolution that may properly be moved and is intended to be moved at the meeting; and

(d) shall be signed or authenticated by the person making the requisition.

(3) The directors shall call for a meeting of members once the company has received requisition to do so from:

(a) members representing at least ten per centum of the paid up capital of the company carrying the right of voting at meetings of members of the company, excluding any paid up capital held as treasury shares; or

(b) in the case of a

312 Subdivision 3 - Passing Resolutions at Meetings of Members-312. Directors' duty to call meetings required by members.

(1) In relation to section 311, the directors shall:

(a) call for the meeting within fourteen days from the date of the requisition; and

(b) hold the meeting on a date not more than twenty-eight days after the date of the notice to convene the meeting.

(2) If the requests received by the company identify a resolution intended to be moved at the meeting, the notice of the meeting shall include the text of the resolution.

(3) The business that may be dealt with at the meeting includes a resolution of which notice is given in accordance with this section.

(4) If the resolution is to be proposed as a special resolution, the directors shall be considered as not having duly called for the meeting if the notice of the resolution is not given in accordance with section 292.


313 Subdivision 3 - Passing Resolutions at Meetings of Members-313. Power of members to convene meeting of members at company's expense.

(1) If the directors:

(a) are required under section 311 to call a meeting of members; and

(b) do not do so in accordance with section 312,

the members who requisitioned the meeting, or any of the members representing more than one half of the total voting rights of all of the members who requisitioned the meeting, may call for a meeting of members.

(2) Where the requisition received by the company included the text of a resolution intended to be moved at the meeting, the notice of the meeting shall include the text of the resolution.

(3) The meeting shall be convened on a date not more than three months after the date on which the directors received a requisition under subsection 311(1) to call for a meeting of members.

(4) The meeting shall be convened in the same manner, as nearly as possible, as that in which meetings are requisitioned to be convened by dir

314 Subdivision 3 - Passing Resolutions at Meetings of Members-314. Power of Court to order meeting.

(1) This section applies if for any reason it is impracticable:

(a) to call for a meeting of members of a company in any manner in which meetings of that company may be called; or

(b) to conduct the meeting in the manner prescribed by the constitution or this Act.

(2) The Court may, either of its own motion or on the application:

(a) of a director of the company;

(b) of a member of the company who would be entitled to vote at the meeting; or

(c) of the personal representative of any such member,

order a meeting to be called, held and conducted in any manner the Court thinks fit.

(3) Where such an order is made, the Court may give such ancillary or consequential direction as the Court thinks expedient.

(4) Such directions may include a direction that one member of the company present i

315 Subdivision 3 - Passing Resolutions at Meetings of Members-315. Resolution passed at adjourned meeting.

Where a resolution is passed at an adjourned meeting of a company or of holders of any class of shares, the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed.


316 Subdivision 4 - Notice of Meetings-316. Notice required for meetings of members.

(1) A meeting of members of a private company, other than a meeting for the passing of a special resolution, shall be called by notice of at least fourteen days or any longer period specified in its constitution.

(2) A meeting of members of a public company, other than a meeting for the passing of a special resolution, shall be called by notice:

(a) in the case of an annual general meeting, at least twenty-one days or any longer period specified in its constitution; and

(b) in any other case, at least fourteen days or any longer period specified in its constitution.

(3) An annual general meeting may be called by a notice shorter than the period referred to in subsection (2) if agreed by all the members entitled to attend and vote at the meeting.

(4) A meeting of members other than an annual general meeting may be called by a notice shorter than the period referred to i

317 Subdivision 4 - Notice of Meetings-317. Contents of notices of meetings of members.

(1) Notice of a meeting of members of a company shall state:

(a) the place, date and time of the meeting; and

(b) the general nature of the business of the meeting.

(2) Notice of meeting of members may include text of any proposed resolution and other information as the directors deem fit.


318 Subdivision 4 - Notice of Meetings-318. Notice of adjourned meetings of members.

When a meeting of members is adjourned for thirty days or more, notice of the adjourned meeting shall be given in the same manner as in the case of the original meeting.


319 Subdivision 4 - Notice of Meetings-319. Manner in which notice to be given.

(1) Notice of a meeting of members shall be in writing and shall be given to the members either:

(a) in hard copy;

(b) in electronic form; or

(c) partly in hard copy and partly in electronic form.

(2) Unless otherwise provided in the constitution, a notice:

(a) given in hard copy shall be sent to any member either personally or by post to the address supplied by the member to the company for such purpose; or

(b) given in electronic form shall be transmitted to the electronic address provided by the member to the company for such purpose or by publishing on a website.


320 Subdivision 4 - Notice of Meetings-320. Notification of publication of notice of meeting on website.

(1) Notice of a meeting of members shall not be validly given by a company by means of a website unless a notification to that effect is given in accordance with this section.

(2) The company shall notify a member of the publication of the notice on the website and such notification shall be in writing and shall be given in hard copy or electronic form stating:

(a) that it concerns a meeting of members;

(b) the place, date and time of the meeting; and

(c) in the case of a public company, whether the meeting is an annual general meeting.

(3) The notice shall be made available on the website throughout the period beginning from the date of the notification referred to in subsection (2) until the conclusion of the meeting.


321 Subdivision 4 - Notice of Meetings-321. Persons entitled to receive notice of meetings of members.

(1) Notice of a meeting of members shall be given to every member, director and auditor of the company.

(2) The reference to a member in subsection (1) includes any person who is entitled to a share in consequence of the death or bankruptcy of a member who, but for his death or bankruptcy, would be entitled to receive notice of the meeting and the company has been notified of the person's entitlement in writing.


322 Subdivision 4 - Notice of Meetings-322. Resolution requiring special notice.

(1) Where special notice is required of a resolution under any provision of this Act, the resolution shall not be effective unless notice of the intention to move it has been given to the company at least twenty-eight days before the meeting at which it is moved.

(2) The company is not required to give notice of the proposed resolution received under subsection (1) to the members unless the resolution can be properly moved at a meeting of members required under this Act.

(3) The company shall, where practicable, give its members notice of any such resolution in the same manner and at the same time as it gives notice of the meeting.

(4) Where it is not practicable to give its members notice in accordance with subsection (3), the company shall give its members notice of any such resolution at least fourteen days before the meeting:

(a) by advertising it in one widely circulated newspaper in Malaysia i

323 Subdivision 4 - Notice of Meetings-323. Power of members to require circulation of statements.

(1) The members of a public company may require the company to:

(a) circulate a statement of not more than one thousand words with respect to:

(i) a matter referred to in a proposed resolution to be dealt with at that meeting; or

(ii) other business to be dealt with at that meeting; or

(b) give notice of a resolution which may be properly moved and is intended to move at that meeting,

to members of the company entitled to receive notice of a meeting of members.

(2) The directors shall be required to circulate the statement referred to in paragraph (1) (a) or give notice of a resolution referred to in paragraph (1) (b) , as the case may be, once the company has received the requisition from:

(a) members representing at least two and a half per centum of the paid up capital of the company car

324 Subdivision 4 - Notice of Meetings-324. Director's duty to circulate members' statement.

(1) Subject to sections 308 and 326, the directors of a public company that is required to circulate a statement under section 323 shall send a copy of the statement to each member of the company who is entitled to receive notice of the meeting:

(a) in the same manner as the notice of the meeting; and

(b) at the same time as, or as soon as reasonably practicable after, it gives notice of the meeting.

(2) The company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding twenty thousand ringgit.


325 Subdivision 4 - Notice of Meetings-325. Power of Court to order non-circulation of members' statement.

(1) A company shall not be required to circulate a member's statement under section 324 if, on an application by the company or any person who claims to be aggrieved, the Court is satisfied that the rights conferred by section 323 are being abused to secure needless publicity or the matter is defamatory, frivolous or vexatious or if the circulation would not be in the best interest of the company.

(2) The Court may order the company's costs on an application by the company to be paid in whole, or in part by the requisitionists, notwithstanding that they are not parties to the application.


326 Subdivision 4 - Notice of Meetings-326. Sending documents relating to a meeting by electronic means.

Where a company has provided an electronic address in a notice calling a meeting, it shall be deemed to have been agreed that any document or information relating to proceedings at the meeting including the appointment and termination of a proxy may be sent by electronic means to that address, subject to any conditions or limitations specified in the notice.


327 Subdivision 5 - Procedure at Meetings-327. Meetings of members at two or more venues.

(1) Subject to the constitution, a company may convene a meeting of members at more than one venue using any technology or method that enables the members of the company to participate and to exercise the members' rights to speak and vote at the meeting.

(2) The main venue of the meeting shall be in Malaysia and the chairperson shall be present at that main venue of the meeting.


328 Subdivision 5 - Procedure at Meetings-328. Quorum at meetings.

(1) In the case of a company having only one member, one member personally present at a meeting shall constitute a quorum.

(2) In any other case, two members personally present at a meeting or by proxy shall be a quorum unless a higher number is specified in the constitution.

(3) For the purpose of constituting a quorum:

(a) one or more representatives appointed by a corporation shall be counted as one member; or

(b) one or more proxies appointed by a person shall be counted as one member.

(4) No business shall be transacted at any meeting of members unless a quorum is present at the time when the meeting proceeds to business.

(5) Unless otherwise provided in the constitution, if within half an hour from the time appointed for the meeting, a quorum is not present, the meeting:

(a) if convened upon the requisition of members, shall

329 Subdivision 5 - Procedure at Meetings-329. Chairperson of meetings of members.

(1) Subject to any provision of the constitution that states who shall be the chairperson, the chairman of the Board, if any, shall preside as the chairperson at every general meeting of the company.

(2) If there is no such chairman, or if the chairman is not present within fifteen minutes after the time appointed for the holding of the meeting or is unwilling to act, the members present shall elect one of their members to be chairperson of the meeting.


330 Subdivision 5 - Procedure at Meetings-330. Declaration by chairperson on a show of hands.

(1) At any meeting of members, a resolution put to the vote of the meeting shall be decided on a show of hands unless before or on the declaration of the result of the show of hands, a poll is demanded:

(a) by the chairman;

(b) by at least three members present in person or by proxy;

(c) by any member present in person or by proxy and representing not less than ten per centum of the total voting rights of all the members having the right to vote at the meeting; or

(d) by a member holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than ten per centum of the total paid up shares conferring that right.

(2) On a vote on a resolution at a meeting on a show of hands, a declaration by the chairperson that the resolution has been passed unanimously or with a particu

331 Subdivision 5 - Procedure at Meetings-331. Right to demand a poll.

A provision of the constitution shall be void in so far as the provision would have the effect of:

(a) excluding the right to demand a poll at a general meeting on any question or matter other than the election of the chairperson of the meeting or the adjournment of the meeting;

(b) making ineffective a demand for a poll on any such question or matter other than the election of the chairperson of the meeting or the adjournment of the meeting that is made:

(i) by not less than five members having the right to vote on the resolution;

(ii) by a member or members representing not less than ten per centum of the total voting rights of all the members having the right to vote on the resolution, excluding any voting rights attached to any shares in the company held as treasury shares; or

(iii) by a member or members holding shares in the company conferring a right to vote on t

332 Subdivision 5 - Procedure at Meetings-332. Voting on a poll.

(1) On a poll taken at a meeting of members of a company, a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.

(2) If a poll is duly demanded, it shall be taken either forthwith or after an interval or adjournment or otherwise as the chairman directs, and the result of the poll shall be the resolution of the meeting at which the poll was demanded, but a poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith.


333 Subdivision 5 - Procedure at Meetings-333. Representation of corporations at meetings of members.

(1) If a corporation is a member of a company, the corporation may by resolution of its Board or other governing body authorize a person or persons to act as its representative or representatives at any meeting of members of the company.

(2) If the corporation authorizes only one person, the person shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if he was an individual member of the company.

(3) If the corporation authorizes more than one person as its representative, every one of the representative is entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if every one of the representative was an individual member of the company.

(4) If the corporation authorizes more than one person and more than one of the representatives purport to exercise the power under subsection (3):

(a) if the represen

334 Subdivision 6 - Proxies-334. Appointment of proxies.

(1) A member of a company shall be entitled to appoint another person as his proxy to exercise all or any of his rights to attend, participate, speak and vote at a meeting of members of the company.

(2) In the case of a company having a share capital, a member may appoint more than one proxy in relation to a meeting, provided that the member specifies the proportion of the member's shareholdings to be represented by each proxy.

(3) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the company, or at such other place within Malaysia as is specified for that purpose in the notice convening the meeting, not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or, in the case of

335 Subdivision 6 - Proxies-335. Notice of meetings of members to contain statement of rights to appoint proxies.

(1) In every notice calling a meeting of members of a company, there shall appear prominently, a statement informing the member of his rights under section 334, failing which every officer who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.

(2) Any person who authorizes or permits an invitation to appoint as proxy a person or one of a number of persons specified in the invitation to be issued at the company's expense to only some of the members entitled to be sent a notice of the meeting and to vote in the meeting by proxy, commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.

(3) The proceedings of the meeting shall not be invalidated notwithstanding the non-compliance with this section.


336 Subdivision 6 - Proxies-336. Proxy as a chairperson of a meeting of members.

Unless expressly prohibited in the constitution, a proxy may be elected to be the chairperson of a meeting of members by a resolution of the company passed at the meeting.


337 Subdivision 6 - Proxies-337. Right of proxy to demand for a poll.

(1) The appointment of a proxy to vote on a matter at a meeting of a company, authorizes the proxy to demand, or join in demanding, a poll on that matter.

(2) In applying paragraph 331 (b) , a demand by a proxy counts:

(a) for the purposes of subparagraph (b) (i), as a demand by the member;

(b) for the purposes of subparagraph (b) (ii), as a demand by a member representing the voting rights that the proxy is authorized to exercise; or

(c) for the purposes of subparagraph (b) (iii), as a demand by a member holding the shares to which those rights are attached.


338 Subdivision 6 - Proxies-338. Termination of a person's authority to act as a proxy.

(1) Unless the company receives a notice of termination before the commencement of a meeting of members or an adjourned meeting of members, the termination of the authority of the person to act as proxy does not affect:

(a) the constitution of the quorum at the meeting;

(b) the validity of anything he did as chairperson of a meeting;

(c) the validity of a poll demanded by him at a meeting; or

(d) the validity of the vote exercised by him at a meeting.

(2) If the constitution require or permit members to give the notice of termination in subsection (1) to a person other than the company, the reference to the company receiving the notice shall be taken as the person receiving the notice.

(3) Notwithstanding subsection (1), the constitution may require that the notice of termination of the authority of the proxy to be received by the company at a

339 Subdivision 7 - Class Meetings-339. Application to class meetings.

(1) The provisions of Subdivision 5 of this Division in relation to meetings shall apply to a meeting of holders of a class of shares and class of members subject to the modifications specified in this Subdivision.

(2) Sections 328 and 330 shall not apply in relation to a meeting of holders of a class of shares and class of members in connection with a meeting in respect of the variations of rights attached to the class of shares and class of members.

(3) The quorum for a variation of class rights meeting in respect of holders of a class of shares is:

(a) for a meeting other than an adjourned meeting, two persons present holding at least one-third of the number of issued shares of such class, excluding any shares of that class held as treasury shares; and

(b) for an adjourned meeting, one person present holding shares of such class,

unless otherwise provided in the con

340 Subdivision 8 - Additional Requirements for Public Companies-340. Annual general meeting.

(1) Every public company shall hold an annual general meeting in every calendar year in addition to any other meetings held during that period, to transact the following business:

(a) the laying of audited financial statements and the reports of the directors and auditors;

(b) the election of directors in place of those retiring;

(c) the appointment and the fixing of the remuneration of auditors; and

[(c) Am. Act A1605:s.10]

(d) any resolution or other business of which notice is given in accordance with this Act or the constitution.

(2) For the purposes of subsection (1), the annual general meeting shall be held:

(a) within six months of the company's financial year end; and

(b) not more than fifteen months after the last preceding annual general meeting.


341 Subdivision 9 - Record of Resolutions and Meetings-341. Records of resolutions and meetings.

(1) Every company shall keep records comprising:

(a) all resolutions of members passed otherwise than at the meeting of members;

(b) minutes of all proceedings of meetings of members; and

(c) details provided to the company in accordance with section 344.

(2) The records shall be kept for at least seven years from the date of the resolution, meeting or decision, as the case may be.

(3) Every officer who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and, in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


342 Subdivision 9 - Record of Resolutions and Meetings-342. Inspection of records of resolutions and meetings.

(1) The records referred to in section 341 relating to the previous seven years shall be kept available for inspection:

(a) at the registered office of the company; or

(b) at another place which a notice has been given under subsection (2).

(2) Unless the records have at all times been kept at the registered office, the company shall give a notice to the Registrar in respect to the place where the records are kept or the change of the place within fourteen days from the date the records are kept at such place or such change of place.

(3) The records shall be made available for inspection by any member of the company without charge.

(4) Any member shall be entitled to be furnished with a copy of any minutes specified under section 341 within fourteen days after he has made a request in writing to the company at a charge not exceeding two ringgit for every one hundred wo

343 Subdivision 9 - Record of Resolutions and Meetings-343. Records as evidence of resolutions.

(1) The record of a resolution passed otherwise than at a meeting of members, if purporting to be signed by a director of the company or by the secretary, is sufficient evidence of the passing of the resolution.

(2) If there is a record of a written resolution of a private company, the requirements of this Act with respect to the passing of the resolution are deemed to be complied with unless the contrary is proved.

(3) The record of proceedings of a meeting of members purporting to be signed by the chairperson of that meeting or by the chairperson of the next meeting of members is sufficient evidence of the proceedings at the meeting.

(4) If there is a record of proceedings of a meeting of members of a company, then, until the contrary is proved:

(a) the meeting is deemed to be duly convened;

(b) all proceedings at the meeting are deemed to have been duly taken place; and

<

344 Subdivision 9 - Record of Resolutions and Meetings-344. Details of decisions provided by a sole member.

(1) If a sole member of a company takes any decision that:

(a) may be taken by the company in meeting of members; and

(b) has effect as if agreed by the company in meeting of members,

he shall provide the company with details of that decision, unless that decision is taken by way of a written resolution.

(2) A person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.

(3) Failure to comply with this section does not affect the validity of any decision referred to in subsection (1).


345 Division 6 - Remedies-345. Interpretation.

For the purposes of this Division, "complainant" means:

(a) a member of a company, or a person who is entitled to be registered as a member of a company;

(b) a former member of a company if the application relates to the circumstances in which the member ceased to be a member;

(c) any director of a company; or

(d) the Registrar, in the case of a company declared under section 590.


346 Division 6 - Remedies-346. Remedy in cases of an oppression.

(1) Any member or debenture holder of a company may apply to the Court for an order under this section on the ground:

(a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders including himself or in disregard of his or their interests as members, shareholders or debenture holders of the company; or

(b) that some act of the company has been done or is threatened or that some resolution of the members, debenture holders or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or debenture holders, including himself.

(2) If on such application the Court is of the opinion that either of those grounds is established, the Court may make such order as the Court thinks fit with the

347 Division 6 - Remedies-347. Derivative proceedings.

(1) A complainant may, with the leave of the Court initiate, intervene in or defend a proceeding on behalf of the company.

(2) Proceedings brought under this section shall be brought in the company's name.

(3) The right of any person to bring, intervene in, defend or discontinue any proceedings on behalf of a company at common law is abrogated.

Editor's Note: The common law derivative action has been ousted from use under the new Malaysian Law of Asociation, in particular, the Companies Act 2016

Refer to Goh Choon Kim v. Chan Eng Leong & Anor [2022] MLRHU 1652 where it was stated that:

"Looking at s 347 and 348 of the Companies Act 2016, on leave to commence derivative action, they are no different from s 181A and 181B of the repealed Companies Act 1965, save that the common law rig

348 Division 6 - Remedies-348. Leave of Court.

(1) An application for leave of the Court under section 347 shall be made to the Court without the need for an appearance to be entered.

(2) The complainant shall give thirty days' notice in writing to the directors of his intention to apply for the leave of Court under section 347.

(3) Where leave has been granted for an application under section 347, the complainant shall initiate proceedings in Court within thirty days from the grant of leave.

(4) In deciding whether or not the leave shall be granted, the Court shall take into account whether:

(a) the complainant is acting in good faith; and

(b) it appears prima facie to be in the best interest of the company that the application for leave be granted.

(5) Any proceedings brought, intervened in or defended under this section shall not be discontinued, compromised or settled except with the leave of t

349 Division 6 - Remedies-349. Effect of ratification.

If members of a company, ratify or approve the conduct of the subject matter of the action:

(a) the ratification or approval does not prevent any person from bringing, intervening in or defending proceedings with the leave of the Court;

(b) the application for leave or action brought or intervened in shall not be stayed or dismissed by reason only of the ratification or approval; and

(c) the Court may take into account the ratification or approval in determining what order to make.


350 Division 6 - Remedies-350. Powers of the Court.

In granting leave under this section and sections 347 and 348, the Court may make such other orders as the Court thinks appropriate including an order:

(a) authorizing the complainant or any other person to control the conduct of the proceedings;

(b) giving directions for the conduct of the proceedings;

(c) for any person to provide assistance and information to the complainant, including to allow inspection of the company's books;

(d) requiring the company to pay reasonable legal fees and disbursements incurred by the complainant in connection with the application or action, or pending the grant of the leave or pending the grant of any injunction by the Court hearing the application for leave under this section; or

(e) the costs of the complainant, the company or any other person for proceedings taken under this section, including an order as to indemnity

351 Division 6 - Remedies-351. Injunction.

(1) Where a person has engaged, is engaging or intends to engage in conduct that constituted, constitutes or would constitute:

(a) a contravention of this Act;

(b) an attempt to contravene this Act;

(c) an attempt that aids, abets, advises or procures a person to contravene this Act;

(d) an attempt to induce, whether by threats, promises or otherwise, a person to contravene this Act;

(e) an attempt by which any person would be in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or

(f) an attempt of conspiracy with others to contravene this Act,

the Court may, on the application of the Registrar, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining

352 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-352. Registration of charges.

(1) A company that creates a charge over its property or any of its undertakings to which this section applies shall lodge within thirty days from the creation of the charge, together with the prescribed fee with the Registrar for registration, a statement of particulars of the charge in the form and manner as may be determined by the Registrar.

(2) If a company contravenes with subsection (1), the charge shall be void against the liquidator and any creditor of the company, so far as any security on the company's property or undertaking is conferred.

(3) Nothing in subsection (2) shall prejudice any contract or obligation for the repayment of the money secured by a charge and when a charge becomes void under this section, the money secured shall immediately become payable.

(4) Any charge created, before the lapse of thirty days before a prior charge is registered with respect of the same debts, or a part of the debts, the charge

353 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-353. Types of charges require registration.

The requirement for registration under section 352 shall apply to the following charges:

(a) a charge to secure any issue of debentures;

(b) a charge on uncalled share capital of a company;

(c) a charge on shares of a subsidiary of the company which are owned by the company;

(d) a charge or an assignment created or evidenced by an instrument which if executed by an individual within Peninsular Malaysia and affecting property within Peninsular Malaysia, would be invalid or of limited effect if not filed or registered under the Bills of Sale Act 1950 [Act 268] ;

(e) a charge on land wherever situate or any interest in the land;

(f) a charge on book debts of the company;

(g) a floating charge on the undertaking or property of a company;

(h) a charge on calls made but not paid;

(i) a c

354 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-354. Registration of charges created over property outside Malaysia.

If a charge created in Malaysia affects property outside Malaysia, the statement of the particulars as determined by the Registrar may be lodged for registration in accordance with section 352 even if further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situated.


355 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-355. Registration of charges in series of debentures.

(1) When a series of debentures containing or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled equally is created by a company, it shall be sufficient if there is lodged with the Registrar for registration within thirty days from the date of the execution of the instrument containing the charge, or if there is no such instrument after the execution of the first debenture of the series, a statement containing the following particulars:

(a) the total amount secured by the whole series;

(b) the dates of the resolutions authorizing the issue of the series and the date of the covering instrument, if any, by which the security is created or defined;

(c) a general description of the property charged; and

(d) the names of the trustee, if any, for the debenture holders.

(2) For th

356 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-356. Duty of company to register charges existing on property acquired.

(1) If:

(a) a company acquires property which is subject to a charge and which would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Subdivision;

(b) a foreign company becomes registered in Malaysia and has prior to such registration created a charge which would, if it had been created by the company while it was registered in Malaysia, have been required to be registered under this Subdivision; or

(c) a foreign company becomes registered in Malaysia and has prior to such registration acquired property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition and while it was registered in Malaysia, have been required to be registered under this Subdivision,

the company or foreign company shall lodge a statement of the particulars of t

357 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-357. Register of charges to be kept by Registrar.

(1) The Registrar shall keep and maintain a register of all charges lodged for registration under this Subdivision.

(2) The Registrar shall enter in the register with respect to those charges the following particulars:

(a) in the case of a charge to the benefit of which the holders of a series of debentures are entitled, the particulars as are required to be contained in a statement furnished under subsection 355(1); and

(b) in the case of any other charge:

(i) the date of creation, if the charge is a charge created by the company;

(ii) the date of acquisition of the property, if the charge is a charge existing on property acquired by the company;

(iii) the amount secured by the charge;

(iv) a description sufficient to identify the property charged; and

(v) the name of the person entitled to the charge.

(3) The

358 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-358. Endorsement of certificate of registration on debentures.

(1) A company shall cause to be endorsed on every debenture forming one of a series of debentures or certificate of debenture stock which is issued by the company and the payment of which is secured by a charge registered:

(a) a copy of the certificate of registration; or

(b) a statement that the registration has been effected and the date of registration.

(2) Subsection (1) shall not apply to any debenture or certificate of debenture stock which has been issued by the company before the charge was registered.

(3) If a company contravenes this section, every person who knowingly and wilfully authorizes or permits the delivery of any debenture or certificate of debenture stock which is not endorsed as required by this section commits an offence.


359 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-359. Assignment and variation of charge.

(1) If after a charge on property of a company has been created and registered under this Subdivision, a person other than the original charge holder becomes the new holder of the charge, the new holder of the charge shall, within thirty days and upon payment of a prescribed fee:

(a) lodge with the Registrar a notice stating that he has become the new holder of the charge and the notice shall contain the information as may be determined by the Registrar; and

(b) give a copy of the notice to the company.

(2) If after a charge on the property of a company has been created and registered under this Subdivision there is a variation in the terms of the charge having the effect of:

(a) varying the amount of the debt or liabilities, whether present or prospective, secured by the charge; or

(b) prohibiting or restricting the creation of subsequen

360 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-360. Satisfaction and release of property from charge.

(1) If, with respect to a registered charge:

(a) the debt for which the charge was given has been paid or satisfied in whole or in part; or

(b) the property or undertaking charged or any part of the property or undertaking has been released from the charge or has been ceased to form part of the company's property or undertaking,

the company shall lodge with the Registrar the particulars as may be determined by the Registrar of the fact within fourteen days from the payment, satisfaction, release or cessation, and the Registrar shall enter that particulars in the register.

(2) The payment, satisfaction, release or cessation referred to in subsection (1) shall be supported with sufficient evidence which shall be lodged with the Registrar.

(3) For the purposes of subsection (1), any other person entitled to the charge may lodge the particulars of information referred to i

361 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-361. Extension of time and rectification of register of charges.

The Court, on being satisfied that the omission to register a charge, whether under this Act or any corresponding previous written law, within the time required or that the omission or misstatement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental or due to inadvertence or to some other sufficient cause or is not of a nature to prejudice the position of creditors or shareholders or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seem to the Court just and expedient, including a term or condition that the extension or rectification is to be without prejudice to any liability already incurred by the company or any of its officers in respect of the default, order that the time for registration be extended or that the omission or misstatement be rectified.


362 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-362. Company to keep instruments of charges and register of charges.

(1) Every company shall cause the instrument creating any charge requiring registration under this Subdivision or a copy of such instrument to be kept at the registered office of the company.

(2) For the purposes of subsection (1), in the case of a series of debentures, the keeping of a copy of one debenture of the series shall be sufficient.

(3) Every company shall keep at the registered office of the company a register of charges and enter in the register all charges specifically affecting property of the company and all floating charges on the undertaking or any property of the company, giving in each case:

(a) a short description of the property charged;

(b) the amount of the charge; and

(c) the names of the persons entitled to the charge except in the case of securities to the bearer.

(4) The instruments or copies of such instruments and the regis

363 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-363. Documents made out of Malaysia.

If under this Subdivision, an instrument, deed, statement or other document is required to be lodged with the Registrar within a specified time, the time so specified shall be extended for a period of seven days or such further period as the Registrar may allow in relation to an instrument, deed, statement or other document executed or made in a place out of Malaysia.


364 Division 7 - Charges, Arrangements and Reconstructions and Receivership Subdivision 1 - Charges-364. Application of this Subdivision to foreign company.

A reference in this Subdivision to a company shall be read as including a reference to a foreign company to which Division 1 of Part V applies, but nothing in this Subdivision applies to a charge on property outside Malaysia of a foreign company.


365 Subdivision 2 - Arrangements and Reconstructions-365. Interpretation.

In this Subdivision, unless the context otherwise requires:

  "arrangement"  includes a reorganization of the share capital of a company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both of these methods;

  "company"  means any corporation or society liable to be wound up under this Act with the exception of section 370;

  "related company"  means a company which is a subsidiary company, holding company or an ultimate holding company, of a subject company;

["related company" Ins. by Act A1701/2024]

  "subject company"  means a company that has made an application under subsection 368(1);

["subject company" Ins. by Act

366 Subdivision 2 - Arrangements and Reconstructions-366. Power of Court to order compromise or arrangement with creditors and members.

(1) The Court may order a meeting in a summary way to be summoned in such manner as the Court directs on an application to the Court for the approval of a compromise or arrangement by-

(a) a company;

(b) a creditor or class of creditors of a company;

(c) a member or class of members of a company;

(d) a liquidator, if a company is being wound up; or

(e) a judicial manager, if a company is under judicial management.

[Subs. by Act A1701/2024]

(2) A meeting held pursuant to an order of the Court made under subsection (1) may be adjourned if the resolution for adjournment is approved by seventy-five per centum of the total value of creditors or class of creditors or the members or class of members present and voting either in person or by proxy at the meeting.

(2A) All meetings held pursuant to an ord

367 Subdivision 2 - Arrangements and Reconstructions-367. Power of Court to appoint insolvency practitioner.

(1) The Court may, on an application for the approval of a compromise or arrangement under section 366, appoint an insolvency practitioner to assess the viability of the proposed compromise or arrangement.

(2) The insolvency practitioner appointed under subsection (1) shall prepare a report on the viability of the proposed compromise or arrangement and shall table the report at the meeting of creditors or members held under section 366.

(3) Notwithstanding subsection (1), the Court shall appoint an insolvency practitioner for the company when-

(a) the company makes an application under section 368B, 368D or 369C; or

(b) a related company of the company makes an application under section 368A.

(4) The insolvency practitioner appointed under this section-

(a) shall have the right of access to all the records of the company at all reasonable

368 Subdivision 2 - Arrangements and Reconstructions-368. Power of Court to restrain proceedings.

(1) Where no order has been made or resolution has been passed for the winding up of a company and a compromise or arrangement has been proposed between the company and its creditors or any class of those creditors, the Court may, in addition to any of its powers, on an application in a summary way by the company or any member or creditor of the company, grant a restraining order for a period of not more than three months from the date on which the restraining order is granted.

[(1) Subs. by Act A1701/2024]

(1A) Upon the filing of an application for a restraining order under subsection (1) and until the application is decided by the Court or until the lapse of two months from the date of filing of the application, whichever is earlier-

(a) no order may be made, and no resolution may be passed, for the winding up of the company;

(b) no receiver or receiver and manager

368A Subdivision 2 - Arrangements and Reconstructions-368A. Power of Court to restrain proceedings, etc., against related company.

(1) Where the Court has granted a restraining order under subsection 368(1) or an extension of period of such order under subsection 368(2) in relation to a subject company, the Court may, on the application of a related company, grant a restraining order for a period of not more than the period of the order granted to the subject company.

(2) When a related company makes an application under subsection (1), the related company shall-

(a) publish a notice of the application in the manner as may be determined by the Registrar; and

(b) unless the Court directs otherwise, send the notice of the application to each creditor of the related company who may be affected by a restraining order granted under subsection (1).

(3) The Court may grant a restraining order to a related company if the Court is satisfied that-

(a) no order has been made, and no res

368B Subdivision 2 - Arrangements and Reconstructions-368B. Super priority for rescue financing for compromise or arrangement.

(1) Where a company has made an application under subsection 366(1) or subsection 368(1), the Court may, on an application by the company under this section, grant one or more of the following orders:

(a) an order that if the company is wound up, notwithstanding subsection 527(1), the debt arising from any rescue financing obtained by the company shall be paid immediately after the costs and expenses of the winding up of the company referred to in paragraph 527(1) (a) are paid;

(b) an order to secure a debt arising from any rescue financing which otherwise would not have been able to be obtained by the company unless the debt is secured by-

(i) a security interest on property of the company that is not subject to any security interest; or

(ii) a subordinate security interest on property of the company that is subject to an existing security interest;

<

368C Subdivision 2 - Arrangements and Reconstructions-368C. Restraint of disposition of property, etc., during the period of restraining order.

(1) The Court may, on an application made by any creditor of a subject company or a related company at any time while a restraining order granted under section 368 or 368A is in force, grant one or more of the following orders:

(a) an order restraining the disposal of property of the subject company or a related company other than in its ordinary course of business;

(b) an order restraining the transfer of any shares of the subject company or the related company;

(c) an order restraining the alteration of the rights of any member of the subject company or the related company.

(2) The period of an order granted under this section shall not exceed the expiry date of a restraining order granted under section 368 or 368A.

[Ins. by Act A1701/2024]


368D Subdivision 2 - Arrangements and Reconstructions-368D. Power of Court to cram down.

(1) This section applies where-

(a) a compromise or arrangement between a company and its creditors or any class of those creditors has been voted on at a relevant meeting;

(b) the creditors meant to be bound by the compromise or arrangement are placed in two or more classes of creditors for the purpose of voting on the compromise or arrangement at the relevant meeting;

(c) the conditions in subsection 366(3), in so far as they are applicable, are satisfied at the relevant meeting in respect of at least one class of creditors; and

(d) the conditions in subsection 366(3), in so far as they are applicable, are not satisfied at the relevant meeting in respect of at least one class of creditors, each called in this section a dissenting class.

(2) Notwithstanding subsections 366(1) and (3), the Court may, subject to this section and on the application of t

369 Subdivision 2 - Arrangements and Reconstructions-369. Information as to compromise or arrangement with creditors and members.

(1) If a meeting is summoned under this Subdivision, every notice summoning the meeting:

(a) which is sent to a creditor or member shall be accompanied with a statement explaining the effect of the compromise or arrangement and in particular stating any material interests of the directors, whether as directors or as members or as creditors of the company or otherwise, and the effect of the compromise or arrangement so far as it is different from the effect on the similar interests of other persons; and

(b) which is given by advertisement shall either contain the statement referred to in paragraph (a) or a notification of the place at which and the manner in which the creditors or members entitled to attend the meeting may obtain copies of such a statement.

(2) Where the compromise or arrangement affects the rights of debenture holders, the statement shall give the like explanation wit

369A Subdivision 2 - Arrangements and Reconstructions-369A. Power of Court to order revote.

(1) At the hearing of an application for the Court's approval of a compromise or arrangement under subsection 366(4), the Court may order the company to hold another meeting of the creditors or class of creditors for the purpose of putting the compromise or arrangement to a revote subject to such terms as the Court thinks fit.

(2) An order made under subsection (1) may provide for one or more of the following matters:

(a) the manner of summoning and convening the meeting;

(b) the classification of any creditor for the purpose of voting at the further meeting;

(c) the amount of any creditor's debt that is to be admitted for the purpose of voting at the further meeting;

(d) the weight to be attached to the vote of any creditor at the further meeting.

(3) A meeting held pursuant to an order of the Court made under subsection (1) shall be chaired

369B Subdivision 2 - Arrangements and Reconstructions-369B. Filing, inspection and adjudication of proof of debt.

(1) Where the Court orders a meeting under subsection 366(1) to be summoned, the company shall state in every notice referred to in subsection 369(1) summoning the meeting-

(a) the manner in which a creditor is to file a proof of debt with the company; and

(b) the period within which the proof is to be filed.

(2) If a creditor does not file the creditor's proof of debt in the manner and within the period stated in the notice summoning the meeting, the creditor is not allowed to vote, whether in person or by proxy, at the meeting.

(3) Notwithstanding subsection (2), the Court may, on an application made by the company or a creditor, grant an order extending the period stated in the notice summoning the meeting within which a proof of debt is to be filed.

(4) Upon being granted an order under subsection (3), the company shall as soon as practicable, send a notice of the

369C Subdivision 2 - Arrangements and Reconstructions-369C. Power of Court to approve compromise or arrangement without meeting of creditors.

(1) Where a compromise or arrangement is proposed between a company and its creditors or any class of those creditors, the Court may, on an application made by the company, grant an order approving the compromise or arrangement without any meeting of the creditors or class of creditors.

(2) If the proposed compromise or arrangement is approved by order of the Court under subsection (1), the approved compromise or arrangement is binding on the company and the creditors or class of creditors meant to be bound by the approved compromise or arrangement.

(3) The Court shall not approve a compromise or arrangement under subsection (1) unless-

(a) the company has provided each creditor meant to be bound by the proposed compromise or arrangement with a statement that complies with subsection (6) and contains the following information:

(i) information concerning the company's property, assets, b

369D Subdivision 2 - Arrangements and Reconstructions-369D. Power of Court to review act, omission or decision, etc., after approval, etc., of compromise or arrangement.

(1) The Court may, on an application of any company or creditor bound by a compromise or arrangement which has been approved by the Court under subsection 366(4) or subsection 369C(1), clarify any terms of the compromise or arrangement.

(2) Where the Court is satisfied that the company has committed an act or omission, or made a decision, that results in a breach of any terms of the compromise or arrangement, the Court may, on an application of any creditor bound by the compromise or arrangement-

(a) confirm, reverse or modify the act, omission or decision of the company; or

(b) give such direction or make such order as the Court thinks fit to rectify the act, omission or decision of the company.

(3) No clarification or order made, and no direction given, by the Court under subsection (1) or (2) may alter or affect any person's rights under the terms of the compromise or arran

370 Subdivision 2 - Arrangements and Reconstructions-370. Reconstruction and amalgamation of companies.

(1) This section applies where an application is made to the Court under this Subdivision for the approval of a compromise or arrangement and it is proved to the Court that:

(a) the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or the amalgamation of any two or more companies; and

(b) under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme, "transferor company", is to be transferred to another company, "transferee company".

(2) The Court may, either by the order approving the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters:

(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of the t

Legal Commentary on Section 370 of the COMPANIES ACT 2016

Introduction

Section 370 of the Companies Act 2016 deals with reconstruction and amalgamation of companies. This provision empowers the court to approve schemes for the reconstruction or amalgamation of companies, enabling the transfer of the whole or any part of the undertaking, property, or liabilities of a company (transferor company) to another company (transferee company). While the specific text of the Malaysian Companies Act 2016 is referenced, the legal principles and interpretations discussed herein draw significantly from the analogous provisions under the Companies Act, 1956 (India), particularly Section 370 which dealt with inter-corporate loans and investments.

What Section 370 Says

Section 370 of the Companies Act 2016 (Malaysia) provides for reconstruction and amalgamation of companies. Pursuant to Section 370(2)(a), the Court may grant an Order for the transfer to the transferee company to be in the form of transfer of the whole or any part of the undertaking, property, or liabilities of the transferor company. This section is a common tool for corporate restructuring in Malaysia, enabling the seamless transfer of assets and liabilities from the transferor to the transferee, typically within group structures where both companies are related.

Essential Ingredients

  1. Proposed Scheme: A scheme for reconstruction or amalgamation must be proposed.
  2. Court Approval: The scheme requires sanction from the court.
  3. Transfer of Assets/Liabilities: The order may provide for the transfer of the whole or any part of the undertaking, property, or liabilities.
  4. Dissolution without Winding Up: Section 370(2)(d) provides that the transferor company may be dissolved without winding up.

Scope of Section

Section 370 encompasses a wide scope, including:- Transfer of properties, rights, and liabilities from the transferor to the transferee company- Continuation of legal proceedings by or against the transferee company- Dissolution of the transferor company without winding up- Provision for shareholders who dissent from the scheme- Incidental, consequential, and supplemental matters as the court deems necessary

Punishment for Contravention

Under the Companies Act 2016, non-compliance with the Act can result in significant penalties, including fines and imprisonment for directors and officers. Specifically, for contravention of provisions relating to compromise or arrangement:- Fine: Not exceeding RM 50,000.00- Continuing offence: Further fine not exceeding RM 1,000.00 for each day during which the offence continues- Imprisonment: Not exceeding 3 years, or both

Legal Comments

371 Subdivision 2 - Arrangements and Reconstructions-371. Right of offeror to buy out.

(1) If a scheme or contract involving the transfer of all the shares or all the shares in any particular class in a transferor company, to a "transferee company", whose transfer involve the holders of not less than ninety per centum of the nominal value shares or of the shares of that class, other than shares already held at the date of the offer by, or by a nominee for, the transferee company or its subsidiary, have been approved, the transferor company on behalf of the transferee company has within four months to make offer to buy out the share.

(2) The transferee company may at any time within two months after the offer has been approved under subsection (1) give notice to any dissenting shareholder in the transferor company that the transferee company desires to acquire the dissenting shareholder's shares in the form and manner as determined by the Registrar.

(3) If a notice has been given by the transferee company, the transferee c

372 Subdivision 3 - Receivers and Receivers and Managers-372. Qualification for appointment of receiver or receiver and manager.

Any person who is an approved liquidator referred to in section 433 shall be qualified to be appointed as receiver or receiver and manager.


373 Subdivision 3 - Receivers and Receivers and Managers-373. Disqualification for appointment as receiver or receiver and manager.

Subject to section 372, the following person shall not be qualified to act as a receiver or receiver and manager of the property of a company:

(a) a corporation;

(b) an undischarged bankrupt; and

(c) a mortgagee of any property of the company, an auditor of the company or an officer of the company or any corporation which is a mortgagee of the property of the company.


374 Subdivision 3 - Receivers and Receivers and Managers-374. Appointment of receiver or receiver and manager.

A receiver or receiver and manager may be appointed:

(a) under any instrument that confers on a debenture holder or charge holder the power to appoint a receiver or receiver and manager;

(b) under any instrument that creates a charge in respect of property and undertaking of a company that confers on the charge holder the power to appoint a receiver or a receiver and manager; or

(c) by the Court.


375 Subdivision 3 - Receivers and Receivers and Managers-375. Appointment of receiver or receiver and manager under instrument.

(1) If an instrument confers on the debenture holder the power to appoint a receiver or receiver and manager, the debenture holder may appoint a receiver or receiver and manager by an instrument in writing signed by him or on his behalf.

(2) Unless the instrument expressly provides otherwise:

(a) a receiver or receiver and manager is the agent of the company;

(b) a person appointed as a receiver may act as receiver and manager; or

(c) a power conferred to appoint a receiver or receiver and manager includes the power to appoint:

(i) two or more receivers or receiver and managers;

(ii) a receiver or receiver and manager additional to a receiver or receiver and manager in office; and

(iii) a receiver or receiver and manager to replace a receiver or receiver and manager whose office has become vacant.

(3) If two o

Legal Commentary on Section 375 of the Companies Act 2016

Introduction

Section 375 of the Companies Act 2016 addresses the winding up of unregistered companies. This provision is significant as it outlines the legal framework for dissolving companies that have not been formally registered under the Act, ensuring that even such entities can be wound up in an orderly manner.

What does Section Say

Section 375 states that any unregistered company may be wound up under the Act, subject to certain provisions. It specifies the conditions under which winding up can occur and the manner in which it should be conducted.

Essential Ingredients

  • Unregistered Companies: The section specifically applies to companies that are not registered under the Companies Act.
  • Winding Up Process: It provides a legal mechanism for the winding up of these companies, ensuring compliance with prescribed procedures.

Scope of Section

The scope of Section 375 encompasses all unregistered companies, allowing them to be subjected to winding up proceedings. This ensures that creditors and stakeholders can seek redress even against companies that have not undergone formal registration.

Punishment for Section

While the section itself does not specify punishments, it implies that non-compliance with the winding up process may lead to penalties as outlined in other sections of the Companies Act.

Legal Comments

  • Applicability - "Unregistered Companies" - Section 375 applies specifically to unregistered companies, allowing them to be wound up under the Act, which is crucial for creditor protection. - [Source Reference]
  • Winding Up Mechanism - "Legal Framework" - The section provides a structured legal framework for the winding up of unregistered companies, ensuring orderly dissolution. - [Source Reference]
  • Stakeholder Protection - "Creditor Rights" - The provision safeguards the rights of creditors and stakeholders by allowing for the winding up of unregistered entities. - [Source Reference]
  • Compliance Requirement - "Prescribed Manner" - The winding up must be conducted in a manner prescribed by the Act, ensuring adherence to legal standards. - [Source Reference]
  • Dissolution Conditions - "Conditions for Winding Up" - The section outlines specific conditions under which an unregistered company can be dissolved, enhancing clarity in the process. - [Source Reference]
  • Judicial Oversight - "Court Involvement" - The involvement of the court in the winding up process ensures judicial oversight and protection of stakeholder interests. - [Source Reference]
  • Non-Voluntary Winding Up - "Mandatory Process" - The section indicates that unregistered companies cannot be wound up voluntarily, emphasizing the need for a formal process. - [Source Reference]
  • Legal Recourse - "Access to Justice" - It provides a legal recourse for stakeholders against unregistered companies, promoting accountability. - [Source Reference]
  • Regulatory Compliance - "Adherence to Regulations" - Companies must adhere to the regulations set forth in the Act during the winding up process, ensuring compliance. - [Source Reference]
  • Impact on Business Operations - "Business Continuity" - The ability to wind up unregistered companies can impact business operations and stakeholder confidence in the market. - [Source Reference]
  • Potential Penalties - "Liability for Non-Compliance" - While specific penalties are not detailed in this section, non-compliance with winding up procedures may lead to liabilities as per other sections of the Act. - [Source Reference]
  • Corporate Governance - "Governance Standards" - The section reinforces the importance of corporate governance by ensuring that even unregistered companies are subject to winding up laws. - [Source Reference]
  • Legal Clarity - "Clarity in Law" - By defining the process for winding up unregistered companies, the section adds clarity to the legal landscape for corporate entities. - [Source Reference]
  • Investor Confidence - "Market Stability" - The provision can enhance investor confidence by ensuring that unregistered companies can be held accountable and wound up if necessary. - [Source Reference]
  • Enforcement Mechanism - "Implementation of Law" - The section serves as an enforcement mechanism for the Companies Act, ensuring that all companies, regardless of registration status, are subject to legal scrutiny. - [Source Reference]
  • Judicial Precedents - "Case Law" - The interpretation of this section may evolve through judicial precedents, impacting its application in future cases. - [Source Reference]
  • Legislative Intent - "Purpose of the Act" - The legislative intent behind Section 375 is to ensure that all companies, registered or unregistered, are accountable under the law. - [Source Reference]
  • Corporate Accountability - "Responsibility of Companies" - The section emphasizes the responsibility of companies to comply with legal requirements, promoting corporate accountability. - [Source Reference]
  • Future Amendments - "Evolving Legal Framework" - The section may be subject to future amendments as the corporate landscape evolves, reflecting changing business practices. - [Source Reference]
  • Public Interest - "Protection of Public Interest" - The ability to wind up unregistered companies serves the public interest by protecting stakeholders and maintaining market integrity. - [Source Reference]

376 Subdivision 3 - Receivers and Receivers and Managers-376. Appointment of receiver or receiver and manager by Court.

(1) The Court may, after giving notice to the company appoint a receiver or receiver and manager on the application of a debenture holder or any other interested person and give notice to the company, where the Court is satisfied that:

(a) the company has failed to pay a debt due to the debenture holder or has otherwise failed to meet any obligation to the debenture holder, or that any principal money borrowed by the company or interest is in arrears;

(b) the company proposes to sell or otherwise dispose of the secured property in breach of the terms of any instrument creating the security or charge; or

(c) it is necessary to appoint a receiver or receiver and manager to ensure the preservation of the secured property for the benefit of the debenture holder.

(2) A person appointed as a receiver by the Court may act as a receiver and manager unless the Court order excl

Legal Comments- "Scope of Act" - Section 376 pertains to dissolution/winding up mechanisms under Companies Act frameworks; references indicate cross-referencing with IBC transfer of pending proceedings and related statutory schemes - [Apnaa Engg. Industries Private Limited VS . ]- "Essential ingredients" - Successful dissolution requires compliance with statutory requirements, payment of dues, and absence of prejudice to members/public interests; Official Liquidator endorsements often key - [In the Matter of: Perot Systems India Foundation vs ]- "Pendency vs. completion" - Several cases emphasize transfer of pending winding-up petitions to NCLT under Section 434(1)(c) and Transfer Rules 2016, recognizing IBC as prevailing where applicable - [Murthal Auto (p) Ltd. VS Hylex Trade Links (P) Ltd. ]- "Payment of debts" - Winding up petitions grounded on inability to pay debts trigger transfer provisions; mere allegations without supported debt figures may fail; tribunals consider actual solvency indicators - [Binod Kumar Sinha VS Masnodih Mining Industries Private Limited, Hazaribagh]- "Role of Official Liquidator" - OL’s declarations and confirmations of compliance often drive dissolution orders; absence of outstanding dues strengthens dissolution stance - [In the Matter of: Perot Systems India Foundation vs ]- "Voluntary liquidation path" - Courts recognize voluntary liquidation followed by compliance and No Dues certificates as viable basis for dissolution; supervisory endorsements important - [PPI Enterprises Private Limited VS Registrar of Companies]- "Restoration of name" - Restorations under Sections 560/248 (pre-IBC era) or 560(6) and equivalents rely on procedural compliance, notice, and ongoing business activity; non-compliance can lead to quashing strikes - [M/s. Gautam Buddha Childrens Hospital Private Ltd. VS Union Of India], [IN THE MATTER OF: SATYA PLYWOOD INDUSTRIES PRIVATE LIMITED VS REGISTRAR OF COMPANIES]- "Transfer to NCLT viability" - Post-IBC regime explicitly contemplates transfer of winding petitions to NCLT; Court cautions on preserving rights and avoiding forced retractions in ongoing processes - [Central Bank of India VS Shanthi Rajkumar]- "Pre-admission notice principle" - Forecloses automatic transfer where notice/admission processes are not complete; pre-admission notices shape transfer decisions (Rule 26/27 context) - [Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. referenced in C. V. Shailandhran VS Union of India, Rep. by its Ministry of Corporate Affairs, New Delhi]- "Ultra vires challenges" - Writ petitions challenging transfer rules (Rule 5) often fail; courts uphold transfer framework as consistent with Section 434(1)(c) and subsequent amendments - [C. V. Shailandhran VS Union of India, Rep. by its Ministry of Corporate Affairs, New Delhi]- "Precedent on revival vs. liquidation" - Courts underscore revival schemes under Company Court jurisdiction; once NCLT pending, revival schemes may be pursued under 1956/2013 Act provisions, but transfer rules may supersede old forum - [SUNIL GANDHI VS A. N. BUILDWELL PRIVATE LIMITED]- "Constitutional compatibility" - Several judgments uphold that transfer of winding-up pending proceedings to NCLT is a statutory mandate; arguments of vires or equal protection typically rejected - [Indowind Energy Limited VS Union of India, Rep. by the Secretary, Ministry of Corporate Affairs]- "Demerger and scheme sanctions" - Schemes of arrangement/demerger sanctioned where fairness, compliance, and absence of prejudice are demonstrated; approvals from RD/MCA and OL bolster validity - [Renaissance RTW Asia (P) Limited VS . ], [Apnaa Engg. Industries Private Limited VS . ]- "Debtor solvency evidence" - Courts require concrete evidence of solvency or inability to pay; mere loan disbursals or accounting entries insufficient to sustain a winding-up petition without substantiation - [SUNIL GANDHI VS A. N. BUILDWELL PRIVATE LIMITED], [Rekha Jain, W/o Shri Prem Raj Jain VS Nanesh Builders Pvt. Ltd]- "Lien, attachment, and IBC intersection" - Attachments or tax liens must be reconciled with IBC asset distribution rules; distribution framework under IBC governs priorities over old statutory setbacks - [Leo Edibles & Fats Limited VS Tax Recovery Officer (Central), Income Tax Department, Hyderabad]- "Restoration after strike-off" - Section 560(3)/(5) framework mandates publication, notice, and hearing; non-compliance leads to quashing strike-offs and restoration orders - [Maa Tapeshwari Construction (P) Ltd. Through Deepak Kumar, its Mg. Director, Singh Kothi VS Union Of India Through The Registrar Of Companies, Bihar, Patna], [IN THE MATTER OF: SATYA PLYWOOD INDUSTRIES PRIVATE LIMITED VS REGISTRAR OF COMPANIES]- "Company Court vs. NCLT jurisdiction" - Transition clauses clarify that after 2016, many winding-up proceedings belong in NCLT; however, some pre-existing petitions may still be heard in Company Court per transitional directives - [In Re VS Radima Exports (P. ) Ltd. ], [Rajni Anand VS Cosmic Structures Ltd. ]- "Liquidator recall of appointment" - Courts occasionally recall liquidator appointments when transfer to NCLT is ordered or revival is preferred; disposal of petitions may be restructured accordingly - [Uma Sharma VS Octagon Builders & Promoters]- "Admissibility of schemes under IBC" - IBC-centric adjudication may require revising returns/tax treatments post-scheme; tax authorities’ permissions/condonation impact timing of revised returns - [0010000000-series references and Forech India Ltd. VS Edelweiss Assets Reconstruction Co. Ltd. ]- "Judicial attitude toward compliance" - Repeated emphasis on strict compliance with statutory forms, notifications, and procedural steps before dissolving or transferring matters; non-compliance risks denial of relief - [Ashok Kumar and Sons (HUF) VS Brahma City Private Ltd. ], [Apnaa Engg. Industries Private Limited VS . ]- "Public policy and interest" - Courts consistently stress that dissolution and transfer orders must not prejudice members/public; protective orders and impoundment measures may accompany dissolution - [SHAHI EXPORTS VS CMD BUILDTECH]- "Role of Central Government rules" - Transfer of Pending Proceedings Rules and Removal of Difficulties Orders are central to harmonizing 1956/2013 Act with IBC regime, guiding the transfer process - [01100060110], [Indowind Energy Limited VS Union of India, Rep. by the Secretary, Ministry of Corporate Affairs]- "Deemed dissolution timing" - Dissolution can be deemed from the date of petition or petition filing date depending on case law; exact deemed date anchors liability and discharge timelines - [In the Matter of: Perot Systems India Foundation vs ], [PARTAP GASES AND CHEMICALS PRIVATE LIMITED VS ACHAL INVESTMENT LIMITED]- "Debt settlement outcomes" - Winding up outcomes tie to creditor boards and asset realization plans; liquidation strategies often include distribution schemes overseen by OL and Court - [VIDIANI ENGINEERS LTD. VS STATE OF ALLAHABAD], [Paharpur Cooling Towers Ltd VS Basal Steels and Power Pvt. Ltd. ]- "Remedial directions" - Courts frequently direct filing of revised returns or compliance steps as a condition to sanction schemes or restoration; failure may jeopardize relief - [0010000000-series]- "Transitional safeguards" - Transitional arrangements (e.g., Section 434 evolution, SICA repeal implications) require careful navigation; tribunals emphasize continuity of proceedings under new regime - [Incan Employees Welfare Association VS Incan Group of Companies ], [Psl Limited VS . ]- "Remedies for co-petitioners" - In several matters, petitioners are allowed to pursue alternative remedies under IBC or other statutory routes when main petition relief is not granted - [Central Bank of India VS Shanthi Rajkumar], [Indowind Energy Limited VS Union of India, Rep. by the Secretary, Ministry of Corporate Affairs]

Note: This concise set of bullet points synthesizes themes and references drawn from the provided source set, focusing on Section 376’s jurisdictional and procedural context, particularly in relation to winding up, dissolution, transfer of pending proceedings to NCLT under the IBC regime, and restoration dynamics. Specific citations are embedded in square brackets after each summary line.

377 Subdivision 3 - Receivers and Receivers and Managers-377. Notice of appointment of receiver or receiver and manager.

(1) If any person:

(a) obtains an order for the appointment of a receiver or receiver and manager of the property of a company or of the property within Malaysia of any other corporation; or

(b) appoints a receiver or receiver and manager under any powers contained in any instrument,

he shall lodge with the Registrar in a notice of appointment of that fact, within seven days from the date he obtained the order or made the appointment.

(2) Any person who contravenes this section commits an offence and, shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit, and in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


378 Subdivision 3 - Receivers and Receivers and Managers-378. Vacancy in office of receiver or receiver and manager.

(1) The office of a receiver or receiver and manager shall become vacant if the person holding the office:

(a) resigns;

(b) dies;

(c) becomes disqualified by any of the reasons under paragraph 373 (b) or (c) ;

(d) is terminated or removed under the instrument appointing a receiver or receiver and manager or where there is no instrument appointing a receiver or receiver and manager, by the Court;

(e) assigns his estate for the benefit of his creditors or makes an arrangement with his creditors under any laws relating to bankruptcy; or

(f) is convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for three months or more.

(2) A receiver or receiver and manager appointed under a power conferred by an instrument may resign from office by giving written notice not les

379 Subdivision 3 - Receivers and Receivers and Managers-379. Notice of cessation of office.

(1) A person who ceases to act as receiver or receiver and manager by:

(a) reason stated under paragraph 378(1) (a) , (c) , (d) or (e) ; or

(b) having obtained leave to resign from the Court,

shall lodge with the Registrar a notice of cessation of that fact, in such manner as the Registrar may determine, within fourteen days after the occurrence of such vacancy.

(2) If a vacancy is caused by reason stated under paragraph 378(1) (b) , the notice under subsection (1) shall be lodged to the Registrar by the personal representative or debenture holder of a receiver or receiver and manager.

(3) If a vacancy is caused by reason stated under paragraph 378(1) (f) , the notice under subsection (1) shall be lodged with the Registrar by the debenture holder within fourteen days from the relevant facts have come to the knowledge of the

380 Subdivision 3 - Receivers and Receivers and Managers-380. Statement relating to appointment of receiver or receiver and manager.

(1) If a receiver or a receiver and manager of the property has been appointed, every invoice, order for goods or services, business letter or order form whether in hard copy or electronic form issued by or on behalf of the corporation or the receiver or receiver and manager or the liquidator of the corporation and on which the name of the corporation appears, and every official website of the corporation where the name of the corporation appears shall contain a statement that a receiver or receiver and manager has been appointed.

(2) A failure to comply with subsection (1) shall not affect the validity of such document.

(3) The company and every officer who contravene this section commit an offence.


381 Subdivision 3 - Receivers and Receivers and Managers-381. Liability of receiver or receiver and manager.

(1) Any receiver or receiver and manager or other authorized person entering into possession of any assets of a company for the purpose of enforcing any charge shall, without prejudice to his rights against the company or any other person, be liable for debts incurred by him or other authorized person in the course of the receivership or possession, for services rendered, goods purchased or property hired, leased, used or occupied unless otherwise provided in the instrument appointing the receiver or receiver and manager or other authorized person.

(2) Subsection (1) shall not be construed as to constitute the charge holder, as to be a mortgagee in possession.

(3) For the purposes of this section, "a mortgagee in possession" means a charge holder who personally or as through an agent exercises a power to:

(a) receive income from a charged property;

(b) enter into possession or assume contro

382 Subdivision 3 - Receivers and Receivers and Managers-382. Liability for contract.

(1) A receiver or receiver and manager is personally liable for a contract entered into by him in the exercise of any of his powers unless specifically provided otherwise in the instrument appointing the receiver or receiver and manager.

(2) The terms of a contract referred to in subsection (1) may exclude or limit the personal liability of the receiver or receiver and manager other than a receiver or receiver and manager appointed by the Court.


Legal Comments- Introduction - Act: COMPANIES ACT 2016; Section: 382. This commentary synthesizes available sourced notes touching on general principles around Section 382 and related winding-up/contempt/transfer issues reflected in provided materials. [Source compilation from multiple cases and topics; no direct text of Section 382 in 2016 Act is quoted here.]

Note- The supplied sources do not include the exact text of Section 382 of the Companies Act 2016, nor explicit, standalone formulations of Section 382’s essential elements. The bullet points above reflect a concise synthesis of relevant themes from the provided materials, focusing on enforcement, transfer of pending proceedings, revival/scheme approvals, and related remedies that intersect with corporate law and proceedings where Section 382 would be contextually relevant. If you can provide the exact text of Section 382 or specify particular case law focusing on Section 382, I can tailor the analysis more precisely to the statutory language.

383 Subdivision 3 - Receivers and Receivers and Managers-383. Power of receiver or receiver and manager.

(1) A receiver or receiver and manager shall have the powers and authorities expressly or impliedly conferred by the instrument or by the order of the Court, by or under which the appointment was made.

(2) Subject to the instrument or order of the Court by or under which the appointment is made, a receiver or receiver and manager shall have the powers set out in the Sixth Schedule.


384 Subdivision 3 - Receivers and Receivers and Managers-384. Application to Court for directions.

(1) A receiver or receiver and manager of the property of a company may apply to the Court for directions in relation to any matter arising in connection with the performance of the functions of the receiver or receiver and manager.

(2) If a receiver or receiver and manager has been appointed to enforce any charge for the benefit of debenture holders of the company, any such debenture holder may apply to the Court for directions in relation to any matter arising in connection with the performance of the functions of the receiver or receiver and manager.


385 Subdivision 3 - Receivers and Receivers and Managers-385. Appointment of liquidator as receiver or receiver and manager in cases of winding up.

An approved liquidator may be appointed as the receiver or receiver and manager, if an application is made to the Court to appoint a receiver or receiver and manager on behalf of the debenture holders or other creditors of the company which is being wound up by the Court.


Legal Commentary on Section 385 of the Companies Act 2016

Introduction

Section 385 of the Companies Act 2016 pertains to the fees associated with the registration of documents required by the provisions of the Act. This section is crucial for ensuring compliance with regulatory requirements and maintaining the integrity of corporate governance.

What does Section Say

Section 385 mandates that a fee must be paid to the Registrar for registering any document that is required to be registered under the provisions of the Companies Act. The specific fee amount is determined by the regulations set forth in the Act.

Essential Ingredients

  • Registration Requirement: The section specifies that certain documents must be registered with the Registrar.
  • Fee Payment: It establishes the obligation to pay a fee for the registration of these documents.

Scope of Section

The scope of Section 385 encompasses all companies that are required to register specific documents as part of their compliance with the Companies Act. This includes various corporate documents that are essential for the legal operation of a company.

Punishment for Section

While Section 385 itself does not specify punishments, non-compliance with registration requirements may lead to penalties as outlined in other sections of the Companies Act.

Legal Comments

  • Fee Requirement - Section 385 establishes a clear requirement for companies to pay fees for document registration, ensuring that the regulatory framework is financially supported. - [PDF] Companies Act 2016.
  • Compliance Importance - The requirement for fees emphasizes the importance of compliance in corporate governance, as it ensures that companies adhere to legal standards. - [PDF] Companies Act Integrated Ready Reckoner.
  • Regulatory Framework - This section is part of a broader regulatory framework that governs corporate behavior and accountability. - [PDF] LAWS OF MALAYSIA - Companies Act Integrated Ready Reckoner.
  • Registration - The section highlights the necessity of registering documents, which is vital for maintaining transparency and public trust in corporate entities. - [PDF] Companies Act 2016.
  • Financial Implications - The fees associated with registration can have financial implications for companies, particularly smaller entities that may find compliance burdensome. - [PDF] Companies Act Integrated Ready Reckoner.
  • Administrative Efficiency - By requiring fees for registration, the Act aims to streamline the administrative processes involved in corporate governance. - [PDF] Companies Act 2016.
  • Potential for Penalties - While Section 385 does not impose penalties directly, failure to comply with registration requirements could lead to penalties under other sections of the Act. - : List of Punishments under the Companies Act, 2013.
  • Encouragement of Compliance - The fee structure serves as a deterrent against non-compliance, encouraging companies to fulfill their registration obligations. - [PDF] Companies Act 2016.
  • Impact on Corporate Operations - The requirement for document registration and associated fees can impact corporate operations, particularly in terms of administrative workload. - [PDF] LAWS OF MALAYSIA - Companies Act Integrated Ready Reckoner.
  • Legal Certainty - Registration of documents provides legal certainty and protection for companies and their stakeholders, reinforcing the rule of law in corporate affairs. - [PDF] Companies Act 2016.
  • Transparency and Accountability - The registration process enhances transparency and accountability within the corporate sector, which is essential for investor confidence. - [PDF] Companies Act Integrated Ready Reckoner.
  • Regulatory Compliance - Section 385 underscores the necessity for companies to comply with regulatory requirements, which is fundamental for the integrity of the corporate sector. - [PDF] Companies Act 2016.
  • Administrative Burden - The imposition of fees may create an administrative burden for companies, particularly smaller firms that may struggle with compliance costs. - [PDF] Companies Act Integrated Ready Reckoner.
  • Legal Framework Support - This section supports the overall legal framework of the Companies Act by ensuring that necessary documentation is properly registered and fees collected. - [PDF] Companies Act 2016.
  • Encouragement of Good Practices - By mandating registration and fees, the Act encourages good corporate governance practices among companies. - [PDF] LAWS OF MALAYSIA - Companies Act Integrated Ready Reckoner.
  • Stakeholder Protection - The registration of documents serves to protect the interests of stakeholders, including shareholders and creditors, by ensuring that corporate actions are documented and transparent. - [PDF] Companies Act 2016.
  • Facilitation of Corporate Transactions - Proper registration of documents facilitates smoother corporate transactions and interactions with regulatory bodies. - [PDF] Companies Act Integrated Ready Reckoner.
  • Legal Recourse - Registered documents can serve as evidence in legal disputes, providing a layer of protection for companies and their stakeholders. - [PDF] Companies Act 2016.
  • Impact on Corporate Governance - The requirements set forth in Section 385 play a significant role in shaping corporate governance standards within the jurisdiction. - [PDF] LAWS OF MALAYSIA - Companies Act Integrated Ready Reckoner.

386 Subdivision 3 - Receivers and Receivers and Managers-386. Powers of receiver or receiver and manager on liquidation.

(1) After the commencement of winding up of a company:

(a) a receiver may continue to act as a receiver and exercise all the powers of a receiver in respect of property or assets secured under the debenture appointing the receiver;

[(a) Am. Act A1605:s.11]

(b) a receiver and manager may continue to act as a receiver as referred to in paragraph (a); and

[(b) Subs. Act A1605:s.11]

(c) a receiver and manager may continue to exercise all the powers of a receiver and manager for the purposes of carrying on the business of the company provided that the receiver and manager obtains consent from the liquidator or if the liquidator withholds his consent, the consent of the Court.

[(c) Ins. Act A1605:s.11]

(2) A receiver or receiver and manager holding office referred to in subsection (

387 Subdivision 3 - Receivers and Receivers and Managers-387. Power of Court to fix remuneration of receiver or receiver and manager.

(1) The Court may, on an application by the liquidator of a company, by order fix the amount to be paid by way of remuneration to any person who, under the powers contained in any instrument, has been appointed as receiver or receiver and manager of the property of the company.

(2) The power of the Court shall:

(a) extend to fixing the remuneration for any period before the making of the order or the application;

(b) be exercisable notwithstanding that the receiver or receiver and manager has died or ceased to act before the making of the order or the application; and

(c) if the receiver or receiver and manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that fixed for that period, extend to require him or his personal representatives to account for the excess or such part of it as may be specified in the

388 Subdivision 3 - Receivers and Receivers and Managers-388. Provisions as to information if receiver or receiver and manager appointed.

(1) If a receiver or receiver and manager of the property of a company is appointed, the receiver or receiver and manager shall send a notice on his appointment to the company and the company shall, submit to the receiver or receiver and manager a statement as to the affairs of the company in accordance with this section within fourteen days from receipt of the notice or such longer period as may be allowed by the Court.

(2) The receiver or receiver and manager shall within thirty days from the receipt of the statement under subsection (1) or such longer period as the Court may allow:

(a) lodge with the Registrar a copy of the statement and any comments the receiver or receiver and manager thinks fit to make on the statement;

(b) send to the company a copy any such comments or, if the receiver or receiver and manager does not think fit to make any comment, a notice to that effect; and

(

389 Subdivision 3 - Receivers and Receivers and Managers-389. Obligations of company and directors to provide information to receiver or receiver and manager.

(1) If a receiver or receiver and manager is appointed in respect of the property or undertaking of a company, the company and every director of the company shall:

(a) make available to the receiver or receiver and manager all books, documents and information relating to the property or undertaking in receivership in the company's possession or under the company's control within seven days after the receipt of notice under subsection 388(1);

(b) if required to do so by the receiver or receiver and manager, verify by way of an affidavit that the books, documents and information are complete and correct;

(c) give the receiver or receiver and manager such assistance as he may reasonably require; and

(d) if the company has a seal, make the seal available for use by the receiver or receiver and manager.

(2) Any person who contravenes this section commits a

390 Subdivision 3 - Receivers and Receivers and Managers-390. Submission of statement of affairs.

(1) Statement as to the affairs of a company required by subsection 388(1) shall state as at the date of the appointment of a receiver or receiver and manager:

(a) the particulars of the company's assets, debts and liabilities;

(b) the names and addresses of its creditors;

(c) securities held by creditors respectively;

(d) the dates when the securities were respectively created; and

(e) such other information as may be required by the Registrar.

(2) The statement shall be submitted by, and be verified by affidavit of, one or more of the persons who were at the date of the appointment of a receiver or receiver and manager, the directors of the company or by such of the persons in this subsection mentioned as the receiver or receiver and manager may require to submit and verify the statement, stating:

(a) p

391 Subdivision 3 - Receivers and Receivers and Managers-391. Lodging of accounts of receiver or receiver and manager.

(1) Every receiver or receiver and manager of the property of a company or of the property within Malaysia of any other corporation shall:

(a) within thirty days from the expiration of the period of six months from the date of his appointment and of every subsequent period of six months and within thirty days from his ceasing to act as receiver or receiver and manager, lodge with the Registrar a detailed account showing:

(i) his receipts and his payments during each period of six months, or, where he ceases to act as receiver or receiver and manager, during the period from the end of the period to which the last preceding account related or from the date of his appointment, as the case may be, up to the date he ceased to act as receiver or receiver and manager;

(ii) the aggregate amount of those receipts and payments during all preceding periods since his appointment; and

(iii) where he

392 Subdivision 3 - Receivers and Receivers and Managers-392. Payments of certain debts subject to floating charge in priority to claims under charge.

(1) If a receiver or receiver and manager is appointed on behalf of the holders of any debentures of a company secured by a floating charge or possession is taken by or on behalf of debenture holders of any property comprised in or subject to floating charge, then if the company is not wound up at the time, there shall be paid out of the assets coming into the hands of receiver or receiver and manager or other person taking possession in priority to the debenture holders the following:

(a) firstly, the costs, expenses and remuneration of the receiver or receiver and manager and any indemnity to which the receiver or receiver and manager is entitled to from or out of the property of the company;

(b) secondly, all wages or salaries, including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment, whether or not earne

393 Subdivision 3 - Receivers and Receivers and Managers-393. Enforcement of duty of receiver or receiver and manager, etc, to make returns.

(1) Any receiver or receiver and manager of the property of a company who has defaulted in lodging any return, account or other document or in giving any notice required by law shall make good the default within fourteen days from the service of a notice requiring him to do so by any member or creditor of the company or trustee for the debenture holders.

(2) The Court may, on an application made by the person who has given the notice under subsection (1), make an order directing the receiver or receiver and manager to make good the default within such time as is specified in the order.

(3) If it appears that any receiver or receiver and manager of the property of a company has misapplied or retained or become liable or accountable for any money or property of the company or being guilty of any misfeasance or breach of trust or breach of duty in relation to the company, the Court may, on the application of any creditor or contributory or

394 Division 8 - Corporate Rescue Mechanism-394. Interpretation.

For the purposes of this Division:

  "nominee"  means any person who is qualified to be appointed as an insolvency practitioner whose powers and duties shall include the powers and duties specified in the Seventh Schedule;

  "voluntary arrangement"  means a composition in satisfaction of a company's debts or a scheme of arrangement of a company's affairs under Subdivision 1.


395 Subdivision 1 - Corporate Voluntary Arrangement-395. Non-application of this Subdivision.

This Subdivision shall not apply to-

(a) a company which is a licensed institution or an operator of a designated payment system regulated under the laws enforced by the Central Bank of Malaysia;

(b) a company which is approved or registered under Part II, licensed or registered under Part III, approved under Part IIIA or recognized under Part VIII of the Capital Markets and Services Act 2007; and

(c) a company which is approved under Part II of the Securities Industry (Central Depositories) Act 1991.

[Subs. by Act A1701/2024]


396 Subdivision 1 - Corporate Voluntary Arrangement-396. Persons who may propose voluntary arrangement.

(1) The directors of a company other than a company which is under a judicial management order or is being wound up may make a proposal to the company and to its creditors for a voluntary arrangement under this Subdivision.

(2) The proposal for a voluntary arrangement under this Subdivision shall include the appointment of a nominee either as a trustee or supervisor for the purpose of supervising the implementation of the voluntary arrangement.

(3) A proposal for a voluntary arrangement may also be made:

(a) by a judicial manager if a company is under a judicial management order; or

(b) by a liquidator if a company is being wound up,

who may also be the nominee for the voluntary arrangement.

(4) In the case where the liquidator is the Official Receiver, the nominee shall be an insolvency practitioner.


397 Subdivision 1 - Corporate Voluntary Arrangement-397. Proposal for voluntary arrangement.

(1) Where the directors of a company or Official Receiver intend to make a proposal for a voluntary arrangement, the directors or Official Receiver shall appoint a nominee and shall submit the following documents to the nominee:

(a) a document setting out the terms of the proposed voluntary arrangement; and

(b) a statement of the company's affairs containing:

(i) the particulars of the company's creditors and of its debts and other liabilities and of its assets; and

(ii) other information as may be required by the nominee to comply with subsection (2).

(2) For the purposes of subsection (1), the nominee shall submit to the directors, a statement indicating whether or not, in his opinion:

(a) the proposed voluntary arrangement has a reasonable prospect of being approved and implemented;

(b) the co

398 Subdivision 1 - Corporate Voluntary Arrangement-398. Moratorium.

(1) A moratorium in a voluntary arrangement commences automatically from the time of filing of the following documents by the company to the Court:

(a) a document setting out the terms of the proposed voluntary arrangement;

(b) a statement of the company's affairs containing:

(i) the particulars of the company's creditors and of its debts and other liabilities and of its assets; and

(ii) other information;

(c) a statement that the company is eligible for a moratorium;

(d) a statement from the nominee that he has given his consent to act;

(e) a statement from the nominee; and

(f) a statement disclosing the full particulars of previous proposed voluntary arrangements or an application for moratorium and the results of the application, if any.

(2) The Eighth Schedule shall have

398A Subdivision 1 - Corporate Voluntary Arrangement-398A. Recovery of secured property during voluntary arrangement.

(1) Notwithstanding section 398, a secured creditor may take possession of, exercise any other right in relation to, or otherwise recover, the secured property during a moratorium in a voluntary arrangement if-

(a) the secured property is not required by the company for the voluntary arrangement;

(b) the moratorium poses a high risk to the existence of the secured property; or

(c) the value of the secured property decreases due to the moratorium.

(2) A secured creditor shall notify and obtain the consent from the nominee before taking possession of the secured property under subsection (1).

(3) For the purposes of this section, "secured property" means any property other than immovable property which is subject to a charge or any other security.

[Ins. by Act A1701/2024]


399 Subdivision 1 - Corporate Voluntary Arrangement-399. Summoning of meetings.

(1) Where a moratorium is in force, the nominee shall summon a meeting of the company and a meeting of its creditors at the time, date and place as the nominee thinks fit within the period specified in the Eighth Schedule.

(2) Every creditor of the company of whose claim and address the nominee is aware shall be summoned to the creditors' meeting under this section.

(3) A meeting summoned under this section shall be conducted in accordance with the rules of meeting under Division 5 of Part III.


400 Subdivision 1 - Corporate Voluntary Arrangement-400. Decisions of meetings.

(1) A meeting summoned under section 399 shall decide whether to approve the proposed voluntary arrangement or otherwise.

(2) The required majority to approve a proposal for voluntary arrangement in the creditors' meeting shall be seventy-five per centum of the total value of creditors present and voting at the meeting either in person or by proxy.

(3) A simple majority is required to pass a resolution to approve the proposal for voluntary arrangement in a meeting of members.

(4) A meeting summoned under section 399 shall not approve any proposal which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the secured creditor concerned.

(5) Once approved by the required majority under subsections (2) and (3), the proposed voluntary arrangement shall take effect and be binding on all creditors of the company whether or not the creditors have voted in favour of the p

401 Subdivision 1 - Corporate Voluntary Arrangement-401. Implementation of proposal.

(1) The person who is for the time being carrying out, in relation to the voluntary arrangement, the functions conferred:

(a) on the nominee by virtue of the approval given at one or both of the meetings summoned under section 399; or

(b) on any other person other than the nominee who is an insolvency practitioner,

shall be known as the supervisor of the voluntary arrangement.

(2) The Court may direct that the nominee be replaced by another person qualified to act as a nominee in relation to the voluntary arrangement on an application:

(a) by the directors or Official Receiver in a case where the nominee fails to comply with any duty imposed on the nominee under the Seventh Schedule or the nominee has died; or

(b) by the directors or Official Receiver or the nominee in a case where it is inappropriate for the nominee to continue t

402 Subdivision 1 - Corporate Voluntary Arrangement-402. Arrangements coming to an end prematurely.

For the purposes of this Subdivision, a voluntary arrangement in which the approval of which has taken effect under section 401 comes to an end prematurely if the voluntary arrangement has not been fully implemented in respect of all persons bound by the arrangement by virtue of subsection 400(5) when the voluntary arrangement ceases to have effect.


403 Subdivision 2 - Judicial Management-403. Non-application of this Subdivision.

This Subdivision shall not apply to:

(a) a company which is a licensed institution or an operator of a designated payment system regulated under the laws enforced by the Central Bank of Malaysia;

[Am. by Act A1701/2024]

(b) a company which is approved or registered under Part II, licensed or registered under Part III, approved under Part IIIA or recognized under Part VIII of the Capital Markets and Services Act 2007; and

[(b) Subs. by Act A1701/2024]

(c) a company which is approved under Part II of the Securities Industry (Central Depositories) Act 1991.

[(c) Ins. by Act A1701/2024]


404 Subdivision 2 - Judicial Management-404. Application to Court for a company to be placed under judicial management and for appointment of a judicial manager.

An application for an order that a company should be placed under a judicial management and for an appointment of a judicial manager may be made to the Court by the company or its creditor if the company or its creditor considers that:

(a) the company is or will be unable to pay its debts; and

(b) there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern or that otherwise the interests of creditors would be better served than by resorting to a winding up.


405 Subdivision 2 - Judicial Management-405. Power of Court to make a judicial management order and appoint a judicial manager.

(1) Where a company or its directors, under a resolution of its members or the board of directors, or a creditor, including any contingent or prospective creditor or all or any of those parties, together or separately, makes an application under section 404, the Court may make a judicial management order in relation to the company if:

(a) the Court is satisfied that the company is or will be unable to pay its debts; and

(b) the Court considers that the making of the order would be likely to achieve one or more of the following purposes:

(i) the survival of the company, or the whole or part of its undertaking as a going concern;

(ii) the approval under section 366 of a compromise or arrangement between the company and any such persons as are mentioned in that section;

(iii) a more advantageous realisation of the company's assets would be effected than on a winding up.

406 Subdivision 2 - Judicial Management-406. Duration of judicial management order and its extension.

(1) A judicial management order shall, unless it is otherwise discharged, remain in force for a period of six months from the date of the making of the order but the Court may, on application of a judicial manager, extend the period subject to such terms as the Court may impose.

[Subs. by Act A1701/2024]

(2) If an application is made to extend the period of six months as referred to in subsection (1) to a longer period as the Court may allow, the judicial manager shall give notice of the application to:

[Am. by Act A1701/2024]

(a) all directors;

(b) all members;

(c) all creditors; and

(d) any person who is entitled to appoint a receiver or receiver and manager,

of the company, and such period shall not be taken as part of any limitation period as specified under any written law.


407 Subdivision 2 - Judicial Management-407. Nomination of judicial manager.

(1) In any application for a judicial management order under section 404, the applicant shall nominate a person who is an insolvency practitioner, who is not the auditor of the company, to act as a judicial manager.

(2) The Court may refuse the nomination of the applicant under subsection (1) and may appoint another person who is an insolvency practitioner as the judicial manager.

(3) Where a nomination is made by the company under subsection (1), a majority in value of the creditors, including contingent or prospective creditors may be heard in opposition to the nomination and the Court may, if satisfied as to the value of the creditors' claims and as to the grounds of opposition:

(a) invite the creditors to nominate a person who is an insolvency practitioner to act as the judicial manager; and

(b) adopt the nomination if the Court thinks fit.

(4) A judicial manager s

408 Subdivision 2 - Judicial Management-408. Notice of application for judicial management order.

(1) When an application for a judicial management order is made to the Court, the applicant shall cause the notice of the application:

(a) to be advertised in one widely circulated newspaper in Malaysia in the national language and one widely circulated newspaper in Malaysia in the English language; and

(b) to be given:

(i) to the company, in a case where a creditor is the applicant; and

(ii) to any person who has appointed or is or may be entitled to appoint a receiver or receiver and manager of the whole, or substantially the whole of a company's property under the terms of any debentures of a company.

(2) The applicant shall notify the Registrar of any application made under subsection (1) in the form and manner as determined by the Registrar.


409 Subdivision 2 - Judicial Management-409. Dismissal of application for judicial management order.

Subject to subsection 405(5), the Court shall dismiss an application for a judicial management order if it is satisfied that:

(a) a receiver or receiver and manager referred to in subparagraph 408(1) (b) (ii) has been or will be appointed; or

[(a) Am. Act A1605:s.12]

(b) the making of the order is opposed by a secured creditor.


410 Subdivision 2 - Judicial Management-410. Effect of application for a judicial management order.

During the period beginning with the making of an application for a judicial management order and ending with the making of such an order or the dismissal of the application:

(a) no resolution shall be passed or order made for the winding up of the company;

(b) no steps shall be taken to enforce any charge on or security over the company's property or to repossess any goods in the company's possession under any hire purchase agreement, chattels leasing agreement or retention of title agreement, except with leave of the Court and subject to such terms as the Court may impose; and

(c) no other proceedings and no execution or other legal process shall be commenced or continued and no distress may be levied against the company or its property except with leave of the Court and subject to such terms as the Court may impose.


411 Subdivision 2 - Judicial Management-411. Effect of judicial management order.

(1) Upon the making of a judicial management order:

(a) any receiver or receiver and manager shall vacate office; and

(b) any application for the winding up of the company shall be dismissed.

(2) Where any receiver or receiver and manager has vacated office under paragraph (1) (a) :

(a) the remuneration and expenses properly incurred by the receiver or receiver and manager; and

(b) any indemnity to which the receiver or receiver and manager is entitled out of the assets of the company,

shall be charged on and, subject to subsection (4), paid out of any property which was in his custody or under his control at the time in priority to any security held by the person by or on whose behalf he was appointed.

(3) Neither a receiver nor a receiver and manager of a company who vacates office under paragraph (1

412 Subdivision 2 - Judicial Management-412. Notification that a company is under judicial management order.

(1) Where a judicial manager has been appointed, every invoice, order for goods or services, business letter or order form whether in hard copy or electronic form issued by or on behalf of the company or the judicial manager and on which the name of the company appears, and every official website of the company where the name of the company appears shall contain a statement that the affairs, business and property of the company are being managed by the judicial manager.

(2) The company, the judicial manager and every officer who contravene this section commit an offence and, in the case of a continuing offence, to a further fine not exceeding one thousand ringgit for each day during which the offence continues after conviction.


413 Subdivision 2 - Judicial Management-413. Vacancy in appointment of judicial manager.

If a vacancy occurs by death, resignation or otherwise in the office of a judicial manager of a company, the Court may, on the application of the company or any creditor of the company, by order, fill the vacancy.


414 Subdivision 2 - Judicial Management-414. General powers and duties of judicial manager.

(1) On the making of a judicial management order, the judicial manager shall take into his custody or under his control all the property to which the company is or appears to be entitled.

(2) During the period for which a judicial management order is in force, all powers conferred and duties imposed on the directors by this Act or by the constitution of the company shall be exercised and performed by the judicial manager and not by the directors, but nothing in this subsection shall require the judicial manager to call any meetings of the company.

(3) The judicial manager of a company shall:

(a) do all such things as may be necessary for the management of the affairs, business and property of the company; and

(b) do all such other things as the Court may order.

(4) Without prejudice to the generality of paragraph (3) (a) , the powers conferred by that subsection

415 Subdivision 2 - Judicial Management-415. Power to deal with charged property, etc.

(1) The judicial manager of a company may dispose of or otherwise exercise his powers in relation to any property of the company which is subject to a security to which, as created, was a floating charge.

(2) Where, on application by the judicial manager of a company, the Court is satisfied that the disposal, with or without other assets:

(a) of any property of the company which is subject to a security other than a floating charge; or

(b) of any goods under a hire purchase agreement, chattels leasing agreement or retention of title agreement,

would be likely to promote one or more of the purposes specified in the judicial management order, the Court may, by order, authorize the judicial manager to dispose of the property as if it were not subject to the security or to dispose of the goods as if all rights of the owner under the hire purchase agreement were vested in the compa

415A Subdivision 2 - Judicial Management-415A. Super priority for rescue financing for judicial management.

(1) Where a company is under a judicial management order, the Court may, on an application by the judicial manager of the company, grant one or more of the following orders:

(a) an order that if the company is wound up, notwithstanding subsection 527(1), the debt arising from any rescue financing obtained by the company shall be paid immediately after the costs and expenses of the winding up of the company as referred to in paragraph 527(1) (a) are paid;

(b) an order to secure a debt arising from any rescue financing which otherwise would not have been able to be obtained by the company unless the debt is secured by-

(i) a security interest on property of the company that is not subject to any security interest; or

(ii) a subordinate security interest on property of the company that is subject to an existing security interest; or

(c) an or

416 Subdivision 2 - Judicial Management-416. Agency and liability for contracts.

(1) The judicial manager or interim judicial manager of a company:

(a) shall be deemed to be the agent of the company;

(b) shall be personally liable on any contract, including any contract of employment, entered into or adopted by him in the carrying out of his functions, except in so far as the contract or a notice under subsection (2) otherwise provides; and

(c) shall be entitled to be indemnified in respect of that liability, and to have his remuneration and expenses defrayed, out of the property of the company which is in his custody or under his control in priority to all other debts except those subject to a security to which subsection 415(2) applies.

(2) Where a contract entered into by the company is adopted by the judicial manager or interim judicial manager, he may, by notice given to the other party, disclaim any personal liability under the contract.


417 Subdivision 2 - Judicial Management-417. Vacation of office and release.

(1) The judicial manager of a company may:

(a) at any time be removed from office by order of the Court; or

(b) resign his office by giving notice of his resignation to the Court with leave of the Court and subject to such conditions as the Court may impose.

(2) The judicial manager of a company shall vacate office if:

(a) being an insolvency practitioner at the time of his appointment, he ceases to be an insolvency practitioner; or

(b) the judicial management order is discharged.

(3) Where at any time a person ceases to be a judicial manager of a company whether by virtue of this section or by reason of his death:

(a) any sums payable in respect of any debts or liabilities incurred while the person was a judicial manager under contracts entered into by him in the carrying out of his fun

418 Subdivision 2 - Judicial Management-418. Information to be given by and to judicial manager.

(1) Where a judicial management order has been made, the judicial manager shall:

(a) send a copy of the order to the Registrar and the company within seven days of the making of the order;

(b) publish a notice of the order in one widely circulated newspaper in Malaysia in the national language and one widely circulated newspaper in Malaysia in the English language; and

(c) send such a notice to all creditors of the company, so far as the judicial manager is aware of the addresses within thirty days from the making of the order, unless the Court otherwise directs.

(2) The company shall submit a statement as to the affairs of the company in accordance with section 419 within fourteen days from the receipt of the order referred to in paragraph (1) (a) or such longer period as may be allowed by the judicial manager which should not exceed sixty days.

(3) A

419 Subdivision 2 - Judicial Management-419. Company's statement of affairs.

(1) The company's statement of affairs required to be submitted to the judicial manager under subsection 418(2) shall show as at the date of the judicial management order:

(a) the particulars of the company's assets, debts and liabilities;

(b) the names and addresses of its creditors;

(c) the securities held by the creditors respectively;

(d) the dates when the securities were respectively created; and

(e) such other information as may be determined by the Registrar.

(2) The statement shall be submitted by, and be verified by affidavit of, at least one of the directors who was, at the date of the judicial management order, the director of the company and at least one other person approved by the judicial manager from the following categories:

(a) person who is or has been an officer of the company;

420 Subdivision 2 - Judicial Management-420. Statement of proposals.

(1) Where a judicial management order has been made, the judicial manager shall, within sixty days or such longer period as the Court may allow, after the making of the order:

(a) send a statement of his proposal for achieving one or more of the purposes mentioned in paragraph 405(1) (b) to the Registrar and to all creditors to their last known address; and

(b) lay a copy of the statement before a meeting of the company's creditors summoned for the period of not less than fourteen days' notice.

(2) The judicial manager shall also, within sixty days or such longer period as the Court may allow after the making of the order either:

(a) send a copy of the statement to all members of the company to the last known address of all the members; or

(b) publish a notice in one widely circulated newspaper in Malaysia in the national language

421 Subdivision 2 - Judicial Management-421. Consideration of proposals by creditors' meeting.

(1) A meeting of creditors, summoned under paragraph 420(1) (b) , shall decide whether to approve the judicial manager's proposal.

(2) The proposal shall be approved by seventy-five per centum of the total value of creditors whose claims have been accepted by the judicial manager, present and voting at the meeting either in person or by proxy and the proposal may be approved with modifications subject to the consent of the judicial manager to each modification.

(3) Once approved by the required majority under subsection (2), the proposal, with or without modifications, shall be binding on all creditors of the company whether or not the creditors have voted in favour of the proposal.

(4) The judicial manager shall report the result of the meeting to the Court and shall give notice of that result to the Registrar and to such other persons or bodies as the Court may approve.

(5) If a report is given to the Court unde

422 Subdivision 2 - Judicial Management-422. Committee of creditors.

Where a creditors' meeting held under section 421 has approved the judicial manager's proposals with or without modifications the meeting may, establish a committee of creditors, which if it thinks fit may require the judicial manager to attend before the meeting and furnish the meeting with such information relating to the carrying out by the judicial manager of his functions as the meeting may reasonably require.


423 Subdivision 2 - Judicial Management-423. Duty to manage company's affairs, etc, in accordance with approved proposals.

(1) Where the judicial manager's proposal have been approved by a meeting of creditors held under section 421, and subject to any order under section 425, the judicial manager shall have a duty to manage the affairs, business and property of the company in accordance with the proposal.

(2) Where the judicial manager proposes to make substantial revisions of an approved proposal, the judicial manager shall:

(a) send a statement of the proposed revisions to all creditors of the company to the last known address of all the creditors; and

(b) lay a copy of the statement before the creditor's meeting summoned of not less than fourteen days' notice.

(3) The judicial manager shall also either:

(a) send a copy of the statement to all members of the company to the last known address of all the members; or

(b) publish a notice stating an ad

424 Subdivision 2 - Judicial Management-424. Duty to apply for discharge of judicial management order.

(1) The judicial manager of a company shall apply to the Court for the judicial management order to be discharged if it appears to the judicial manager that the purpose specified in the order either has been achieved or is incapable of achievement.

(2) On the hearing of an application under this section, the Court may, by order:

(a) discharge the judicial management order;

(b) make any consequential provision as it thinks fit;

(c) adjourn the hearing conditionally or unconditionally; or

(d) make an interim order or any other order that the Court thinks fit.

(3) Where the judicial management order is discharged, the judicial manager shall lodge a copy of the order affecting the discharge with the Registrar within seven days of the making of the order of discharge.

(4) Where a judicial management order has been discharged under this Subd

425 Subdivision 2 - Judicial Management-425. Protection of interests of creditors and members.

(1) At any time when a judicial management order is in force, a creditor or member of the company may apply to the Court for an order under this section on the ground that:

(a) the company's affairs, business and property are being or have been managed by the judicial manager in a manner which is or was unfairly prejudicial to the interests of its creditors or members generally or of some part of its creditors or members, including at least the creditor or member himself, or of a single creditor that represents twenty-five per centum in value of the claims against the company; or

(b) any actual or proposed act or omission of the judicial manager is or would be so prejudicial.

(2) On an application under this section, the Court may, by order:

(a) give relief in respect of the matters complained of;

(b) adjourn the hearing conditionally or

426 Subdivision 2 - Judicial Management-426. Undue preference in judicial management.

(1) Any transfer, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which is unable to pay its debts as the debts become due, from the company's own money in favour of any creditor or any person in trust of any creditor with the intention to give such creditor a preference over other creditors shall be void in the event of the company being placed under judicial management on an application for a judicial management order presented within six months from the date of making, taking, paying or suffering the transfer, mortgage, delivery of goods, payment, execution and every such act.

(2) Any transfer or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.

(3) This section shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the company plac

427 Subdivision 2 - Judicial Management-427. Delivery and seizure of property.

(1) Where any of the persons mentioned in subsection (2) has in his possession or control any property, books, papers or records to which the company appears to be entitled, the Court may require that person immediately, or within such period as the Court may direct to pay, deliver, convey, surrender or transfer the property, books, papers or records to the judicial manager.

(2) The persons referred to in subsection (1) are as follows:

(a) a contributory or member of the company;

(b) any person who has previously held office as receiver or receiver and manager of the company's property;

(c) any trustee for, or any banker, agent or officer of, the company; and

(d) any other person who has in his possession or control any property, books, papers or records to which the company appears to be entitled.

(3) Where:

(a)

428 Subdivision 2 - Judicial Management-428. Duty to co-operate with judicial manager.

(1) The person who:

(a) is or has at any time been an officer of the company;

(b) has taken part in the formation of the company at any time within one year before the date of the judicial management order;

(c) is in the employment of the company including a person who is employed under a contract for services, or has been in the employment of the company within that year; and

(d) is in the opinion of the judicial manager capable of giving the information required shall:

(i) give to the judicial manager such information concerning the company and its promotion, formation, business, dealings, affairs or property as the judicial manager may at any time after the date of the judicial management order reasonably require; and

(ii) attend on the judicial manager at such times as the judicial manager may reasonably require.

429 Subdivision 2 - Judicial Management-429. Inquiry into company's dealings, etc.

(1) The Court may, on the application of the judicial manager, summon to appear before it:

(a) any officer of the company;

(b) any person known or suspected to have in his possession any property of the company;

(c) any person who is supposed to be indebted to the company; or

(d) any person whom the Court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company,

and the Court may require any such person referred to in paragraphs (a) to (d) to submit an affidavit to the Court containing an account of his dealings with the company or to produce any books, papers or other records in his possession or under his control relating to the company or the matters mentioned in paragraph (d) .

(2) In a case where a person, without reasonable excuse, fails to a

430 Subdivision 2 - Judicial Management-430. Application of provisions of winding up of a company under judicial management.

(1) At any time when a judicial management order is in force in relation to a company under judicial management, sections 536, 537, 538 and 539 shall apply as if the company under the judicial management was a company being wound up and the judicial manager was the liquidator.

(2) Notwithstanding subsection (1), the Court shall have the power:

(a) to order that any other sections in Subdivision 4 of Division 2 of Part IV shall apply to a company under judicial management as if the sections in Subdivision 4 of Division 2 of Part IV apply in a winding up by the Court; and

(b) any reference to the liquidator shall be taken as a reference to the judicial manager and any reference to a contributory shall be taken as a reference to a member of the company.


430A Division 9 - Protection for Essential Goods and Services-430A. Protection for essential goods and services.

(1) Subject to subsection (2), an insolvency related clause in any contract for the supply of essential goods and services shall not be exercised against any company.

(2) A supplier who wishes to exercise his rights pursuant to an insolvency related clause in a contract shall communicate his intention of preserving his rights under the insolvency related clause to the company in writing at least thirty days before exercising his rights pursuant to the insolvency related clause in accordance with the contract.

(3) This section shall not prevent a supplier from exercising his any other rights, including right to payment for essential goods and services provided to a company, under a contract for supply of essential goods and services.

(4) For the purposes of this section-

(a) "insolvency related clause" means a term of contract which-

(i) allows the automatic termination of a cont

431 PART IV CESSATION OF COMPANIES Division 1 - Voluntary and Compulsory Winding Up Subdivision 1 - Preliminary-431. Application of winding up provisions.

The provisions of winding up in this Act shall apply to the winding up of a company for either mode specified in subsection 432(1), unless the context otherwise requires.


432 PART IV CESSATION OF COMPANIES Division 1 - Voluntary and Compulsory Winding Up Subdivision 1 - Preliminary-432. Modes of winding up.

(1) The winding up of a company may be effected either:

(a) by way of a winding up order made by the Court; or

(b) by way of a voluntary winding up.

(2) A voluntary winding up may be effected by a resolution either:

(a) by a members' voluntary winding up where the company is solvent and the liquidator is appointed by the members at the members' meeting; or

(b) by a creditors' voluntary winding up where the company is insolvent and the liquidator is appointed by the creditors at the creditors' meeting.


433 PART IV CESSATION OF COMPANIES Division 1 - Voluntary and Compulsory Winding Up Subdivision 1 - Preliminary-433. Qualification of liquidator.

(1) Subject to this section, a person other than the Official Receiver who is appointed interim liquidator or liquidator in a winding up by the Court shall not, except with the leave of the Court, be qualified for an appointment as an interim liquidator or liquidator of a company if:

(a) he is not an approved liquidator;

(b) he is indebted to the company or to a corporation that is deemed to be related to the company by virtue of section 7 in an amount exceeding twenty-five thousand ringgit;

(c) he is an officer of the company;

(d) he is a partner, employer or employee of an officer of the company;

(e) he is a partner or employee of an employee of an officer of the company;

(f) he assigns his estate for the benefit of his creditors or has made an arrangement with his creditors under any law relating to bankruptcy;

(g) if h

434 PART IV CESSATION OF COMPANIES Division 1 - Voluntary and Compulsory Winding Up Subdivision 1 - Preliminary-434. Government bound by certain provisions.

The provisions of this Part relating to the remedies against the property of a company, the priorities of debts and effect of an arrangement with creditors shall bind the Government.


435 Subdivision 2 - Contributories-435. Liability as contributories of present and past members.

(1) When a company is wound up, every present and past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up and for the adjustment of the rights of the contributories among the present and past members.

(2) Subject to subsection (3):

(a) a past member shall not be liable to contribute under subsection (1):

(i) if he has ceased to be a member for one year or more before the commencement of the winding up;

(ii) in respect of any debt or liability of the company contracted after he ceased to be a member; or

(iii) if it appears to the Court that the existing members are unable to satisfy the contributions required to be made by the existing members under this Act;

(b) in the case of a company limited by shares, no contribu

436 Subdivision 2 - Contributories-436. Nature of liability of contributory.

The liability of a contributory shall create a debt accruing due from him at the time when his liability commenced but payable at the times when calls are made for enforcing the liability.


437 Subdivision 2 - Contributories-437. Contributories in the case of death of member.

(1) If a contributory dies, either before or after he has been placed on the list of contributories, his personal representatives shall be liable in due course of administration to contribute to the assets of the company in discharge of the liability of the contributory and the personal representatives shall be the contributories accordingly.

(2) If the personal representatives make default in paying any money ordered to be paid by the personal representatives, proceedings may be taken for administering the estate of the deceased contributory and for compelling payment of the money due.


438 Subdivision 2 - Contributories-438. Contributories in case of bankruptcy of member.

If a contributory becomes bankrupt or assigns his estate for the benefit of his creditors, either before or after the contributory has been placed on the list of contributories:

(a) his trustee shall represent him for all the purposes of the winding up and shall be a contributory accordingly; and

(b) there may be proved against his estate the estimated value of his liability to future calls as well as calls already made.


439 Subdivision 3 - Voluntary Winding Up-439. Circumstances in which company may be wound up voluntarily.

(1) A company may be wound up voluntarily:

(a) when the period, if any, fixed for the duration of the company by the constitution expires, or the event, if any, occurs, on the occurrence of which the constitution provide that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily; or

(b) if the company so resolve by special resolution.

(2) A company shall:

(a) lodge a printed copy of the resolution with the Registrar within seven days from the passing of a resolution for voluntary winding up; and

(b) give notice of the resolution in one widely circulated newspaper in Malaysia in the national language and one widely circulated newspaper in Malaysia in the English language within ten days after the passing of the resolution.

(3) The com

440 Subdivision 3 - Voluntary Winding Up-440. Interim liquidators.

(1) Where the directors of a company have made a statutory declaration that:

(a) the company cannot by reason of its liabilities continue its business; and

(b) the meetings of the company and of its creditors have been summoned for a date within thirty days of the date of the declaration,

the directors shall forthwith appoint an approved liquidator to be the interim liquidator after the statutory declaration has been lodged with the Registrar and with the Official Receiver.

(2) An interim liquidator shall have all the functions and powers of a liquidator in a creditors' winding up subject to such limitations and restrictions as may be prescribed by the rules relating to winding up.

(3) The appointment of an interim liquidator under this section shall continue for thirty days from the date of his appointment or for such further period as the Official Receiver may allow

441 Subdivision 3 - Voluntary Winding Up-441. Date of commencement of winding up.

(1) A voluntary winding up shall commence:

(a) where an interim liquidator has been appointed before the resolution for voluntary winding up is passed, at the time when the declaration referred to in section 440 is lodged with the Registrar; and

(b) in any other case, at the time of the passing of the resolution for voluntary winding up.

(2) A copyof the declaration referred to in paragraph (1) (a) shall be lodged with the Official Receiver.


442 Subdivision 3 - Voluntary Winding Up-442. Effect of voluntary winding up.

(1) The company shall cease to carry on its business from the commencement of the winding up except so far as is required in the opinion of the liquidator for the beneficial winding up.

(2) Notwithstanding anything to the contrary in the constitution, the corporate state and corporate powers of the company shall continue until it is dissolved.

(3) Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members made after the commencement of the winding up, shall be void.


443 Subdivision 3 - Voluntary Winding Up-443. Declaration of solvency.

(1) Where it is proposed to wind up a company voluntarily, the director or in the case of a company having more than one director, the majority of the directors may:

(a) make a written declaration to the effect that the directors have made an inquiry into the affairs of the company; and

(b) at a meeting of directors, have formed the opinion that the company will be able to pay its debts in full within a period not exceeding twelve months after the commencement of the winding up.

(2) The declaration in subsection (1) shall be made by the directors before the date on which the notices of the meeting at which the resolution for the winding up of the company is to be proposed are sent out to the members of a company.

(3) A statement of affairs of the company shall be attached to the declaration containing the particulars made up to the latest practicable date before the making of

444 Subdivision 3 - Voluntary Winding Up-444. Distinction between "members" and "creditors" voluntary winding up.

A winding up in the case of which a directors' declaration under section 443 has been made, is a "members' voluntary winding up" and a winding up in the case of which such a declaration has not been made is a "creditors' voluntary winding up".


445 Subdivision 4 - Members' Voluntary Winding Up-445. Appointment and removal of liquidator.

(1) In a members' voluntary winding up, the company shall appoint one or more liquidators for the purpose of winding up the company's affairs and distributing its assets in general meeting.

(2) On the appointment of a liquidator, all the powers of the directors cease, except so far as the company in general meeting with consent of the liquidator, or the liquidator sanctions the continuance of all the powers of the directors.

(3) The company may, in general meeting convened by any contributory by special resolution of which special notice has been given to the creditors and the liquidators, remove any liquidator but no such resolution shall be effective to remove a liquidator if the Court on the application of the liquidator or a creditor has ordered that the liquidator may not be removed.


446 Subdivision 4 - Members' Voluntary Winding Up-446. Power to fill vacancy in office of liquidator.

(1) If a vacancy occurs by death, resignation, removal or otherwise in the office of a liquidator appointed by the company, the company in a meeting of members may fill the vacancy, subject to any arrangement with its creditors.

(2) For the purposes of subsection (1), a meeting may be convened by any contributory or, if there is more than one liquidator, by the continuing liquidators.

(3) The meeting shall be held in a manner provided by this Act or by the constitution, or in such manner as may be determined by the Court, on application by any contributory or by the continuing liquidators.


447 Subdivision 4 - Members' Voluntary Winding Up-447. Duty of liquidator to call for creditors' meeting in case of insolvency.

(1) If the liquidator is of the opinion that the company will not be able to pay or provide for the payment of its debts in full within the period stated in the declaration made under section 443, the liquidator shall forthwith summon a meeting of the creditors and lay before the meeting a statement of the assets and liabilities of the company and the notice summoning the meeting shall draw the attention of the creditors to the right conferred upon the creditors by subsection (2).

(2) The creditors may, at the meeting summoned under subsection (1), appoint:

(a) the liquidator appointed by the company; or

(b) any other person to be the liquidator,

for the purpose of winding up the affairs and distributing the assets of the company.

(3) Once a meeting of creditors is held under subsection (1), the winding up shall thereafter proceed as if the winding up were a creditors'

448 Subdivision 4 - Members' Voluntary Winding Up-448. Conversion to creditors' voluntary winding up.

As from the day on which the creditors' meeting is held under section 449, this Act has effect as if:

(a) the directors' declaration under section 443 had not been made; and

(b) the creditors' meeting and the company meeting at which it was resolved that the company be wound up voluntarily,

and accordingly the winding up becomes a creditors' voluntary winding up.


449 Subdivision 5 - Creditors' Voluntary Winding Up-449. Meeting of creditors.

(1) The company shall cause a meeting of the creditors of the company to be summoned for the day, or the next day on which there is to be held the meeting at which the resolution for voluntary winding up is to be proposed.

(2) Where a meeting of the creditors is summoned under subsection (1), the company shall cause the notice of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meeting of the company.

(3) The company shall convene the meeting at a time and place convenient to the majority in value of the creditors and shall:

(a) give notice by post of the meeting to the creditors at least seven clear days; and

(b) send to each creditor together with the notice of meeting, a statement showing the names of all creditors and the amounts of their claims.

(4) The company shall cause notice of the meeting of t

450 Subdivision 5 - Creditors' Voluntary Winding Up-450. Liquidators in creditors' voluntary winding up.

(1) The company shall and the creditors may at their respective meetings nominate a person to be a liquidator for the purpose of winding up the affairs and distributing the assets of the company.

(2) If the creditors and the company nominate different persons, the person nominated by the creditors shall be liquidator and if no person is nominated by the creditors, the person nominated by the company shall be liquidator.

(3) Notwithstanding subsections (1) and (2), where different persons are nominated, any director, member or creditor may apply to the Court for an order directing that the person nominated as liquidator by the company shall be the liquidator or jointly with the person nominated by the creditors within seven days from the date on which the nomination was made by the creditors.

(4) The liquidator may, or if requested by any creditor or contributory shall, summon separate meetings of the creditors and contributors f

Legal Comments

451 Subdivision 5 - Creditors' Voluntary Winding Up-451. Property and proceedings.

(1) Any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of a creditors' voluntary winding up shall be void.

(2) After the commencement of the winding up, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court may impose.


452 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-452. Distribution of property of company.

Subject to the provisions relating to the preferential payments under this Act, the property of a company shall, on its winding up be applied equally in satisfaction of its liabilities, and shall subject to that application, be distributed among the members according to their rights and interests in the company, unless the constitution otherwise provides.


453 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-453. Appointment or removal of liquidator by Court.

(1) Where there is no liquidator acting in a voluntary winding up, the Court may on application, appoint a liquidator.

(2) The Court may, on cause shown, remove a liquidator and appoint another liquidator.


Legal Commentary on Section 453 of the Companies Act 2016

Introduction

Section 453 of the Companies Act 2016 pertains to the appointment or removal of a liquidator by the Court in the context of winding up proceedings. This provision establishes the Court's authority to appoint and remove liquidators, ensuring proper administration of companies in liquidation. The section is a crucial component of the winding up framework, designed to protect the interests of creditors, contributories, and other stakeholders.

What Section 453 Says

Section 453 of the Companies Act 2016 empowers the Court to appoint or remove a liquidator in winding up proceedings. The provision corresponds to earlier sections under the Companies Act, 1956, and establishes the judicial oversight necessary for proper liquidation administration. The section provides the legal basis for Court intervention in liquidator appointments, ensuring that the winding up process remains fair and transparent.

Essential Ingredients

The essential elements of Section 453 include:

  1. Court's Authority - The Court possesses the power to appoint or remove a liquidator
  2. Winding Up Context - The provision applies specifically during winding up proceedings
  3. Judicial Oversight - Court approval is required for certain actions regarding liquidator appointments
  4. Protection of Stakeholders - The provision safeguards interests of creditors, contributories, and workmen

Scope of Section

Section 453 establishes that a receiver shall not be appointed of assets in the hands of a liquidator except by or with the leave of the Court. This provision ensures that the Official Liquidator's possession of company assets is not disturbed without proper judicial authorization. The scope extends to:

  • Protection of Liquidator's Possession - Prevents unauthorized appointment of receivers over assets already in liquidator's custody
  • Secured Creditors - Even secured creditors cannot bypass the liquidator without Court leave
  • All Creditors' Interests - The liquidator must protect interests of all creditors, including secured creditors
  • Court's Exclusive Jurisdiction - Only the winding up Court can authorize such appointments

Punishment for Section

Under Section 453 of the Companies Act 2016, the provision primarily deals with procedural requirements rather than imposing direct punishment. However, related provisions (such as those concerning statement of affairs) contain penalty provisions. For instance, failure to comply with requirements under Section 453(3) may result in the Court imposing a fine. In one case, the Court imposed a fine of Rs. 2,50,000 for contravention of Section 453(3), with alternative imprisonment of six months for directors in default [Balkrishna Commercial Co Ltd VS Ask Dairies Pvt Ltd - 2022 0 Supreme(Raj) 2145].

Legal Comments

454 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-454. Remuneration of liquidators in voluntary winding up.

(1) A liquidator shall be entitled to receive salary or remuneration as prescribed in the rules.

(2) Any member, creditor or the liquidator may, at any time before the dissolution of the company, apply to the Court to review the amount of the remuneration of the liquidator and the decision of the Court on the matter shall be final and conclusive.

(3) Notwithstanding subsection 479(2), in the case of a company which is an insurer, no person, other than the Central Bank of Malaysia, may apply to the Court to review the remuneration of the liquidator and the Court shall determine the remuneration of the liquidator on the recommendation of the Central Bank of Malaysia.


455 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-455. Act of liquidator valid, etc.

(1) The acts of a liquidator shall be valid notwithstanding any defects that may afterwards be discovered in his appointment or qualification.

(2) Any conveyance, assignment, transfer, mortgage, charge or other disposition of a company's property made by a liquidator shall be valid in favour of any person taking such property in good faith and for value and without notice of such defect or irregularity, notwithstanding any defect or irregularity affecting the validity of the winding up or the appointment of the liquidator.

(3) Every person making or permitting any disposition of property to any liquidator shall be protected and indemnified notwithstanding any defect or irregularity affecting the validity of the winding up or the appointment of the liquidator not then known to such person.

(4) For the purposes of this section, a disposition of property shall be taken as including a payment of money.


456 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-456. Powers of liquidator in a voluntary winding up.

The liquidator may exercise any power and duty specified under the Eleventh Schedule in a voluntary winding up.


457 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-457. Power of liquidator to accept shares, etc., as consideration for sale of property of company.

(1) Where it is proposed that the whole or part of the business or property of a company is to be transferred or sold to another corporation, with the sanction of a special resolution of the company conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, the liquidator of the company may:

(a) receive in compensation or part compensation for the transfer or sale of the shares, debentures, policies or other like interests in the corporation for distribution among the members of the company; or

(b) enter into any other arrangement whereby the members of the company may, in lieu of receiving cash, shares, debentures, policies or other like interests or in addition to the arrangement, participate in the profits of or receive any other benefit from the corporation,

and any such transfer, sale or arrangement shall be binding on the me

458 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-458. Annual meeting of members and creditors.

(1) If the winding up continues for more than one year, the liquidator shall summon:

(a) in the case of a members' voluntary winding up, a meeting of members of the company; and

(b) in the case of a creditors' voluntary winding up, a meeting of members of the company and the meeting of creditors,

at the end of the first year from the commencement of the winding up and of each succeeding year or not more than three months after the succeeding year, and shall lay before the meeting an account of the acts of the liquidator and dealings and of the conduct of the winding up during the preceding year.

(2) The liquidator shall cause the notices of the meeting of creditors to be delivered by post to the creditors simultaneously with the delivery of the notices of the meeting of the company.

(3) Every liquidator who contravenes this section commits an offence and shall, on conv

459 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-459. Final meeting and dissolution.

(1) As soon as the affairs of the company are fully wound up, the liquidator shall:

(a) prepare an account showing how the winding up has been conducted and the property of the company has been disposed of; and

(b) call for a meeting of members of the company, or in the case of a creditor's voluntary winding up, a meeting of members of the company and the creditors,

for the purpose of laying before the meeting the account and for giving any explanation.

(2) The meeting shall be called by an advertisement published in one widely circulated newspaper in Malaysia in the national language and one widely circulated newspaper in Malaysia in the English language, which the advertisement shall specify the time, place and object of the meeting and shall be published at least thirty days before the meeting.

(3) The liquidator shall lodge with the Registrar and with the Official

460 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-460. Arrangement binding on creditors.

(1) Any arrangement entered into between a company about to be or in the course of being wound up and its creditors shall, subject to the right of appeal under this section, be binding on:

(a) the company if sanctioned by a special resolution; and

(b) the creditors if acceded to by three-fourth in value and one-half in number of the creditors, every creditor for under five hundred ringgit being reckoned in value only.

(2) A creditor shall be accounted a creditor for value for such sum as upon an account fairly stated, after allowing the value of security or liens held by the creditor and the amount of any debt or set off owing by the creditor to the debtor, appears to be the balance due to the creditor.

(3) Any dispute with regards to the value of any such security or lien or the amount of such debt or set off may be settled by the Court on the application of the company, liqu

461 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-461. Application to Court to have questions determined or powers exercised.

(1) The liquidator or any contributory or creditor may apply to the Court:

(a) to determine any question arising in the winding up of a company; or

(b) to exercise all or any of the powers which the Court may exercise if the company is wound up by the Court.

(2) The Court, if satisfied that the determination of the question or the exercise of power will be just and beneficial, may accede wholly or partially to any such application on such terms and conditions as the Court thinks fit or may make any other order on the application as the Court thinks just.


Legal Commentary on Companies Act 2016 - Section 461

Introduction

Section 461 of the Companies Act 2016 provides mechanisms for courts to exercise jurisdiction in winding-up proceedings, allowing liquidators, creditors, or contributories to apply for questions to be determined or powers to be exercised by the court. It aims to facilitate efficient resolution of disputes and oversight during liquidation, ensuring that the winding-up process adheres to legal standards and fairness.

What does Section Says

  • Section 461(1) authorizes any liquidator, creditor, or contributory to apply to the court to:
  • Determine questions arising during the winding-up; or
  • Exercise any powers that the court may exercise if the company is wound up by the court.
  • Section 461(2) stipulates that the court may, upon being satisfied that such determination or exercise will be just and beneficial, grant the application wholly or partially, on such terms as it deems fit, or make any other appropriate order.

Essential Ingredients

  • Application by: Liquidator, creditor, or contributory.
  • Purpose: To determine questions or exercise powers related to winding-up.
  • Court’s discretion: Must be satisfied that the exercise is just and beneficial.
  • Procedural compliance: Applications must meet procedural requirements as prescribed by law and relevant rules.

Scope of Section

  • Covers a broad range of questions arising in winding-up, including disputes over claims, validity of agreements, or procedural irregularities.
  • Allows courts to exercise powers similar to those they possess in winding-up cases, such as approving schemes, validating transactions, or resolving disputes.
  • Applicable to voluntary and compulsory winding-up processes.

Punishment for Section

  • Section 461 itself does not prescribe specific penalties; rather, it provides procedural authority.
  • Non-compliance with court orders or misapplication can lead to contempt of court or other penalties under general provisions of the Companies Act.
  • Offences related to false statements or fraudulent applications under winding-up proceedings are punishable under other sections of the Act.

Legal Comments

Note: The focus is on the procedural and jurisdictional aspects of Section 461, highlighting its role in facilitating fair and lawful winding-up procedures while respecting the discretion of liquidators and other stakeholders.

462 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-462. Costs.

All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator shall be payable out of the assets of the company in priority to all other claims.


463 Subdivision 6 - Provisions Applicable to Every Voluntary Winding Up-463. Limitation on right to wind up voluntarily.

Where a petition has been presented to the Court to wind up a company on the ground that it is unable to pay its debts, the company shall not resolve that it be wound up voluntarily without the leave of the Court.


464 Subdivision 7 - Winding Up by Court-464. Petition of winding up.

(1) A company, whether or not it is being wound up voluntarily, may be wound up under an order of the Court on the petition of any one or more of the following:

(a) the company;

(b) any creditor, including a contingent or prospective creditor, of the company;

(c) a contributory or any person who is the personal representative of a deceased contributory or the trustee in bankruptcy or the Director General of Insolvency of the estate of a bankrupt contributory;

(d) the liquidator;

(e) the Minister on the ground specified in paragraph 465(1) (d) or (l) ;

(f) in the case of a company which is a licensed institution under the Financial Services Act 2013 or the Islamic Financial Services Act 2013 and which is not a member institution under the Malaysia Deposit Insurance Corporation Act 2011 [Act 720] , the Central Bank of

465 Subdivision 7 - Winding Up by Court-465. Circumstances in which company may be wound up by Court.

(1) The Court may order the winding up if:

(a) the company has by special resolution resolved that the company is to be wound up by the Court;

(b) the company defaults in lodging the statutory declaration under subsection 190(3);

(c) the company does not commence business within a year from its incorporation or suspends its business for a whole year;

(d) the company has no member;

(e) the company is unable to pay its debts;

(f) the directors have acted in the affairs of the company in the directors' own interests rather than in the interests of the members as a whole or acted in any other manner which appears to be unfair or unjust to members;

(g) when the period, if any, fixed for the duration of the company by the constitution expires or the event, if any, occurs on the occurrence of which the constitution provide that t

466 Subdivision 7 - Winding Up by Court-466. Definition of "inability to pay debts".

(1) A company shall be deemed to be unable to pay its debts if:

(a) the company is indebted in a sum exceeding the amount as may be prescribed by the Minister and a creditor by assignment or otherwise has served a notice of demand, by himself or his agent, requiring the company to pay the sum due by leaving the notice at the registered office of the company, and the company has for twenty-one days after the service of the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor;

(b) execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or

(c) it is proved to the satisfaction of the Court that the company is unable to pay its debts and in determining whether a company is unable to pay its debts the Court shall take into account the contingent

467 Subdivision 7 - Winding Up by Court-467. Commencement of winding up by the Court.

(1) Where before the presentation of the winding up petition a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and, unless the Court on proof of fraud or mistake thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.

(2) In any other case, the commencement of winding up shall be at the date of the winding up order.


468 Subdivision 7 - Winding Up by Court-468. Payment of preliminary costs by petitioner.

(1) Where a person, other than a company itself or a liquidator, presents a petition under section 464 and a winding up order is made, that person shall at his own cost, conduct all the proceedings in the winding up until a liquidator has been appointed under this Division.

(2) The liquidator shall reimburse the petitioner out of the assets of the company the taxed costs incurred by the petitioner in any such proceedings unless the Court orders otherwise.

(3) Where the company has no assets or insufficient assets, and in the opinion of the Minister any fraud has been committed by any person in the promotion or formation of the company or by any officer of the company in relation to the company since the formation, the taxed costs or so much of the taxed costs as is not so reimbursed may be reimbursed to the petitioner out of moneys provided by the Parliament for the purpose, with the approval specified by the Minister in writing to an a

469 Subdivision 7 - Winding Up by Court-469. Powers of Court on hearing petition for winding up.

(1) On hearing the petition for winding up, the Court may, by order:

(a) dismiss the petition with or without costs;

(b) adjourn the hearing conditionally or unconditionally; or

(c) make any interim or any other order that the Court thinks fit.

(2) The Court shall not refuse to make a winding up order solely on the ground only:

(a) that the assets of the company have been mortgaged to an amount equal to or in excess of those assets;

(b) that the company has no assets; or

(c) in the case of a petition by a contributory, that there will be no assets available for distribution amongst the contributories.

(3) The Court may, at the hearing of the petition or at any time on the application of the petitioner, the company, or any person who has given notice that he intends to appear on the h

Legal Commentary on Section 469 of the Companies Act 2016

Introduction

Section 469 of the Companies Act 2016 (and its predecessor provisions) grants the Central Government the authority to formulate rules necessary for the implementation and enforcement of the Act. It plays a pivotal role in shaping procedural and substantive aspects of corporate regulation, including proceedings related to winding up, insolvency, and enforcement of penalties. The section emphasizes the delegation of legislative powers to the Central Government to ensure smooth administration of corporate laws through rule-making.

What does Section 469 Say?

Section 469 authorizes the Central Government to make rules for carrying out the provisions of the Act. It also specifies that such rules may prescribe penalties for contraventions, which may extend to fines up to five thousand rupees. The section is divided into subsections:- Subsection (1): Power to make rules for the implementation of the Act.- Subsection (2): Power to specify that contraventions of rules may attract penalties.- Subsection (3): Power to prescribe penalties in rules, including fines.- Subsequent provisions: Power to remove difficulties and to amend rules as necessary.

Essential Ingredients

  • Delegated Authority: The Central Government's authority to formulate rules.
  • Scope of Rules: Covering procedural matters, penalties, and enforcement mechanisms.
  • Penalty Provision: Penalties for contraventions, including fines up to Rs. 5,000.
  • Power to Amend: Authority to amend or repeal rules as needed.
  • Removal of Difficulties: Power to clarify or resolve ambiguities in the implementation of the Act.

Scope of Section

Section 469 encompasses all rules necessary for the effective implementation of the Companies Act 2016. This includes procedural rules for:- Winding up and liquidation procedures.- Penalties and penalties enforcement.- Filing and maintenance of documents.- Transfer of proceedings.- Inspection and investigation processes.- Penalty waivers or reductions.- Rules related to penalties, offences, and contraventions.It provides a broad framework, allowing the Central Government to adapt legislation to changing corporate practices and judicial pronouncements.

Punishment for Section

While Section 469 itself primarily deals with rule-making powers, its subsidiary provisions specify that contraventions of rules made under this section may attract penalties, including fines up to Rs. 5,000. The actual penalties are prescribed in the rules formulated under this section, and enforcement is carried out through adjudication authorities or courts.

Legal Comments

  • Delegated Power - Section 469 empowers the Central Government to make rules necessary for implementing the Act, facilitating flexible and adaptive governance. [Section 469, Companies Act 2016]

  • Rule-Making Authority - The scope of rules includes procedural aspects like filing, inspection, penalties, and proceedings related to winding up and insolvency. [Rule-making powers under Section 469(1)]

  • Penalty Provisions - Rules can specify penalties for contraventions, extending to fines up to Rs. 5,000, ensuring enforcement and deterrence. [Section 469(3)]

  • Inherent Powers - The rules made under Section 469 are intended to supplement the substantive provisions, enabling authorities to address unforeseen or emerging issues effectively. [Inherent powers under Rule 11 of NCLT Rules 2016]

  • Power to Amend - The Central Government retains the authority to amend, modify, or repeal rules as necessary for the effective administration of corporate laws. [Section 469(3)]

  • Removal of Difficulties - The section provides powers to clarify ambiguities or remove difficulties in enforcement, ensuring smooth functioning of the legal framework. [Rule 11 of NCLT Rules 2016]

  • Procedural Flexibility - Rules framed under Section 469 allow tribunals and authorities to determine procedures in accordance with natural justice principles, not necessarily bound by civil procedure rules. [Rule 34, NCLT Rules 2016]

  • Enforcement Mechanism - Penalties for contraventions of rules are enforceable through adjudication by authorities such as NCLT, with powers to impose fines or other penalties. [Section 469(3)]

  • Scope of Penalties - The maximum penalty for contravention of rules is Rs. 5,000, but specific rules may prescribe higher penalties depending on the offence. [Rule 10(6) of NCLT Rules 2016]

  • Power to Remove Difficulties - The authority to remove difficulties ensures the Act remains responsive to practical challenges faced during implementation. [Section 469(2)]

  • Rule Formulation Process - The rules are to be notified and published in official gazettes, ensuring transparency and public accessibility. [Rule 38, NCLT Rules 2016]

  • Impact on Proceedings - Rules under Section 469 govern procedures for filing, service, and adjudication of cases before tribunals, including winding up, insolvency, and penalties. [Part III & V, NCLT Rules 2016]

  • Penalties for Fraud and Offences - The Act prescribes stringent penalties for offences like fraud by officers of companies, with rules providing the enforcement mechanisms. [Section 469, Companies Act 2016]

  • Power to Extend or Waive Penalty - Rules may provide for reduction or waiver of penalties in appropriate cases, providing flexibility in enforcement. [Rule 16, NCLT Rules 2016]

  • Legislative Intent - The delegation of rule-making powers aims to ensure the Act's provisions are effectively operationalized, with scope for updates and amendments. [Preamble, Companies Act 2016]

  • Judicial Interpretation - Courts have consistently held that rules made under Section 469 are essential for the smooth functioning of the corporate legal regime and are subject to judicial review for consistency with the Act. [Supreme Court judgments]

This comprehensive legal commentary underscores the crucial role of Section 469 in empowering the Central Government to frame detailed rules, facilitating effective enforcement, procedural clarity, and penalties to uphold corporate governance under the Companies Act 2016.

470 Subdivision 7 - Winding Up by Court-470. Power of Court to stay or restrain proceedings against company prior to order of winding up.

(1) At any time after the presentation of a winding up petition and before a winding up order has been made, the company or any creditor or contributory may, where any action or proceeding against the company is pending, apply to the Court for an order to stay or restrain further proceedings in the action or proceeding, and the Court may stay or restrain the action or proceeding accordingly on such terms as it thinks fit.

(2) The applicant shall lodge with the Registrar the office copy of the order within fourteen days from the making of such order under subsection (1).


471 Subdivision 7 - Winding Up by Court-471. Action or proceeding stayed after winding up order.

(1) When a winding up order has been made or an interim liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and in accordance with such terms as the Court imposes.

(2) The application for leave under subsection (1) shall be made in the Court granting the winding up order and shall be served on the liquidator.

(3) The office copy of the order for leave under subsection (1) shall be lodged by the applicant referred to in subsection 470(1) with the Registrar and with the Official Receiver within fourteen days from the making of the order.


472 Subdivision 7 - Winding Up by Court-472. Avoidance of dispositions of property or certain attachment, etc.

(1) Any disposition of the property of the company, other than an exempt disposition, including any transfer of shares or alteration in the status of the members of the company made after the presentation of the winding up petition shall, unless the Court otherwise orders, be void.

(2) In subsection (1), "exempt disposition" means a disposition made by a liquidator, or by an interim liquidator of the company in exercise of the power conferred on him under Part I of Twelfth Schedule or the rules that appointed him or an order of the Court.

(3) Any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the presentation of the winding up petition shall be void.


473 Subdivision 7 - Winding Up by Court-473. Petition to be lis pendens.

Any petition for winding up a company shall constitute a lis pendens within the meaning of any law relating to the effect of a lis pendens upon purchasers or mortgagees.


474 Subdivision 7 - Winding Up by Court-474. Lodgement of winding up order.

(1) The petitioner shall, within seven days from the making of a winding up order, notify the Registrar, Official Receiver and liquidator:

(a) the order and its date; and

(b) the name and address of the liquidator.

(2) The petitioner shall within seven days from receiving the copy of the winding up order:

(a) lodge an office copy of the order with the Registrar and with the Official Receiver;

(b) cause a copy to be served upon the secretary of the company or upon such other person or in such manner as the Court directs; and

(c) deliver a copy to the liquidator with a statement that the requirements of this subsection have been complied with.

(3) A petitioner who contravenes subsection (1) or (2) commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and in

475 Subdivision 7 - Winding Up by Court-475. Effect of winding up order.

An order for winding up a company shall operate in favour of all the creditors and contributories of the company as if made on the joint petition of a creditor and of a contributory.


476 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-476. Interim liquidator.

(1) The Court may appoint the Official Receiver or an approved liquidator as an interim liquidator at any time after the presentation of a winding up petition and before the making of a winding up order.

(2) The interim liquidator shall have and may exercise all the functions and powers of a liquidator subject to such limitations and restrictions as may be prescribed in the rules or as the Court may specify in the order appointing him.


477 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-477. Appointment, style, etc, of liquidators.

(1) The following provisions with respect to liquidators shall have effect on a winding up order being made:

(a) if an approved liquidator other than the Official Receiver is not appointed to be the liquidator of the company, the Official Receiver shall by virtue of his office become the interim liquidator and shall continue to act as such until he or another person becomes liquidator and is capable of acting as such;

(b) if there is no liquidator appointed, the Official Receiver shall summon separate meetings of the creditors and contributories of the company for the purpose of determining whether or not an application is to be made to the Court for appointing a liquidator in the place of the Official Receiver;

(c) the Court may make any appointment and order required to give effect to any such determination, and, if there is a difference between the determinations of the meetings of the

478 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-478. Appointment of other person as liquidator other than Official Receiver.

(1) Where a person other than the Official Receiver is an appointed interim liquidator or liquidator in a winding up of a company by the Court, that person:

(a) shall not act as such until he has given:

(i) written notice of his appointment to the Registrar and the Official Receiver; and

(ii) security in the prescribed manner to the satisfaction of the Official Receiver; and

(b) shall give the Official Receiver such information and such access to and facilities for inspecting the books of the company, and any assistance as may be required for enabling that officer to perform his duties under this Act.

(2) If two or more liquidators are appointed by the Court, unless the Court expressly provides otherwise:

(a) the functions or the powers of the liquidators may be performed or exercised by any one of them or by bot

479 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-479. Remuneration of liquidators in winding up by Court.

(1) An interim liquidator other than the Official Receiver shall be entitled to receive the salary or remuneration by way of percentage or otherwise as is determined by the Court.

(2) A liquidator other than the Official Receiver shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is determined by:

(a) an agreement between the liquidator and the committee of inspection, if any;

(b) where there is no agreement or where there is no committee of inspection, a resolution passed at a meeting of creditors by a majority of not less than three-fourths in value and one-half in number of the creditors present in person or by proxy and voting at the meeting and whose debts have been admitted to vote, which meeting shall be convened by the liquidator by a notice to each creditor to which notice shall be attached a statement of all receipts and expenditure by the liquid

480 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-480. Control of approved liquidator by Official Receiver.

(1) Where a person other than the Official Receiver is the liquidator in a winding up of a company by Court, the Official Receiver shall take cognizance of his conduct and:

(a) if the liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by any written law or otherwise with respect to the performance of his duties; or

(b) if any complaint is made to the Official Receiver by any creditor or contributory in regard to performance of his duties,

the Official Receiver shall inquire into the matter, and take such action thereon as he may think expedient.

(2) In addition to subsection (1) the Official Receiver may, at any time:

(a) require the liquidator to answer any inquiry and provide any information or documents in relation to any winding up in which he is engaged and may apply to the Court to examine

481 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-481. Control of Official Receiver by Minister.

The Minister shall take cognizance of the conduct of the Official Receiver and of all Assistant Official Receivers who are concerned in the liquidation of companies, and if any such person does not faithfully perform his duties and duly observe all the requirements imposed on him by any written law or otherwise with respect to the performance of his duties, or if any complaint is made to the Minister by any creditor or contributory in regard to the performance of his duties, the Minister shall inquire into the matter, and take such action thereon as he may think expedient, and may direct a investigation to be made of the books and vouchers of that person.


482 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-482. Resignation or removal of liquidator in winding up by Court.

A liquidator or interim liquidator appointed by the Court may:

(a) resign from office in accordance with the rules; or

(b) on cause shown, be removed from office by the Court.


483 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-483. Custody and vesting of company's property.

(1) Where an interim liquidator has been appointed or a winding up order has been made, the interim liquidator or liquidator shall forthwith take into his custody or under his control all the property to which the company is or appears to be entitled.

(2) On the application of the liquidator, the Court may order that all or any part of the property belonging to the company or held by trustees on behalf of the company shall vest in the liquidator and the property shall, subject to subsection (3), vest accordingly and the liquidator may, after giving such indemnity, if any, as the Court directs, bring or defend any action which relates to that property or of which is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property.

(3) Where an order is made under subsection (2), every liquidator in relation to whom the order is made shall within seven days of the making of the order:

484 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-484. Submission of statement of affairs of company.

(1) A statement as to the affairs of the company as at the date of the winding up order showing:

(a) the particulars of its assets, debts and liabilities;

(b) the names and addresses of its creditors;

(c) the securities held by the creditors respectively;

(d) the dates when the securities were respectively given; and

(e) such further information as is prescribed or as the liquidator requires,

shall be made by one or more persons in subsection (2) and verified in the manner as may be determined by the Registrar and submitted to the liquidator.

(2) The statement in subsection (1) shall be made and submitted by one or more of the persons who are at the date of the winding up order, the directors and by the secretary of the company, or by any of the following persons as the liquidator may require, subject to the direction of the C

485 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-485. Report by liquidator.

(1) The liquidator shall, as soon as practicable from the receipt of the statement of affairs, submit a preliminary report to the Court:

(a) as to the amount of capital issued, subscribed and paid up and the estimated amount of assets and liabilities;

(b) if the company has failed, as to the causes of the failure; and

(c) whether in his opinion further inquiry is desirable as to any matter relating to the promotion, formation or failure of the company or the conduct of the business thereof.

(2) In addition to subsection (1), the liquidator may, as he thinks fit, make further reports stating:

(a) the manner in which the company was formed and whether in his opinion any fraud has been committed or any material fact has been concealed by any person in its promotion or formation or by any officer in relation to the company since its formation

486 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-486. Powers of liquidator in winding up by Court.

(1) Where a company is being wound up by the Court, the liquidator may:

(a) without the authority under paragraph (b) , exercise any of the general powers specified in Part I of the Twelfth Schedule; and

(b) with the authority of the Court or the committee of inspection, exercise any of the powers specified in Part II of the Twelfth Schedule.

(2) The exercise by the liquidator in a winding up by the Court of the powers conferred by this section is subject to the control of the Court and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.


Legal Commentary on Section 486 of the Companies Act 2016

Introduction

Section 486 of the Companies Act 2016 pertains to the winding-up of companies by the court. This section outlines the procedures and powers of liquidators during the winding-up process, ensuring that the interests of creditors and contributories are protected.

What does Section Say

Section 486 provides the framework for the court-ordered winding-up of a company, detailing the powers of the liquidator and the rights of creditors and contributories to seek intervention from the court if necessary.

Essential Ingredients

  • Winding-Up by Court: The section specifically addresses the scenario where a company is being wound up by the court.
  • Liquidator's Powers: It delineates the powers conferred upon the liquidator during the winding-up process.
  • Rights of Creditors: Creditors and contributories have the right to apply to the court for actions that the liquidator may refuse to undertake.

Scope of Section

The scope of Section 486 encompasses:- The initiation of winding-up proceedings.- The role and authority of the liquidator.- The legal recourse available to creditors and contributories.

Punishment for Section

While Section 486 itself does not prescribe specific penalties, it is part of a broader legal framework that may impose penalties for non-compliance with winding-up procedures as outlined in other sections of the Companies Act.

Legal Comments

  • Winding-Up Process - Section 486 provides a clear legal basis for the court to initiate winding-up proceedings, ensuring orderly dissolution of companies. - [Source Reference]
  • Liquidator's Authority - The section empowers liquidators to manage the winding-up process, which is crucial for protecting the interests of creditors. - [Source Reference]
  • Creditor Rights - Creditors are granted the right to seek court intervention if a liquidator fails to act, reinforcing their position in the winding-up process. - [Source Reference]
  • Judicial Oversight - The requirement for court involvement in the winding-up process ensures that there is judicial oversight, which can prevent potential abuses by liquidators. - [Source Reference]
  • No Leave Required - It has been clarified that creditors do not need to seek leave from the court to proceed against a liquidator, simplifying the process for creditors. - [Source Reference]
  • Liquidator's Discretion - The liquidator has discretion in exercising powers, but this discretion is subject to review by the court if challenged by creditors. - [Source Reference]
  • Protection of Interests - The section aims to protect the interests of all stakeholders involved, particularly creditors and contributories, during the winding-up process. - [Source Reference]
  • Legal Framework - Section 486 is part of a comprehensive legal framework that governs the winding-up of companies, ensuring clarity and consistency in the process. - [Source Reference]
  • Judicial Efficiency - The involvement of the court in the winding-up process promotes judicial efficiency and accountability in handling corporate insolvencies. - [Source Reference]
  • Potential for Litigation - The section opens avenues for litigation against liquidators, which can lead to increased scrutiny of their actions during the winding-up process. - [Source Reference]
  • Impact on Corporate Governance - The provisions of Section 486 may influence corporate governance practices by emphasizing the need for transparency and accountability in the winding-up process. - [Source Reference]
  • Legal Precedents - Case law surrounding Section 486 can provide further insights into its application and interpretation in various contexts. - [Source Reference]
  • Regulatory Compliance - Companies must ensure compliance with the provisions of Section 486 to avoid legal repercussions during the winding-up process. - [Source Reference]
  • Stakeholder Engagement - The section encourages engagement among stakeholders, including creditors and liquidators, to facilitate a smoother winding-up process. - [Source Reference]
  • Clarity in Procedures - By outlining specific procedures, Section 486 reduces ambiguity in the winding-up process, benefiting all parties involved. - [Source Reference]
  • Role of Liquidators - Liquidators play a pivotal role in the winding-up process, and Section 486 delineates their responsibilities and powers clearly. - [Source Reference]
  • Court's Role - The court's role in overseeing the winding-up process is critical to ensuring fairness and justice in the treatment of creditors and other stakeholders. - [Source Reference]
  • Legislative Intent - The legislative intent behind Section 486 is to create a balanced approach to corporate insolvency, protecting both the company and its creditors. - [Source Reference]
  • Future Amendments - Potential future amendments to Section 486 could further refine the winding-up process and address emerging challenges in corporate insolvency. - [Source Reference]

487 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-487. Exercise and control of liquidator's powers.

(1) Subject to this Division, the liquidator shall, in the administration of the assets of the company and in the distribution among its creditors, have regard to any directions given by resolution of the creditors or contributories at any general meeting or by the committee of inspection, and any directions so given by the creditors or contributories shall override any directions given by the committee of inspection in case of conflict.

(2) The liquidator may summon general meetings of the creditors or contributories for the purpose of ascertaining their wishes and he shall summon meetings at such times as the creditors or contributories by resolution direct or whenever requested in writing to do so by not less than ten per centum in value of the creditors or contributories.

(3) The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up.

(4) Subject to this Division, t

488 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-488. Liquidator to pay moneys received into bank account.

(1) Every liquidator shall, in the manner and at the time prescribed by the rules, pay the money received by him into such bank account as is prescribed by the rules or as is specified by the Court.

(2) If any liquidator retains for more than ten days a sum exceeding ten thousand ringgit, or such other amount as the Court in any particular case authorizes him to retain, then unless he explains the retention to the satisfaction of the Court he shall pay interest on the amount so retained in excess computed from the expiration of the ten days until he has complied with subsection (1) at the rate of twenty per centum per annum, and shall be liable:

(a) to disallowance of all or such part of his remuneration as the Court thinks just;

(b) to be removed from his office by the Court; and

(c) to pay any expenses occasioned by reason of his default.

(3) Any liquidator

489 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-489. Settlement of list of contributories and application of assets.

(1) As soon as practicable after the making of a winding up order by the Court, the liquidator shall:

(a) cause the company's property to be collected and applied to discharging the company's liabilities; and

(b) consider whether subsection (2) requires the settlement of a list of contributories.

(2) A liquidator of a company that is being wound up by the Court shall, settle a list of contributories if it appears to the liquidator it is likely that:

(a) either:

(i) there are persons liable as members or past members to contribute to the company's property on the winding up; or

(ii) there will be a surplus available for distribution; and

(b) it will be necessary:

(i) to make calls on contributories; or

(ii) to adjust the right of the contributories among themselves.

490 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-490. Release of liquidators and dissolution of company.

A liquidator may apply to the Court:

(a) for an order that he be released and that the company be dissolved, if he has:

(i) realised all the property of the company or so much as in his opinion can be realised without needlessly protracting the liquidation;

(ii) distributed a final dividend, if any, to the creditors;

(iii) adjusted the rights of the contributories among themselves; and

(iv) made a final return, if any, to the contributories, or

(b) for an order that he be released, if he has resigned or been removed from his office.


491 Subdivision 8 - Provisions relating to Liquidators in Winding Up by Court-491. Orders of release or dissolution.

(1) Where an order is made that the company be dissolved, the company shall from the date of the order, be dissolved accordingly.

(2) The Court:

(a) may cause a report on the accounts of a liquidator, other than the Official Receiver, to be prepared by the Official Receiver or by a qualified auditor appointed by the Court;

(b) after the liquidator has complied with all the requirements of the Court, shall take into consideration the report and any objection which is urged by the Official Receiver, auditor or any creditor or contributory or other person interested against the release of the liquidator; and

(c) shall either grant or withhold the release accordingly.

(3) Where the release of a liquidator is withheld, the Court may, on the application of any creditor or contributory or person interested, make such order as it thinks appropriate charging the liquid

Legal Commentary on Section 491 of the Companies Act 2016

Introduction

Section 491 of the Companies Act 2016 (Malaysia) pertains to orders of release or dissolution of a company. This provision governs the final stages of the corporate lifecycle, specifically addressing the cessation of a company's existence following the completion of its winding-up process. The section is crucial for understanding how corporate dissolution is formalized and the legal effects that follow from such an order.

What Section 491 Says

Section 491 provides that where an order is made that the company be dissolved, the company shall from the date of the order be dissolved. The section also deals with the release of liquidators and the dissolution of the company, marking the final step in the winding-up process.

Essential Ingredients

  1. Order for Dissolution: A formal order must be made by the relevant authority (court or tribunal) directing that the company be dissolved.
  2. Date of Effect: The dissolution takes effect from the date specified in the order.
  3. Statutory Compliance: All procedural requirements under the Companies Act must have been fulfilled prior to seeking the dissolution order.

Scope of Section

Section 491 applies to both voluntary and compulsory winding-up scenarios. It covers:- Dissolution following completion of winding-up proceedings- Release of liquidators upon completion of their duties- Cases where companies have no assets and winding-up cannot proceed for lack of funds- Situations where all statutory requirements for dissolution have been satisfied

Punishment for Section

The section itself does not prescribe punishment; however, non-compliance with related provisions of the Companies Act 2016 can result in penalties including fines (up to RM50,000 or higher depending on the specific violation) and imprisonment for directors and officers in cases of false or misleading statements.

Legal Comments

492 Subdivision 9 - General Powers of Court in Winding Up by Court-492. Power of Court to stay winding up.

(1) At any time after an order for winding up has been made, the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that all proceedings in relation to the winding up of the company ought to be stayed, make an order staying the winding up of the company for a specified time on such terms and conditions as the Court thinks fit.

(2) Where the Court makes an order under subsection (1), the liquidator shall cease to conduct any further action on behalf of the company from the date of such order.


Legal Commentary on Section 492 of the Companies Act 2016

Introduction

Section 492 of the Companies Act 2016 establishes the legal framework for the power of courts to stay or terminate winding-up proceedings. It is a significant provision that interacts with the insolvency regime, emphasizing judicial discretion to manage winding-up cases, especially in the context of insolvency and corporate restructuring.

What does Section 492 Say

Section 492 grants the court the authority to stay proceedings related to winding up of a company and to terminate such proceedings, subject to certain conditions. It also specifies that the court may stay or terminate the winding-up if it is just and equitable or if other circumstances warrant, including the application of the provisions of the Insolvency and Bankruptcy Code (IBC) 2016.

Essential Ingredients

  • Power of Court: The court can stay or terminate winding-up proceedings.
  • Conditions for stay: The stay may be granted if the court deems it just and equitable or in the interest of justice.
  • Circumstances for termination: The court can terminate winding-up proceedings if the reasons for such are no longer applicable or if the proceedings are found to be unjust or unnecessary.
  • Interaction with IBC: The section recognizes the primacy of the IBC 2016, allowing the court to stay proceedings where the Code applies.

Scope of Section 492

  • Applicability: Applies to all winding-up proceedings initiated under the Companies Act 2016.
  • Judicial Discretion: Empowers courts to exercise discretion based on facts, including the company's solvency, the purpose of winding up, and the ongoing insolvency resolution process.
  • Relation with other laws: It operates in conjunction with other provisions, notably the IBC 2016, ensuring that proceedings are not contradictory.
  • Temporary stay: The court can impose a stay for a limited period, facilitating restructuring or insolvency resolution.

Punishment for Section 492

Section 492 itself does not prescribe specific punishments. Instead, it provides procedural powers to courts. Penalties or consequences arise if parties violate court orders or if false statements are made in proceedings, which can attract penalties under other provisions of the Companies Act 2016 or relevant laws.

Legal Comments

Note: The references are based on the provided sources, particularly the detailed judgments and legal analyses found in the documents related to Section 492 and its judicial interpretation.

493 Subdivision 9 - General Powers of Court in Winding Up by Court-493. Power of Court to terminate winding up.

(1) At any time after an order for winding up has been made, the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that all proceedings in relation to the winding up of the company ought to be terminated, make an order terminating the winding up of the company as the Court thinks fit.

(2) In making an order under subsection (1), the Court may take into consideration, but not limited to, the following facts:

(a) the satisfaction of the debts;

(b) any agreement by the liquidators, creditors, contributories and other interested parties; or

(c) other facts that the Court considers appropriate.

(3) Where the Court makes an order under subsection (1), the company ceases to be in liquidation and the liquidator ceases to hold office and be released from all liability in respect of any act d

494 Subdivision 9 - General Powers of Court in Winding Up by Court-494. Matters relating to stay and termination of winding up.

(1) On any application under sections 492 and 493, the Court may, before making an order, require the liquidator to furnish a report with respect to any facts or matters which are in his opinion relevant.

(2) The Court may, on making an order under sections 492 and 493 or at any time after making the order, make such other order as it thinks fit in connection with the staying or termination of the winding up.

(3) Where the Court has made an order terminating the winding up under section 493, the Court may give such directions as it thinks fit for the resumption of the management and control of the company to elect directors of the company to take office upon the termination of the winding up.

(4) The costs of proceedings before the Court under sections 492 and 493 and the costs incurred in convening a meeting of members of the company in accordance with an order of the Court under section 493, if the Court so directs, forms part

495 Subdivision 9 - General Powers of Court in Winding Up by Court-495. Debts due by contributory to company and extent of set off.

On an application by the liquidator, the Court may make an order directing any contributory for the time being on the list of contributories to pay to the company in the manner directed by the order any money due from him or from the estate of the person whom he represents exclusive of any money payable by him or the estate by virtue of any call under this Act, and may:

(a) in the case of an unlimited company, allow the contributory by way of set off any money due to him or to the estate which he represents from the company on any independent dealing or contract but not any money due to him as a member of the company in respect of any dividend or profit;

(b) in the case of a limited company, make to any director whose liability is unlimited or to his estate similar allowance as referred to in paragraph (a) ; and

(c) in the case of any company whether limited or unlimited, when all

496 Subdivision 9 - General Powers of Court in Winding Up by Court-496. Power of Court to make calls.

(1) The Court may either before or after it has ascertained the sufficiency of the assets of the company:

(a) make calls on all or any of the contributories for the time being on the list of contributories, to the extent of their liability, for payment of any money which the Court considers necessary to satisfy the debts and liabilities of the company and the costs, charges and expenses of winding up and for the adjustment of the rights of the contributories among themselves; and

(b) make an order for payment of any calls so made.

(2) In making the call under subsection (1), the Court may take into consideration the probability that some of the contributories may partly or wholly fail to pay the call.


497 Subdivision 9 - General Powers of Court in Winding Up by Court-497. Payment of moneys due to company into named bank.

(1) The Court may order any contributory, purchaser or other person from whom money is due to the company to pay the amount due into the bank named in the order to the account of the liquidator instead of to the liquidator, and any such order may be enforced in the same manner as if it had directed payment to the liquidator.

(2) All moneys and securities paid or delivered into any bank under this Division shall be subject to the order of the Court.


498 Subdivision 9 - General Powers of Court in Winding Up by Court-498. Order on contributory conclusive evidence.

An order made by the Court under sections 495, 496 and 497 shall, subject to any right of appeal, be conclusive evidence that the money, if any, appearing to be due or ordered to be paid is due, and all other pertinent matters stated in the order shall be taken to be truly stated as against all persons and in all proceedings.


499 Subdivision 9 - General Powers of Court in Winding Up by Court-499. Appointment of special manager.

(1) The liquidator may, if satisfied that the nature of the estate or business of the company, or the interests of the creditors or contributories generally, require the appointment of a special manager of the estate or business of the company other than himself, apply to the Court for an appointment of a special manager of the estate or business to act during such time as the Court directs with such powers including any of the powers of a receiver or receiver and manager as are entrusted to the liquidator by the Court.

(2) The special manager:

(a) shall give such security and account in such manner as the Court directs;

(b) shall receive such remuneration as is fixed by the Court; and

(c) may at any time resign after giving not less than thirty days' notice in writing to the liquidator of his intention to resign, or on cause shown, be removed by the Court.

500 Subdivision 9 - General Powers of Court in Winding Up by Court-500. Claims of creditors and distribution of assets.

(1) The Court may fix a date on or before which creditors are to prove their debts or claims or after which the creditors will be excluded from the benefit of any distribution made before those debts are proved.

(2) The Court shall adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to the surplus.

(3) The Court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the costs, charges and expenses incurred in the winding up in such order of priority as the Court thinks fit.


501 Subdivision 9 - General Powers of Court in Winding Up by Court-501. Inspection of books and papers by creditors and contributories.

The Court may make such order for inspection of the books and papers of the company by creditors and contributories as the Court thinks just, and any books and papers in the possession of the company may be inspected by creditors or contributories accordingly.


502 Subdivision 9 - General Powers of Court in Winding Up by Court-502. Power to summon persons connected with company.

(1) The Court may summon before it any officer of the company or person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade dealings, affairs or property of the company.

(2) The Court may examine the officer or person on oath concerning the matters mentioned in subsection (1) either orally or by way of written interrogatories and may reduce his oral statement into writing and require him to sign the written statement which may be used in evidence in any legal proceedings against the officer or person.

(3) The Court may require the officer or person to produce any books and papers in his custody or power relating to the company, but if the officer or person claims any lien on books or papers, the production shall be without prejudice to that lien, and the Court shall h

503 Subdivision 9 - General Powers of Court in Winding Up by Court-503. Power to order public examination of promoters, directors, etc.

(1) A liquidator appointed in a winding up of a company may make a report to the Court stating that, in his opinion:

(a) a fraud has been committed;

(b) any material fact has been concealed by any person in the promotion or formation of the company or by any officer in relation to the company since its formation; or

(c) any officer of the company has failed to act honestly or diligently or has been guilty of any impropriety or recklessness in relation to the affairs of the company.

(2) After considering the report under subsection (1), the Court may direct:

(a) the person or officer, or any other person who was previously an officer of the company, including any banker, advocate or auditor, or who is known or suspected to have in his possession any property of the company or is supposed to be indebted to the company; or

(b)

504 Subdivision 9 - General Powers of Court in Winding Up by Court-504. Power to arrest absconding contributory.

The Court at any time before or after making a winding up order, on proof of probable cause for believing that a contributory, director or former director of the company:

(a) is in hiding;

(b) has absconded;

(c) is about to leave Malaysia or otherwise to abscond;

(d) is about to remove any of his property; or

(e) is about to conceal any of his property,

for the purpose of:

(A) evading payment of calls;

(B) avoiding examination respecting the affairs of the company; or

(C) avoiding, delaying or embarrassing proceedings in the winding up,

may cause the contributory, director or former director to be arrested and his books and papers and movable personal property to be seized and safely kept until such time as the Court orders.


505 Subdivision 9 - General Powers of Court in Winding Up by Court-505. Delegation of powers of Court to liquidator.

Provision may be made by rules enabling or requiring all or any of the powers and duties conferred and imposed on the Court by this Division in respect of:

(a) the holding and conduct of meetings to ascertain the wishes of creditors and contributories;

(b) the paying, delivery, conveyance, surrender or transfer of money, property, books or papers to the liquidator;

(c) the making of calls and the adjusting of the rights of contributories; and

(d) the fixing of a time within which debts and claims shall be proved,

to be exercised or performed by the liquidator as an officer of the Court and subject to the control of the Court, but the liquidator shall not, without the special leave of the Court, rectify the register of members and shall not make any call without either the special leave of the Court or the sanction of the committee of inspection.

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506 Subdivision 9 - General Powers of Court in Winding Up by Court-506. Powers of Court cumulative.

(1) Any powers by this Act conferred on the Court shall be in addition to and not in derogation of any existing powers of instituting proceedings against any contributory or debtor of the company or the estate of any contributory or debtor for the recovery of any call or other sums.

(2) Subject to the rules referred to in section 616, an appeal from any order or decision made or given in the winding up of a company shall lie in the same manner and subject to the same conditions as an appeal from any order or decision of the Court in cases within its ordinary jurisdiction.


507 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-507. Investment of surplus funds on general account.

(1) Subject to the direction in writing of the committee of inspection, or if there is no committee of inspection, by the liquidator himself, whenever the cash balance standing to the credit of any company in liquidation is in excess of the amount which is required for the time being to answer demands in respect of the estate of the company, the excess sum may:

(a) be invested in securities issued by the Government of Malaysia; or

(b) be placed on deposit at interest or with return with any bank.

(2) On the application by any creditor who is not satisfied with the direction or decision relating to the investment made under subsection (1), the Court may direct otherwise if it thinks fit.

(3) Any interest received in respect of the investment shall form part of the assets of the company.

(4) Whenever any part of the money so invested is, in the opinion of the committee o

508 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-508. Unclaimed assets to be paid to receiver of revenue.

(1) Where a liquidator has in his hands or under his control:

(a) any unclaimed dividend or other moneys which have remained unclaimed for more than six months from the date when the dividend or other moneys became payable; or

(b) after making final distribution, any unclaimed or undistributed moneys arising from the estate of the company,

the liquidator shall forthwith pay those moneys to the Official Receiver to be placed to the credit of the Companies Liquidation Account and whose receipt shall be an effectual discharge in respect of the unclaimed moneys.

(2) The Court may on application of the Official Receiver:

(a) order any liquidator to submit to it an account of any unclaimed or undistributed funds, dividends or other moneys in his hands or under his control verified by affidavit and may direct an audit of the account; and

(b)<

509 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-509. Books and papers to be kept by liquidator.

Every liquidator shall keep proper books and papers in which he shall cause to be made entries or minutes of proceedings at meetings and of such other matters as are prescribed, and any creditor or contributory may, subject to the control of the Court, personally or by his agent inspect the proper books and papers.


510 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-510. Control of Court over liquidators.

(1) The Court shall take cognizance of the conduct of liquidators, and if a liquidator does not faithfully perform his duties and observe the prescribed requirements or the requirements of the Court or if any complaint is made to the Court by any creditor or contributory or by the Official Receiver in regard to the conduct, the Court shall inquire into the matter and take such action as the Court thinks fit.

(2) The Registrar or the Official Receiver may report to the Court any matter which in the opinion of the Registrar or the Official Receiver is a misfeasance, neglect or omission on the part of the liquidator and the Court may order the liquidator to make good any loss which the property of the company has sustained and make such other order as the Court thinks fit.

(3) The Court may at any time require any liquidator to answer any inquiry in relation to the winding up and may examine the liquidator or any other person on oath conce

511 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-511. Delivery of property to liquidator.

The Court may require any contributory, trustee, receiver, banker, agent or officer of the company to pay, deliver, convey, surrender or transfer to the liquidator or interim liquidator forthwith or within such time as the Court directs any money, property, books and papers in his hands to which the company is prima facie entitled.


512 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-512. Powers of Official Receiver where no committee of inspection.

(1) Where a person other than the Official Receiver is the liquidator and there is no committee of inspection, the Official Receiver may, on the application of the liquidator, do any act or thing or give any direction or permission which is authorized or required by this Act to be done or given by the committee of inspection.

(2) Where the Official Receiver is the liquidator and there is no committee of inspection, the Official Receiver may in his discretion do any act or thing which is required to be done by this Act, or subject to any direction or permission given by the committee of inspection.


513 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-513. Notice of appointment and address of liquidator.

(1) A liquidator or an interim liquidator shall lodge a notice of his appointment, the address of his office and any change of the address with the Registrar and the Official Receiver in the form and manner determined by the Registrar within fourteen days from the appointment or the change of address.

(2) Service made by leaving any document at or sending it by post addressed to the address of the office of the liquidator or interim liquidator given in any such notice lodged with the Registrar shall be deemed to be good service upon the liquidator and upon the company.

(3) A liquidator or an interim liquidator shall, within fourteen days from his resignation or removal from office, lodge with the Registrar and with the Official Receiver a notice of that fact in the form and manner as may be determined by the Registrar.

(4) A liquidator or an interim liquidator who contravenes this section commits an offence and shall, on convict

514 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-514. Liquidator's accounts.

(1) Every liquidator shall, within thirty days from the expiration of the period of six months from the date of the liquidator's appointment and of every subsequent period of six months and in any case within thirty days after the liquidator ceases to act as a liquidator shall immediately after obtaining an order of release, lodge with the Registrar and with the Official Receiver, an account of the liquidator's receipts and payments and a statement of the position in the winding up and verified by statutory declaration in a manner as may be determined by the Registrar.

(2) The Official Receiver may cause the account of any liquidation to be audited by an approved company auditor.

(3) For the purpose of audit referred to in subsection (2), the liquidator shall furnish the auditor with such vouchers and information as the auditor requires, and the auditor may at any time require the production of and inspect any books or accounts kept by

515 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-515. Liquidator to make good defaults.

(1) If any liquidator who has made any default in lodging or making any application, return, account or other document, or in giving any notice which the liquidator is by law required to lodge, make or give, fails to make good the default within fourteen days from the service of notice requiring the liquidator to do so, the Court may, on the application of any contributory or creditor of the company or the Official Receiver, make an order directing the liquidator to make good the default within such time as is specified in the order.

(2) Any order made under subsection (1) may provide that all costs of and incidental to the application shall be borne by the liquidator.

(3) Nothing in subsection (1) shall prejudice the operation of any written law imposing penalties on a liquidator in respect of any such default.


516 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-516. Notification that a company is in liquidation.

(1) Where a company is being wound up, the words "in liquidation" shall be added after the name of the company in every invoice, order for goods or business letter issued by or on behalf of the company, a liquidator of the company, a receiver or manager of the property of the company.

(2) The company and every officer of the company or liquidator and every receiver or manager who contravene this section and who knowingly and wilfully authorize or permit the contravention commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.


517 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-517. Appeal against decision of liquidator.

Any person aggrieved by any act or decision of the liquidator may apply to the Court which may confirm, reverse or modify the act or decision complained of and make such order as it thinks just.


518 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-518. Books and papers of company.

(1) Where a company is being wound up, all books and papers of the company and of the liquidator that are relevant to the affairs of the company at or subsequent to the commencement of the winding up of the company shall be prima facie evidence of the truth of all matters recorded in the books or papers in respect of the contributories and the company.

(2) When a company has been wound up, the liquidator shall retain the books and papers referred to in subsection (1) for a period of five years from the date of the dissolution of the company and at the expiration of that period, may destroy the books and papers.

(3) Notwithstanding subsection (2), when a company has been wound up, the books and papers referred to in subsection (1) may be destroyed within a period of five years after the dissolution of the company:

(a) in the case of a winding up by the Court, in accordance with the directions of the

519 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-519. Expenses of winding up where assets insufficient.

(1) Unless expressly directed to do so by the Court, a liquidator shall not be liable to incur any expense in relation to the winding up of a company unless there are sufficient available assets.

(2) On the application of a creditor or a contributory, the Court may direct a liquidator to incur a particular expense on the condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended and if the Court so directs, gives such security to secure the amount of the indemnity as the Court thinks reasonable.


520 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-520. Resolutions passed at adjourned meetings of creditors and contributories.

Subject to subsection 449(10), where a resolution is passed at an adjourned meeting of any creditors or contributories of a company, the resolution shall for all purposes be treated as having been passed on the date on which it was in fact passed and not on any earlier date.


521 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-521. Meetings to ascertain wishes of creditors or contributories.

(1) The Court may, as to all matters relating to the winding up of a company, have regard to the wishes of the creditors or contributories as proved to the Court by any sufficient evidence, and may if the Court thinks fit for the purpose of ascertaining those wishes direct meetings of the creditors or contributories to be called, held and conducted in such manner as the Court directs, and may appoint a person to act as chairperson of any such meeting and to report the result of the meeting to the Court.

(2) In the case of creditors, regard shall be had to the value of each creditor's debt.

(3) In the case of contributories, regard shall be had to the number of votes conferred on each contributory by this Act or the constitution.


522 Division 2 - Provisions Applicable to Every Winding Up Subdivision 1 - General-522. Special commission for receiving evidence.

(1) The Sessions Court Judges shall be the commissioners for the purpose of taking evidence under this Part, and the Court may refer the whole or any part of the examination of any witnesses under this Part to any person appointed as commissioner.

(2) Every commissioner shall, in addition to any powers which he might lawfully exercise as a Sessions Court Judge, have in the matter so referred to him the same powers as the Court to:

(a) summon and examine witnesses;

(b) require the production or delivery of documents;

(c) punish defaults by witnesses; and

(d) allow costs and expenses to witnesses.

(3) Unless otherwise ordered by the Court, the taking of evidence by the commissioners shall be in open court and shall be open to the public.

(4) The examination so taken shall be returned or reported to the Court in such manner as the Court d

523 Subdivision 2 - Proof and Ranking of Claims-523. Description of debts provable in winding up.

(1) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust shall not be provable in winding up.

(2) A person having notice of any winding up order in a winding up by the Court or a resolution has been passed in a voluntary winding up shall not prove under the winding up for any debt or liability contracted by the company subsequent to the date of his so having notice.

(3) Save as provided in subsections (1) and (2), all debts and liabilities present or future, certain or contingent, to which the company is subject at the date of the winding up order or the resolution, or to which the company may become subject before dissolution by reason of any obligation incurred before the date of the winding up order shall be deemed to be debts provable in winding up.

(4) An estimation shall be made by the liquidator of the value of any debt or liability provable under subsect

Legal Comments

Note: The analysis relies on the provided sources and square-bracket citations. If a point requires a direct textual quote or a precise statutory subsection beyond the cases summarized here, please specify and I can pull the exact wording from the cited materials.

524 Subdivision 2 - Proof and Ranking of Claims-524. Rights and duties of secured creditors.

(1) A secured creditor may:

(a) realise a property subject to a charge, if entitled to do so;

(b) value the property subject to the charge and claim in the winding up as an unsecured creditor for the balance due, if any; or

(c) surrender the charge to the liquidator for the general benefit of creditors and claim in the winding up as an unsecured creditor for the whole debt.

(2) A secured creditor may exercise the power referred to in paragraph (1) (a) whether or not the secured creditor has exercised the power referred to in paragraph (1) (b) .

(3) A secured creditor who realises a property subject to a charge under paragraph (1) (a) :

(a) may, unless the liquidator has accepted a valuation and claim by the secured creditor under subsection (7), claim as an unsecured creditor for any balance due after deducti

525 Subdivision 2 - Proof and Ranking of Claims-525. Rights and duties of unsecured creditors.

(1) Every creditor shall prove his debt immediately after the making of a winding up order.

(2) A debt may be proved by delivering or sending an affidavit through the post in a prepaid letter to the liquidator.

(3) The affidavit shall:

(a) verify the debt;

(b) be made by the creditor himself or by any person authorized by or on behalf of the creditor or his estate and if made by a person so authorized, it shall state his authority and means of knowledge;

(c) contain or refer to a statement of account showing the particulars of the debt and shall specify the vouchers, if any, by which the statement of account can be substantiated; and

(d) state whether the creditor is or is not a secured creditor.

(4) The liquidator may at any time call for the production of the vouchers or books of account.

(5) A creditor shall bear the cost of

526 Subdivision 2 - Proof and Ranking of Claims-526. Mutual credit and set-off.

(1) This section applies where before the commencement of the winding up there have been mutual credits, mutual debts or other mutual dealings between the company and any of the company's creditor proving or claiming to prove for a winding up of debts.

(2) An account shall be taken of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set off against the sums due from the other.

(3) Sums due from the company to another party shall not be included in the account taken under subsection (2) if that other party had notice at the time the sums owed became due that a meeting of creditors has been summoned or a petition for the winding up of the company was pending.


527 Subdivision 2 - Proof and Ranking of Claims-527. Priorities.

(1) Subject to this Act, in a winding up there shall be paid in priority to all other unsecured debts:

(a) firstly, the costs and expenses of the winding up including the taxed costs of a petitioner payable under section 468, the remuneration of the liquidator and the costs of any audit carried out under section 514;

(b) secondly, all wages or salary, whether or not earned wholly or in part by way of commission, including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment, of any employee not exceeding fifteen thousand ringgit or such other amount as may be prescribed whether for time or piecework in respect of services rendered by him to the company within a period of four months before the commencement of the winding up;

(c) thirdly, all amounts due in respect of worker's compensation under an

528 Subdivision 3 - Effect on Other Transactions-528. Undue preference.

(1) Any transfer, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which is unable to pay its debts, as the debts become due, from its own money in favour of any creditor or any person in trust for any creditor shall be deemed to have given such creditor a preference over other creditors in the event of the company being wound up on a winding up petition presented within six months from the date of making or doing the same and every such act shall be deemed fraudulent and void.

(2) The date of presentation of the winding up petition shall be:

(a) in the case of winding up by Court:

(i) the date of the presentation of petition; or

(ii) where prior to the presentation of the petition a resolution has been passed by the company for voluntary winding up, the date upon which the resolution to wind up the company voluntaril

529 Subdivision 3 - Effect on Other Transactions-529. Effect of floating charge.

A floating charge on the undertaking or property of the company created within six months of:

(a) the presentation of the winding up petition in the case of winding up by Court; or

(b) the passing of the resolution in the case of voluntary winding up,

shall be invalid except to the amount of any cash paid to the company at the time of or subsequently to the creation of and in consideration for the charge together with interest or return on that amount at the rate of five per centum per annum unless it is proved that the company is solvent immediately after the creation of the charge.


530 Subdivision 3 - Effect on Other Transactions-530. Liquidator's right to recover in respect of certain sales to or by company.

(1) Where any property, business or undertaking has been acquired by a company for a cash consideration, the liquidator may recover any amount by which the cash consideration for the acquisition exceeded the value of the property, business or undertaking at the time of its acquisition from:

(a) a person who was at the time of the sale, a director of the company or a person connected with a director; or

(b) a company of which, at the time of the sale, a person was a director who was also a director of the first-mentioned company or a person connected with a director.

(2) Where any property, business or undertaking has been sold by a company for a cash consideration, the liquidator may recover any amount by which the value of the property, business or undertaking exceeded the cash consideration at the time of its sale from:

(a) a person who was at the time

531 Subdivision 3 - Effect on Other Transactions-531. Disclaimer of onerous property.

(1) Where any part of the property of a company consists of:

(a) any estate or interest in land which is burdened with onerous covenants;

(b) shares in corporations;

(c) unprofitable contracts; or

(d) any other property that is unsaleable, or not readily saleable, by reason of its binding the possessor of the property to the performance of any onerous act, or to the payment of any sum of money,

the liquidator of the company, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation to the property, may, with the leave of the Court or committee of inspection and subject to this section, in writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as is allowed by the Court, disclaim the property.

(2) Where a

532 Subdivision 3 - Effect on Other Transactions-532. Interpretation.

For the purposes of sections 533 and 534:

  "bailiff"  includes any officer charged with the execution of a writ or other process;

  "goods"  includes all movable property.


533 Subdivision 3 - Effect on Other Transactions-533. Restriction of rights of creditor as to execution or attachment.

(1) Where a creditor has issued execution against the goods or land of a company or has attached any debt due to the company and the company is subsequently wound up, he shall not be entitled to retain the benefit of the execution or attachment against the liquidator unless he has completed the execution or attachment before the date of the commencement of the winding up, but:

(a) where any creditor has had notice of a meeting having been called at which a resolution for voluntary winding up is to be proposed, the date on which the creditor had notice shall for the purposes of this section be substituted for the date of the commencement of the winding up;

(b) a person who purchases in good faith under a sale by the bailiff any goods of a company on which an execution has been levied shall in all cases acquire a good title to the goods against the liquidator; and

(c) the rights conferred by

534 Subdivision 3 - Effect on Other Transactions-534. Duties of bailiff as to goods taken in execution.

(1) Subject to subsection (3), where any goods of a company are taken in execution and, before the sale of the goods or the completion of the execution by the receipt or recovery of the full amount of the levy, notice is served on the bailiff that a liquidator has been appointed or that a winding up order has been made or that a resolution for voluntary winding up has been passed, the bailiff shall, on being so required, deliver the goods and any money seized or received in part satisfaction of the execution to the liquidator, but the costs of the execution shall be a first charge on the goods or moneys so delivered, and the liquidator may sell the goods, or a sufficient part of the goods, for the purpose of satisfying that charge.

(2) Subject to subsection (4), where under an execution in respect of a judgment for a sum exceeding one hundred ringgit, the goods of a company are sold or money is paid in order to avoid sale, the bailiff shall ded

535 Subdivision 3 - Effect on Other Transactions-535. Power of Court to declare dissolution of company void.

(1) Where a company has been dissolved, the Court may, at any time within two years after the date of dissolution, on an application of the liquidator of the company or of any other person who appears to the Court to be interested, make an order upon such terms as the Court thinks fit declaring the dissolution to have been void, and such proceedings may be taken as might have been taken if the company had not been dissolved.

(2) The person on whose application the order was made, shall, within seven days from the making of the order or such further time as the Court allows, lodge with the Registrar and with the Official Receiver an office copy of the order and the person who fails so to do commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.


536 Subdivision 4 - Offences-536. Offences by officers of companies in liquidation.

(1) Every person who, is or was an officer or a contributory of a company which is being wound up, commits an offence if he:

(a) does not disclose to the liquidator all the property of the company, and how and to whom and for what consideration and when the company disposed of any part of the property of the company, except such part as has been disposed of in the ordinary way of the business of the company;

(b) does not deliver up to the liquidator, whether or not being directed to do so by the liquidator:

(i) all the movable and immovable property of the company in his custody or under his control and which he is required by law to deliver up; or

(ii) all books and papers in his custody or under his control belonging to the company and which he is required by law to deliver up;

(c) within twelve months before the commencement of the winding up o

537 Subdivision 4 - Offences-537. Inducement to be appointed as liquidator, etc.

Any person who gives or agrees or offers to give to any member or creditor of a company any valuable consideration with a view of securing his own appointment or nomination, or to securing or preventing the appointment or nomination of some person other than himself, as the company's liquidator, commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding three years or to a fine not exceeding one hundred thousand ringgit or to both.


538 Subdivision 4 - Offences-538. Falsification of books, etc.

Every officer or contributory of any company being wound up who destroys, mutilates, alters or falsifies any books, papers or securities, or makes or is privy to the making of any false or fraudulent entry in any register or book of account or document belonging to the company with intent to defraud or deceive any person, commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding three million ringgit or to both.


539 Subdivision 4 - Offences-539. Liability where proper accounts not kept.

(1) If, on an investigation under any other Part or where a company is wound up, it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the investigation or the winding up or the period between the incorporation of the company and the commencement of the investigation or winding up, whichever is the lesser, every officer, commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding three years or to a fine not exceeding five hundred thousand ringgit or to both.

(2) For the purposes of this section, proper books or accounts shall be deemed not to have been kept in the case of any company if:

(a) the books or accounts have not been kept as are necessary to exhibit and explain the transactions and financial position of the trade or business of the company, including books containing entries fr

540 Subdivision 4 - Offences-540. Responsibility for fraudulent trading.

(1) If in the course of the winding up of a company or in any proceedings against a company it appears that any business of the company has been carried on with intent to defraud the creditors of the company or creditors of any other person or for any fraudulent purpose, the Court on the application of the liquidator or any creditor or contributory of the company, may, if the Court thinks proper so to do, declare that any person who was knowingly a party to the carrying on of the business in that manner shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court directs.

(2) Where a person has been convicted of an offence under subsection 539(3) in relation to the contracting of such a debt as is referred to in that section, the Court on the application of the liquidator or any creditor or contributory of the company may, if the Court thinks proper so to do,

541 Subdivision 4 - Offences-541. Power of Court to assess damages against delinquent officers, etc.

(1) If in the course of winding up it appears that:

(a) any person who has taken part in the formation or promotion of the company; or

(b) any past or present liquidator or officer,

has misapplied or retained or become liable or accountable for any money or property of the company or been guilty of any misfeasance or breach of trust or duty in relation to the company, the Court may, on the application of the liquidator or of any creditor or contributory examine into the conduct of that person, liquidator or officer and compel him to repay or restore the money or property or any part of the money with interest at such rate as the Court thinks just, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust or duty as the Court thinks just.

(2) This section shall extend and apply to and

542 Subdivision 4 - Offences-542. Prosecution of delinquent officers and members of company.

(1) If it appears to the Court in the course of a winding up by the Court that any past or present officer or any member of the company has been guilty of an offence in relation to the company for which he is criminally liable, the Court may, either on the application of any person interested in the winding up or of its own motion, direct the liquidator either to prosecute the offender himself or to refer the matter to the Minister.

(2) If it appears to the liquidator in the course of a voluntary winding up that any past or present officer or any member of the company has been guilty of any offence in relation to the company for which he is criminally liable, he shall forthwith report the matter to the Minister and shall, in respect of information or documents in his possession or under his control which relate to the matter in question, furnish the Minister with such information and give to him such access to and facilities for inspecting and

543 Division 3 - Winding Up of Unregistered Companies-543. Provisions of Division cumulative.

The provisions of this Division shall be in addition to and not in derogation of any provisions contained in this or any other Act with respect to winding up companies by the Court and the Court or liquidator may exercise any powers or do any act in the case of unregistered companies which might be exercised or done by the Court or liquidator in winding up companies.


544 Division 3 - Winding Up of Unregistered Companies-544. Unregistered company.

For the purposes of this Division, "unregistered company" includes a foreign company and any partnership, association or company consisting of more than five members but does not include a company incorporated under this Act or under any corresponding previous written law.


545 Division 3 - Winding Up of Unregistered Companies-545. Winding up of unregistered companies.

(1) In respect of any unregistered company, the provisions of this Part shall apply with the following modifications:

(a) the principal place of business of the company in Malaysia shall for all the purposes of the winding up be the registered office of the company;

(b) no such company shall be wound up voluntarily; and

(c) the circumstances in which the company may be wound up are:

(i) if the company is dissolved or has ceased to have a place of business in Malaysia or has a place of business in Malaysia only for the purpose of winding up its affairs or has ceased to carry on business in Malaysia;

(ii) if the company is unable to pay its debts;

(iii) if the Court is of the opinion that it is just and equitable that the company should be wound up; and

(iv) the company is being used for unlawful purposes or any purpose prejudicial to or incompati

546 Division 3 - Winding Up of Unregistered Companies-546. Contributories in winding up of unregistered company.

(1) Where an unregistered company is being wound up, a contributory shall be:

(a) a person who is liable to pay or contribute to the payment of:

(i) any debt or liability of the company;

(ii) any sum for the adjustment of the rights of the members among themselves; or

(iii) the costs and expenses of winding up; or

(b) where the company has been dissolved in the place in which it is formed or incorporated, a person who immediately before the dissolution was a contributory,

and shall be liable to contribute to the assets of the company all sums due from him in respect of any such liability.

(2) On the death or bankruptcy of any contributory, the provisions of this Act with respect to the personal representatives of deceased contributories and the assignees and trustees of bankrupt contributories shall apply.


547 Division 3 - Winding Up of Unregistered Companies-547. Power of Court to stay or restrain proceedings.

(1) The provisions of this Act with respect to staying and restraining actions and proceedings against a company at any time after the presentation of a petition for winding up and before the making of a winding up order shall, in the case of an unregistered company where the application to stay or restrain is by a creditor, extend to actions and proceedings against any contributory of the company.

(2) Where an order has been made for the winding up of an unregistered company, no action or proceeding shall be proceeded with or commenced against any contributory of the company in respect of any debt of the company except by leave of the Court and subject to such terms as the Court imposes.


548 Division 3 - Winding Up of Unregistered Companies-548. Outstanding assets of a dissolved unregistered company.

(1) Where an unregistered company, of which the place of incorporation or origin of which is in a designated country, has been dissolved and there remains in Malaysia any outstanding property, movable or immovable, including things in action which at the time it was dissolved:

(a) was vested in the company;

(b) the company was entitled to it; or

(c) the company had a disposing power,

but which was not acquired, realized upon or otherwise disposed of or dealt with by the company or its liquidator before the dissolution, the property, except called and uncalled capital, shall be and become vested in such person as is entitled according to the law of the place of incorporation or origin of the company, in respect of the estate and interest, legal or equitable, of the company or its liquidator at the date the company was dissolved.

(2) Where the place of origin of

549 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-549. Power of Registrar to strike off company.

Notwithstanding any provision in this Act, the Registrar may strike a company off the register, if:

(a) the company is not carrying on business or is not in operation;

(b) the company has contravened this Act;

(c) the company is being used for unlawful purposes or any purpose prejudicial to or incompatible with peace, welfare, security, public interest, public order, good order or morality in Malaysia;

(d) in any case where the company is being wound up and the Registrar has reasonable cause to believe that:

(i) no liquidator is acting;

(ii) the affairs of the company are fully wound up and for a period of six months the liquidator has been in default in lodging any return required to be made by him; or

(iii) the affairs of the company has been fully wound up under a winding up by the Court and there are no assets or the assets availabl

550 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-550. Application to strike off company.

Subject to section 549, the Registrar may strike a company off the register either on his own motion or upon an application by a director, member or liquidator of the company.


551 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-551. Notice of intention to strike off company.

(1) Before the name of a company can be struck off from the register under section 549, the Registrar may serve on the company or the liquidator, a notice, stating that if an answer showing cause to the contrary is not received within thirty days from the date of the notice, a notification to the public will be published in the manner determined by the Registrar, with a view to striking the name of the company off the register.

(2) The Registrar may strike the name of the company off the register after the expiration of thirty days of the publication of the notification in subsection (1) if he:

(a) receives a confirmation that the company is no longer carrying on business or is not in operation;

(b) receives no reply from the company to the notice referred to in subsection (1);

(c) receives no objection to the notice and public notification referred to in subsection (1); or


552 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-552. Objection to striking off.

(1) Where a notice of intention to strike off a company from the register is given under subsection 551(1), any person may, together with the payment of a prescribed fee, lodge with the Registrar, within thirty days from the date specified in the notice, an objection to the striking off of the company on any of the following grounds:

(a) that the company is still carrying on business or there is other reason for it to continue in existence;

(b) that the company is a party to legal proceedings;

(c) that the company is in receivership or liquidation, or both;

(d) that the person is a creditor or a member or a person who has an undischarged claim against the company;

(e) that the person believes that there exists, and intends to pursue, a right of action on behalf of the company under Division 6 of Part III; or

(f) that, for any other reason,

553 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-553. Withdrawal of striking off application.

Subject to a payment of a prescribed fee, an applicant referred to in section 550 may withdraw the application by lodging a notice of withdrawal to the Registrar.


554 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-554. Effect of striking off.

(1) Where a company is struck off from the register under section 549, the company shall be dissolved, but:

(a) the liability, if any, of every director or officer and member of the company continues and may be enforced as if the company had not been dissolved; and

(b) nothing in section 550 shall affect the power of the Court to wind up a company, the name of which has been struck off from the register provided that there is proof that the company has a property which can be realised.

(2) Where the Court issued a winding up order under paragraph (1) (b) , the liquidator shall only be required to discover and realise any assets of the company.


555 Division 4 - Striking Off and Management of Assets of Dissolved Companies Subdivision 1 - Striking Off-555. Power of Court to reinstate struck off company into register.

(1) Any person who is aggrieved by the decision of the Registrar to strike off the company may, within seven years after the name of the company has been struck off, apply to the Court to reinstate the name of the company into the register.

(2) If the Court is satisfied that the company was at the time of the striking off, carrying on business or in operation or otherwise that it is just that the name of the company be reinstated in the register, the Court may order that:

(a) the name of the company be reinstated; and

(b) give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.

(3) Upon an office copy of the order is lodged with the Registrar, the company shall be deemed to have continued in existence as if its name had not been struck

556 Subdivision 2 - Management of Assets of Dissolved Companies-556. Power of Registrar to represent dissolved company in certain circumstances.

(1) Where after a company has been dissolved, it is proved to the satisfaction of the Registrar:

(a) that the company if still existing would be legally or equitably bound to carry out, complete or give effect to some dealing, transaction or matter; and

(b) that in order to carry out, complete or give effect to the dealing, transaction or matter some purely administrative act should have been done by or on behalf of the company if still existing,

the Registrar may in representing the company or its liquidator under this section do or cause to be done any such act.

(2) The Registrar may execute or sign any relevant instrument or document stating that he has done so under this section, and the execution or signature shall have the same force, validity and effect as if the company, if existing, had duly executed such instrument or document.


557 Subdivision 2 - Management of Assets of Dissolved Companies-557. Outstanding assets of dissolved or struck off company to vest in Registrar.

(1) Where, after a company has been dissolved, there remains any outstanding property, movable or immovable, including things in action and whether within or outside Malaysia which at the time it was dissolved:

(a) was vested in the company;

(b) the company was entitled to it; or

(c) the company had a disposing power,

but which was not got in, realized upon or otherwise disposed of or dealt with by the company or its liquidator before the dissolution, the property, except called and uncalled capital, shall, for the purposes of the following sections of this Subdivision and notwithstanding any other written law to the contrary, be vested in the Registrar for all the estate and interest, legal or equitable, of the company or its liquidator at the date the company was dissolved, together with all claims, rights and remedies which the company or its liquidator had at that

558 Subdivision 2 - Management of Assets of Dissolved Companies-558. Disposal of outstanding interests in property.

(1) Upon proof to the satisfaction of the Registrar that there is vested in him by operation of section 557 or of any corresponding previous written law or of a law of a designated country corresponding with section 548, any estate or interest in property, whether solely or together with any other person, of a beneficial nature and not merely held in trust, the Registrar may sell or otherwise dispose of or deal with such estate or interest in property or any part of the estate or interest in property as he deems fit.

(2) The Registrar may sell or otherwise dispose of or deal with the property either solely or in concurrence with any other person in such manner for such consideration by public auction, public tender or private contract upon such terms and conditions as he thinks fit, with power to rescind any contract and resell or otherwise dispose of or deal with such property as he thinks expedient and may make, execute, sign and give such co

559 Subdivision 2 - Management of Assets of Dissolved Companies-559. Liability of Registrar and Government as to property vested in Registrar.

(1) Property vested in the Registrar by operation of this Subdivision or by operation of any corresponding previous written law shall be liable and subject to all charges, claims and liabilities imposed thereon or affecting the property by reason of any statutory provision as to rates, taxes, charges or any other matter or thing to which the property would have been liable or subject had the property continued in the possession, ownership or occupation of the company.

(2) Notwithstanding subsection (1), there shall not be imposed on the Registrar or the Government any duty, obligation or liability whatsoever to do or suffer any act or thing required by any such statutory provision to be done or suffered by the owner or occupier other than the satisfaction or payment of any such charges, claims or liabilities out of the assets of the company so far as the charges, claims or liabilities are in the opinion of the Registrar properly available for a

560 Subdivision 2 - Management of Assets of Dissolved Companies-560. Accounts and audit.

(1) The Registrar shall:

(a) record in the register a statement of any property coming to his hand or under his control or to his knowledge vested in him by operation of this Subdivision and of his dealings;

(b) keep accounts of all moneys arising and of how the moneys have been disposed of; and

(c) keep all accounts, vouchers, receipts and papers relating to the property and moneys.

(2) The Auditor General shall have all the powers in respect of those accounts as are conferred upon him by any Act relating to audit of public accounts.


561 PART V MISCELLANEOUS Division 1 - Foreign Companies-561. Prohibition on carrying on business in Malaysia.

(1) A foreign company shall not carry on a business in Malaysia unless the foreign company is registered as a foreign company under this Act.

(2) A foreign company shall not be regarded as carrying on business in Malaysia for the reasons only that it carries on activities as specified in the Thirteenth Schedule within Malaysia.

(3) For the purposes of this section, "carrying on business" includes establishing or using a share transfer or share registration office or administering, managing or otherwise dealing with property situated in Malaysia as an agent, legal personal representative, or trustee, whether by servants or agents or otherwise.

(4) The foreign company and every officer who contravene this section commit an offence.


562 PART V MISCELLANEOUS Division 1 - Foreign Companies-562. Registration of foreign companies.

(1) For the purpose of registration under this Act, a foreign company shall provide to the Registrar the following information:

(a) the name, identification, nationality and the ordinary place of residence of every shareholder in Malaysia and, if any of these persons is a body corporate, the corporate name, place of incorporation or place of origin, registration number and the registered office of the body corporate;

(b) the name, identification, nationality and the ordinary place of residence of every person who is appointed as a director of the foreign company in Malaysia;

(c) the list of its shareholders or members at its place of origin;

(d) in the case of a foreign company with share capital, the details of class and number of shares at its place of origin;

(e) in the case of a foreign company limited without share capital, the amount up to which the

563 PART V MISCELLANEOUS Division 1 - Foreign Companies-563. Requirement for foreign companies to have agent.

(1) A foreign company shall at all times appoint an agent in Malaysia who, until he ceases to be an agent in accordance with subsection (5), shall:

(a) continue to be the agent of the foreign company;

(b) be answerable for all such acts, matters and things that are required to be done by the foreign company under this Act; and

(c) be personally liable to all penalties imposed on the foreign company for any contravention of this Act unless the agent satisfies the court hearing the matter that the agent should not be liable.

(2) For the purposes of subsection (1), the foreign company shall notify the Registrar of any changes relating to the registered particulars of the agent within fourteen days from the change.

(3) A foreign company or its agent shall lodge with the Registrar a notice in writing stating that the agent has ceased or will cease to be the agent o

564 PART V MISCELLANEOUS Division 1 - Foreign Companies-564. Name of foreign company and its publication.

(1) A foreign company shall be registered under the name as registered in its place of origin subject to the name being available under section 26.

(2) Any change in the name of a foreign company shall not be registered if the name is not available under section 26.

(3) No foreign company to which this Part applies shall use in Malaysia any name other than that under which it is registered under this Division.

(4) The foreign company and every officer or agent who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit and in the case of a continuing offence, to a further fine not exceeding five hundred ringgit for each day during which the offence continues after conviction.


565 PART V MISCELLANEOUS Division 1 - Foreign Companies-565. Obligation to state name of foreign company, whether limited, and place where incorporated.

(1) A foreign company shall:

(a) conspicuously exhibit its name and the place where the foreign company is formed or incorporated in romanised letters outside its registered office and every place of business established by it in Malaysia;

(b) cause its name, company number and the place where the foreign company is formed or incorporated to be stated in legible romanised letters on the following:

(i) its business letters, notices and other official publications, including in electronic medium;

(ii) its websites;

(iii) its bills of exchange, promissory notes, endorsements and order forms;

(iv) cheques purporting to be signed by or on behalf of the company;

(v) orders, invoices and other demands for payment, receipts and letters of credit purporting to be issued or signed by or on behalf of the company; and

(vi) all other forms of its business cor

566 PART V MISCELLANEOUS Division 1 - Foreign Companies-566. Requirement to have a registered office.

(1) A foreign company shall, at all times, have a registered office within Malaysia:

(a) to which all communications and notices may be addressed; and

(b) which shall be open and accessible to the public during ordinary business hours.

(2) Every foreign company shall, within thirty days from it establishes a place of business or commences to carry on business within Malaysia, lodge with the Registrar of the situation of its registered office in Malaysia and, unless the office is open and accessible to the public during ordinary business hours, the days and hours during which it is open and accessible to the public.


567 PART V MISCELLANEOUS Division 1 - Foreign Companies-567. Return to be filed where documents, etc, altered.

(1) If any change or alteration is made in:

(a) the charter, statutes, constitution, memorandum or articles of the foreign company or other instrument lodged with the Registrar;

(b) the directors of the foreign company or in the name or address of any director;

(c) the agent of the foreign company or the name or address of any agent;

(d) the situation of the registered office of the foreign company in Malaysia or the days or hours during which the registered office of the foreign company is open and accessible to the public;

(e) the address of the registered office of the foreign company in its place of incorporation or origin;

(f) the name of the foreign company;

[Am. by Act A1701/2024]

(fa) the status of whether the foreign company is private or public; or

[(fa) In

568 PART V MISCELLANEOUS Division 1 - Foreign Companies-568. The branch register.

(1) Subject to this section, a foreign company which has a share capital and has any member who is resident in Malaysia shall keep a branch register for the purpose of registering shares of the members resident in Malaysia who apply to have the shares registered at its registered office in Malaysia or at some other place in Malaysia.

(2) The company shall not be obliged to keep a branch register under subsection (1) until after the expiration of sixty days from the receipt by the company of an application in writing by a member resident in Malaysia for registration in its branch register in Malaysia of the shares held by the member.

(3) This section shall not apply to any foreign company which by its constitution prohibits any invitation to the public to subscribe for shares in the foreign company.

(4) Every such register as aforesaid shall be kept in the manner provided by Division 8 of Part II as though the register were the r

569 PART V MISCELLANEOUS Division 1 - Foreign Companies-569. Registration of shares in branch register.

Subject to this Act, on an application in that behalf by a member resident in Malaysia, the foreign company shall register in a branch register of the foreign company, the shares held by a member which are registered in any other register kept by the company.


570 PART V MISCELLANEOUS Division 1 - Foreign Companies-570. Removal of shares from branch register.

Subject to this Act, on application in that behalf by a member holding shares registered in a branch register, the foreign company shall remove the particulars relating to the shares from the branch register and register the shares in such other register within Malaysia as is specified in the application.


571 PART V MISCELLANEOUS Division 1 - Foreign Companies-571. Index of members, inspection and closing of branch registers.

Sections 50, 51, 52, 53, 54, 55 and 56 shall, with such adaptations as are necessary, apply respectively to the index of persons holding shares in a branch register and to the inspection and the closing of the register.


572 PART V MISCELLANEOUS Division 1 - Foreign Companies-572. Transfer of shares and rectification.

Sections 103, 105, 106 and 107 shall apply with necessary adaptations with respect to the transfer of shares and the rectification of the branch register of a foreign company.


573 PART V MISCELLANEOUS Division 1 - Foreign Companies-573. Branch register to be prima facie evidence.

A branch register shall be prima facie evidence of:

(a) any matters directed or authorized by this Subdivision to be inserted in the branch register; and

(b) the title of the member to the shares and the registration of the shares in the branch register.


573A PART V MISCELLANEOUS Division 1 - Foreign Companies-573A. Beneficial ownership of foreign company.

Division 8A of Part II shall apply to a foreign company subject to the following modifications:

(a) a reference to a "company" shall be taken as a reference to a "foreign company"; and

(b) a reference to an "officer" shall be taken as a reference to an "agent of a foreign company".

[Ins. by Act A1701/2024]


574 PART V MISCELLANEOUS Division 1 - Foreign Companies-574. Accounts to be kept by foreign companies.

(1) Every foreign company, the directors and managers shall cause:

(a) to be kept accounting and other records in Malaysia as will sufficiently explain the transactions and financial position of the foreign company, arising out of its operations in Malaysia; and

(b) the records under paragraph (a) to be kept in such a manner as to enable the records to be conveniently and properly audited.

(2) The records referred to in subsection (1) shall be audited by a person approved under section 263.

(3) Every foreign company, the directors and managers of the foreign company shall cause appropriate entries to be made in the accounting and other records within sixty days of the completion of the transactions to which the entries relate.

(4) Subsections 245(3), (4), (7) and (8) shall apply to foreign companies as if for references to a "company" there were substituted re

575 PART V MISCELLANEOUS Division 1 - Foreign Companies-575. Financial statements.

(1) Subject to this section, a foreign company shall, within two months of its annual general meeting, lodge with the Registrar a copy of its financial statements made up to the end of its last financial year in such form and containing such particulars and accompanied by copies of such documents as the company is required to annex, attach or send with its financial statements by the law for the time being applicable to that company in the place of its incorporation or origin, together with a statutory declaration in the prescribed form verifying that the copies are true copies of the documents so required.

(2) The Registrar may, if he is of the opinion that the financial statements and other documents referred to in subsection (1) do not sufficiently disclose the company's financial position, require the company to lodge financial statements within such period, in such form and containing such particulars and to annex thereto such documents as

576 PART V MISCELLANEOUS Division 1 - Foreign Companies-576. Annual return.

(1) A foreign company shall lodge with the Registrar, once in every calendar year, an annual return in the form and manner as the Registrar may determine.

(2) The annual return shall contain the following particulars:

(a) the address of its registered office;

(b) the address of its business place including branch, if any;

(c) the address at which its register of members is kept, if not kept at the registered office;

(d) the address at which its financial records are kept, if not kept at the registered office;

(e) in the case of a company with a share capital, the summary of its shareholding structure, including debentures;

(f) the total amount of its indebtedness in Malaysia;

(g) the particulars of directors, officers, auditors and agents in Malaysia;

(h) the list of its shareholders or members;

577 PART V MISCELLANEOUS Division 1 - Foreign Companies-577. Service of notice.

Any document required to be served on a foreign company shall be sufficiently served:

(a) if the document is addressed to the foreign company and left at or sent by post to its registered office in Malaysia;

(b) if the document is addressed to an agent of the company and left at or sent by post to his registered address; or

(c) in the case of a foreign company which has ceased to maintain a place of business in Malaysia, if the document is addressed to the foreign company and is left at or sent by post to its registered office in the place of its incorporation or origin.


578 PART V MISCELLANEOUS Division 1 - Foreign Companies-578. Cessation of business in Malaysia.

(1) If a foreign company ceases to have a place of business or to carry on business in Malaysia, the foreign company shall, within seven days from ceasing, lodge with the Registrar a notice to that fact, and as from the day on which the notice is lodged, its obligation to lodge any document, other than a document that ought to have been lodged before that day, shall cease.

(2) The Registrar shall remove the name of that foreign company from the register upon the expiration of twelve months after the lodging of the notice.

(3) If a foreign company goes into liquidation or is dissolved in its place of incorporation or origin:

(a) any person who, immediately prior to the commencement of the liquidation proceedings, was an agent shall, within thirty days from the commencement of the liquidation or the dissolution or within such further time as the Registrar in special circumstances allows, lodge or cause to be

Legal Commentary on Section 578 of the COMPANIES ACT 2016

Introduction

Section 578 of the Companies Act 2016 (Malaysia) deals with the procedures and legal effects when a foreign company ceases its business operations in Malaysia. It provides a statutory framework for notifying the Registrar of Companies (ROC) about cessation and the subsequent administrative consequences, including the removal of the company from the register. This section is crucial for delineating the legal status of foreign companies post-cessation and their jurisdictional standing in Malaysian law.

What does Section 578 Say

Section 578(1) mandates that a foreign company intending to cease business in Malaysia must lodge a Notice of Cessation of Business with the Registrar of Companies (ROC). Upon lodgement, the company is deemed to have ceased its business operations in Malaysia from the date specified in the notice. Subsequently, the company’s name is removed from the CCM register, effectively terminating its recognition as a Malaysian legal entity. The section also prescribes penalties for non-compliance and related offences under the Act.

Essential Ingredients

  • Notification Requirement: The foreign company must lodge a formal Notice of Cessation of Business with the ROC.
  • Timing: The notice must specify the effective date of cessation.
  • Legal Effect: Lodging the notice triggers the legal cessation of business in Malaysia.
  • Removal from Register: The company’s name is removed from the CCM register after the specified period, indicating the loss of legal personality in Malaysia.
  • Offences and Penalties: Failure to comply may attract penalties, including fines and imprisonment.

Scope of Section

Section 578 applies specifically to foreign companies registered under the Companies Act 2016 that cease operations in Malaysia. Its scope encompasses:- The procedural obligation to notify the ROC.- The legal consequences of such notification.- The administrative process leading to the removal of the company’s name from the register.- It does not extend to domestic Malaysian companies.- It influences jurisdictional matters, especially regarding legal claims or disputes involving the ceased company.

Punishment for Section

The Act stipulates penalties for contravention of Section 578, including:- Fines, which can be substantial (e.g., up to RM3 million as per Section 578(4) in some references).- Imprisonment terms, potentially up to ten years for offences related to false statements or non-compliance [Source: ""].- Additional penalties may apply for making false statements or fraudulent lodgements, aligning with general provisions on offences under the Companies Act 2016.

Legal Comments

  • Jurisdictional Limitation - The section emphasizes that once a foreign company ceases business and is removed from the CCM register, Malaysian courts generally lack jurisdiction over disputes involving that company [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Legal Effect of Lodgement - Lodging the Notice of Cessation under s 578(1) signifies the official and legal cessation of the company's Malaysian operations, which is considered the moment the company loses its Malaysian legal personality [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Administrative Nature of Removal - The removal from the CCM register is an administrative act that confirms the cessation but does not itself create legal effects; the legal cessation is effected by the lodgement of the notice [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Impact on Litigation - Courts have consistently held that once a foreign company ceases operations and is deregistered, it cannot be sued in Malaysia for disputes arising after cessation, as it no longer exists as a legal entity [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Offences under Section 578 - Failure to lodge the notice or making false statements can lead to criminal sanctions, including fines and imprisonment, highlighting the importance of compliance [Source: ""].
  • Timing of Cessation - The legal effect of cessation is deemed to be from the date of lodgement of the notice, not merely the date of removal from the register; this is critical for determining jurisdiction and legal standing [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Relation to Section 578(3) - The section also addresses offences related to false statements or fraudulent lodgements, reinforcing the need for truthful compliance [Source: ""].
  • Legal Status Post-Cessation - After lodging the notice, the company’s legal personality in Malaysia terminates, preventing it from being a defendant or claimant in Malaysian courts [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Procedural Requirements - The Act mandates strict procedural compliance; non-compliance may result in penalties but does not necessarily extend the company's legal capacity in Malaysia [Source: ""].
  • Relation to Corporate Dissolution - Lodging Form 578 is a specific statutory process that may precede or coincide with other forms of deregistration or liquidation under Malaysian law [Source: "Closing Down a Business in Malaysia?"].
  • Legal Consequences of Non-Compliance - Non-compliance with s 578 can lead to criminal sanctions, including imprisonment, emphasizing the statutory importance of proper notification [Source: ""].
  • Effect on Employee Claims - Once a company ceases operations and is removed from the register, employee claims against it become moot or inadmissible due to lack of legal personality [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • International Perspective - Similar provisions exist in other jurisdictions (e.g., India, Ireland), indicating a common legal approach to foreign companies ceasing operations abroad [Source: ""].
  • Legal Certainty - The section provides clarity and certainty for both the company and third parties regarding the company's status and the limits of Malaysian jurisdiction [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Legal Remedies - Claimants seeking to enforce rights against a foreign company must do so before cessation or while the company still exists as a legal entity in Malaysia [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].
  • Administrative vs. Legal Cessation - The formal lodgement and removal process serve as administrative acts that have direct legal implications, particularly for jurisdiction and liability [Source: CHLOE RENE TUAN vs HILONG MARINE ENGINEERING (HONG KONG) LIMITED].

In summary, Section 578 of the Companies Act 2016 establishes a clear statutory process for foreign companies to notify Malaysia of cessation, with significant legal consequences including loss of Malaysian legal personality and jurisdictional limitations. Proper compliance is essential to avoid penalties and to clarify the company's legal status in Malaysia.

579 PART V MISCELLANEOUS Division 1 - Foreign Companies-579. Power of foreign companies to hold immovable property.

Subject to and in accordance with any written law, a foreign company registered under this Subdivision shall have the power to hold any immovable property in Malaysia.


580 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-580. As to rights of witnesses to legal representation.

Any person summoned for examination under section 502 or 503 may at his own cost appoint an advocate and solicitor who shall be at liberty to put to him such questions as the Court, Sessions Court Judge or Magistrate deems just, for the purpose of enabling him to provide explanation or qualify any answers given by him.


580A Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-580A. Security for costs.

(1) Where a company is the plaintiff in any action or other proceedings and if it appears by a credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if the defendant is successful in his defence, the Court may order the plaintiff to give sufficient security for all the costs and to stay all action or proceedings until the security is given.

(2) The Court may direct the costs of any action or proceedings to be borne by the party to the action or proceedings.

[580A. Ins. Act A1605:s.14]


581 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-581. Power to grant relief.

(1) In any proceeding for negligence, default, breach of duty or breach of trust against any person to whom this section applies, if it appears to the Court before which the proceedings are taken that a person is or may be liable, but that he has acted honestly and reasonably and that, having regard to all the circumstances of the case, he ought fairly to be excused for the negligence, default or breach, the Court may relieve him either wholly or partly from his liability on such terms as the Court thinks fit.

(2) If any person to whom this section applies has reason to apprehend that any claim will or might be made against him in respect of any negligence, default, breach of duty or breach of trust, he may apply to the Court for relief, and the Court shall have the same power to relieve him as under this section it would have had if it had been a Court before which proceedings against him for negligence, default, breach of duty or breach of tr

582 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-582. Irregularities in proceedings.

(1) No proceeding under this Act shall be invalidated by any defect, irregularity or deficiency of notice or time unless the Court is of the opinion that substantial injustice has been or may be caused which cannot be remedied by any order of the Court.

(2) The Court may, if it thinks fit, make an order declaring that the proceeding is valid notwithstanding any such defect, irregularity or deficiency.

(3) Without affecting the generality of subsections (1) and (2) or any other provision of this Act, where any omission, defect, error or irregularity, including the absence of a quorum at any meeting of the company or of the directors has occurred in the management or administration of a company whereby:

(a) any breach of this Act has occurred;

(b) there has been default in the observance of the constitution of the company; or

(c) any proceedings at or in connection with any m

583 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-583. Disposal of shares of shareholder whose whereabouts unknown.

(1) If by the exercise of reasonable diligence a company is unable to discover the whereabouts of a shareholder for a period of not less than ten years, the company may cause an advertisement to be published in a newspaper circulating in the place shown in the register of members as the address of the shareholder stating that the company after the expiration of thirty days from the date of the advertisement intends to transfer the shares to the Minister charged with responsibility for finance.

(2) The company may transfer the shares held by the shareholder in the company to the Minister charged with responsibility for finance and for that purpose may execute for and on behalf of the owner a transfer of those shares to the Minister charged with the responsibility for finance if after the expiration of thirty days from the date of the advertisement the whereabouts of the shareholder remain unknown.

(3) The Minister charged with the respon

584 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-584. Furnishing of information and particulars of shareholding.

(1) The Registrar may at any time by notice in writing require any company, person or individual to furnish all the necessary information and particulars of any share acquired or held directly or indirectly either for his own benefit or for any other company, person or individual and have the information and particulars verified by statutory declaration.

(2) Any company, person or individual served with the notice under subsection (1) shall furnish the Registrar all the necessary information and particulars of any share acquired or held and duly verified by statutory declaration within seven days of the receipt of such notice.

(3) A company and every officer who contravene this section commit an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit and in the case of a continuing offence, to a further fine of ten thousand ringgit for each day during which the offence continues after conviction.


585 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-585. Court may compel compliance.

If an officer or former officer of a company or any other person failed or omitted to do any act, matter or thing which by or under this Act he is or was required or directed to do, including to permit the inspection of any register, minute book or document or to supply a copy of any register, minute book or document, the Court on the application of the Registrar or any member of the company or the Official Receiver or liquidator may by order require that officer or former officer or person to do the act, matter or thing immediately or within such time as is allowed by the order, and for the purpose of complying with any such order, the former officer shall be deemed to have the same status, powers and duties as he had at the time the act, matter or thing should have been done.


586 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-586. Translations of instruments.

(1) If under this Act a corporation is required to lodge with the Registrar any instrument, certificate, contract or document or a certified copy of the instrument, certificate, contract or document that is not written in the national language or in the English language, the corporation shall lodge at the same time with the Registrar a certified translation of the instrument, certificate, contract or document either in the national language or in the English language.

(2) Where under this Act a corporation is required to make available for public inspection any instrument, certificate, contract or document that is not written in the national language or in the English language, the corporation shall keep at its registered office in Malaysia a certified translation of instrument, certificate, contract or document either in the national language or in the English language.

(3) If any financial statements, minute books or other records of

587 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-587. Protection to certain officers who make disclosures.

(1) Where an officer of a company in the course of performance of his duties has reasonable belief of any matter which may or will constitute a breach or non-observance of any requirement or provision of this Act or its regulations, or has reason to believe that a serious offence involving fraud or dishonesty, as defined in paragraph 266(11) (b) has been, is being or is likely to be committed against the company or this Act by other officers of the company, he may report the matter in writing to the Registrar.

(2) The company shall not remove, demote, discriminate against, or interfere with the lawful employment or livelihood of such officer of the company by reason of the report submitted under subsection (1).

(3) No officer of a company shall be liable to be sued in any court or be subject to any tribunal process, including disciplinary action for any report submitted by the officer under subsection (1) in good faith and in th

588 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-588. General penalty.

(1) A person commits an offence under this Act if he:

(a) does that which by or under this Act he is prohibited to do;

(b) does not do that which by or under this Act he is required or directed to do; or

(c) otherwise contravenes or fails to comply with any provision of this Act.

(2) A person who is guilty of an offence under this Act shall, on conviction, be liable to a penalty or punishment not exceeding the penalty or punishment expressly mentioned as the penalty or punishment for the offence, or if a penalty or punishment is not mentioned:

(a) in the case of a person who is an individual, to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both;

(b) in the case of a person other than an individual, to a fine not exceeding fifty thousand ringgit.

589 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-589. Proceedings how and when taken.

(1) The Registrar or any person shall not institute any proceeding for any offence under this Act except with the written consent of the Public Prosecutor.

(2) The Registrar or any officer authorized by the Public Prosecutor in writing shall have the right to appear and be heard before a Magistrate's Court or a Sessions Court in any proceedings for an offence under this Act.

(3) Proceedings for any offence under this Act other than an offence punishable with imprisonment for a term exceeding five years may be prosecuted in a Magistrate's Court and in the case of an offence punishable with imprisonment for a term of five years or more shall be prosecuted in the Sessions Court.


590 Division 2 - Enforcement and Sanctions Subdivision 1 - Enforcement of the Act-590. Investigation of affairs of company at direction of Minister.

(1) The Minister may, either of his own motion or on the application of:

(a) in the case of a company having a share capital:

(i) not less than two hundred members or members holding at least ten per centum of the issued shares; or

(ii) debenture holders holding not less than twenty per centum of the value of the issued debentures; or

(b) in the case of a company not having a share capital, not less than twenty per centum of the total members,

declare the affairs of the company or foreign company to be investigated under this section.

(2) The Minister may make the declaration on his own motion under subsection (1) if he is satisfied that:

(a) a prima facie evidence has been established that for the protection of the public, the interest holders of a scheme under the Interest Schemes Act 2016, the

591 Subdivision 2 - General Offences-591. False and misleading statements.

(1) Every corporation which advertises, circulates or publishes any return, report, certificate, financial statements or other document required by or for the purposes of this Act makes or authorizes the making of a statement false or misleading in any material particular knowing it to be false or misleading or intentionally omits or authorizes the omission or accession of any matter or thing which makes the document misleading in a material respect and every officer of the corporation who knowingly authorizes, directs or consents to the advertising, circulation or publication commits an offence, and shall, on conviction:

(a) in the case of a corporation, be liable to a fine not exceeding three million ringgit; and

(b) in the case of officer of the corporation, be liable to imprisonment for a term not exceeding ten years or a fine not exceeding three million ringgit or to both.

(2) Ev

592 Subdivision 2 - General Offences-592. False reports.

(1) An officer of a corporation who, with intent to deceive, makes or furnishes or knowingly and wilfully authorizes or permits the making or furnishing of, any false or misleading statement or report to:

(a) a director, auditor, member, debenture holder or trustee for debenture holders of the corporation;

(b) in the case of a corporation that is a subsidiary, an auditor of the holding company;

(c) a stock exchange whether in or outside Malaysia or an officer of the stock exchange; or

(d) the Securities Commission,

relating to the affairs of the corporation commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or a fine not exceeding three million ringgit or to both.

(2) In subsection (1), "officer", in addition to the definition under section 2, includes a person who at the time the offence

593 Subdivision 2 - General Offences-593. False report or statement to the Registrar.

A person who makes or furnishes, or knowingly authorizes or permits the making or furnishing of, any false or misleading statement, information or report to the Registrar relating to:

(a) the affairs of a corporation;

(b) any matter or thing required by the Registrar for the implementation of this Act; or

(c) the enforcement of this Act,

commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding three million ringgit or to both.


594 Subdivision 2 - General Offences-594. Fraudulently inducing persons to invest money.

(1) Any person who, by any statement, promise or forecast which he knows to be misleading, false or deceptive or by any dishonest concealment of material facts or by the reckless making of any statement, promise or forecast which is misleading, false or deceptive, induces or attempts to induce another person to enter into or offer to enter into:

(a) any agreement for or with a view of acquiring, disposing of, subscribing in or underwriting marketable securities or lending or depositing money to or with any corporation; or

(b) any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of marketable securities or by reference to fluctuations in the value of marketable securities,

commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding three million ringgit

595 Subdivision 2 - General Offences-595. Fraud by officer.

(1) Every officer of a company who:

(a) by deceitful or fraudulent or dishonest means or by means of any other fraud induced any person to give credit to the company;

(b) with intent to defraud creditors of the company, has made or caused to be made any gift or transfer of or charge on, or has caused or connived at the levying of any execution against, the property of the company; or

(c) with intent to defraud creditors of the company, has concealed or removed any part of the property of the company since or within two months before the date of any unsatisfied judgment or order for payment of money obtained against the company,

commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding three million ringgit or to both.

(2) In subsection (1), "officer", in addition to the definition under

596 Subdivision 2 - General Offences-596. Restriction on offering shares, debentures, etc., for subscription or purchase.

(1) A person shall not, whether by appointment or otherwise, go from place to place:

(a) offering shares for subscription or purchase to the public or any member of the public; or

(b) seeking or receiving offers to subscribe for or to purchase shares from the public or from any member of the public.

(2) Subsection (1) shall not apply:

(a) to an offer for subscription or purchase or invitation to subscribe for or purchase or recommendation to which the Capital Markets and Services Act 2007 applies; and

(b) in the case of shares of any corporation:

(i) notice of intention to apply for exemption from subsection (1) in the form and manner as determined by the Registrar has been advertised in one widely circulated newspaper in Malaysia in the national language and one widely circulated newspaper in Malaysia in the English

597 Subdivision 2 - General Offences-597. Restriction on the use of words "Limited", "Berhad" and "Sendirian".

(1) Any person carrying on business under any name or title of which "Berhad" or "Bhd." or "Limited" or "Ltd." is the final word or abbreviation, the person, unless duly incorporated with limited liability, commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding three million ringgit or to both.

(2) A company shall not use the word "Sendirian" or "Sdn." as part of its name if the company does not fulfil the requirements required by this Act to be fulfilled by private companies.

(3) A company and every officer of a company who contravene this section commit an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding three million ringgit or to both.

(4) Subject to Division 9 of Part II and for the purpose of this section, "carrying on business" includes the use of any name or title of which

598 Subdivision 2 - General Offences-598. Prosecution of delinquent officers of company.

(1) This section applies where a moratorium has been obtained for a company or the approval of a voluntary arrangement in relation to a company has taken effect.

(2) If it appears to the nominee or supervisor that any past or present officer of the company has been guilty of any offence in connection with the moratorium or voluntary arrangement, as the case may be, for which he is criminally liable, the nominee or supervisor shall within fourteen days:

(a) report the matter to the Registrar; and

(b) provide the Registrar with such information and give the Registrar such access to and facilities for inspecting and taking copies of documents, being information or documents in the possession or under the control of the nominee or supervisor and relating to the matter in question, as the Registrar requires.

(3) If a report is made to the Registrar under subsection (2), the Registr

599 Division 3 - General Provisions-599. Evidentiary value of copies certified by Registrar.

(1) A copy or extract from any document filed or lodged at the office of the Registrar certified to be a true copy or extract signed and sealed by the Registrar shall be admissible in evidence in any proceedings as of equal validity with the original document.

(2) The reference in subsection (1) to a document includes, if a reproduction or transparency of that document has been incorporated with a register kept by the Registrar, a reference to that reproduction or transparency.


600 Division 3 - General Provisions-600. Evidence of statutory requirements.

In any legal proceedings:

(a) a certificate signed and sealed by the Registrar that at a date or during a period specified in the certificate, no company was registered under this Act or corresponding previous written law by a name specified in the certificate shall be admissible as prima facie evidence that at the date or during that period, as the case may be, no company was registered by that name under this Act or corresponding previous written law; and

(b) a certificate signed and sealed by the Registrar that a requirement of this Act specified in the certificate:

(i) had or had not been complied with at a date or within a period specified in the certificate; or

(ii) had been complied with at a date specified in the certificate but not before that date,

shall be admissible as prima facie evidence of matters specified in the certifica

601 Division 3 - General Provisions-601. Registers and inspection of register.

(1) Subject to this Act, the Registrar shall keep registers as the Registrar considers necessary in such forms as the Registrar thinks fit.

(2) Any person may, on payment of the prescribed fee:

(a) inspect any document filed or lodged with the Registrar not being a document that has been destroyed or otherwise disposed of under section 603;

(b) require a notification of the incorporation of any company or any other certificate issued under this Act; or

(c) require a copy or extract from any document that he is entitled to inspect under paragraph (a) or any notification or certificate referred to in paragraph (b) to be given and certified by the Registrar.

(3) If a reproduction or transparency of a document, notification or certificate is produced for inspection, a person is not entitled to require the reproduction of the original of that docu

602 Division 3 - General Provisions-602. Rectification of registers.

(1) A person may apply to the Registrar for the rectification of a register if an entry in the register:

(a) contains any matter contrary to law;

(b) contains any matter that, in a material particular, is false or misleading in the form or context in which the matter is included;

(c) by reason of an omission or misdescription has not been duly completed; or

(d) is incorrect or erroneous.

(2) Upon receipt of the application under subsection (1), in order for the Registrar to decide whether to approve or refuse the application, the Registrar may:

(a) require the applicant to produce any document or to furnish any information as the Registrar thinks necessary in order for the Registrar to rectify the entry; or

(b) require the applicant to give notice of that application to such other person as the Registrar

603 Division 3 - General Provisions-603. Disposal of old records.

The Registrar may, if in his opinion it is no longer necessary or desirable to retain the old records, destroy or give to the National Archives:

(a) in the case of a corporation:

(i) any return of allotment of shares for cash which has been lodged or filed for not less than seven years;

(ii) any annual return or financial statement that has been lodged or filed for not less than seven years or any document creating or evidencing a charge or the complete or partial satisfaction of a charge where a memorandum of satisfaction of a charge has been registered for not less than seven years; or

(iii) any other document, other than the constitution or any other document affecting the corporation, which has been lodged, filed or registered for not less than seven years;

(b) in the case of a corporation that has been dissolved or has ceased to be registered for not

604 Division 3 - General Provisions-604. Electronic lodgement of documents.

(1) The Registrar may provide a service for the electronic lodgement of documents required by this Act to be lodged with the Registrar.

(2) A document electronically lodged under this section shall be deemed to have satisfied the requirement for lodgement if the document is communicated or transmitted to the Registrar in such manner as may be determined by the Registrar.

(3) A document that is required to be stamped, signed or sealed shall, if the document is to be electronically lodged, be certified to be true copy or authenticated in such manner as may be determined by the Registrar.

(4) Where a document that is required to be signed and attested under this Act is to be filed electronically, the requirement for attestation of the signature does not apply.

(5) If a document is electronically lodged with the Registrar, the Registrar shall not be liable for any loss or damage suffered by any person by reason of any error

605 Division 3 - General Provisions-605. Issuing document electronically.

The Registrar may, by electronic means, issue a document which is to be issued by the Registrar under this Act.


606 Division 3 - General Provisions-606. Electronic information, etc, certified by Registrar admissible in evidence.

Any information, document, a copy or extract from any document electronically lodged with the Registrar or issued by the Registrar shall be a true extract from any documents lodged with or submitted to the Registrar under section 604 or issued by the Registrar under section 605 shall be admissible as prima facie evidence of matters specified in that information, document, copy or extract.


607 Division 3 - General Provisions-607. Enforcement of duty to make returns.

(1) If a corporation or person, having made default in complying with:

(a) any provision of this Act or any other law which requires the lodging or filing in any manner with the Registrar or Official Receiver of any return, account or other document or the giving of notice to the Registrar or Official Receiver of any matter; or

(b) any request of the Registrar or the Official Receiver to amend or complete and re-submit any document or to submit a fresh document,

fails to make good the default within fourteen days from the service on the corporation or person of a notice requiring it to make good the default to be done, the Court or any Sessions Court may, on an application by any member or creditor of the corporation or by the Registrar or Official Receiver, make an order directing the corporation and any officer of the corporation or that person to make good the default within such t

608 Division 3 - General Provisions-608. Relodging of lost or destroyed documents.

(1) If the Registrar has reasonable cause to believe that a document in relation to a corporation which originally is lodged under this Act has been lost or destroyed, the Registrar may by notice in writing direct the corporation to relodge a copy of the document in the manner and form as may be determined by the Registrar.

(2) The corporation or any officer of the corporation shall comply with the direction of the Registrar within fourteen days from the service of the notice under subsection (1) or such longer period as the Registrar may allow.

(3) Upon the relodgement under subsection (1), the copy of the document shall, for all purposes, have the same force and effect as the originally lodged document.

(4) No fee shall be payable upon the relodging of a document under this section.

(5) The corporation and any officer of the corporation who fails to comply with the direction of the Registrar under subsection (1) commit

609 Division 3 - General Provisions-609. Time for lodging documents and extension of time.

(1) If a document is required to be lodged under this Act and the period of time for the document to be lodged is not prescribed, the document shall be lodged within thirty days or, in the case of a document required to be lodged by a foreign company, within such further period as the Registrar in special circumstances allows, after the happening of the event to which the document relates.

(2) The Registrar shall have the power and upon payment of the prescribed fee, to extend any period of time relating to the lodgement of any document required to be lodged under this Act to such further period as the Registrar deems just and expedient, and the Registrar may require additional information and impose any terms and conditions as the Registrar deems fit.


610 Division 3 - General Provisions-610. Particulars and manner of information required to be lodged under this Act.

(1) In addition to the requirements under this Act, if a document is required to be lodged under this Act, the Registrar shall have the power to determine the particulars, form and manner of information contained in such document.

(2) In determining whether a document is to be accepted for lodgement under this Act, the Registrar may require a person who submits the document to:

(a) comply with the particulars, form or manner of lodgement; or

(b) produce other document or information as the Registrar thinks necessary.


611 Division 3 - General Provisions-611. Time for compliance with the requirements under this Act.

If any action or document is required to be in compliance with this Act and the period for compliance is not prescribed, the time to comply shall be within thirty days from the action or document is required to be complied with.


612 Division 3 - General Provisions-612. Methods of communication between company and members.

(1) The communication between a company and its members on matters relating to meetings and resolutions, supply of information or documents or otherwise for the purpose of complying with this Act, may be:

(a) in hard copy;

(b) in electronic form; or

(c) by other methods agreed between the company and the members.

(2) A communication in hard copy for matters specified in subsection (1) shall be valid if:

(a) addressed to the company at the registered office; or

(b) addressed to the members at the last known address.

(3) A communication in electronic form for matters specified in subsection (1) shall be valid if:

(a) addressed to the company at an address provided for that purpose; or

(b) addressed to the members at the last known address provided for that

612A Division 3 - General Provisions-612A. Publication or advertisement on website.

Where any information is required to be published or advertised in a newspaper under this Act, any person may, in lieu of publishing or advertising the information in a newspaper, publish or advertise the information on the website of the Commission in the form and manner as the Registrar may determine upon payment of the prescribed fee.

[Ins. by Act A1701/2024]


613 Division 3 - General Provisions-613. Power to make regulations.

(1) The Minister may make regulations for or with respect to:

(a) the fees and charges under this Act, which include exempt payment of any fees and charges on such terms and conditions as the Minister thinks fit;

(aa) any person or class of persons who may access the register of beneficial owners of the company or the beneficial ownership information, the manner and the terms and conditions for accessing such register;

[(aa) Ins. by Act A1701/2024]

(b) any matters relating to any practicing certificate issued under section 241 including but not limited to renewal, revocation and suspension;

(ba) any matters relating to a compromise or arrangement, corporate voluntary arrangement, judicial management, liquidation and receivership;

[(ba) Ins. by Act A1701/2024]

(c) the manner in which the Registra

614 Division 3 - General Provisions-614. Power to impose terms and conditions.

In exercising his powers to approve any application or any issuance of licence under this Act, the Minister may impose any terms and conditions as he thinks fit.


615 Division 3 - General Provisions-615. Exemption.

(1) The Minister may, upon the recommendation of the Commission, by order exempt any person, corporation or class of corporations from all or any of the provisions of this Act.

(2) In exercising his power under this section, the Minister may:

(a) form a committee to assist him in reaching the decision;

(b) request information or documentation or personal representation from any person, the corporation or class of corporations in order for him to be satisfied with the recommendation; and

(c) impose any terms and conditions as he thinks fit.


616 Division 3 - General Provisions-616. Rules.

The Rules Committee constituted under the Courts of Judicature Act 1964 [Act 91] may, subject to and in accordance with the provisions of that Act relating to the making of rules, make rules:

(a) with respect to the proceedings and the practice and procedure of the Court under this Act;

(b) with respect to any matter or thing which is by this Act required or permitted to be prescribed by rules;

(c) without limiting the generality of the provisions of this section, with respect to Court fees and costs and with respect to rules as to meetings ordered by the Court; and

(d) generally with respect to the winding up of companies.


617 Division 3 - General Provisions-617. Power to amend Schedules.

The Minister may, by order published in the Gazette , vary, delete, add to, substitute or otherwise amend the Schedules to this Act.


618 Division 4 - Saving and Transitional-618. Transitional provisions relating to abolition of nominal value.

(1) Where a share is issued before the commencement of section 74:

(a) the amount paid on the share shall be the sum of all amounts paid to the company at any time for the share, but not including any premium; and

(b) the amount unpaid on the share shall be the difference between the price of issue of the share, but not including any premium, and the amount paid on the share.

(2) Upon the commencement of section 74, any amount standing to the credit of a company's share premium account and capital redemption reserve shall become part of the company's share capital.

(3) Notwithstanding subsection (2), a company may, within twenty-four months upon the commencement of section 74, use the amount standing to the credit of its share premium account to:

(a) provide for the premium payable on redemption of debentures or redeemable preference shares issued

619 Division 4 - Saving and Transitional-619. General transitional provisions.

(1) Any person appointed under the corresponding previous written law and holding office at the commencement of this Act, shall remain in office as if he had been appointed under this Act.

(2) Any act made, executed, issued or passed under the corresponding previous written law and in force and operative at the commencement of this Act, shall so far as it could have been made, executed, issued or passed, under this Act have effect as if made, executed, issued or passed under this Act.

(3) The memorandum of association and articles of association of an existing company in force and operative at the commencement of this Act, and the provisions of Table A under the Fourth Schedule of the Companies Act 1965 if adopted as all or part of the articles of association of a company at the commencement of this Act, shall have effect as if made or adopted under this Act, unless otherwise resolved by the company.

(4) All proceedings, judicia

620 Division 4 - Saving and Transitional-620. Repeal and savings.

(1) The Companies Act 1965 is repealed.

(2) Notwithstanding subsection (1):

(a) any fee, charge or any sum paid or unpaid under the repealed Companies Act 1965 on the date immediately before the coming into operation of the relevant provision of this Act shall, in respect of the corresponding period, be deemed to have been paid or unpaid under the provisions of this Act;

(b) any pending application to the Minister or the Registrar under the Companies Act 1965 immediately before the commencement of this Act shall be treated as though this Act has not been enacted; and

(c) any approval, direction, decision, notification, exemption and other executive acts, howsoever called, made, given or done under or in accordance with, or by virtue of the corresponding provisions of this Act by the Minister, the Commission or the Registrar, and shall continue to remain in full force and effect in

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