Accounting Records And Company Auditors

  • Account and Audit – Section 167

    Every company is required to keep, at the company’s registered office or such other place as the directors think fit, the proper accounting records. Such records must be made available for inspection by the company officers and all transactions must be recorded within 60 days of completion of transactions and they must give a true and fair view of state of affairs of the company and explain the company’s transactions.

    Directors of every company shall at some date not later than eighteen months after incorporation and subsequently at least once in every calendar year at intervals of not more than fifteen months, lay a profit and loss account at its AGM.Accounts must be made up to a date not more than 6 months before the AGM

    Profit and loss account and balance sheet – section 169

    Every company and its directors must present an audited profit and loss account and balance sheet together with a directors’ report, signed by the directors, with regard to the state of affairs of the company at the annual general meeting (AGM).The period for such presentation to the AGM IS,

    Within or 18 months after incorporation of a company, and

    Every 5 months and once at least in every calendar year.

  • Appointment of Auditors – section 172

    First Auditors

    The first auditor(s) of the company may be appointed by the board of directors at any time before the first annual general meeting. Any auditor(s) so appointed shall hold office until the conclusion of the first annual general meeting.

    Every so appointed must give notice of consent of the appointment to Companies Commission of Malaysia within 30 days of receipt of the intimation. Beside that the auditor(s) also must provide the consent to act to the company secretary and directors.

  • How Auditor can be Appointed?

    S172

    Appointment of auditor

    First auditors are appointed by the directors within three months of the incorporation

    Then, the auditors are appointed at each Annual General Meeting – AGM

    Office of the auditors term= appointment à following Annual General Meeting – AGM

    In the event of death of any auditor, director may filled the office but it is not compulsory to do so ie the remaining auditors may continue to act until their term of office expires

    If not appointed as required, registrar will do so on the written application of any member

    S9(6) of CA 1965

    A written consent must be obtained before a person can be appointed as an auditor

    It a new auditor is nominated, notice of the nomination must be given by a member at least 21 days before the AGM,

    The act seems to contemplate that individual will be appointed as auditors of companies

    However, it is usual practice to appoint a firm of accountants as auditors

    Such an appoint operates as an appointment of all the partners of the firm at the time as auditors of the company

  • What is The Qualification of an Auditor?

    Approved company auditor

    Requires auditor to be competent, approved by the Minister of Finance (MoF) and must ordinarily be registered as a public accountant with the MIA under the Accountants Act 1967


  • Who Cannot be a Company Auditor?

    S9 – The following cannot be a company auditor:

    (i) He is not an approved auditor

    (ii) He is indebted to the company for an amount exceeding RM2.5K

    (iii) He is:
    a. An officer of the company
    b. A partner, employer or employee of an officer of the company
    c. A shareholder or his spouse is an officer of the company

    (iv) He is responsible for or he is a partner, employee, or employer of a person responsible for the making of the register of members or the register of debenture holders of the company

  • How Auditor can be Removed/Resigned?

    S172(14) – An auditor may resign if he is not the sole auditor of the company or at a general meeting of a company

    S172(11)&(12) – no person shall be appointed as auditor of the company at an AGM other than the retiring auditor unless notice of his nomination of as auditor was given to the company by a member not less than 21 days before meeting

    The company must send a copy of the notice of nomination to the person nominated and to all members at least 7 days before the AGM.

  • What are The Rights & Power of Auditors?

    S174(4)&(5)

    Rights to access accounting book/records, vouchers, and other records of the company and its subsidiaries

    Entitlement to require from any officer of the company and any auditor of a related company or of any subsidiaries, such information and explanation as he desires for the purpose of carrying out his duties

    S174(7)

    The entitlement to attend any general meeting of any company and to speak on any part of the business of that meeting that concern him in his capacity as auditor

    Rights to receive all notices of any other communication relating to any general meeting in which a member entitled to receive

    S172 (6)

    Auditor has a right to be heard at the meeting

  • What are the Duties of Auditors to Company?

    Statutory Duties (S174)

    Duty to carry out audit

    Duty to report to appropriate management

    Duty to be independent

    Duty to use reasonable care and skill

  • What are the Auditor's Duties/Liabilities to Shareholders & Outsiders

    An auditor is under a duty to exercise the appropriate standard of care to shareholders and outsiders.

    Any failure to do that may lead the auditor liable in an action for the tort of negligent

    It was held that a firm of accountant was not liable to outsider investor who had relied on a negligently prepared report. This was because there was no contract between the accountants and outsider and they were under no duty of care.


Company Law In Malaysia

  • Basic Information About Company Law In Malaysia

    A company must have a minimum of two directors, being natural persons of full age and having their principal or only place of residence in Malaysia and not under bankruptcy .Directors need not be shareholders of the company. A director has onerous duties under the Companies Act as in common law. The duties of directors stipulated in the Companies Act are not exhaustive and generally directors are imposed with statutory duties, duty of care and fiduciary duties. In addition, directors are also governed by a Code of Ethics.

    A register of directors is kept at the registered office of the company and is available for public inspection.

    (1) Every company shall have at least two directors, who each has his principal or only place of residence within Malaysia.

    (1A) In subsection (1), “director” shall not include an alternate or substitute director.

    (2) No person other than a natural person of full age shall be a director of a company.

    (3) The first directors of a company shall be named in the memorandum or articles of the company.

    (4) Any provision in the memorandum or articles of a company which was in force immediately before the commencement of this Act and which operated to constitute a corporation as a director of the company shall be read and construed as if it authorized that corporation to appoint a natural person to be a director of that company.

    (5) On the commencement of this Act any corporation which holds office as a director of a company shall cease to hold office and the vacancy may be filled as a casual vacancy in accordance with the articles of the company.

    (6) Notwithstanding anything contained in this Act or in the memorandum or articles of a company or in any agreement with a company, 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 by subsection (1) and any purported resignation or vacation of office in contravention of this section shall be deemed to be invalid.

  • Persons connected with a director

    (1) For the purposes of this Division a person shall be deemed to be connected with a director if he is -

    (a) a member of that director’s family; or
    (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 his family is a beneficiary; or
    (d) a partner of that director or a partner of a person connected with that director.

    (2) In paragraph (1) (a), “a member of that director’s family” shall include his spouse, parent, child (including adopted child and stepchild), brother, sister and the spouse of his child, brother or sister.

    (3) For the purposes of paragraph (1) (b), a body corporate is associated with a director if -

    (a) the body corporate is accustomed or is under an obligation, whether formal or informal, or its directors are accustomed, to act in accordance with the directions, instructions or wishes of that director;
    (b) that director has a controlling interest in the body corporate; or
    (c) that director or persons connected with him, or that director and persons connected with him, are entitled to exercise, or control the exercise of, not less than fifteen per centum of the votes attached to voting shares in the body corporate.

  • Undischarged bankrupts acting as directors

    (1) Every person who being an undischarged bankrupt acts as director of, or directly or indirectly takes part in or is concerned in the management of, any corporation except with the leave of the Court shall be guilty of an offence against this Act.

    Penalty: Imprisonment for five years or one hundred thousand ringgit or both.

    (2) The Court shall not give leave under this section unless notice of intention to apply there for has been served on the Minister and on the Official Receiver and the Minister and the Official Receiver or either of them may be represented at the hearing of and may oppose the granting of the application.

  • About Shelf Companies

    Ready Made or Shelf companies are companies which are already incorporated under the Companies Act, and are available to investors who require a Malaysian company on an urgent basis. These companies are normally dormant and have the minimum number of Malaysians, as required under the Companies Act, being named as the subscribers to the Memorandum of Association and first directors in the Articles of Association of the companies. The cost of the purchase of such companies includes the payment of minimum capital registration fee and statutory minute book, registers and the common seal of the company. The name of the shelf company may be changed to another name subject to the approval of the ROC.

  • About Banking Procedure
    Please download it from the below.
  • Publication Of Name

    (1) The name of the company (whether or not it is carrying on business under a business name) in legible romanized letters and the company number of the company shall appear on-

    (a) its seal; and (b) all business letters, statements of account, invoices, official notices, publications, bills of exchange, promissory notes, endorsements, cheques, orders, receipts and letters of credit of or purporting to be issued or signed by or on behalf of, the company, and if default is made in complying with this subsection the company shall be guilty of an offence against this Act.

    (1A) Where a company has changed its name pursuant to section 23, the former name of the company shall also appear beneath its present name on all documents, business letters, statements of account, invoices, official notices, publications, bills of exchange, promissory notes, endorsements, cheques, orders, receipts and letters of credit of, or purporting to be issued or signed by or on behalf of, the company for a period of not less than twelve months from the date of the change, and if default is made in complying with this subsection the company shall be guilty of an offence against this Act.

    (2) If an officer of a company or any person on its behalf-

    (a) uses or authorizes the use of any seal purporting to be a seal of the company where on its name does not so appear;

    (b) issues or authorizes the issue of any business letter, statement of account, invoice, official notice or publication of the company wherein its name and former name (if applicable) is not so mentioned; or

    (c) signs issues or authorizes to be signed or issued on behalf of the company any bill of exchange, promissory note, cheque or other negotiable instrument or any endorsement, order, receipt or letter of credit wherein its name and former name (if applicable) is not so mentioned, he shall be guilty of an offence against this Act, and where he has signed, issued or authorized to be signed or issued on behalf of the company any bill of exchange, promissory note or other negotiable instrument or any endorsement thereon or order wherein that name and former name (if applicable) is not so mentioned, he shall in addition be liable to the holder of the instrument or order for the amount due thereon unless it is paid by the company.

  • Name to be displayed on all offices

    (3) Every company shall paint or affix and keep painted or affixed on the outside of every office or place in which its business is carried on, in a prominent position in romanized letters easily legible its name, and also, in the case of the registered office, the words “Pejabat Yang Didaftarkan” and if it fails so to do the company shall be guilty of an offence against this Act. Penalty: One thousand ringgit. Default penalty.

    (4) In this section, “company number” means the number allocated by the Registrar to a company on its incorporation.

  • Registered office of company

    (1) A company shall as from the day on which it begin to carry on business or as from the fourteenth day after the date of its incorporation, whichever is the earlier, have a registered office within Malaysia to which all communications and notices may be addressed and which shall be open and accessible to the public for not less than three hours during ordinary business hours on each day, Saturdays, weekly and public holidays excepted.

    (2) If default is made in complying with subsection (1) the company and every officer of the company who is in default shall be guilty of an offence against this Act. Penalty: One Thousand Ringgit. Default penalty.

  • Interpretation

    (1) In this Act, unless the contrary intention appears—”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 made up;” accounts” means profit and loss accounts and balance sheets and includes notes or statements required by this Act (other than auditors’ reports or directors’ reports) and attached or intended to be read with profit and loss accounts or balance sheets;” annual general meeting” in relation to a company means a meeting of the company required to be held by section 143.

  • Annual Return means

    (a) in relation to a company having a share capital, the return required to be made by subsection 165(1); and (b) in relation to a company not having a share capital, the return required to be made by subsection 165(5),and includes any document accompanying the return;

    “appointed date” has the same meaning as is assigned to that expression in the Companies Commission of Malaysia Act 2001 [Act 614];

    “approved company auditor” means a person approved as such by the Minister under section 8 whose approval has not been revoked;

    “approved liquidator” means an approved company auditor who has been approved by the Minister under section 8 as a liquidator and whose approval has not been revoked;

    “articles” means articles of association;

    “banking corporation” means a licensed bank, a licensed merchant bank and an Islamic bank;

    “books” includes any register or other record of information and any accounts or accounting records, however compiled, recorded or stored, and also includes any document;

    “borrowing corporation” means a corporation that is or will be under a liability (whether or not such liability is present or future) to repay any money received or to be received by it in response to an invitation to the public to subscribe for or purchase debentures of the corporation in accordance with Division 4 of Part IV;

  • Branch Register Means

    (a) in relation to a company

    (i) a branch register of members of the company kept in pursuance of section 164; or(ii) a branch register of holders of debentures kept in pursuance of section 70,

    as the case may require; and

    (b) in relation to a foreign company, a branch register of members of the company kept in pursuance of section 342;

    “certified”, in relation to a copy of a document, means certified in the prescribed manner to be a true copy of the document and, in relation to a translation of a document, means certified in the prescribed manner to be a correct translation of the document into the national language or into the English language, as the case requires;

    “charge” includes a mortgage and any agreement to give or execute a charge or mortgage whether upon demand or otherwise;

    “Commission” means the Companies Commission of Malaysia established under the Companies Commission of Malaysia Act 2001;

    “company” means a company incorporated pursuant to this Act or pursuant to any corresponding previous enactment;

    “company having a share capital” includes an unlimited company with a share capital;

    “company limited by guarantee” means a company formed on the principle of having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up;

    “company limited by shares” means a company formed on the principle of having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;

    “contributory”, in relation to a company, means a person liable to contribute to the assets of the company in the event of its being wound up, and includes the holder of fully paid shares in the company and, prior to the final determination of the persons who are contributories, includes any person alleged to be a contributory;

    “corporation” means any body corporate formed or incorporated or existing within Malaysia and includes any foreign company but does not include— or outside

    (a) any body corporate that is incorporated within 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;

    “corresponding previous written law” means any written law relating to companies which has been at any time in force in any part of Malaysia and which corresponds with any provision of this Act;

    “Court” means the High Court or a judge thereof;

    “creditors’ voluntary winding up” means a winding up under Division 3 of Part X, other than a members’ voluntary winding up;

    “debenture” includes debenture stock, bonds, notes and any other securities of a corporation whether constituting a charge on the assets of the corporation or not;

    “default penalty” means a default penalty within the meaning of section 370;

    “director” includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors of a corporation are accustomed to act and an alternate or substitute director;

    “Division” means a Division of this Act and a reference to a specified Division is a reference to that Division of the Part in which the reference occurs;

    “document” includes summons, order and other legal process, and notice and register;

    “emoluments”, in relation to a director or auditor of a company, includes any fees, percentages and other payments made (including the money value of any allowances or perquisites) or consideration given, directly or indirectly, to the director or auditor by that company or by a holding company or a subsidiary of that company, whether made or given to him in his capacity as a director or auditor or otherwise in connection with the affairs of that company or of the holding company or the subsidiary;

    “equity share” means any share which is not a preference share;”exempt private company” means a private company in the shares of which no beneficial interest is held directly or indirectly by any corporation and which has not more than twenty members none of whom is a corporation;

    “expert” includes engineer, valuer, accountant and any other person whose profession or reputation gives authority to a statement made by him;

    “filed” means filed under this Act or any corresponding previous written law;”financial year”, in relation to any corporation, means the period in respect of which any profit and loss account of the corporation laid before it in general meeting is made up, whether that period is a year or not;

  • Foreign Company Means

    (a) a company, corporation, society, association or other body incorporated outside Malaysia; or(b) an unincorporated society, association or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia;

    “guarantor corporation”, in relation to a borrowing corporation, means a corporation that has guaranteed or has agreed to guarantee the repayment of any money received or to be received by the borrowing corporation in response to an invitation to the public to subscribe for or purchase debentures of the borrowing corporation;

    “limited company” means a company limited by shares or by guarantee or both by shares and guarantee;

    “liquidator” includes the Official Receiver when acting as the liquidator of a corporation;

    “lodged” means lodged under this Act or any corresponding previous written law;

    “manager”, in relation to a company, means the principal executive officer of the company for the time being by whatever name called and whether or not he is a director;

    “marketable securities” means debentures, funds, stocks, shares or bonds of any Government or of any local authority or of any corporation or society and includes any right or option in respect of shares in any corporation and any interest as defined in section 84;

    “members’ voluntary winding up” means a winding up under Division 3 of Part X, where a declaration has been made and lodged in pursuance of section 257;

    “memorandum” means memorandum of association;”minimum subscription”—

    (a) in relation to any shares of an unlisted recreational club which are offered to the public for subscription, means the amount stated in the prospectus relating to the offer in pursuance of paragraph

    4(a) of the Fifth Schedule;(b) in relation to any issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, shares made pursuant to the Securities Commission Act 1993 [Act 498], means the amount stated in the prospectus relating to the issue, offer or invitation in pursuance of the requirements of the Securities Commission relating to contents of prospectuses, as the minimum amount which in the opinion of the directors must be raised by the issue of the shares so offered;

    “Minister” means the Minister charged with the responsibility for companies;”office copy”, in relation to any Court order or other Court document, means a copy authenticated under the hand or seal of the Registrar or other proper officer of the Court;

    “officer” in relation to a corporation includes

    (a) any director, secretary or employee of the corporation;(b) a receiver and manager of any part of the undertaking of the corporation appointed under a power contained in any instrument; and(c) any liquidator of a company appointed in a voluntary winding up,

    but does not include

    (d) any receiver who is not also a manager;(e) any receiver and manager appointed by the Court; or(f) any liquidator appointed by the Court or by the creditors;

    “Official Receiver” means the Director General of Insolvency, Deputy Director General of Insolvency, Senior Assistant Directors of Insolvency, Assistant Directors of Insolvency, Insolvency officers and any other officer appointed under the Bankruptcy Act 1967 [Act 360];

    “preference share” means a share by whatever name called, which does not entitle the holder thereof to the right to vote at a general meeting or to any right to participate beyond a specified amount in any distribution whether by way of dividend, or on redemption, in a winding up, or otherwise;

    “prescribed” means prescribed by or under this Act;

    “principal register”, in relation to a company, means the register of members of the company kept in pursuance of section 158;

    “printed” includes typewritten or lithographed or reproduced by any mechanical means;

    “private company” means

    (a) any company which immediately prior to the commencement of this Act was a private company underthe repealed written laws;(b) any company incorporated as a private company by virtue of section

    15; or(c) any company converted into a private company pursuant to section 26(1), being a company which has not ceased to be a private company under section 26 or 27;

    “profit and loss account” includes income and expenditure account, revenue account or any other account showing the results of the business of a corporation for a period;

    “promoter”, in relation to a prospectus issued by or in connection with a corporation, means a promoter of the corporation who was a party to the preparation of the prospectus or of any relevant portion thereof; but does not include any person by reason only of his acting in a professional capacity;

    “prospectus” means any prospectus, notice, circular, advertisement or invitation inviting applications or offers from the public to subscribe for or purchase or offering to the public for subscription or purchase any shares in or debentures of or any units of shares in or units of debentures of a corporation or proposed corporation and, in relation to any prospectus registered under the Securities Commission Act 1993, means a prospectus as defined under that Act;

    “public company” means a company other than a private company;

    “registered” means registered under this Act or any corresponding previous written law;

    “Registrar” means the Registrar of Companies as designated under subsection 7(1);

    “regulations” means regulations under this Act;

    “related corporation”, in relation to a corporation, means a corporation which is deemed to be related to the first-mentioned corporation by virtue of section 6;

    “repealed written laws” means the written laws repealed by this Act;

    “resolution for voluntary winding up” means the resolution referred to in section 254;

    “rules” means rules of court;

    “securities” has the same meaning as is assigned to that word in the Securities Commission Act 1993;

    “share” means share in the share capital of a corporation and includes stock except where a distinction between stock and shares is expressed or implied;

    “statutory meeting” means the meeting referred to in section 142;

    “statutory report” means the report referred to in section 142;

    “Subdivision” means a Subdivision of this Act and a reference to a specified subdivision is a reference to that Subdivision of the Division in which the reference occurs;

    “Table A” means Table A in the Fourth Schedule;

    “this Act” includes any regulations;

    “transparency”, in relation to a document, means

    (a) a developed negative or positive photograph of that document (in this definition referred to as an “original photograph”) made on a transparent base, by means of light reflected from or transmitted through the document;
    (b) a copy of an original photograph made by the use of photo-sensitive material (being photo-sensitive material on a transparent base) placed in surface contact with the original photograph; or
    (c) any one of a series of copies of an original photograph, the first of the series being made by the use of photosensitive material (being photo-sensitive material on a transparent base) placed in surface contact with a copy referred to in paragraph
    (d), and each succeeding copy in the series being made, in the same manner from any preceding copy in the series;

  • Trustee Corporation Means

    (a) a company registered as a trust company under the Trust Companies Act 1949 [Act 100]; or(b) a corporation that is a public company under this Act or under the laws of any other country, which has been declared by the Minister to be a trustee corporation for the purposes of this Ac

    “unit”, in relation to a share, debenture or other interest, means any right or interest therein, by whatever term called;

    “unlimited company” means a company formed on the principle of having no limit placed on the liability of its members;

    “unlisted recreational club” has the same meaning as is assigned to that expression in the Securities Commission Act 1993;

    “voting share”, in relation to a body corporate, means an issued share of the body corporate, not being

    (a) a share to which, under no circumstances, there is attached a right to vote; or(b) a share to which there is attached a right to vote only in one or more of the following circumstances:

    (i) during a period in which a dividend (or part of a dividend) in respect of the share is in arrears;
    (ii) upon a proposal to reduce the share capital of the body corporate;
    (iii) upon a proposal affecting the rights attached to the share;
    (iv) upon a proposal to wind up the body corporate;
    (v) upon a proposal for the disposal of the whole of the property, business and undertakings of the body corporate;
    (vi) during the winding up of the body corporate.

    (1A) In this Act—

    (a) “licensed bank”, “licensed business”, “licensed discount house”, “licensed finance company”, “licensed institution”, “licensed merchant bank”, “licensed money broker”, “nonscheduled institution”, “scheduled business” and “scheduled institution” shall have the meanings assigned thereto in subsection 2(1) of the Banking and Financial Institutions Act 1989 [Act 372]; and
    (b) “Islamic bank” or “Islamic banking business” shall have the meaning assigned thereto in the Islamic Banking Act 1983 [Act 276].

    (2) For the purposes of this Act a person shall not be regarded as a person in accordance with whose directions or instructions the directors of a company are accustomed to act by reason only that the directors act on advice given by him in a professional capacity.

    (3) For the purposes of this Act a statement included in a prospectus or statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included.

    (4) For the purposes of this Act a statement shall be deemed to be included in a prospectus or statement in lieu of prospectus if it is contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.

    (5) For the purposes of this Act any invitation to the public to deposit money with or to lend money to a corporation shall be deemed to be an invitation to subscribe for or purchase debentures of the corporation and any document that is issued or intended or required to be issued by a corporation acknowledging or evidencing or constituting an acknowledgement of the indebtedness of the corporation in respect of any money that is or may be deposited with or lent to the corporation in response to such an invitation shall be deemed to be a debenture, but an invitation to the public by a prescribed corporation as defined in subsection 38(7) shall not be deemed to be an invitation to the public to deposit money with or to lend money to the corporation for the purpose of Division 4 of Part IV.

    (6) Any reference in this Act to offering shares or debentures to the public shall, unless the contrary intention appears, be construed as including a reference to offering them to any section of the public, whether selected as clients of the person issuing the prospectus or in any other manner; but a bona fide offer or invitation with respect to shares or debentures shall not be deemed to be an offer to the public if it is—

    (a) an offer or invitation to enter into an underwriting agreement;
    (b) made to a person whose ordinary business it is to buy or sell shares or debentures whether as principal or agent;
    (c) made to existing members or debenture holders of a corporation and relates to shares in or debentures of that corporation and is not an offer to which section 46 of the Securities Commission Act 1993 applies; or
    (d) made to existing members of a company within the meaning of section 270 and relates to shares in the corporation within the meaning of that section.

    (7) Unless the contrary intention appears any reference in this Act to a person being or becoming bankrupt or to a person assigning his estate for the benefit of his creditors or making an arrangement with his creditors under any written law relating to bankruptcy or to a person being an undischarged bankrupt or to any status, condition, act, matter or thing under or in relation to the law of bankruptcy shall be construed as including a reference to a person being or becoming bankrupt or insolvent or to a person making any such assignment or arrangement or to a person being an undischarged bankrupt or insolvent or to the corresponding status, condition, act, matter or thing (as the case requires) under any written law relating to bankruptcy or insolvency.


Power of Companies in Malaysia

  • Details
    1. To carry on any other business which may seem to the company capable of being conveniently carried on in connection with its business or calculated directly or indirectly to enhance the value of or render profitable any of the company’s property or rights.

    2. To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which the company is authorized to carry on, or possessed of property suitable for the purposes of the company.

    3. To apply for, purchase, or otherwise acquire any patents, patent rights, copyrights, trade marks, formulas, licenses, concessions, and the like, conferring any exclusive or non-exclusive or limited right to use, or any secret or other information as to, any invention which may seem capable of being used for any of the purposes of the company, or the acquisition of which may seem calculated directly or indirectly to benefit the company; and to use, exercise, develop, or grant licenses in respect of, or otherwise turn to account, the property, rights, or information so acquired.

    4. To amalgamate or enter into partnership or into any arrangement for sharing of profits, union of interest, co-operation, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in or about to carry on or engage in any business or transaction which the company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit the company.

    5. To take, or otherwise acquire, and hold, shares, debentures, or other securities of any other company.

    6. To enter into any arrangements with any Government or authority, supreme, municipal, local, or otherwise, that may seem conducive to the company’s objects, or any of them; and to obtain from any such Government or authority any rights, privileges, and concessions which the company may think it desirable to obtain; and to carry out, exercise, and comply with any such arrangements, rights, privileges, and concessions.

    7. To establish and support or aid in the establishment and support of associations, institutions, funds, trusts, and conveniences calculated to benefit employees or directors or past employees or directors of the company or of its predecessors in business, or the dependents or connections of any such persons; and to grant pensions and allowances, and to make payments towards insurance; and to subscribe or guarantee money for charitable or benevolent objects, or for any exhibition, or for any public, general, or useful object.

    8. To promote any other company or companies for the purpose of acquiring or taking over all or any of the property, rights, and liabilities of the company, or for any other purpose which may seem directly or indirectly calculated to benefit the company.

    9. To purchase, take on lease or in exchange, hire, and otherwise acquire any movable or immovable property and any rights or privileges which the company may think necessary or convenient for the purposes of its business, and in particular any land, buildings, easements, machinery, plant, and stock in trade.

    10. To construct, improve, maintain, develop, work, manage, carry out, or control any buildings, works, factories, mills, roads, ways, tramways, railways, branches or sidings, bridges, reservoirs, watercourses, wharves, warehouses, electric works, shops, stores, and other works and conveniences which may seem calculated directly or indirectly to advance the company’s interests; and to contribute to, subsidies, or otherwise assist or take part in the construction, improvement, maintenance, development. working, management, carrying out, or control thereof.

    11. To invest and deal with the money of the company not immediately required in such manner as may from time to time be thought fit.

    12. To lend and advance money or give credit to any person or company; to guarantee and give guarantees or indemnities for the payment of money or the performance of contracts or obligations by any person or company; to secure or undertake in any way the repayment of moneys lent or advanced to or the liabilities incurred by any person or company; and otherwise to assist any person or company.

    13. To borrow or raise or secure the payment of money in such manner as the company may think fit and to secure the same or the repayment or performance of any debt, liability, contract, guarantee or other engagement incurred or to be entered into by the company in any way and in particular by the issue of debentures perpetual or otherwise, charged upon all or any of the company’s property (both present and future), including its uncalled capital; and to purchase, redeem, or pay off any such securities.

    14. To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the company’s capital or any debentures, or other securities of the company, or in or about the organization, formation, or promotion of the company or the conduct of its business.

    15. To draw, make, accept. endorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, and other negotiable or transferable instruments.

    16. To sell or dispose of the undertaking of the company or any part thereof for such consideration as the company may think fit, and in particular for shares, debentures, or securities of any other company having objects altogether or in part similar to those of the company.

    17. To adopt such means of making known and advertising the business and products of the company as may seem expedient.

    18. To apply for, secure, acquire by grant, legislative enactment, assignment, transfer, purchase, or otherwise, and to exercise, carry out, and enjoy any charter, license, power, authority, franchise, concession, right, or privilege, which any Government or authority or any corporation or other public body may be empowered to grant; and to pay for, aid in, and contribute towards carrying the same into effect; and to appropriate any of the company’s shares, debentures, or other securities and assets to defray the necessary costs, charges, and expenses thereof.

    19. To apply for, promote, and obtain any statute, order, regulation or other authorization or enactment which may seem calculated directly or indirectly to benefit the company; and to oppose any bills, proceedings, or applications which may seem calculated directly or indirectly to prejudice the company’s interests.

    20. To procure the company to be registered or recognized in any country or place outside Malaysia.

    21. To sell, improve, manage, develop, exchange, lease, dispose of, turn to account, or otherwise deal with all or any part of the property and rights of the company.

    22. To issue and allot fully or partly paid shares in the capital of the company in payment or part payment of any movable or immovable property purchased or otherwise acquired by the company or any services rendered to the company.

    23. To distribute any of the property of the company among the members in kind or otherwise but so that no distribution amounting to a reduction of capital shall be made without the sanction required by law.

    24. To take or hold mortgages, liens, and charges to secure payment of the purchase price, or any unpaid balance of the purchase price, of any part of the company’s property of whatsoever kind sold by the company, or any money due to the company from purchasers and others.

    25. To carry out all or any of the objects of the company and do all or any of the above things in any part of the world and either as principal, agent, contractor, or trustee, or otherwise, and by or through trustees or agents or otherwise, and either alone or in conjunction with others.

    26. To do all such other things as are incidental or conducive to the attainment of the objects and the exercise of the powers of the company.


FAQ About Company Law In Malaysia

  • What does it mean by holding company?
    Is not directly defined under section 5

    S5(1)(a)- Deemed to be a subsidiary of a holding company if the holding co. with respect to the subsidiary, if the holding company:
    a) Controls the composition of the BOD of the subsidiary company
    b) Controls more than half of the voting power of the subsidiaries
    c) Controls more than half of the issued share capital of the subsidiaries

    S5(1)(b) – a corporation is also deemed to be a subsidiary if it is a subsidiary of a holding company that itself a subsidiary.

  • Which section state about the ultimate holding company and wholly owned subsidiary?
    S5A – A corporation is an ultimate holding company of another corporation if:
    a. That other corporation is a sub is that holding company
    b. The holding company is not itself a subsidiary of another

    S5B- A corporation is wholly owned subsidiary if none of its members is a person other than
    a. Its holding company
    b. A nominee of its holding company
    c. Another wholly owned subsidiary of the holding company, or
    d. Nominee of such a wholly owned subsidiary

  • What does it mean by related corporation?
    S6 – Corporation is deemed to be related to each other where a corporation:
    a. Is the holding company of another corporation
    b. Is a subsidiary of another corporation
    c. Is a subsidiary of the holding company of another corporation
  • What does it mean by foreign company?
    S4(1) – Foreign Company means:

    a. A company, corporation, society, association, or other body incorporated outside Malaysia
    b. An incorporated society, association or other body which under the law of its place of origin may sue and be sued, or hold property in the name of the secretary or other officer of the body of or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia.

  • What is the definition of winding up?
    There are two types of winding up:
    a. Compulsory Winding Up
    It is a winding up by an order of the court which is initiated by the presentation of a petition by a person who is entitled to do so.

    b. Voluntary Winding
    A voluntary winding up should commence where a provisional liquidator has been appointed before the resolution for voluntary winding up was passed and in any other case, at the time of passion of the resolution for voluntary winding up. S255(6)

  • When can a company winding up by the court under section 218?
    There are a few circumstances in which company may be wound up by court.
    (1) The court may order the winding up if: (MC DOS D)

    (a) The company has by special resolution resolved that it be wound up by the Court
    (b) The company has defaulted in lodging the statutory report or in holding the statutory meeting
    (c) The company does not commence business within a year from its incorporation or suspends its business for a whole year
    (d) The number of members is reduced below two
    (e) The company is unable to pay its debt
    (f) The Directors have acted in their own interests rather than in the interests of the members as a whole, or in any other manner whatsoever which appears to be unfair or unjust to other member.

  • What are two things that must be shown before the court make a winding up order on a petition?
    Two things to be shown before the court will make a winding up order on a petition are:

    a. That the petitioner had the right to present the petition
    b. That one of the grounds set out in the Acts as justifying a winding up has been made out.

  • When a company is considered as unable to pay its debt?
    A company is deemed to be unable to pay its debt if any one of the following circumstances is shown to exist:

    a. The petitioner has delivered to the company at its registered office, a written demand for payment of all debt owing to him of at least RM500 and within the ensuing three weeks, the company has neither paid the debt nor given security for the payment
    b. A judgment has been obtained against the company for the debt and an attempt to obtain payment out of the company’s assets remain unsatisfied, or
    c. The court is satisfied that the company is unable to pay its debt.

  • Who are the parties who can apply for winding up of an company?
    Section 27(1) of CA 1965 provides that the following persons may petition for the winding up of a company:

    a. The company itself
    b. Any creditor, including a contingent or prospective creditor of the company
    c. A contributor or any person who is the personal representative of a deceased contributory or the trustee in bankruptcy or the Official Assigner of the estate of a bankrupt contributory.
    d. The liquidator
    e. The minister pursuant to section 205 or on the ground specified in section 218(1)(d)
    f. Bank Negara Malaysia
    g. The registrar on the grounds specified in section 218(1)(m) or (n)

  • What does it mean by contributory in winding up process?
    Contributory include every person liable to contribute to the assets of the company in the events of its being wound up.

    It includes the present members and certain past members of the company

    It has been held that a holder of fully paid up share is a contributory and entitled to present a petition.

    Section 217(2) provides exceptions whereby contributory may not present a petition on any of the grounds specified in section 218(a),(b),(c),(e) or (l) unless
    a. The number of members is reduced below two, or

    b. The shares allocated to the contributor, or have been held by him and registered in his name at least 6 months during the 18 months before the presentation of the petition or have devolved on him through the death or bankruptcy of a former holder.

  • How voluntary winding up can happen?
    It happened where a provisional liquidator has been appointed before the resolution for voluntary winding up was passed and in any other case, at the time of passion of the resolution for voluntary winding up (S255(6)).

    The resolution may be of two types:
    a. Ordinary resolution
    It passed when the articles provide that the company is to be wound up when a specified purpose has been achieved or a specified period has elapsed.

    b. Special Resolution

    It requires no ground for winding up and is used in any other case such as a solvent liquidation.

    Two types of voluntary winding up are:
    a. Member Voluntary Winding Up – where the company is solvent
    b. Creditor Voluntary Winding Up – where the company is insolvent

  • What are the effects of an order for winding up?
    If an order is made it is retrospective in effect to the date on which the petition was presented to their court which becomes the date of commencement of liquidations (S219(2))

    Among the legal consequences of an order court for winding up are:
    a. The effective dismissal of the directors and employees
    b. A stay of any execution of a judgment against the company and of any legal proceeding in which it is either plaintiff or defendant.
    c. A standstill on any disposition of assets or transfer of shares (unless approved by the court) from the date of commencement of liquidation S226.

  • What are three types of application that commonly used for winding up?
    a. Application by the company

    Section 217(1)(a)
    Allows the company to apply to have itself compulsorily wound up. The general meeting is the appropriate organ to determine that the company be wound up.

    Application by a company for its compulsory winding up is quite rare. Usually, if the members wish to liquidate their company, they will do so by a voluntary winding up. A voluntary winding up does not involve a court hearing and so is cheaper.

    On the other hand, a voluntary winding up can only be initiated by a special resolution which requires 3 quarters majority, whereas under S217(1)(a), a compulsory winding up only requires an ordinary resolution.

    In some circumstances, the members may desire to place the company into liquidation as quickly as possible.

    If this is the case, a compulsory winding up may be preferred over a members’ winding up, because meetings at which ordinary resolutions are to be proposed require less notice than meetings at which it is proposed to pass special resolution

    b. Application by the creditors as a ground for compulsory liquidation

    Section 218(1)(e)
    Usually the vast majority of applications for compulsory winding up are presented by creditors on the grounds, i.e. the company is unable to pay its debt

    S217(1)(b)
    Permits a creditor, a contingent or a prospective creditor to apply for a compulsory winding up. This section enables creditors to apply for a compulsory winding up even though their debts are not immediately due and payable at the date of application
    – Case: RE William Ltd

    It was held that a person who is owed a debt by the company, which is still unpaid at the date of the application for winding up is a creditor

    c. Application by the contributories as a ground for liquidation (S217(1)(C)

    Section 4 (1) defines a contributory to includes
    a. A person liable as a member or past member to contribute to the assets of the company in the event of winding up
    b. A holder of a fully paid shares in the company

    This definition of a contributory, in the case of a company limited by shares, includes persons who at the commencement of the winding up, held either fully paid or partly paid,even though strictly speaking, only a holder of partly paid, is able to contribute an amount on the winding up. Not only the contributories must hold the shares, their names must also be entered in the register of membership.

    S214 (1)
    – Past members may also be liable to contribute to the assets of a company if they were members within one year of the commencement of winding up and the present members are unable to satisfy the full extent of their liabilities.
    – E.g. past member ceased to be a member for 1 or more years before the commencement of the winding up (a) till (g)

    S215
    A contributory’s liabilities is that of a specialty debt. This diminishes the effect of the statute of limitations as a specialty debt can be enforced within 20 years of the liquidator making the call. The debt accrues from the contributory at the time that he or she is liable and becomes payable at the time when calls are made to enforce the liability.

  • What does it mean by contributory in winding up process?
    Contributory include every person liable to contribute to the assets of the company in the events of its being wound up.

    It includes the present members and certain past members of the company

    It has been held that a holder of fully paid up share is a contributory and entitled to present a petition.

    Section 217(2) provides exceptions whereby contributory may not present a petition on any of the grounds specified in

    section 218(a),(b),(c),(e) or (l) unless
    a. The number of members is reduced below two, or
    b. The shares allocated to the contributor, or have been held by him and registered in his name at least 6 months during the 18 months before the presentation of the petition or have devolved on him through the death or bankruptcy of a former holder.

  • What are three classes of shares?
    a. Ordinary shares

    Also known as equity shares
    – Typically carry normal rights without special definitions
    – Equity = Net value of real property= Appraised Property Value-unpaid debts

    b. Preference Shares

    S4 Of CA1965
    It is a share which does not entitle the holder thereof to vote at general meeting or to participate beyond a specified amount in any distributions, whether by way of dividend or redemption in a winding up or otherwise
    – Also known as preferred shares
    – Typically a higher ranking share than ordinary share
    – May or may not carry voting right
    – Will paid out in assets before the common stockholders after debt holders in winding up

    c. Redeemable shares

    Are those shares that carry a right by the company to buyback the shares

  • What does section 18(1)(c) said about capital structure?
    It stated that the amount of capital which a company proposes to be registered must be stated in the MOA which called authorized capital and the company cannot allot shares more than authorized in its MOA. Any such allotment is void.
  • What section described about the power of the company to alter its share capital?
    S62 of CA 1965
    – A company may alter its authorized capital in general meeting by the creation of new shares or consolidated or divide all or any of its shares capital into shares of larger amount

    S62(1)(C) of CA 1965
    – Fully paid up shares may also be converted into stock. Stock unlike shares, it does not exist as discrete unit but as fund

    S99(1) of CA 1965
    – Shares must be numbered but stock need not be

  • What are three kinds of share capital?
    a. Authorized share capital

    - It is the amount which the company can issue
    – S18(1) Required all companies except unlimited state in MOA amount of share capital.

    b. Issued share capital

    - It is the nominal value of share capital that actually issued.
    – For example, 100 authorized capital of which 50 RM1 share have been issued

    c. Reserve or uncalled capital

    - A company may issue share and not receive the full par value immediately
    – The share issued may be partly paid (paid-up capital)
    – The amount unpaid called reserved @ uncalled capital


Company Statutory Records And Annual Returns

  • Name Display – Section 121
    The name display of the company must be painted and affixed on the outside of every office or place in which the business is carried out in Romanized letters and easily legible by using the words “Registered Office” or “Pejabat Yang Di Daftarkan”.

    Register of Directors,Managers and secretaries – Section 141 (6)

    Every company must keep at its registered office a register of its directors,managers and secretaries containing all particulars in the register as mentioned below:-
    Set Company Register Book
    The Register Of Members (Section 158)
    The Register Of Directors, Managers And Secretaries (Section 141)
    The Register Of Debenture Holders (Section 70)
    The Register Of Charges (Section 115)
    The Register of Accounts (Section 167)
    The Register Of Substantial Shareholdings, Debentures and interests (Section 69L) – for Public Company only.
    Set Of Minute Book
    The Minute Books of proceedings of General Meetings and meetings of its directors and of its managers (if any) (Section 156)
    Set Of Pre-Printed Shares Certificates Book
    Set Of Company Common Seal.

  • Annual Returns of a company

    Every Company having a share capital is required by section 165 of The Companies Act,1965 to prepare an annual return, which must be made up to the date of the Annual General Meeting (AGM) of the company in the year, or a date not later than 14th day after the date of the AGM.

    The annual return, accompanied by a certificate and a list of members, signed by a director, or by the manager or secretary of the company, must be lodged in duplicate with Companies Commission Malaysia (CCM) within one month after the AGM.

    First AGM to be held within 18 months of incorporation

    Held once every calendar year

    Periods between two AGMs must not be more that 15 months after the preceding AGM.

    An annual return should be accompanied by copies of documents, certificates, financial statements.

    Penalty:RM5,000 / Default Penalty:RM100


Articles of Association

  • About Articles of Association?
    The “Articles of Association”, which constitutes the internal regulations of a company usually contains clauses dealing with under-mentioned matters.

    Every company is required to have a written constitution in the form of the above two documents.

    The name of the company

    The name of each first director (minimum two)

    The name of the first company secretary

    The minimum and maximum number of directors

    The share qualifications of each director, if any

    Name, identity card number (if Malaysian), passport (if foreigner), address and occupation of each subscriber

    Name, designation and address of the witness to the signature of each subscriber

    The “Articles of Association” also includes a provision governing the use of a company seal on certain formal documents such as share certificates.


Memorandum And Articles of Association

  • What Is Memorandum And Articles of Association?
    The “Memorandum of Association” defines the essential components of the structure of the company. Its essential contents are:

    The name of the company (which must end with the words “Sendirian Berhad” if it is a private company, or just “Berhad” if it is a public company);

    The situation of the company’s registered office;

    The objects of the company, i.e the nature of business intended to be carried out;

    That the liability of the members is limited

    The nominal amount of the authorized share capital with which it is proposed to register the company and the division of such capital into shares of a fixed amount; and

    The association clauses

    The “Memorandum of Association” must be signed by at least two subscribers; duly dated. The signature of each subscriber must be witnessed by a third person. Each of the subscribers must undertake to subscribe for one or more shares of the company.

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