Malaysia was ranked 23rd in the world in the World Bank’s Ease of Doing Business Index. To further improve this standing, the Malaysian government continues to find ways to make Malaysia more attractive to local and foreign investors and entrepreneurs, including the revamped Company Law 2017.
The latest step towards this is the implementation of the Companies Act 2016 (CA 2016) to replace the 50-year-old Companies Act 1965 (CA 1965).The CA 2016 received Royal Assent on 31 August 2016 and was gazetted on 15 September 2016. Staggered implementation started from 31 January 2017.
The new Act aims to provide a better regulatory framework to facilitate the starting of a company and accord better protection to corporate directors and other stakeholders.
What’s MyCoID about?
The MyCoID 2016 portal of the Companies Commission of Malaysia was launched along with the CA 2016 to simplify the whole process of setting up a company. The portal will also be the channel for communication and lodgement of statutory information of the company.
Starting a company begins with the submission of a name through the MyCoID portal. The portal will immediately indicate if the name is available, already taken, or too similar to an existing company. Promoters may now also set up companies.
Once the preferred name has been approved, the company may be registered as a single member company or a public company. For a single member company, only one promoter is required and he will be the shareholder and director.
Business registration made simple
For public companies, the requirement of having at least two directors and shareholders remain. However, there is now no age limit for directors. Furthermore, promoters and directors only need to submit Statements of Compliance instead of the previously required Statutory Declarations.
At this stage, new companies will be issued with a ‘Notice of Registration’ instead of a ‘Certificate of Registration’. Upon registration, companies no longer need to state their authorised capital.
Similarly, shares in new companies no longer need to have a nominal value. Companies also do not have to submit any Memorandum of Association (M&A) and Articles of Association or nominate a company secretary at this time. These can all be done later.
How it affect corporate governance?
Under the new CA 2016, only public companies need to hold Annual General Meetings. Private companies may choose to make decisions either through meetings of members, or by circulation of written resolutions. Procedures for share capital reduction, winding up, lodgement of annual returns and financial statements have also been simplified and streamlined.
Several provisions have also been included in the CA 2016 to enhance corporate governance and responsibility. These include additional powers for the Registrar to remove directors for contravention of duties under the Act (for instance, if the directors have been convicted of bribery or if two of their companies had been liquidated in the last five years).
The Act also provides for more transparency regarding fees and other payments and benefits to directors. It also calls for openness on service contracts and transactions with directors, substantial shareholders or connected persons.
Overall, the new Company Act 2016 and its complementary portal MyCoID is instrumental in further improving the business environment in Malaysia, for entrepreneurs and investors alike.
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