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Frequently Asked Questions

Malaysia Companies Act 1965
Interpretations of Terms
Management and Administration
Wind Up of Company
Other worthy notes in Malaysia Companies Act 1965

 

Company Formation in Malaysia
What is Company Secretary?
Who can be a Company Secretary?
Yes, how and where do I form a business in Malaysia?
What is the requirement to become Directors, Subscribers and Secretary(ies)?
 


Interpretation of Terms

Definition of subsidiary and holding company

  1. For the purposes of this Act, a corporation shall, subject to subsection (3), be deemed to be a subsidiary of another corporation, if –
  1. that other corporation -
  1. controls the composition of the board of directors of the first mentioned corporation
  2. controls more than half of the issued share capital of the first-mentioned corporation; or
  3. holds more than half of the issued share capital of the first-mentioned corporation (excluding any part thereof which consists of preference shares); or
  1. the first-mentioned corporation is a subsidiary of any corporation which is that other corporation subsidiary.
  1. For the purposes of subsection (1), the composition of a corporation’s board of directors shall be deemed to be controlled by another corporation if that other corporation by the exercise of the some power exercisable by it without the consent or concurrence of any other person can appoint or remove all or a majority of the directors, and for the purposes of this provision that other corporation shall be deemed to have power to make such an appointment if –
  1. a person cannot be appointed as a director without the exercise in his favour by that other corporation of such a power; or
  2. a person’s appointment as a director follows necessarily from his being a director or other officer of that other corporation.
  1. in determining whether one corporation is a subsidiary of another corporation-
  1. any shares held or power exercisable by that other corporation in a fiduciary capacity shall be treated as not held or exercisable by it;
  2. subject to paragraphs (c) and (d), any shares held or power exercisable
  1. by any person as a nominee for that other corporation (except where that other corporation is concerned only in a fiduciary capacity;) or
  2. by, or by a nominee for, a subsidiary of that other corporation, not being a subsidiary which is concerned only in a fiduciary capacity, shall be treated as held or exercisable by that other corporation;
  1. any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first-mentioned corporation or of a trust deed for securing any issue of such debentures shall be disregarded; and
  2. any shares held or power exercisable by, or by a nominee for, that other corporation or its subsidiary (not being held or exercisable as mentioned in paragraph (c) shall be treated as not held or exercisable by that other corporation if the ordinary business of that other corporation.

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 auditor’s 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

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

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

articles
means articles of association;

banking corporation
means a licensed bank, a licensed merchant bank and Islamic bank;

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 or to be received by it in response to an invitation to the public to subscribe for or purchase debentures of the corporation;

certified
in relation to a copy of a documents, 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;

company
means a company incorporated pursuant to this Act or pursuant to 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 under take 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 or outside Malaysia and includes any foreign company but does not include;

  1. any body corporate that is incorporated within Malaysia and is buy 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;
  2. any corporation sole;
  3. any society registered under any written law relating to co-operative societies; or
  4. 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 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;

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 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 elation 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

  1. a company, corporation, society, association, or other body incorporated outside MALAYSIA; or
  2. an unincorporated society, association, or other body which under the law of its place of origin may 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.

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

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

memorandum
means memorandum of association;

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;

officer
in relation to a corporation includes:-

  1. any director, secretary or employee of the corporation;
  2. a receiver and manager of any part of the undertaking of the corporation appointed under a power contained in any instrument; and
  3. any liquidator of a company appointed in a voluntary winding up but does not include
  4. any receiver who is not also a manager;
  5. any receiver and manager appointed by the Court; or
  6. any liquidator appointed by the Court or by the creditors.

official receiver
means the Official Assignee, Deputy Official Assignee, Senior Assistant Official Assignee, Assistant Official Assignee, Bankruptcy Officer and any other officer appointed under the Bankruptcy Act 1957;

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 acting in a professional capacity;

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

regulations
means regulation under this Act;

rules
means rules of court;

statutory meeting

means the meeting referred to in section 142;

statutory report
means the report referred to in section 142;

Table A
means Table A in the fourth Schedule;

unlimited company
means a company formed on the principal of having no limit placed on the liability of its members.

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Management and Administration

Office and Name
Registered office of company

119

  1. A company shall as from the day on which it begins to carry on business or as from 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 of the company who is in default shall be guilty of an offence against this Act.

(Am. Act A 616)

Penalty: One thousand Ringgit Default penalty

120

  1. Notice in the prescribed form of the situation of the registered office, the day and hours during which it is open and accessible to the public, and of any change therein shall be lodge with the Registrar within one month after the date of incorporation or of any such change, as the case may be, but no notice of the days and hours during which the office is open and accessible to the public shall be required if the office is open for at least five hours during ordinary business hours on each day, Saturday, weekly and public holidays excepted.
     
  2. If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

(Am. Act A 616)

Penalty: One thousand Ringgit Default penalty


Publication of name
120

  1. The name of the company (whether or not it is carrying on business under a business name) in legible romanised letters and the company number of the company shall appear on -
  1. its seal; and
  2. all business letters, statements of account, invoices, official notices, publications, bills of exchange, promissory notes, endorsements, cheques, order, 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, order, 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.

  1. If an officer of a company or any person on its behalf -
  1. uses or authorizes the use of any seal purporting to be a seal of the company whereon its name does not so appear;
  2. issues or authorizes the issue of any business letter statement of account invoice or official notice or publication of the company wherein its name and former name (if applicable) is not so mentioned; or
  3. signs issues or authorizes to be signed or issued on behalf of the company any bill of exchange promissory note cheques or other negotiable instruments or any endorsement order receipt or letter of credit wherein its name and former name (if applicable) is not so mentioned,
  4. 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

  1. Every company shall paint or affix and keep or affixed on the outside of every office or place in which its business is carried on, in a prominent position in romanised 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.

    (Am. Act A657)

    Penalty: One thousand Ringgit Default penalty.
     
  2. In this section, "company number" means the number allocated by the Registrar to a company on its incorporation.

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Winding Up

Division Preliminary

211

The winding up of a company may be either -
a. by the Court; or
b. voluntary

Winding up by Court

217

  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 -
  1. the company;
  2. any creditor, including a contingent or prospective creditor, of the company;
  3. a contributory or any person who is the personal representative of a deceased contributory or the trustee in bankruptcy or the official Assignee of the state of a bankrupt contributory;
  4. the liquidator;
  5. the Minister pursuant to section 205 or on the ground specified in section 218 (1) (d) ;
  6. in the case of a company which is a licensed institution, or a scheduled institution in respect of which the Minister charged with responsibility for finance has made an order under section 24 (1) of the Banking and Financial Institution Act 1989, or a non-scheduled institution in respect of which such Minister has made an order under section 93 (1) of that Act, Bank Negara Malaysia; or of any two or more those parties.

Winding up by Voluntary

Circumstances in which company may be wound up voluntarily

254

  1. A company may be wound up voluntarily -
  1. when the period, if any, fixed for the duration of the company by memorandum or articles expires, or the event, if any, occurs, on the occurrence of which the memorandum or articles 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
  2. if the company so resolves by special resolution.
  1. A company shall -
  1. within seven days after passing of a resolution for voluntarily winding up lodge a printed copy of the resolution with the Registrar and
  2. within ten days after the passing of the resolution give notice of the resolution in a newspaper circulating generally throughout MALAYSIA
     

Provisional liquidators

255

  1. Where the directors of a company have made a statutory declaration in the prescribed form which has been lodged with the Registrar and with the Official Receiver -
  1. that the company cannot by reason of its liabilities continue its business; and
  2. that meetings of the company and of its creditors have been summoned for a date within one month of the date of the declaration, the directors shall forthwith appoint an approved liquidator to be the provisional liquidator.
  1. A provisional liquidator shall have and may exercise all functions and powers of a liquidator in a creditors’ winding up subject to such limitations and restrictions as may be prescribed by the rules.
  2. The appointment of a provisional liquidator under this section shall continue for one month from the date of his appointment or for such further period as the Official Receiver may allow in any particular case or until the appointment of a liquidator (whichever first occurs).
  3. Notice of the appointment of a provisional liquidator under this section together with the copy of declaration lodged with the Registrar shall be advertised within fourteen days of the appointment of the provisional liquidator in some newspaper circulating generally throughout MALAYSIA.
  4. A provisional liquidator shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is prescribed.

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Other Worthy Notes in Malaysia Companies Act 1965

Since 16th April,2002 Registrar Of Companies (R.O.C) has changed to Suruhanjaya Syarikat Malaysia (S.S.M)

Section 16 (2)
- Statutory Declarations

Section 139 (1C)(1D)(1E)
- Secretary

Section 125(1)
- Undischarged bankrupts acting as directors.

DIVISION 2 Section 122
- Director And Officers

Section 122A
- "Persons connected with a director"

Section 132
- As to duty and liability of officers

Section 139
- Secretary

Section 139A
- Qualification for company secretary

Section 430
- FOURTH SCHEDULE


Statutory Declarations [Section 16 (2)]

The person named in the articles as the first secretary of the company shall lodge with the Registrar a declaration in the prescribed form stating that all or any of the requirement of this Act have been complied with and containing such information as may be prescribed, and the Registrar may accept such a declaration as sufficient of compliance.

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Secretary [Section 139 (1C) (1D) (1E)]

(1C) Notwithstanding subsection (1B) where none of the directors of the company can be communicated with at the last-known residential address, the secretary may, notwithstanding section 141 (6), lodge with the Registrar a notice in the prescribed form notifying the Registrar of that fact of his intention to vacate the office of secretary.

(1D) Where the secretary has lodged a notice in accordance with subsection (1C), the secretary shall cease to be the secretary of the company on the expiry of one month from the date of the notice.

(1E) Nothing in subsections (1C) and (1D) shall relieve the secretary from liability for any act or omission done before the secretary vacated that office

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Undischarged bankrupts acting as directors. [Section 125 (1)]

125. (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.

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DIVISION 2
Director And Officers [Section 122]


122.

  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.

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

  1. The first directors of a company shall be named in the memorandum or articles of the company.

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"Persons connected with a director"
[Section 122A]

  1. For the purposes of this Division a person shall be deemed to be connected with a director if he is:-
  1. a member of that director’s family: or
  2. a body corporate which is associated with that that director: or
  3. a trustee of trust (other than trustee for an employee share scheme or pension scheme) under which that director or a member of his family is a beneficiary; or
  4. a person of that director or a partner of a person connected with that director.
  1. In subsection (1) (a), "member of that director's family" shall include his spouse, parent, child (including adopted child and step-child), brother, sister and the spouse of his child, brother or sister.
  2. For the purposes of subsection (1) (b), a body corporate is associated with a director if:-
  1. the body corporate is accustomed or is under an obligation, whether formal or in formal, or its directors are accustomed, to act in accordance with the directions, instructions or wishes of that director; or
  2. that director has a controlling interest in the body corporate; or
  3. 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.

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As to duty and liability of officers [Section 132]

  1. A director shall at all times acts honestly and use reasonable diligence in the discharge of the duties of his office.
  2. An officer or agent of a company or officer of the Stock Exchange shall not make improper use of any information acquired by virtue of his position as an officer or agent of the company or officer of the Stock Exchange to gain directly or indirectly an advantage for himself or for any other person or to cause detriment to the company.
  3. An officer or agent or officer of Stock Exchange who commits a breach of this section shall be:-
  1. liable to the company for any profit made by him or for any damage suffered by the company as a result of the breach; and
  2. guilty of an offence against this Act.
    Penalty: Imprisonment for five years or thirty thousand Ringgit.
  1. (Repealed by Act A616)
  2. This section is in addition to and not in derogation of any other written law or rule of law relating to the duty or liability of directors or officers of a company.
  3. In this section :-
    "Officer" includes a person who at any time has been an officer of the company; and

    "Agent" includes a banker, advocate and solicitor, auditor, accountant or a stockbroker of the corporation and any person who is or at any time in the preceding six months has been knowingly connected with the corporation and has information which:-
  1. he holds by virtue of being connected with the corporation;
  2. it would be reasonable to expect a person so connected and in the position by virtue he is so connected not to disclose except for the proper performance of the functions attaching to that position: and
  3. he knows is unpublished price sensitive information in relation to securities of the corporation.

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Secretary [Section 139]

  1. Every company shall have on or more secretaries each of whom shall be natural person of full age who has his principal or only place of residence in Malaysia.

1A. The first secretary of a company shall be named in memorandum or articles of the company.

1B. The office of secretary of a company shall not left vacant for more than one month at any one time.

1C. Notwithstanding subsection (1B), where none of the directors of the company can be communicated with at the last-known residential address, the secretary may, notwithstanding section 141 (6), lodge with the Registrar a notice in prescribed form notifying the Registrar of that fact and of his attention to vacate the office of secretary.

1D. Where the secretary has lodged a notice in accordance with subsection (1C), the secretary shall cease to be the secretary of the company on the expiry of one month from the date of the notice.

1E. Nothing in subsection (1C) and (1D) shall relieve the secretary from liability for any act or omission done before the secretary vacated that office.

  1. Subsection (1) shall not operate to prevent a corporation which acting as the secretary of a company immediately before the commencement of this Act from continuing to act as secretary of that company for a period of twelve months after the commencement of this act.
  2. The secretary or secretaries shall be appointed by the directors and at least one of those secretaries shall be present at the registered office of the company by himself or his agent or clerk on that days and at the hours during which the registered office is to accessible to the public.
  3. Subject to subsection (1B), anything required or authorized to be done by or in relation to the secretary may, if the office is vacant or for any other reason the secretary is not capable of acting, be done by or in relation to any assistant or deputy secretary or, if there is no assistant or deputy secretary capable to acting, by or in relation to any officer of the company authorized generally or specially in that behalf by the directors.
  4. A provision requiring or authorizing a thing to be done by or in relation to a director and the secretary shall not satisfied by its being done by or in relation to the same person acting both as directors and as, or in place of the secretary.
  5. Every person shall, before he is appointed a secretary of a company, make a declaration in the prescribed form that he is not contravention of sections 139A and 139C and that he consents to act as a secretary of the company.

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Qualification for company secretary
[Section 139A]

No person shall act as a secretary of a company unless:-

  1. he is a member of a professional body, or any other body, which has for the time being been prescribed by the Minister by notification published in the Gazette; or
  2. he is licensed by the Registrar for that purpose.

Provided that a person who is a secretary of the company before the coming into operation of this section and who is not a member of a professional or other body as prescribed by the Minister may continue to act as the secretary for that company for a period of not more than twelve months after the coming into operation of this section unless he has obtained a license pursuant to paragraph (b).

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FOURTH SCHEDULE [Section 430]

TABLE A
REGULATIONS FOR MANAGEMENT OF COMPANY LIMITED BY SHARES
Interpretation

Articles 95.The secretary shall in accordance with the act be appointed by such term, at such remuneration, and upon such conditions as they may think fit, and any secretary so appointed may be removed by them.

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