A New Dawn for Business
in Malaysia
("the Bill") was passed by the House
of Senate on April 29, 2016, and
became an official Act of Parliament on
September 15, 2016. The Companies
Commission of Malaysia announced that
the new Companies Act 2016 would take
effect on January 31, 2017, in stages.
The new Companies Act 2016 marks
the beginning of a total new regulatory
regime in Malaysia.
changes in the new Companies Act 2016,
with regard to the incorporation of a
company and the maintenance of it.
Private Company
Section 14(1) provided that a company
should be incorporated by at least two
people. Thus, there must be at least two
directors in one company.
However, the new Companies Act
2016, Section 9, provides that one
of the essential requirements to form
a company is one or more directors.
Further, Section 196 (1) states that a
private company should have at least
one director.
Therefore, these two sections have
clearly been drafted in such a way to
make it easy for local or foreign investors
to form a private company in Malaysia.
virtue of Section 122 (1) had required
that all of the directors must have a
principal place of residence, or at the
very least a place of residence, within
Malaysia.
Conversely, under the new act,
by virtue of Section 196(4)(a), only a
minimum number of directors is required
to have a principal place of residence in
Malaysia. Therefore, under the new act,
it is not a requirement for all directors
to have a principal place of residence
in Malaysia.
Further, the new Companies Act
2016 covers the issue of a "shadow
director." This can be seen in Section 2
the person who is occupying the position
and the person whose directions or
instructions the majority of directors are
accustomed to follow.
The key change and the only
difference in the definition of director
under Section 2 of the new act is the
insertion of the word "majority." By
such insertion, in order to prove that
a person is a "shadow director," one
needs to look at the circumstances of
the case to ascertain whether or not the
majority of the directors are accustomed
to act in accordance with that person's
instruction. If the answer is affirmative,
that person is a "shadow director" and
will be subjected to similar liabilities
as the directors of the company. This
is notwithstanding the fact that the
company has never officially appointed
him as director.
1965, the companies in Malaysia were
"identified" and "controlled" by their
Memorandum of Association and Article
of Association.
However, under this new regime, the
need for a Memorandum of Association
and Article of Association has been
abolished.
solicitor of the High Court of Malaya. He is also a
member of the Malaysian Bar. He is a partner at
J. Lee & Associates, where he is the head of the
firm's litigation department.
Solicitor of the High Court of Malaya. He is also a
member of the Malaysian Bar. As a legal assistant,
he is handling the majority of the conveyancing
and litigation matters of the firm.
A-16-13, Tower A
No.5 Jalan Bangsar Utama 1
Kuala Lumpur, Malaysia
jlee-associates.com