Seminar & Research On The Companies Act 2016: Implementation & Challenges. Organized by

Transcription

1 Seminar & Research On The Companies Act 2016: Implementation & Challenges Organized by Centre for Continuing Legal Education(CCLE) Faculty of Law Universiti Teknologi MARA Shah Alam 03 April 2017 YCA

2 Incorporation & Company s Constitution under the Companies Act 2016 : Moving Forward By: Dr Yang Chik Adam Faculty of Law Multimedia University Melaka 03 April 2017 YCA

3 Line of Discussion : Incorporation & Company s Constitution under the Companies Act 2016 (CA 2016): Moving Forward 1 Introduction 1.1 Process, procedure and requirements for incorporation: 1.2 requirement for company secretary; 1.3 one-member company legal rules and implications of a company; 1.4 constitution of a company; 1.5 pre-incorporation contract. 1.6 Conclusion YCA

4 1 Introduction Companies Act 2016 came a long way since 2013 (Companies Bill 2013). Companies Act 2016 received Royal Assent on 31 August 2016 Published in the Gazette on 15 September 2016 as Companies Act 2016 (CA 2016) Came into effect in stages from January 31, One of the objective of CA 2016 is self-governance and aims to, among others, protect shareholders interests, ensure accountability of directors, and increase the ease of doing business in Malaysia. YCA

5 1.1 Process, procedure and requirements for incorporation: CA 2016 simplify the formation and incorporation of companies. - Application for incorporation - s 14 (1), a person - s14 (3)(a)-(f); YCA

6 Continuation 1.1 Process, procedure and requirements for incorporation: No requirement for the following documents: i) Memorandum and Articles of Association; ii) Form 48A Statutory Declaration by promoters and/or directors; iii) Form 6 Declaration of Compliance; and iv) Form 48F Declaration by the Secretary Registration for incorporation s 15 Certificate of incorporation optional upon an application s 17 Effect of incorporation s 18, s 20, s 21 Notice of registration as conclusive evidence s 19 YCA

7 Continuation 1.1 Process, procedure and requirements for incorporation Common Seals s 61 (1) a company may or may not have a common seal. YCA

8 1.2 requirement for company secretary; Section 235(1) a company shall have at least one secretary. Appointment of a secretary by the board s 236(1) The board shall appoint a secretary and determine the terms and conditions of such appointment. Under CA 2016 in relation to company secretary is the implementation of a mandatory registration regime for practicing company secretaries. They have to register with the Registrar of Companies and have their name entered into the register of secretaries practicing certificate. Section 241 requirement to register with Registrar. It is an offence under CA 2016 for a person to act as secretary without registering with the Registrar s 241(8) YCA

9 1.3 one-member company legal rules and implications; Under CA 2016 (s 14) permissible for a director director or a member to form a company. This is applicable only to a private company. In other worlds a private company can be incorporated with one shareholder or one director. For meeting purposes the quorum can be one person. This is new compared with the position under CA 1965 and the common law on meetings which required a minimum quorum of two persons. S 619(1) person(s) holding office prior to CA 2016, shall remain in office as if he had been appointed under this Act. Implications/challenges issues of lack of accountability and transparency. YCA

10 1.4 constitution of a company Memorandum and Articles of Association of a company is replaced as Constitution of a company. Section 31 (1) a company, other than a company limited by guarantee, may or may not have a constitution. A company registered under CA 2016 may adopt a constitution and adoption is to be made by way of special resolution s 32(1) Effect of constitution s 33 Contents of a company s constitution s 35 YCA

11 Continuation 1.4 constitution of a company General transitional provisions s 619(3) CA 2016 shall apply to the Memorandum and Articles of Association of existing companies prior to CA 2016, shall have effect as if made or adopted under the Act, unless otherwise resolved by the company. YCA

12 1.5 pre-incorporation contract. Pre-incorporation contract s 65(1) A contract or transaction that purports to be made by or on behalf of a company at a time when the company has not been formed has effect as a contract or transaction made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract or transaction accordingly. S 65(2) may be ratified by the company after its incorporation and the company shall be bound by the contract or transaction YCA

13 Non-application of doctrine of constructive notice Section 39 states that no person shall be deemed to have notice or knowledge of the contents of the Constitution or any other document relating to a company due to the fact : (a) That the constitution or document has been registered by the Registrar; or (b) That it is available for inspection at the registered office of the company, With the exception of document relating to instrument of charges. YCA

14 1.6 Conclusion CA 2016 among others, aim to strengthen corporate governance and promote accountability of directors when running companies and ease the doing of business as well as make Malaysian company law more competitive and flexible. YCA

15 Thank you YCA