This article is second in a series entitled A New Corporate Landscape: Key Changes under the Companies Bill 2015 that our clients should know about.
Since our first article in this A New Corporate Landscape series, the Companies Bill 2015 has received royal assent and has been gazetted as the Companies Act 2016 (from hereon and the rest of the series, the new Act will be referred to as “CA 2016”).
Once the CA 2016 comes into force, it will bring substantial changes to the manner in which a company is run, or corporate decisions made. Particularly, key changes are brought to the area of meetings and written resolutions.
Key Change 4: AGM requirement for private companies abolished
Under the current Companies Act 1965, it is mandatory to hold an annual general meeting (AGM) to deal with issues such as the laying of accounts, appointment of auditors and retirement/ election of directors. The new CA 2016 will abolish this requirement for private companies, and instead:
- Accounts are to be circulated within 6 months of the financial year-end and lodged with the CCM within a month from circulation;
- Auditors may be appointed first by the Board, and then to be approved by members through an ordinary resolution (simple majority);
- Retirement/ election of directors can be decided by the members by way of written resolution.
Notwithstanding the abolishment of a mandatory AGM, the CA 2016 still allows members holding at least 5% of paid-up capital to request directors to hold a physical meeting where it has been more than 12 months since a meeting requisitioned pursuant to the same section, and the proposed resolution is not defamatory, frivolous or vexatious, or would not be in the company’s best interest.
As with AGMs, the abolishment of unanimous written resolutions applies only to private companies.
Other Meetings and Resolutions Changes
A handful of smaller changes to the procedures for holding and passing of resolutions at general meeting are also brought about by the amendments.
Members (holding 10% of paid-up capital or 5% of voting rights) continue to have the right to requisition for a meeting. Directors are required to issue a notice convening the meeting within 14 days and the meeting shall be held within a further 28 days. This is a shorter time period than that of two months from receipt of the requisition notice, provided in the current Companies Act 1965.
The CA 2016 further does not make it mandatory for all venues of a meeting (where there is more than one) to be in Malaysia, however it does require that the Chairman be at the main venue, which must be within Malaysia. Lastly for our purposes, the CA 2016 also abolishes the requirement that a proxy must be a member or qualified person.
What do these Key Changes mean for you?
The above changes reflect the CA 2016’s key objective of easing the conduct of business. Significantly for you, the lessening of procedural requirements such as the [no need] to hold AGMs for private companies, can translate into lower running costs.
We continue to set out for you some upcoming key changes you should note in terms of running and operating your company in the next issue of The Legal Link. The next article in our series will explore the changes as it pertains to company directors.
Christina Chia – firstname.lastname@example.org
Liew Siew Pen – email@example.com
Joshinae Wong – firstname.lastname@example.org
CCLC Corporate and Commercial advises and supports clients on an extensive range of matters including in mergers and acquisitions, takeovers, security dealings, capital and fund raising, restructuring, joint ventures, financial instruments, and general regulatory and compliance issues.