CHANGES IN COMPANY INCORPORATION IN MALAYSIA
The new Companies Act 2016 (new CA) provides for easier incorporation of companies compared to the existing Companies Act, 1965 (CA 1965). Be prepared for the change in doing business in Malaysia. An individual being the single shareholder and single director can incorporate a company. A single individual can have complete control of the company, and still enjoy the separate liability of the corporate entity. This will make incorporating a company more attractive for businesses, entrepreneurs and business owners.
- minimum two resident directors.
- companies can be incorporated and operated with a single individual or corporate shareholder and only one resident director is required (who can also be the sole shareholder of the company).
- public company must have two directors
Documents required for registration
- statutory declaration by each promoter/director
- memorandum & articles of Association
- declaration by the First Secretary
- payment of registration fee in accordance with the authorised capital
- statement of compliance by each promoter/director giving prescribed particulars
- statement of consent & non-disqualification to act
- payment of registration fee which is determined by the Registrar
- the incorporation of a company is certified by the Registrar under his hand and seal in the certificate of incorporation
- the Memorandum shall contain share capital clause
- notice of registration issued by the Registrar is conclusive evidence of incorporation
- certificate of incorporation is issued upon application
- no constitution required and no authorised capital requirement
- appointment of secretary is required.
- appointment of secretary at point of incorporation is optional.
- secretary must be appointed within 30 days after incorporation.
Capacity of company
- the object clause of a company defines a company's capacity to carry out commercial activities in its Memorandum of Association.
- any acts or actions outside its object clause are beyond the company's legal power or authority (i.e. ultra vires).
- powers of a company are defined in the Third Schedule。
- a company may choose not to specify its objects.
- unlimited capacity for company. The company can carry on any lawful business or activity together with full rights, powers and privileges unless the constitution provides otherwise.
- removes the burden on third parties to verify if a company has capacity to enter into a transaction.
Memorandum and Articles of Association
- compulsory for incorporation
- replaced by a constitution.
- constitution is optional
- may adopt after incorporation
- If a company has no constitution, the rights, powers, duties and obligations is as set out in the new CA.
- Existing companies with Memorandum & Articles of Association will be deemed to have constitutions.
- a company is required to adopt a common seal.
- a common seal is optional.
- If a company decides to have a common seal, the provisions of the law must be observed.
Execution of documents
- Execution of documents are usually through affixing common seal and countersigned by a person authorized to do so.
- by affixing common seal as provided in the constitution; ordocument may be executed by authorised officers, one of whom must be a director.