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What's New

Companies Bill and Interest Schemes Bill

The Companies Commission of Malaysia (SSM) has recently released the proposed Companies Bill that sets out the new legal framework to replace the existing Companies Act, 1965 and a standalone separate Interest Schemes Bill which is currently reflected under Division 5 of Part VI of Companies Act, 1965.

This proposed Companies Bill was drafted based on 19 policy statements and guiding principles. The followings are the extract of important provisions on Division 3 Accounts and Audit:

General

  • The proposed Companies Bill reaffirms the importance of audited financial statements the timely disclosure of such information and align the company law provisions with International and best auditing practices.
  • Fine and default penalty on each offence against respective provision of the Act has also been revised.

Compliance with approved accounting standards (“AAS”)

  • Section 240 sets out requirements to comply with AAS. Where any conflict or inconsistency arises between the AAS and the provision in the Act, the applicable AAS shall prevail. As the annual general meeting of the private company is no longer mandatory, the accounts may be circulated to its members orlaid at a meeting of members.

Directors’ report and financial statements

  • Section 245 sets out the general requirements for financial statements. The proposed Companies Bill has removed the original Ninth Schedule, but Section 245 includes some minimum disclosures, such as directors’ and auditors’ remunerations.
  • Section 249 specifies the contents of the directors’ report, with most of the matters are now included under Sixth Schedule. In addition, Section 251 requires the directors’ report to also include business review with a list of required information.
  • With the abolishment of compulsory general meeting for private company, the financial statements of the private company shall be circulated within six months of its financial year end, in accordance with Section 255, and 21 days before the date of annual general meeting for public company.
  • It’s noted that, Section 256 states that all amounts shown in the financial statements and reports lodged with the Registrar shall be quoted in Malaysian currency, and not otherwise.

Company auditors

  • Section 260 states the requirements and the appointment of the company auditor.
  • Section 261 sets out requirements for registration of new firms of auditors and reconstitution of audit firm.
  • Section 262 and 266 respectively state that private and public company shall appoint an auditor for each financial year.
  • However, under Section 262, the Registrar shall have the power to exempt any private company from appointing auditor based on conditions as determined by the Registrar.
  • Section 264 sets out term of office of auditor of private company and deemed re-appointment conditions while Section 265sets out condition for prevention by members of deemed re-appointment of auditor.
  • Section 269 states how the auditor’s remuneration are fixed. This section also states remuneration includes sums paid in respect of expenses and payment otherwise than cash.
  • Section 276(1) states an auditor of a company may resign his office by depositing a notice in writing to that effect at the company‘s registered office.
  • Section 277(1) states where an auditor resigns his office, the company shall within 7 days of the deposit of a notice of resignation, send a copy of the notice to the Registrar.
  • Section 282 added a subsection on qualified privilege in certain circumstances which auditors and other person could enjoy, which states that no auditor shall be liable to be sued in any court or be subject to any criminal or disciplinary proceedings for report submitted by the auditor in good faith and in the intended performance of any duty imposed on the auditor under this Act.

Some of the other significant changes in the Companies Law

  • Section 13 allows one or more persons desiring to form a company may lodge an application for incorporation.
  • Section 30 and 60 set out that a company may, but does not need to, have a constitution and common seal respectively.
  • Section 72 states that shares of a company shall have no par or nominal value.
  • Section 97 allows a company not to issue share certificates unless requested by the shareholder, or provided in the constitutions.
  • Section 195 allows a private company and public company to have a minimum of one director and two directors respectively, and the minimum directors shall ordinarily reside in Malaysia.

For more details, please download these Bills from the SSM’s webpage:

http://www.ssm.com.my/