The Companies Act 2016 (Act 777): Embracing New Era

Dear Members,

This is for your information.

THE COMPANIES ACT 2016 (ACT 777) : EMBRACING NEW ERA

We are entering into a new era under the Companies Act 2016 (“the CA 2016”) that came into force on 31 January 2017. Below are some of the new or major changes to the CA 2016 that would affect privates companies :-

1. One person company (for private company only), i.e. a single director single member company.

A director must attain a minimum age of 18 years. No maximum age for directorship.

2. Dividends can only be distributed out of available profits provided if it meets the solvency test, i.e. able to pay its debts as and when due within 12 months immediately after distribution.

3. Lodgement of Annual Return (“AR”) to the Registrar of Companies (SSM) is within 30 days from the anniversary date of the date of incorporation. Failure to lodge 3 or more consecutive ARs, SSM may strike off the company.

4. For private company, the AFS have to be audited and circulated to members within 6 months from the financial close and  to be lodged with the SSM within 30 days from the date of circulation.

5. Holding Annual General Meetings (“AGMs”) by private company will no longer be mandatory but optional.

6. Sole director or the last remaining director of private company cannot resign until a meeting of members is called to  receive the notice of the resignation and to appoint one or more new directors, same applies for company with sole  director who is the sole shareholder.

7. Company Secretary may resign by notice to Board or Registrar and cessation take effect within 30 days of notice.

8. Resolution for removal of directors and auditors shall be passed only through meeting of members.

9. A company may or may not have a Constitution (Constitution – to replace the existing Memorandum and Articles of  Association).

10. Common Seal and Share Certificates are optional (not mandatory).

11. Removal of the authorized capital regime.

12. The decoupling of the AR from the Audited Financial Statements (“AFS”).

Furthermore, the Companies Regulations 2017 (“CRs 2017”) also came into force on 31 January 2017 which automatically revoked the Companies Regulation 1966. We would like to highlight to you that there are new Fees Schedule (“Schedule”) in CRs 2017 and below are some of the fees imposed :-

1) Lodgement of Annual Return under Section 68 (private company) – RM150.00
2) Lodgement of Audited Financial Statements (private company) – RM50.00 (non-audited RM20.00)
3) Lodgement of Certificate relating to exempt private company (EPC) – RM200.00
4) Application for rectification of register – RM300.00
5) Lodgement of any documents relating to company not specifically mentioned in the Schedule – RM100.00
(including but not restricted to changes in officers i.e. directorships, managers, secretaries, allotment of shares, change of registered address, etc)

The fees in respect of any lodgement of documents, or any application or appeal for any matters are as specified in the Schedule and it shall be paid to SSM in such manner as the SSM may direct. Any failure to pay the fees referred to above shall render the lodgement of documents, application or appeal void.

If the lodgement of documents, application or appeal is withdrawn, the fees paid in respect of such lodgement of documents, application or appeal shall not be refunded. The SSM may reduce, waive, partly or wholly, any fees specified in the Schedule.

Please do not hesitate to contact your current company secretaries for more details

Regards

Prem Naidu
Executive Secretary