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CSG Exam (Malaysia) study materials
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CSG Exam (Malaysia) practice questions

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Question 1Legal and regulatory framework for private security services

Which legislation is the principal statute governing the licensing and operation of private security agencies in Malaysia?

  1. Employment Act 1955
  2. Police Act 1967
  3. Companies Act 2016
  4. Private Agencies Act 1971 Correct answer.

Explanation

The Private Agencies Act 1971 (Act 27) is the principal statute that licenses and regulates private agencies, including security guard agencies. It makes unlicensed provision of private agency services an offence and allows conditions to be imposed on licensees. The other statutes govern employment, the police force, or company incorporation rather than private security licensing.

Question 2Legal and regulatory framework for private security services

The Employment Act 1955 generally applies to security guards employed in which of the following areas?

  1. Peninsular Malaysia and the Federal Territory of Labuan Correct answer.
  2. All states of Malaysia without exception
  3. Only the Federal Territory of Kuala Lumpur
  4. Sabah and Sarawak only

Explanation

The Employment Act 1955 applies in Peninsular Malaysia and Labuan. Sabah and Sarawak are governed by their respective Labour Ordinances, so a security firm operating nationwide must apply the correct territorial statute. This matters for hours, overtime and rest-day entitlements.

Question 3Legal and regulatory framework for private security services

The right of private defence, which may be relevant to a security guard facing an imminent attack, is codified in which Malaysian statute?

  1. Occupational Safety and Health Act 1994
  2. Penal Code Correct answer.
  3. Contracts Act 1950
  4. Road Transport Act 1987

Explanation

Sections 96 to 106 of the Penal Code set out the right of private defence of body and property. The right is not unlimited: the force used must be necessary and proportionate to the threat. Security guards should also comply with their employer's use-of-force policy and call the police where practicable.

Question 4Legal and regulatory framework for private security services

A security guard makes a lawful citizen's arrest of a suspected thief under the Criminal Procedure Code. What must the guard do next?

  1. Hand the suspect over to the nearest police station without unnecessary delay Correct answer.
  2. Impose an on-the-spot fine
  3. Hold the suspect for up to 24 hours for questioning
  4. Release the suspect after recording a statement

Explanation

The Criminal Procedure Code permits a private person to arrest in limited circumstances, but the arrested person must be handed over to the police without unnecessary delay. The guard has no power to detain for 24 hours, question, fine or release on his own authority. Prolonged detention without lawful authority can expose the guard and employer to liability.

Question 5Legal and regulatory framework for private security services

A security guard uses force against a person who is advancing aggressively towards him. Which principle best determines whether the force is lawful as private defence?

  1. The force must be necessary and proportionate to the threat faced Correct answer.
  2. Force is lawful only if the guard's employer gives prior approval
  3. Force is never lawful for a private security guard
  4. Any force is lawful once the guard shouts a warning

Explanation

Private defence under the Penal Code requires that the force be necessary to repel the attack and not excessive in the circumstances. A warning may be relevant but does not by itself legalise any level of force. Employer approval is not the legal test, and private defence is available to security guards as it is to other persons.

Question 6Legal and regulatory framework for private security services

Under Malaysian law, a security guard may carry a firearm on duty only when he has which of the following?

  1. A first-aid certificate
  2. A valid arms licence or permit and authorisation for the specific duty Correct answer.
  3. A verbal instruction from the site supervisor
  4. At least five years of security experience

Explanation

The Arms Act 1960 requires a licence or permit for the possession and carrying of firearms, and private security use is tightly restricted. A guard must also be authorised for the particular armed duty and comply with police conditions. First-aid training, verbal instructions or seniority do not replace the statutory licence.

Question 7Legal and regulatory framework for private security services

Under the Occupational Safety and Health Act 1994, what is the employer's primary duty towards security guards in the workplace?

  1. To pay overtime for all night shifts
  2. To post a security notice at the entrance
  3. To ensure the safety, health and welfare of employees so far as is reasonably practicable Correct answer.
  4. To provide free uniforms and meals

Explanation

Section 15 of the Occupational Safety and Health Act 1994 imposes a general duty on employers to ensure, so far as is reasonably practicable, the safety, health and welfare of employees at work. This includes assessing risks such as assault, lone working and equipment hazards. Uniforms, overtime and signage may be relevant but do not replace that general duty.

Question 8Legal and regulatory framework for private security services

A security firm keeps CCTV footage and visitor logbooks containing personal data. Under the Personal Data Protection Act 2010, processing that data is lawful when it is done with consent or on what other basis?

  1. Whenever the firm believes it is useful
  2. Only after obtaining police approval for each visitor
  3. For a lawful purpose and in accordance with the Act's requirements Correct answer.
  4. Never, because security firms are exempt

Explanation

The Personal Data Protection Act 2010 requires personal data to be processed with consent or another lawful basis, for a lawful purpose, and with notice and safeguards. Security firms handling CCTV and visitor records are data users and must limit collection and retention to what is necessary. A general belief that data is useful, or blanket police approval, is not the statutory test.

Question 9Legal and regulatory framework for private security services

A company deploys guards to commercial premises without holding a valid private agency licence under the Private Agencies Act 1971. What is the legal position?

  1. The company is automatically licensed after 30 days of operation
  2. The company receives only a civil warning and no criminal liability
  3. The company is lawful if each individual guard holds a valid identity card
  4. The company commits an offence and may be liable to a fine and/or imprisonment on conviction Correct answer.

Explanation

The Private Agencies Act 1971 prohibits operating a private agency without a licence and creates offences with penalties on conviction. A guard's personal identification or permit does not cure the agency's lack of a licence. Clients should verify the agency's licence because unlicensed operations can also affect insurance and contractual risk.

Question 10Legal and regulatory framework for private security services

A shopper refuses to open her bag for inspection by a mall security guard. Which statement best reflects the guard's legal authority?

  1. The guard may search the bag because the mall is private property
  2. The guard may use reasonable force to search the bag whenever a manager approves
  3. The guard may search only with the shopper's consent or under a specific statutory power Correct answer.
  4. The guard may search the bag if the shopper has already left the shop

Explanation

Private security guards have no general statutory power to search a person or bag. A search is lawful if the person consents, or if a specific law authorises it, and any detention must also have a lawful basis. Mall ownership or managerial approval does not create a police-style search power, and using force risks claims for assault or false imprisonment.

Question 11Legal and regulatory framework for private security services

Under the Private Agencies Act 1971, which ministry is principally responsible for licensing private security agencies in Malaysia?

  1. Ministry of Transport
  2. Ministry of Health
  3. Ministry of Defence
  4. Ministry of Home Affairs Correct answer.

Explanation

The Private Agencies Act 1971 is administered by the Ministry of Home Affairs, which processes private agency licence applications and may obtain police input during vetting. The other ministries listed do not issue security agency licences.

Question 12Legal and regulatory framework for private security services

Which statement best describes the legal status of an ordinary security guard employed by a licensed private security agency in Malaysia?

  1. A police officer with full investigative powers
  2. An auxiliary police officer with statutory police powers
  3. A public officer authorised to prosecute offences
  4. A private citizen with limited citizen's arrest powers Correct answer.

Explanation

An ordinary private security guard is not a police officer and does not possess police powers. He may exercise only the powers available to any citizen, principally the limited power of citizen's arrest under the Criminal Procedure Code.

Question 13Legal and regulatory framework for private security services

A person wants to work as a guard for a licensed security agency. Which licence must he personally hold under the Private Agencies Act 1971?

  1. A trade licence from the local authority
  2. A security guard licence under the Private Agencies Act 1971 Correct answer.
  3. A firearm licence under the Arms Act 1960
  4. A private investigator licence under the Private Agencies Act 1971

Explanation

The Private Agencies Act 1971 requires security guards to be individually licensed; an agency licence held by the employer is not a substitute. A firearm licence or local trade licence does not authorise guard work.

Question 14Legal and regulatory framework for private security services

A licensed security agency hires a new guard who has not yet obtained a security guard licence. The client wants the guard deployed immediately. What is the correct legal position?

  1. The client's approval is sufficient for deployment
  2. The agency licence covers every guard it employs
  3. The guard may work under supervision for one month
  4. The guard needs his own security guard licence Correct answer.

Explanation

An agency licence authorises the agency to carry on business; it does not license each guard. The guard must hold an individual security guard licence before being deployed, and deploying him earlier may breach the Act.

Question 15Legal and regulatory framework for private security services

Under the Employment Act 1955, what is the general maximum normal hours of work per week for a security guard covered by the Act?

  1. 40 hours
  2. 60 hours
  3. 48 hours
  4. 45 hours Correct answer.

Explanation

The Employment Act 1955 was amended to reduce the general maximum normal hours of work from 48 to 45 per week, effective from 1 January 2023. Security guards performing manual labour are generally covered regardless of their monthly wage.

Question 16Legal and regulatory framework for private security services

A mall guard suspects a visitor of theft but has no proof. He locks the visitor in a room for two hours to await questioning. What is the legal characterisation?

  1. A false imprisonment unless a lawful arrest was made Correct answer.
  2. A lawful citizen's arrest because theft is suspected
  3. A permissible detention under the Private Agencies Act 1971
  4. A valid exercise of private defence of property

Explanation

A private guard may detain a person only in the course of a lawful citizen's arrest or other lawful authority. Locking a suspect in a room on mere suspicion is unlawful confinement and can amount to false imprisonment.

Question 17Legal and regulatory framework for private security services

A person refuses to leave a private event after the organiser withdraws consent. A security guard acts on the organiser's authority. What is the guard's best lawful step?

  1. Search him for weapons before removal
  2. Confiscate his identification card until he leaves
  3. Physically eject him immediately without warning
  4. Warn that he is trespassing and call the police Correct answer.

Explanation

Once consent to enter is withdrawn, the person may become a trespasser, and the guard can ask him to leave. The safest lawful approach is to warn him clearly and seek police assistance if he refuses, avoiding unnecessary force or unauthorised searches.

Question 18Legal and regulatory framework for private security services

Which statement distinguishes auxiliary police from ordinary private security guards in Malaysia?

  1. Auxiliary police have statutory police powers Correct answer.
  2. Private guards are public servants under the Penal Code
  3. Auxiliary police may be hired only by foreign embassies
  4. Auxiliary police have no authority to carry firearms

Explanation

Auxiliary police are appointed under the Police Act 1967 and are given police powers, whereas ordinary private security guards are not. Private guards remain private citizens with only limited citizen's arrest powers.

Question 19Legal and regulatory framework for private security services

A security supervisor is offered RM5,000 by a contractor to ignore unauthorised after-hours access at a guarded site. Which law is most directly engaged?

  1. Private Agencies Act 1971 (licensing of security agencies)
  2. Personal Data Protection Act 2010 (personal data)
  3. Malaysian Anti-Corruption Commission Act 2009 Correct answer.
  4. Occupational Safety and Health Act 1994 (workplace safety)

Explanation

Accepting or soliciting a bribe in return for ignoring unauthorised access engages the Malaysian Anti-Corruption Commission Act 2009. The Act covers corrupt transactions involving agents, including employees in the private sector.

Question 20Legal and regulatory framework for private security services

A security firm's guard leaves his post unattended, and thieves steal goods from the client's warehouse. The client sues the firm. What is the strongest legal basis?

  1. The client must sue the guard personally because the firm has no duty
  2. The Private Agencies Act 1971 bars civil claims against licensed agencies
  3. The firm may be vicariously liable for the guard's negligence Correct answer.
  4. The guard's personal criminal liability automatically bars a civil claim

Explanation

An employer can be vicariously liable for negligence committed by its employee in the course of employment. The client may also have a contractual claim against the firm for failing to provide the agreed security service.

Question 21Legal and regulatory framework for private security services

A company's business is to recruit, train and supply security guards to shopping malls and factories for a monthly fee. Under the Private Agencies Act 1971, which authorisation must the company itself hold to carry on that business?

  1. An auxiliary police commission
  2. A business premises licence only
  3. A private agency licence Correct answer.
  4. A security guard licence for each director

Explanation

The Private Agencies Act 1971 requires a private agency licence for carrying on the business of a private agency, including supplying security guards for reward. Individual security guard licences are held by guards, not by the company, and an auxiliary police commission is a separate police-law status.

Question 22Legal and regulatory framework for private security services

A licensed security agency issues its guards dark blue uniforms and badges that closely resemble those of the Royal Malaysia Police. Which statement best reflects the legal position under the private security framework?

  1. They must not resemble or be mistaken for police uniforms or insignia. Correct answer.
  2. The uniforms are lawful if the agency's own management approves the design.
  3. The uniforms are lawful if each client approves the design in writing.
  4. The uniforms are lawful because guards are civilians, not police officers.

Explanation

Private security personnel must be clearly distinguishable from the police, and uniforms, badges or insignia that resemble police issue are prohibited. Approval by a client or by the agency's management does not cure that prohibition.

Question 23Legal and regulatory framework for private security services

Under the Employment Act 1955, a security guard who is covered by the Act is generally entitled to at least how many rest days in each week?

  1. One rest day Correct answer.
  2. No rest day if overtime is paid
  3. Two rest days
  4. One rest day every two weeks

Explanation

The Employment Act 1955 generally entitles a covered employee to one rest day in each week. An employer cannot replace that entitlement simply by paying overtime.

Question 24Legal and regulatory framework for private security services

A security agency pays its guards monthly. The wage period ends on 30 June. Under the Employment Act 1955, by when must the agency generally pay the wages for that period?

  1. By 30 July
  2. By 7 July Correct answer.
  3. By 14 July
  4. By the next gazetted public holiday

Explanation

Under the Employment Act 1955, wages must be paid not later than the seventh day after the last day of the wage period. For a period ending 30 June, the general deadline is therefore 7 July.

Question 25Legal and regulatory framework for private security services

A security agency deducts RM150 from a new guard's first month's wages for a uniform. The guard did not consent in writing and no statutory provision authorises the deduction. Under the Employment Act 1955, the deduction is:

  1. unlawful only if it reduces wages below the minimum wage
  2. lawful, because uniforms are part of the employer's business cost
  3. unlawful, because it is not an authorised deduction Correct answer.
  4. lawful, provided it does not exceed 10% of the guard's wages

Explanation

The Employment Act 1955 restricts deductions from wages to those authorised by law or by the employee's written consent in permitted circumstances. A uniform deduction made without consent and without statutory authority is therefore unlawful.

Question 26Legal and regulatory framework for private security services

A security guard covered by the Employment Act 1955 works beyond normal hours on a normal working day. What is the minimum overtime rate for that extra work?

  1. Three times the hourly rate
  2. One and a half times the hourly rate Correct answer.
  3. One times the hourly rate
  4. Two times the hourly rate

Explanation

For overtime on a normal working day, the Employment Act 1955 requires payment at not less than one and a half times the employee's hourly rate of pay. Higher rates apply in specified situations such as rest days or public holidays.

Question 27Legal and regulatory framework for private security services

A guard employed by a licensed security agency assaults a visitor at the client's site after a dispute over entry. The visitor sues the agency. Which principle best determines the agency's vicarious liability?

  1. The agency is liable only if a director expressly authorised the assault.
  2. The agency can never be liable because assault is an intentional criminal act.
  3. The client is always liable because the guard was physically on its premises.
  4. The agency may be liable if the assault was closely connected with the guard's employment. Correct answer.

Explanation

Vicarious liability depends on whether the employee's tort was committed in the course of employment and sufficiently connected with the duties entrusted to him. An intentional assault is not automatically outside that scope, and express board authorisation is not required.

Question 28Legal and regulatory framework for private security services

A uniformed private security guard tells a resident, "I am a police officer," and demands entry to the resident's home. He holds no police appointment. Which legal issue is most directly raised?

  1. Trespass by the resident
  2. Private defence of property
  3. Lawful exercise of a citizen's arrest power
  4. Impersonating a public servant Correct answer.

Explanation

Falsely representing oneself as a police officer or public servant is an offence under Malaysian criminal law. A private security guard has no police powers merely because he wears a uniform.

Question 29Legal and regulatory framework for private security services

A monthly-rated security guard covered by the Employment Act 1955 works on a gazetted public holiday. What additional pay is generally required for that work, beyond the ordinary monthly salary?

  1. Three days' wages at the ordinary rate
  2. No additional pay if a rest day is given later
  3. Two days' wages at the ordinary rate Correct answer.
  4. One day's wages at the ordinary rate

Explanation

For a monthly-rated employee who works on a gazetted public holiday, the Employment Act 1955 generally requires payment of an additional two days' wages at the ordinary rate. This is separate from any public holiday pay already included in the monthly salary.

Question 30Legal and regulatory framework for private security services

Which action falls within the lawful role of an ordinary private security guard at a shopping mall?

  1. Observing and reporting suspicious activity to management or police Correct answer.
  2. Investigating a theft by questioning suspects under a formal caution
  3. Prosecuting a suspected shoplifter in court
  4. Imposing a fine on a shopper for littering

Explanation

An ordinary private security guard performs a preventive and reporting role for the client and does not have police powers. Investigating under caution, imposing fines and prosecuting offenders are public or judicial functions.

Question 31Roles, responsibilities, ethics and professional conduct

A company secretary is advising the board on a transaction that benefits a major shareholder but harms the company's long-term financial position. The secretary's overriding duty is to act in the best interests of...

  1. the minority shareholders only
  2. the company as a legal entity Correct answer.
  3. the majority shareholder
  4. the board collectively

Explanation

A company secretary owes fiduciary duties to the company as a separate legal entity, not to any particular shareholder or to the board personally. When advising on a transaction, the secretary must assess what serves the company's interests as a whole. The fact that a major shareholder benefits does not change that duty.

Question 32Roles, responsibilities, ethics and professional conduct

A company secretary receives a competitor's confidential pricing schedule by mistake from a supplier. The professional conduct standard requires the secretary to...

  1. share it with the board for discussion
  2. return or destroy it without using it Correct answer.
  3. use it to benchmark the company's prices
  4. keep it until the tender closes

Explanation

Confidentiality and integrity require a professional not to use or disclose information that was received by mistake and belongs to another party. The safe course is to return it, or destroy it if return is not possible, and not to exploit it. Retaining or sharing it would create an unfair advantage and a breach of trust.

Question 33Roles, responsibilities, ethics and professional conduct

During a vendor selection exercise, a prospective supplier offers a company secretary an expensive watch. The secretary's company policy prohibits gifts above a nominal value. The appropriate action is to...

  1. accept it and disclose it in the gift register
  2. decline it and log the offer in the gift register Correct answer.
  3. accept it and share it with the team
  4. accept it if the supplier is ultimately unsuccessful in the tender

Explanation

Anti-bribery standards and typical corporate gift policies require refusal of gifts that could influence a business decision. The offer should be recorded in the gift register so that the compliance risk is visible. Accepting even a well-intentioned gift can create a conflict of interest.

Question 34Roles, responsibilities, ethics and professional conduct

A company secretary is a non-executive director of a firm that is bidding for a contract with the secretary's employer. At the board meeting to decide the award, the secretary should...

  1. participate but abstain from voting
  2. participate fully and vote in favour of the bidder
  3. declare the interest and withdraw from the vote Correct answer.
  4. send a delegate to vote on their behalf

Explanation

A conflict of interest must be declared promptly, and the conflicted person should withdraw from discussion and voting on the matter. Abstaining while remaining in the room may still allow influence. The duty is to protect the integrity of the board's decision.

Question 35Roles, responsibilities, ethics and professional conduct

An employee tells the company secretary that a senior manager is receiving secret commissions from a supplier. The secretary should...

  1. advise the employee to raise it directly with the senior manager
  2. take no action unless the employee provides written proof
  3. escalate the report through the whistleblowing channel and protect the reporter's identity Correct answer.
  4. investigate the matter personally and confront the manager

Explanation

A whistleblowing report should be escalated through the designated channel, such as the audit committee or integrity function, and the reporter's identity should be protected as far as the law allows. The company secretary should not personally confront the suspect, which could destroy evidence or expose the reporter. A written statement is useful but is not a precondition for acting.

Question 36Roles, responsibilities, ethics and professional conduct

A company secretary notices that a client's transactions are structured to avoid reporting thresholds. Under Malaysia's anti-money laundering regime, the secretary must...

  1. confront the client and demand an explanation
  2. submit a suspicious transaction report to the FIU Correct answer.
  3. report the matter to the client's auditors
  4. wait until the transactions exceed the threshold

Explanation

Under Malaysia's anti-money laundering and counter-financing of terrorism regime, a reporting institution that suspects money laundering must submit a suspicious transaction report to the Financial Intelligence Unit. The professional must not tip off the client that a report has been made. Confronting the client or waiting for a threshold to be crossed defeats the reporting obligation.

Question 37Roles, responsibilities, ethics and professional conduct

A company secretary is asked to advise on a complex new tax provision affecting a board resolution, but the secretary lacks the relevant expertise. The professional conduct standard requires the secretary to...

  1. rely on the finance director's informal view
  2. provide a personal opinion based on general knowledge
  3. decline to act as company secretary for that resolution
  4. seek competent professional advice and disclose the limitation Correct answer.

Explanation

Professional competence requires a company secretary to act only within their competence and to obtain expert advice where necessary. Providing an uninformed opinion can mislead the board and breach the duty of care. The limitation should be disclosed openly.

Question 38Roles, responsibilities, ethics and professional conduct

A board meeting discusses a disputed related-party transaction. The company secretary's minutes should...

  1. record the majority view and suppress dissenting views
  2. record only the final resolution and omit the debate
  3. record key discussion points, decisions and declared interests Correct answer.
  4. summarise the debate without identifying who spoke

Explanation

Minutes should be a fair and accurate record of the meeting, including material discussion points, decisions reached and any interests declared. They are not a verbatim transcript, but they must not omit information needed to show how the board reached its decision. Suppressing dissent or declared interests misrepresents the governance process.

Question 39Roles, responsibilities, ethics and professional conduct

The chair asks a company secretary to prepare a board resolution dated before the meeting at which it was approved. The secretary should...

  1. ask the finance director to sign the resolution instead
  2. refuse and report the request through the appropriate governance channel Correct answer.
  3. comply but note the true date in a private file
  4. comply because the chair has authority

Explanation

Professional integrity prohibits participation in creating false or misleading records, including backdating a resolution. The secretary should refuse and escalate the request to the board, audit committee or regulator as appropriate. Noting the true date privately does not cure the false record.

Question 40Roles, responsibilities, ethics and professional conduct

A company secretary learns that another professional has submitted false continuing professional development records to the regulator. Under professional ethics, the secretary should...

  1. report the matter to the relevant professional body or regulator Correct answer.
  2. warn the other professional and take no further action if it stops
  3. report it anonymously to the media
  4. ignore it because it is a private matter for the other professional

Explanation

The profession depends on public trust, and a professional who becomes aware of serious misconduct by another member has a duty to report it to the relevant professional body or regulator. Ignoring it or allowing a private warning to substitute for reporting can leave the public at risk. Reporting to the media is not the proper first channel.

Question 41Roles, responsibilities, ethics and professional conduct

Under the Companies Act 2016, a company secretary's duty of care, skill and diligence is measured against which standard?

  1. The highest professional standard attained by any practising company secretary in Malaysia
  2. The standard of an ordinary member of the public who has received no secretarial training at all
  3. Whatever lower standard the company's constitution specifies for its appointed officers
  4. The knowledge, skill and experience reasonably expected of a person carrying out those functions Correct answer.

Explanation

Section 213 of the Companies Act 2016 requires every officer, including a company secretary, to exercise reasonable care, skill and diligence. The standard is measured by the knowledge, skill and experience reasonably expected of a person carrying out the functions actually entrusted to that officer, together with any additional knowledge the officer in fact has. The constitution cannot dilute the statutory duty, and the test is reasonableness rather than perfection.

Question 42Roles, responsibilities, ethics and professional conduct

A company secretary resigns from a secretarial practice and later joins a competitor. What is the position regarding the confidentiality of the former clients' information?

  1. It ends twelve months after the appointment ceases unless the client renews the restriction.
  2. It survives the end of the appointment and continues until the information lawfully becomes public. Correct answer.
  3. It continues only for documents the client has expressly marked as confidential in writing.
  4. It ends on the final day of the appointment, because the contractual retainer has come to an end.

Explanation

Confidentiality is a continuing professional obligation and is not extinguished by the end of the retainer or by leaving the firm. It lasts until the information lawfully enters the public domain, and it binds the individual secretary personally, not merely the practice that held the engagement.

Question 43Roles, responsibilities, ethics and professional conduct

A person may be appointed as company secretary of a Malaysian company only if that person fulfils which requirement?

  1. Is nominated by the board of directors and approved by the outgoing secretary
  2. Holds a bachelor's degree in any discipline from a recognised Malaysian university
  3. Is a member of a prescribed body or licensed by the Companies Commission of Malaysia Correct answer.
  4. Has served three years as an accounts clerk in a company registered in Malaysia

Explanation

The Companies Act 2016 provides that only a natural person who is a member of a prescribed professional body or who holds a licence issued by the Companies Commission of Malaysia may be appointed as company secretary. Academic qualifications alone, clerical experience or board nomination do not satisfy the statutory qualification requirement, and the appointment must also be made within the period prescribed after incorporation or vacancy.

Question 44Roles, responsibilities, ethics and professional conduct

A secretarial practice receives RM40,000 from a client to cover statutory fees and disbursements. How should the practice deal with the money?

  1. Pay it into the managing partner's personal account and reimburse expenses later
  2. Bank it in a designated client account kept separate from the practice's own funds Correct answer.
  3. Deposit it in the practice's general operating account and record it as earned revenue
  4. Hold it as cash in the practice's office safe until the disbursements fall due

Explanation

Client money must be held in a separate client account, kept apart from the practice's own funds, so that it can be identified, accounted for and repaid or applied as instructed. Mixing client money with the firm's working capital is a serious breach that can amount to misappropriation and puts the secretary's licence at risk.

Question 45Roles, responsibilities, ethics and professional conduct

After lodging a suspicious transaction report on a client's layered payments, the company secretary is asked by the client why the transaction has stalled. What is the appropriate response?

  1. Hint that the bank is conducting routine verification checks so the client does not suspect the report
  2. Explain that a suspicious transaction report has already been lodged and that the client should await the authorities' outcome
  3. Complete the transaction as instructed and say nothing about the report to anyone in the firm
  4. Give a neutral reply that does not hint that any report was made; consult the compliance officer Correct answer.

Explanation

Tipping off is an offence: a person must not disclose to the client, or to anyone else, that a suspicious transaction report has been made or is being considered, or anything likely to prejudice an investigation. The secretary should keep the response neutral, avoid any hint, and escalate the query to the firm's compliance officer for guidance.

Question 46Roles, responsibilities, ethics and professional conduct

A company appoints a new company secretary in place of the outgoing secretary, who is owed three months of unpaid fees. What is the outgoing secretary's obligation regarding the company's records?

  1. The outgoing secretary must deliver all company records and documents promptly and assist the handover Correct answer.
  2. The outgoing secretary must destroy working papers but may keep the registers as security
  3. The outgoing secretary may retain the registers but must allow inspection at reasonable notice
  4. The outgoing secretary may keep the statutory registers until the unpaid fees are settled in full

Explanation

Statutory registers and other company records are the company's property, and the outgoing secretary's duty to deliver them up is not conditional on payment of fees. Unpaid fees are a contractual debt to be pursued separately. Retaining the registers would obstruct members' inspection rights and prevent the incoming secretary from discharging statutory duties.

Question 47Roles, responsibilities, ethics and professional conduct

A secretarial firm is instructed to act as company secretary to both the bidder and the target in a proposed takeover. Neither client will consent to the firm acting for the other. What should the firm do?

  1. Decline both appointments because the firm cannot serve two clients with directly opposing interests Correct answer.
  2. Act for the bidder only, since the bidder is likely to pay the higher professional fee
  3. Accept both, but disclose the conflict to the board of the target company only
  4. Accept both appointments and rely on the firm's internal confidentiality walls between teams

Explanation

A company secretary cannot serve two clients whose interests directly conflict in the same transaction, because the duty of loyalty and confidentiality owed to each cannot be reconciled. Where neither client gives informed consent, the firm should decline both engagements rather than act for the more lucrative side or rely on internal information barriers.

Question 48Roles, responsibilities, ethics and professional conduct

A firm's marketing consultant, who is not licensed as a company secretary, introduces new clients and is paid 30 per cent of each secretarial fee. How should this arrangement be assessed?

  1. The arrangement is acceptable provided the consultant signs a confidentiality undertaking
  2. The arrangement is improper because the firm is sharing professional fees with an unlicensed person Correct answer.
  3. The arrangement is acceptable because referral fees are a purely commercial matter for the firm
  4. The arrangement is acceptable only if the client is told the amount of the commission

Explanation

A licensed company secretary may not share professional fees with a person who is not licensed to provide company secretarial services, because this allows an unlicensed person to profit from regulated work and can amount to improper canvassing through an intermediary. Disclosure to the client does not cure the breach; the restriction protects the integrity of the licensed profession.

Question 49Roles, responsibilities, ethics and professional conduct

While drafting board papers, a company secretary learns of an unannounced profit upgrade for a listed client. She holds a personal shareholding in that client. What is the correct course?

  1. She may trade because the information arose in the course of her professional work rather than from the client directly
  2. She may trade after telling the board chair, since disclosure to the chair removes the prohibition
  3. She must not trade or pass the information on, because it is inside information not yet made public Correct answer.
  4. She may trade if the purchase is small and is entered in the firm's personal account dealing register

Explanation

Information about an unannounced profit upgrade is inside information. Under the Capital Markets and Services Act 2007, a person in possession of inside information connected with a listed corporation must not deal in its securities, nor communicate the information to another person who is likely to deal. The fact that the information came from the secretary's own work, the size of the trade or disclosure to the chair makes no difference.

Question 50Roles, responsibilities, ethics and professional conduct

Accounts are being restated and the managing director instructs the company secretary to hold back the annual return and financial statements, whose lodgement deadline is three weeks away. How should the secretary act?

  1. Follow the managing director's instruction without question, since the board as a whole is responsible for the content of filings
  2. Resign immediately without further action, since a disagreement over a filing deadline makes the position untenable
  3. Delay lodgement until the restated accounts are finalised, because accurate audited accounts must override the statutory deadline
  4. Warn the board in writing that the deadline still applies and lodge on time or seek an extension Correct answer.

Explanation

The duty to lodge statutory documents within the prescribed period rests on the company and its officers, and a single director's instruction cannot suspend it; restatement is not a statutory ground for late filing. The secretary should record the instruction, put the legal risk in writing to the board, and use the Registrar's extension procedure where a genuine need exists, keeping evidence of the advice given. Resigning does not discharge the company's obligation or protect the secretary from having failed to escalate.