Company Law and the Companies Act 2016
What is tested
The Companies Act 2016 (CA 2016) took effect on 31 January 2017 and replaced the Companies Act 1965. This domain tests the company lifecycle: incorporation, constitution, separate legal personality, officers, meetings, shares, lodgment and enforcement. The Act is supplemented by the Companies Regulations 2017 and SSM Practice Directives.
Core rules
- A company is a body corporate with perpetual succession, capable of owning property, suing and being sued. Members' liability is limited except where the Act imposes personal liability.
- A private company may have one member and one director; a public company needs at least two directors. Directors must be natural persons, at least 18, resident in Malaysia, and not disqualified.
- A private company limited by shares may be incorporated without a constitution; if adopted, the constitution binds the company and members. Public companies must have a constitution.
- Since 31 January 2017 shares have no par value and share premium is abolished. Objects clauses no longer restrict capacity; the ultra vires doctrine is largely abolished.
- Every company must have a secretary qualified under s 236 and registered with the Registrar; directors must appoint the secretary.
Worked example
A promoter incorporates a private company with one member and one director. This is valid. The director must be resident in Malaysia. The company must appoint a secretary qualified under s 236 and lodge the annual return under s 68. If it wants to skip the AGM, it may pass the resolution permitted by s 340; it must still circulate and lodge financial statements.
Traps
Using repealed CA 1965 concepts such as par value, share premium and memorandum/articles; assuming a company seal is mandatory (it is optional); confusing the annual return with financial statements; treating the constitution as mandatory for every private company.