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Memorandum & Articles of Association vs Constitution

Memorandum & Articles of Association vs Constitution
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M&A vs Constitution

Under the Companies Act 1965, every company was required to have a Memorandum and Articles of Association (M&A). According to the Companies Act 2016, the Memorandum and Articles of Association (M&A) are now referred to as the Constitution. Companies incorporating under the Companies Act 2016 are not obligated to have a constitution immediately upon incorporation. However, they have the option to adopt a constitution after the company has been incorporated.

The Differences

You may notice the following differences between M&A and the Constitution.

1. Number of Directors

2. Annual General Meeting

3. Reduction of Share Capital

4. Share Certificate

Number of Directors

In the M&A under the Companies Act, 1965, a minimum of two directors is required for Sdn Bhd.

However, Constitution is under the Companies Act, 2016, therefore if not being fixed by the company itself, sole director is allowable.

Annual General Meeting

During M&A era, an AGM was a mandatory requirement for a company, therefore the compliance of the timeframe to call for an AGM needs to be complied.

Whereas, in the new act regime, a Sdn. Bhd is no longer required to call for an AGM if the constitution is silent, where to follow the Companies Act, 2016 requirement.

Reduction of Share Capital

Under the Constitution regime, the reduction of share capital is a more streamlined process that outlines the requirement for solvency statements and other procedures

Whereas if under M&A regime of the Companies Act, 1965, it must go through a court order.

Share Certificates

In M&A, issuing a share certificate is a mandatory requirement for all shareholders, whereas, if the Constitution is silent, the issuance of a share certificate is upon request.

Key Takeaways

The above outline highlighted key differences between M&A and the Constitution regime, there are some more variances in terms of requirements of directors, holding of meeting procedures, issuance of dividends, and other pertinent aspects. To provide a more in-depth and details examination of these distinctions, further exploration of specific areas or aspects is needed.

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What are proxy rules in the meeting ?

What are proxy rules in the meeting ?
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What are proxy rules in the meeting ?

What exactly is a proxy?

In the world of business and formal meetings, a ''proxy'' refers to a person who appointed to represent someone else, typically when the primary individual is unable to attend the meeting themselves. The proxy has the responsibility to act on behalf of the absent individual, making decisions, casting votes, or conveying information as required during the meeting.

What if only one proxy?

If a member appoints a proxy during a meeting and that proxy can vote on show of hands. The proxy allows to make important decisions and discussions to proceed even when key stakeholders cannot be physically present. It ensures that their interests are still represented and their input is considered.

Can a member choose more than one proxy?

Certainly! A member eligible to vote can pick one or more proxies. But remember, these proxies can only vote in a poll.

However, the appointment only counts if the member specifies how much of their stake each proxy represents.

What is Proxy’s responsibility?

The responsibilities of a proxy can vary depending on the context in which they are appointed and the specific instructions or authority granted to them by the absent individual. However, here are some common responsibilities associated with being a proxy: -

a) Representing:

The primary responsibility of a proxy is to represent the absent individual faithfully and in accordance with their interests, preferences, and instructions. This includes speaking on their behalf, voting as directed, and making decisions in their stead.

b) Attendance:

Proxies are expected to attend the meeting or event in place of the absent individual. They should arrive on time and be prepared to participate in discussions, votes, and any other relevant activities.

c) Knowledge and Preparation:

A proxy should be knowledgeable about the issues, topics, or agenda items to be discussed at the meeting. They may need to review relevant materials or information in advance to make informed decisions on behalf of the absent party.

d) Voting:

If voting is part of the meeting, a proxy typically casts votes as instructed by the absent individual. This may involve voting on resolutions, proposals, or other matters according to the absent individual’s preferences.

e) Reporting:

After the meeting, a proxy may be required to provide a report or summary to the absent party, detailing what transpired during the meeting, the decisions made, and any important discussion or outcomes.

f) Communication:

Proxies often serve as a communication channel between the absent individual and other participants in the meeting. They may convey messages, questions, or requests as necessary.

g) Adherence to Instructions:

It’s crucial for a proxy to strictly adhere to the instruction, limitations, and wishes of the absent individual. They should not make decisions or take actions that go against the absent party’s directives.

h) Confidentiality:

If sensitive or confidential information is discussed during the meeting, a proxy must maintain confidentiality and not disclose such information to unauthorised parties.

i) Ethical Conduct:

Proxies should act with honesty, integrity, and in a manner consistent with ethical standards. They should avoid conflicts of interest and act in the best interests of the absent individual.

Key Summary

It is important for individuals acting as proxies to have a clear understanding of their role and responsibilities, as well as any legal or contractual obligations associated with their appointment. They should also maintain open communication with the absent party to ensure they fulfil their duties effectively.

 

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Disqualification of Director Malaysia

Disqualification of Director Malaysia
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Disqualification of Director Malaysia

Background

In order to become a director of the company, he must write his consent in writing to become a director and make a declaration that he is not disqualified from being appointed in compliance with Section 201 of the Companies Act 2016.

How to determine if a person is disqualified to become a director?

There are a few ways to determine whether a person is disqualified to become a director of the company. One of the criteria for disqualification of a director includes a committed offence.

What is offence included under this act?

• Bribery;

• Fraud; and

• Dishonesty

Why is a person who committed an offence unable to become a director of the company?

One of the duties of the director require to manage the asset on behalf of the company. If he becomes an undischarged bankrupt person he is not being trusted by the interested party to manage the company.

What will happen if a person failure to comply?

A person who failed to comply under this Section are convicted and be liable :

• to imprisonment for a term not exceeding 5 years; or

• to a fine not exceeding RM1,000,000.00; or

• to both

A person who committed an offence still be able to become a director?

Yes, a person may be re-appointed or hold office to become a director of the company. However, he must apply for leave from the Official Receiver or from the Court.

What is the meaning of the leave?

Leave is permission is granted by the Court

How to apply for leave from the court?

A person intending to apply for leave may follow the below informations :

1. Notice

• Send a notice of intention to apply for leave has been served on the Official Receiver;

• Send a notice of intention to apply for leave has been served on the Registrar not less than 14 days;

2. Heard on application - The official receiver is heard on the application.

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Share Transfer on Death of Shareholder

Share Transfer on Death of Shareholder
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Share Transfer on Death of Shareholder

Background

When a shareholder dies the right to his interest in the shares will pass to whoever inherits them under his will or intestacy. The deceased shareholder's rights will be administered by his or her executors (if there is a will) or administrators of the estate if the shareholder has died intestate.

Two deciding legal considerations

The beneficiary can make a written request to the company to appoint someone registered as the holder of the inherited shares. The very same appointed person can also execute an instrument or transfer in respect of it. However, this can be a complicated and time-consuming process

  • Does the deceased shareholder have a will?

  • Is there any buy-sell agreement? 

The Will

The appointed executor will carry out the following: -

  • Obtain the grant of probate (GOP) from the high court.

  • Notify the Company Secretary regarding the share to be transmitted according to Section 109 of the Companies Act 2016.

What If There Is No Will?

Family members need to obtain a Letter of Administration (LA) by engaging a lawyer for the application process.

  • An administrator will be appointed

  • Once the administrator received the court order,

  • Notify the Company Secretary regarding the shares to be transmitted according to Section 109 of the Companies Act 2016. 

Buy-Sell Agreement

It’s to outline the terms and conditions under which the shares of a deceased shareholder will be purchased by the surviving shareholders or the company itself. 

The agreement includes provisions such as the purchase price, valuation methods, funding mechanisms, and the process for executing the buyout .

The agreement will be presented to the Company’s Secretary to proceed with the transfer of shares under Section 105 of the Companies Act 2016.

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Allotment of Shares Capital In Malaysia

Allotment of Shares Capital In Malaysia
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Allotment of Shares Capital In Malaysia

In Malaysia, the allotment of share capital plays a pivotal role in the establishment and growth of companies. Share capital represents the financial foundation upon which businesses raise funds and allocate ownership stakes to investors.

The process of allotment involves the issuance and distribution of shares among shareholders, facilitating investment opportunities and facilitating capital infusion.

Through a well-regulated framework overseen by the Companies Commission of Malaysia (SSM), the allocation of share capital not only enables companies to raise funds but also fosters economic development, corporate governance, and investor protection in the vibrant Malaysian business landscape.

What does it mean?

Allotment of Shares where investors invest more money in the company. By doing this, it might or might not affect the share structure of the company. All these mainly depend on the investors’ mutual agreement.

How could it affect the structure of the company?

The investors could decide on investing the same proportion of money according to the existing portion so this would not affect the structure of the company as well as the existing right of the shareholders.

But in there are new investors added in with a certain amount of money injected into the company, these action will directly changing the proportion of shares and rights of the shareholders.

How many ways of allotment of shares?

There are 2 ways you could proceed to increase the paid up capital.

A) Allotment of shares via cash considerations

  • Investors/shareholders injected cash into the company via bank in a lump sum of money to the bank.

  • Must be issued for real value in money.

  • Shares allotted must be paid in full and in cash.

  • Proof evidence of bank in slip.

B) Allotment of shares via otherwise than in cash

  • Investors/shareholders paid on behalf of the company certainly in kind for the sake of the business of the company.

  • proof of management account or other documents.

Who could assist you in the allotment of shares?

You may approach your company’s secretary, he/she will assist you in the allotment of shares in SSM.

What are the documents that will prove the allotment of shares?

After your secretary submitted to SSM, you will receive Section 51 to prove your company’s structure. And you may request Share Certification from the Secretary.

Will the allotment of shares affect the shareholders’ rights in the company?

Subject to the Constitution, a company may issue shares that rank equally with existing shares as to voting/distribution rights. Those shares shall first be offered to the holders of existing shares.

If the offer is not accepted after the expiry of the offer date specified in the notice, the Directors may dispose those shares in such a manner as the directors think is most beneficial to the company.

What are the documents involved in the allotment of shares?

You may receive Section 76, Section 78 and Section 51.

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How to raise fund for Sdn Bhd?

How to raise fund for Sdn Bhd?
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How to raise fund for Sdn Bhd?

Every business no matter small or big in size requires funds to run and to meet its business requirements. So, a company needs to raise funds to sustain and expand its business, it may raise funds in different ways:-

Common ways to raise funds

1. Right Issue

2. Bonus Issue

3. Preference share allotment

4. Looking for SME financing

5. CrowdFunding

6. Apply for Government Grant

7. Commercial Bank Loans, Debentures and Overdarft

Right Issue

• Right issue is the company offering rights to existing shareholders to buy additional shares directly from the company at a discounted price.

• The number of shares offering by the company is depending on the number of shares of the existing holdings of shareowners.

• The existing shareholders are given the right to take up the shares offer to them or they want to renounce their right.

Bonus Issue

• Bonus Issue is a way of issue of new shares to its existing shareholders according to the same proportion of the existing share percentage,

• it would not dilute the existing shareholders’ equality or rights.

• The company issue bonus shares with the intention to attract retail investors, provide an alternative to a cash dividend, and also reflect a healthy financial in order to attract more fund investing in the company.

Preference share allotment

• Preference share is a share that does not entitle the holder to the right :

  • to vote on a resolution

  • to any right to participate beyond a specific amount in any distribution whether by way of dividend,

  • on redemption, in a winding-up, or otherwise.

• Its means that the founder does not need to give up their control of the company while having access to funds and the investors are assured of priority in getting returns on their investments.

Looking for SME financing

• Small and Medium Enterprise may apply for loans from another servie financial provider who offers targeted financial assistance, such as :

  • bank;

  • other licensed financial institutions

  • peer-to-peer financing.

Crowd Funding

• Crowdfunding is the practice of funding or venture by raising funds from a large number of people, normally the transaction will be via the internet and crowdfunding platform, so these funding sources could leverage the networks for greater reach and exposure.

Apply for Government Grant

• Every year the government has grant a sum of money to a business or individual to support them to grow, implement and establish the ideas or projects with the ultimate intention to grow the country's economy or society's developments.

• There are some grants such as Working Capital Guarantee Scheme (SJMK), Penjana Kerjaya 2.0, Wage Subsidy Programme (WSP 3.0) and etc.

Commercial Bank Loans, debentures and Overdraft

• A company may apply for an amount of money from a certain bank at a certain fixed or floating interest rate for a certain period of time, or the company may withdraw a limit on borrowing on a bank current account with an overdraft amount that may vary on a daily basis.

• On top of it, the company may also raise it funds via issuing debentures which is a long-term loan that is usually secured against a specific or overall assets of the company with committing a fixed date of repayment at a certain fixed rate of interest.

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How to incorporate a company in Malaysia ?

How to incorporate a company in Malaysia ?
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How to incorporate a company in Malaysia ?

How to on Youtube

Watch the full 30-minute video on our YouTube https://youtu.be/K1tEqVH8vM4

Key Information of the Recorded Webinar

  1. Topic : How to setup a company in Malaysia?

  2. Date : 31/03/23

  3. Time : 10:30am

  4. Location : Live Interview (recorded)

  5. Speakers : Jasmine Ma, a licensed company secretary from THK

  6. Moderator : Koh Teck Peng, an approved auditor & tax agent from KTP

Agenda :

1) What company name do you want your company to be called?

2) What words/symbols are prohibited by SSM for you to use?

3) How many directors do you want your company to have?

4) How many shareholders your company will have?

5) Does a company need a secretary?

6) What is the nature of the business of your company?

7) What is your company's paid-up capital?

8) How long for the whole process of incorporation?

9) & more

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How can I reduce my share capital in Malaysia?

How can I reduce my share capital in Malaysia?
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How can I reduce my share capital in Malaysia?

What does it mean?

A capital reduction is when a company reduces its share capital to a certain amount of its share capital by making payments to its shareholder out of its capital equal to the amount that the shareholder invested in the company, or it could be by a share buyback.

Why would a company want to reduce share capital?

So, before a company’s director decides to reduce the company's share capital, we need to study why we need to do that: -

It could be: -

1) to create distributable reserves to pay a dividend; or

2) to buy back or redeem its own shares; or

3) to reduce or eliminate losses; or

4) to return surplus capital to shareholders;

5) to change in capital structure; etc

How to proceed with the reduction of share capital?

There are 2 ways you could proceed to share capital reduction.

1) By way of Court Confirmation Procedure (Section116, CA 2016).

2) By way of solvency statement procedure (Section 117, CA 2016).

Why do people choose Solvency Statement Procedure?

1) it is faster

2) it incurs less cost

3) it is more simplified and less tedious

Who could assist you with Solvency Statement Procedure?

  1. Accountant for Solvency Statement preparation and

  2. Company Secretary

Reduction of Share Capital via Solvency Statement Procedure for Sdn. Bhd.

Under Section 115 (b), CA 2016, unless otherwise provided in the constitution, a company may reduce its share capital by a special resolution supported by a solvency statement in accordance with Section 117.

A) Solvency statement

1. All directors have to make a solvency statement in relation to the reduction of share capital within 14 days before the end of the date of a special resolution passed by members of a company to approve the reduction of share capital.

(Solvency statement is not required if the reduction is mainly for the purpose of cancellation of any loss of paid-up capital or unrepresented by available assets.)

2. Special resolution passed by way of written resolution must be accompanied by the solvency statement, or if passed at a general meeting, the solvency statement must be made available for inspection throughout the meeting.

3. The solvency statement must be available for the creditor’s inspection for six weeks at the company’s registered office.

B) Within 7 days after the resolution is passed, the company must send a notice to IRB and the Registrar stating that the resolution has been passed together with the solvency statement. And within the same period, the company must advertise a notice of the reduction of the share capital in one widely circulated in Malaysia in the national language and one widely circulated newspaper in Malaysia in English under Section 117(10).

The company’s creditor will have six weeks from the date of the resolution to give a notice of application from the court to the Registrar to cancel the resolution.

If there is no application for cancellation from the creditors after 6 weeks, the company must lodge the following documents with the Registrar within 2 weeks after the period of 6 weeks under Section 119(1)

a) a copy of the resolution;

b) a copy of the solvency statement, if applicable;

c) a statement made by the directors under Section 117(1) and Section 117(3).

d) a copy of the newspaper advertisement.

C) The capital reduction will take effect once the Registrar has recorded the information lodged to them.

 

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What is Company Secretary?

What is Company Secretary?
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What is Company Secretary?

A Company Secretary is a senior position in a citizen sector establishment. Also known as Compliance Officers, it is one of the positions that is a part of the key managerial personnel (which usually includes the CEO & CFO) of any company.

In large American and Canadian publicly listed corporations, a Company Secretary is typically named a Corporate Secretary.

A Company Secretary is responsible for the efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented.

Roles of Company Secretary

 

A.         Helps you with starting a Company (incorporation),

He/she provides you with advice in terms of corporate restructuring, mergers, acquisitions, complying with good corporate governance

 

B.         Advise you on other laws and regulations compliances such as tax issues, business licenses, EPF, Socso, and EIS contributions.

 

C.         Attend and arrange Board or Members Meetings.

He/she assists you in drafting the Agenda, and sending out the notice to ensure that the meeting is properly called, constituted, and carried out according to the laws.

 

D.         Ensure the Company complies with the rules set out in the Companies Act, 2016.

 

E.         Maintain Statutory Records for the Company.

He/she is to ensure that the Company register books are recorded up to date, as well as the records books are kept for a period according to the requirements of the laws.

 

F.         Handle and arrange the Company’s Annual General Meeting.

He/She ensures that the meeting is carried out properly during the whole process of the meeting.

He/She prepares the minutes of the meeting once the meeting is adjourned.

 

G.        Prepare and file the Company’s annual return and audited financial statements with the Directors’ reports.

He/she ensures that the Company is in compliance with these deadlines.

 

H.         Update and maintain the Company’s Statutory Books and documents.

The Company details such as directors, shareholders, paid-up capital, shares and constitution will be changed from time to time.

He/she is responsible for notifying the registrar of the changes and updating all related records.

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Audit Exemption Malaysia

Audit Exemption Malaysia
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Document Required for Audit Exemption

After our sharing on the qualifying criteria for audit exemption, let us further share more information on the documents required for submission of unaudited financial statements to Suruhanjaya Syarikat Malaysia (SSM)

Question :

Do the Company still require to submit a financial report to SSM even though the company is qualified for audit exemption?

Yes, the company is required to prepare the financial statement for submission to SSM.

What are the documents for the submission of the financial statement?

1. Audit Exemption Certificate

In compliance with Section 258 and Section 259 of the Companies Act 2016.

2. Unaudited Financial Statements

In compliance with applicable approved accounting standards.

3. Directors’ Report, Statement by Directors, and Statutory Declaration Under Section 251 and Section 252 of the Companies Act 2016.

Source

For more information on Practice Directive No. 3/2017

  • https://bit.ly/3Bgm0Pf

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Double submission of statutory form to Suruhanjaya Syarikat Malaysia (SSM)?

Double submission of statutory form to Suruhanjaya Syarikat Malaysia (SSM)?
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Double submission of statutory form to Suruhanjaya Syarikat Malaysia (SSM)?

A situation that may encounter on double submission:

• The director of the company submitted the form to SSM (usually over the counter at SSM office) in his/ her capacity without informing the company secretary.

• Appointed Company Secretary submits the same form via SSM system.

The consequences of double submission?

• SSM issued a letter to query both persons (director and secretary) on the submission of the form.

Under some circumstances, the director of the company may not receive the queries from SSM.

Click on this link to retrieve the query:: Pages - e-query (ssm.com.my)

Who to solve the problem?

• Director; or

• Appointed Company Secretary.

How to solve the problem?

1) Cancellation

Cancel the previously submitted form by a notice of withdrawal to SSM with a payment of RM500.00 to SSM.

2) Re-submission after cancellation

Submit again the form by either one of the persons (director or secretary)

3) Follow up

To ensure the completion, need to follow up and check the status via mydata or e-info system to ensure that the form appears in the document listing.

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Audit Exemption - A higher threshold in qualifying criteria for exemption from audit

Audit Exemption - A higher threshold in qualifying criteria for exemption from audit
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New Proposed Audit Exemption for Sdn Bhd Malaysia

Audit Exemption - A higher threshold in qualifying criteria for exemption from audit

Background

This article relates to the qualifying criteria for the Audit Exemption (AE) that we published on 8 February 2022.

Suruhanjaya Syarikat Malaysia (SSM) issued a Consultative Document on the Proposed Review of AE Criteria for Private Companies in Malaysia on 2 February 2023 with the purpose to seek public response and feedback upon the proposal of new thresholds for the following categories:

1. Zero-Revenue Companies

• Turnover: No changes as remain at RM0

• Total Assets: Increase from RM300,000 to RM500,000 for the current financial year and the immediate past 2 financial years.

2. Threshold-Qualified Companies

• Turnover: Increase annual revenue from RM100,000 to RM1,000,000 during the current financial year and the immediate past 2 financial years.

• Total Assets: Increase from RM300,000 to RM1,000,000 for the current financial year and the immediate past 2 financial years.

• Employees: Increase from not more than 5 to not more than 30 employees at the end of its current financial year and immediate past 2 financial years.

SSM remains the same threshold for Dormant Companies category.

SSM Findings

From the Consultative Document (CD), SSM considered the following in formulating the above proposal:

1. SSM analysis on data available as at 30 November 2022

From Table 2 and Table 3 of the CD, the statistics reflected the overall percentage of AE submissions at a very low rate since the introduction in the year 2017.

Financial Year Ended (Rate)

2020 6%

2019 7%

2018 4%

SSM Explanation

Tag along in the analysis rate, SSM also listed 4 possible reasons for the low rate summaries as below :

a. awareness on the eligibility for AE;

b. procedure imposed by related bodies (such as licensing and regulatory authorities, banks) which require audited Financial Statement;

c. Company Directors' option to submit the audited Financial Statement; and

d. Other factors - limitation of data on the number of employees cause the requirement to submit the audited Financial Statement.

2. Findings of a survey

The Malaysian Institute of Accountants (MIA) conducted a survey in the year 2021 on “The Impact of Audit Exemption on Small Companies and Audits Firms.

MIA reported their findings summaries as below:

a. reasons to option for AE or not; and

b. the majority of respondents agreed to increase the threshold.

3. SSM comparative study in other 3 jurisdictions (United Kingdom, Australia and Singapore) on the trend of AE.

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What is LLP in Malaysia?

What is LLP in Malaysia?
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What is LLP in Malaysia?

The Limited Liability Partnership (LLP) is an alternative business container regulated under the Limited Liability Partnership Act 2012 which incorporates the characteristics of a company and conventional partnership.

What is LLP (Limited Liability Partnership)?

1. Combination of a company and conventional partnership.

2. It’s governed under LLP Act 2012

Who does the registration of LLP?

Compliance officer - he/she may also be one of the partners of the LLP.

Where can register an LLP?

Registrar (SSM) - The compliance officer may log in to MyLLP portal to do registration

How to register an LLP?

Requirements

a) name of LLP

b) nature of business

c) registered office of LLP

d) partner’s details

e) compliance officer’s details

f) approval letter from the governed body (if any)

g) others relevant infomation

How to register an LLP?

Registration procedure

a) Either one of the partners will be appointed as a compliance officer.

b) he/she shall go to SSM office to do identity verification purposes to activate the portal account.

c) the registration of LLP will submit via MyLLP portal by the compliance officer.

d) reserve of LLP Name (SSM) must approve your name before you can register it).

e) you need to register the LLP within 30 days.

What documents do you get after registration?

- Company’s profile

- Certificate of registration

***the documents will be issued by SSM upon request together with the prescribed fee.

What are the registration fees for LLP?

There is a registration fee of RM500 to be charged by SSM

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Can I reuse a company name after strike off from SSM?

Can I reuse a company name after strike off from SSM?
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Can I reuse a company name after strike off from SSM?

On 30 January 2023, Suruhanjaya Syarikat Malaysia (SSM) issued a guideline related to the application to Court to reinstate the name of the company under Section 555(1) of Companies Act (CA), 2016.

This guideline is useful to the public (especially Company Directors) who felt upset by SSM's decision to strike off their company under Section 549.

SSM Power To Strike Off

This section gives SSM the legal power to strike a company off in the registrar where the company:

(a) is not carrying on business or operation;

(b) has contravened any of this act;

(c ) is being used for unlawful purposes; and

(d) is being wound up.

This reinstatement is applicable within 7 years after the name has been struck off by SSM.

How does it work?

Application process according to

1) Order 88 rule 2 of the Rules of Court 2012; and

2) Section 555 of CA, 2016.

The proceeding shall be commenced by the applicant (ie Plaintiff) to file in court an originating summons (“Originating Summons”).

The Originating Summons needs to be supported by an Affidavit in Support (“Affidavit”) setting out the grounds and evidence in support of the application.

General Guidelines

The Guidelines about the application for reinstatement under Section 555 of CA 2016 are summarised below: -

1. The Defendant: SSM is to be named as the defendant in the application;

2. Contents of the Affidavit:

The Affidavit must include the following: -

a) Info on the directors of the Company;

b) Info on the shareholders;

c) Consent letter from the other directors;

d) Address of the registered office;

e) Ground of the application; and

f) Other necessary and relevant facts (for example Annual Return and Financial Statement to prove that the company is in existence and operation or bank transaction reflected in the bank statement or there is the existence of ownership of assets).

The orders sought from the Court must include:

a) The Plaintiff lodges the overdue statutory documents not submitted previously such as Financial Statements, Annual Return and other related documents if any;

b) The cost of the proceedings of RM2,000 be paid by the plaintiff within 30 days of the order made;

c) An order that the cost of the application is borne by the plaintiff.

As the result, SSM may oppose an application that does not fulfill the requirements and the court ultimately has the discretion of whether or not to allow an application for reinstatement under Section 555 of CA 2016 to have proceeded.

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How to set up a company in Malaysia?

How to set up a company in Malaysia?
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KTP Get-Connected Session @ 31/03/23

  • Topic : How to set up a company in Malaysia?

  • Date : 31/03/23

  • Time : 10:30am

  • Location : Live Interview

  • Speakers : Jasmine Ma

  • Moderator : Koh Teck Peng

Proposed Agenda :

1) What company name you want your company to be called?

2) What words/symbols are prohibited by SSM for you to use?

3) How many directors do you want your company to have?

4) How many shareholders will your company have?

5) Does a company need a secretary?

6) What is the nature of the business of your company?

7) What is your company's paid-up capital?

8) How long for the whole process of incorporation?

9) & more

Recorded Webinar on YouTube

Stay tuned for the recorded webinar on our YouTube in the coming days.

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How to close LLP in Malaysia ?

How to close LLP in Malaysia ?
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How to close LLP in Malaysia ?

Dissolution of Limited Liability Partnership​

Section 50 of the Limited Liability Partnership (LLP) Act 2012 shall apply to a voluntary winding-up of a Limited Liability Partnership. S.51 of the LLP Act 2012 Power of Registrar to strike-off limited liability partnerships from the register is reserved for the Registrar.

3 options for closure:

1) Compulsory winding-up by Court

2) Voluntary winding up by partners (Preferable option)

3) Strike-off by SSM.

When partners of LLP do not wish to continue the business or have no successor to take over the entity, the partners may opt to close the entity by Voluntary Winding Up (VWU).

The basic requirement for Voluntary Winding Up (VWU)

Section 50(2) of LLP Act, 2012 required the LLP has:

1) ceased to operate and

2) discharged all its debts and liabilities

Who can apply?

1) Any one of the partner

2) Compliance Officer

with an authorised user to access MyLLP under SSM4U system

Application process with SSM to effect the VWU

  • Part A – Pre-application

  • Part B – Application

  • Part C – Post application

Part A - Pre-application process

As per Section 50(4) of LLP Act, 2012 and Item 4 in SSM Guideline

1) Send a notice to all partners by registered post;

2) Send and obtained a written notice of clearance and no objection from Inland Revenue Board (IRB) of Malaysia; and

3) Publish a notice in Malaysia newspaper as per Appendix A and B in

a. national language; and

b. English language

Part B - Application process

As per Section 50(3) of LLP Act, 2012 and Item 9 in SSM Guideline

1) Submit the application via MyLLP within 7 days upon compliance with Part A together with the following documents:

a. Statutory Declaration as per Appendix C;

b. copy of the notice sent to all partners;

c. written notice from IRB; and

d. copy of the notice published in the newspaper

Part C – Post application process

As per Section 50(7),(8) and (9) of LLP Act, 2012 and Item 14 to 16 in SSM Guideline

1) SSM will notify the applicant in writing on

a. declare that the LLP is dissolved if no further objection and withdrawal; and

b. entitlement to distribute its surplus assets (if any) among partners under the LLP agreement.

2) The applicant required to notify SSM of the completion of the distribution of surplus assets within 14 days to effective and complete the application process.

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What Do You Mean by LLP?

What Do You Mean by LLP?
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What Do You Mean by LLP?

Limited Liability Partnership (LLP) is simply a combination of the feature if a partnership and a limited liability company.

Advantages of LLP company:

a) Limited Liability. Under LLP, the partners are only liable for the amount invested in the company (capital) if the company suffers a loss.

b) Separate Legal Entity. It is a separate legal entity like a company, thus this means a LLP can own property, enter into contracts and conduct business in its own name.

c) Flexible Management. LLP is considered to have a flexible management style where the partners could manage the business by themselves or appoint a manager to operate the business on behalf of them. This allows partner to focus on their areas of expertise.

d) Need Not Be Audited. For a LLP company, there is no need to lodge the audited financial statements under normal circumstances. This help the LLP company to save costs.

e) Continuity. The company can still continue to exist and operate even if one or more partners leave the company or die.

Circumstances LLP is Suitable

a) Professional Services. LLP is suitable for professional services provider like accountants, lawyers, consultants and etc. This is because they could benefit from the flexible management feature of the LLP that allows them to focus their own areas of expertise

b) SME. LLP is suitable for SME company because this type of business entity would normally prefer to have limited liability protection for its partners. Especially in the early stage of start-up when the company has very limited resources to repay any potential losses.

Reference

Limited Liability Partnership Act 2012

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Can my Sdn Bhd appoint more than one (1) company secretary ?

Can my Sdn Bhd appoint more than one (1) company secretary ?
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Can my Sdn Bhd appoint more than one (1) company secretary ?

Recently we encountered a question raised by Company Director asking whether Sdn Bhd can appoint more than 1 secretary for the company.

Section 235(1) of the Companies Act (CA) 2016 states that a company shall have at least 1 secretary. This means there is no prohibition to appoint more than 1 person to act as secretary for the company.

CA only prohibition this person to act in dual capital (ie as secretary and at the same time as a director) under Section 242 of CA2016 to avoid authorisation by the same person.

Additionally, the company cannot simply appoint anyone to act as the secretary.

There are requirements to be fulfilled before the appointment and the requirements are listed below:

I) Basic

a) a natural person;

b) age 18 years old and above; and

c) citizen or permanent resident of Malaysia who resident and having a principal address of residence in Malaysia

II) Qualification/ Professional requirement

a) a member of a body listed in the Fourth Schedule of CA2016; or

b) a person licensed under Section 20G of the Companies Commission of Malaysia Act 2001.

Who is responsible to appoint a company secretary?

Company Directors may not have a full understanding of the technical knowledge in compliance according to the act. Hence, he requires the assistance of a qualified person to attend to compliance matters.

Therefore, the secretary holds an official role in the company and is also an officer under Section 2 of the CA 2016.

This means the secretary is binding to the company. He/ she is required to play his/ her role as administrator to maintain the registered record with the Registrar of Company according to the act.

When to appoint a company secretary?

Within 30 days from the date of incorporation with written consent from the Company Secretary as stated in Section 236(2)&(3) of CA2016.

The appointment of a subsequent company secretary is made by the Board of Directors depending on the terms and conditions of such appointment.

Generally, Sdn Bhd may choose to have more than 1 company secretary.

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What are 5 responsibilities of the director under SSM?

What are 5 responsibilities of the director under SSM?
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What are 5 responsibilities of the director under SSM?

1) Lodgement of Annual Return (AR)

Section 68(1) of Companies Act, 2016 require a company to lodge the AR to SSM not later than 30 days from the anniversary of its incorporation date.

Penalty: Fine not exceeding RM50,000.00

2) Prepare Financial Statements

Section 248(1) of Companies Act, 2016 require a company to prepare the financial statements within 6 months of its financial year end.

Penalty: Fine not exceeding RM500,000.00 or imprisonment not exceeding 1 year or both

3) Circulation of Financial Statements

Section 258(1) of Companies Act, 2016 require a company to circulate the financial statements within 6 months of its financial year end.

Penalty: Fine not exceeding RM50,000.00

4) Lodgement of Financial Statements

Section 259 (1) of Companies Act, 2016 require a company Lodge the financial statement to SSM within 30 days from the circulation date.

Penalty: Fine not exceeding RM50,000.00 and if continuing offence, a further fine not exceeding RM1,000 for each day

5) Late Lodgement Fee

SSM issued a Practice Directive No.1/2017 – The Lodgement Requirements and Related Matter that further details out the penalty for late lodgement of documents.

For any documents that is lodged to SSM later than the prescribed timeframe as per stipulated in the Act, the following late lodgment penalty shall apply:

After deadline Penalty(RM)

* 7 days to 3 months RM50
* 4 months to 6 months RM100
* 7 months to 12 months RM150
* 13 months onward RM200

The Company is required to pay this penalty amount on the spot at the time filing for the documents to SSM.

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SSM Heavy Fines on Company, Sole Proprietor and Partnership

SSM Heavy Fines on Company, Sole Proprietor and Partnership
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SSM Heavy Fines on Company, Sole Proprietor and Partnership

Update any changes in company information promptly

Recently we came across an interesting press release published by SSM on 26 October 2022 where the Registrar of Business (ROB) imposed a fine of RM4,000 on the owner of a sole proprietor as a result of giving a false business address.

This serves as a reminder to the public that prosecution will be taken against any person who is found to have given false or misleading statements and information to SSM. SSM is always consistent in regulating compliance with the law and ensuring the corporate community is aware of its responsibility and business ethics.

In this newsletter, we would like to emphasize and spread awareness to our client and the public that it is important to update the business or company’s particular promptly once there are any changes in the details.

Why it is important?

To avoid any heavy penalty imposed by SSM.

Accordingly to the following act governed under SSM, it is a requirement for the business owner or company’s directors to update any changes in the particular such as a change in residential address, or renewal passport number for foreign director and shareholder.

  • ROB Act, 1956 – Section 5B

  • Companies Act (CA), 2016 – Division 8 Registered Office and Registers - Section 51 and 58

When need to notify on the changes?

  • ROB - within 30 days from the date of changes

  • ROC - within 14 days from the date changes.

What are the penalty and fines if failure to comply?

a) Late filing fees are applicable as follows:

Private company:

- Not more than 3 months – RM 50.00

- More than 3 months but not more than 6 months – RM100.00

- More than 6 months but not more than 12 months – RM150.00

- More than 12 months – RM200.00

b) Compound upon conviction

ROB - not exceeding RM10,000 or to imprisonment for a term not exceeding 1 year or both

ROC -

i) Section 51 - not exceeding RM20,000

ii) Section 58 - not exceeding RM50,000

Final Words

In conclusion, the business owner and company directors’ must update any changes of information to SSM. The information provided to SSM must be true and correct to avoid any unnecessary penalty imposed by SSM.

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