The Companies Bill Revamping the Companies Act December LEE SHIH & SHEBA GUMIS

Transcription

1 1 The Companies Bill Revamping the Companies Act December LEE SHIH & SHEBA GUMIS

2 SUMMARY OF PART TWO Company Secretaries Meetings and Written Resolutions Issues Relating to Directors Issues Relating to Auditors Changes to the capital reduction process 2

3 COMPANY SECRETARIES [cl ] Mandatory appointment of company secretary maintained. New requirement: must register with CCM [cl. 237] 3

4 MEETINGS OF MEMBERS Summary 1. Snapshot of present AGM provisions. 2. Move to No-AGM regime for private cos. 3. AGMs maintained for public cos. 4. Changes to how meetings will be held. 5. If all else fails, Court Order for convening a meeting. 4

5 SNAPSHOT: PRESENT AGM Requirement to hold AGMs AGM matters: 1. Laying of accounts 2. Appointment of auditors 3. Retirement / election directors 4. Lodgment of accounts and annual returns 5

6 NEW: NO-AGM REGIME FOR PRIVATE COS Rationale behind this change. Four things that flow from this. 1. Circulation of accounts: Within 6 months of financial year-end and lodged with CCM within 1 month after circulation [cl. 254, 255, 256] 6

7 NEW: NO-AGM REGIME FOR PRIVATE COS 2. Appointment auditors: First round appointment by Board [cl. 262(3)] and subsequently by members ordinary reso [cl.263(4)]. NB: Useful provision allowing Registrar to appoint auditor to fill vacancy upon application by member. [cl.263] 7

8 NEW: NO-AGM REGIME FOR PRIVATE COS 3. Retirement of directors: Up to the members to decide by way of written resolution [cl.204(2)]. (also see later section on appointment and removal of directors) 4. Lodgment of annual returns: To lodge with CCM an annual return for each calendar year not later than 30 days from incorporation date [cl. 67(1)]. 8

9 NEW: NO-AGM REGIME FOR PRIVATE COS Protection for shareholders: Members holding at least 5% of paid-up capital can request directors to hold a physical meeting [cl.306(3)] Requirements: 1. More than 12 months since last meeting (convened under this section); and 2. Proposed resolution not vexatious or frivolous. 9

10 AGM MAINTAINED FOR PUBLIC COS AGM regime still maintained for public companies. E.g. see clauses

11 CHANGES TO HOW MEETINGS ARE HELD Venue requirement: Not mandatory that venue(s) must be in M sia. But Chairman shall be at the main venue which must be in M sia [cl.323]. Quorum: For single-member company, quorum can be one [cl.324]. Corporate representative: No need for certificate [cl.329] Proxies: Not limited to categories of proxies [cl.330] 11

12 CHANGES TO HOW MEETINGS ARE HELD What about requisitioning or convening general meetings? [almost similar to present s.144] Members holding 10% of paid-up (or where no share capital, members with 5% voting rights) can request directors to hold a meeting. [cl.306] Directors must issue notice within 14 days and meeting to be held within 28 days of the notice [cl.307] 12

13 CHANGES TO HOW MEETINGS ARE HELD If directors fail to hold the general meeting, then the members who requested the meeting (or any of them of at least ½ of the requestors) can call such a meeting [cl.308] This meeting to be held not more than 3 monthsafter date directors were required to call such a meeting [cl.308(3)] 13

14 IF ALL ELSE FAILS Power of Court to order meeting [cl.309] [similar to the present s.150] if for any reason it is impracticable to call a meeting of members in any manner in which meetings may be called 14

15 QUESTIONS 15

16 SHIFT TO WRITTEN RESOLUTIONS REGIME PRIVATE COMPANIES 16

17 SHIFT TO WRITTEN RESOLUTIONS REGIME Unanimous written resolution [s.152a] cast aside. Ordinary and special resolutions can be passed as written resolutions, with the same threshold (simple majority and more than 75%). A written resolution can be proposed by a director or a member [cl.292]. Cannot involve removal of director [cl.205] or auditor [cl.271] see [cl.292] 17

18 PROPOSED BY DIRECTORS Query: Single director [cl.292(1)(a)] or the Board of Directors [cl. 296(1)]? 18

19 PROPOSED BY MEMBER(S) 19

20 20

21 PROCEDURE FOR WRITTEN RESOS 1. Company must receive an authenticated document identifying member s agreement to which resolution. Can be sent in hard copy or electronic form [cl.301(1)]. 2. Member s agreement once signified cannot be revoked [cl.301(3)]. 3. Written resolution passed once required majority have signified agreement [cl.301(4)]. 4. Will lapse after 28 days of circulation date [cl.302] 5. Circulation date [cl.294]: date all circulated or on the first of the days of circulation. 21

22 QUESTIONS? 22

23 ISSUES RELATING TO DIRECTORS Summary 1. Appointment & Removal 2. Present Principles on Removal of Directors 3. Future: Removing Directors in a Private and Public Company 4. Board Meetings. 5. Remuneration of Directors. 23

24 DIRECTORS: APPOINTMENT & REMOVAL For private cos: 1 (resident) director [cl.195] For public cos.: 2 (resident) directors [cl.195] Removal of directors [cl.205] 1. Private companies 2. Public companies 24

25 PRINCIPLES ON REMOVAL OF DIRECTORS 25

26 PRESENT: REMOVAL OF DIRECTORS Section 128: public and private companies. Does section 128(2) apply to private companies? i.e. need to give special notice and hold a general meeting? Case of Dato Low Tuck Choy and Anor v Chong Kok Weng and Others [2009] MLJU 826 Further reading: Tien Ik [1992] 2 MLJ 689 (SC), Kow Kek Leong [1998] 5 CLJ 328 (HC) and Chow Chi Hong [2009] 6 MLJ 555 (HC) 26

27 BILL: REMOVAL DIRECTORS PRIVATE COMPANY Must hold a physical general meeting [cl.292(2)(a) and cl.205]. Special notice required [cl.205(3)]. 27

28 BILL: REMOVAL DIRECTORS PUBLIC COMPANY Must hold a physical general meeting [cl.292(2)(a) and cl.205]. Special notice required [cl.205(3)]. Director has right to be heard, right to make oral or written representation [cl.206]. 28

29 BOARD MEETINGS A new Fourth Schedule of the Bill: default procedure unless constitution states otherwise. Quorum: Fixed by Board. If not, majority of directors. Chairperson has casting vote. Director present presumed to have agreed to resolution unless expressly dissents or votes against. 29

30 REMUNERATION OF DIRECTORS Public cos: remuneration and any benefits shall be approved at a general meeting [cl. 229(1)]. Private cos: Subject to constitution, Board may approve remuneration and benefits but: 1. Approval to be recorded in Board minutes and notified to members within 14 days [cl.229(3)]. 2. Members holding at least 10%, within one month of knowing, can require directors to obtain a written resolution or ordinary reso at general meeting [cl.229(4)]. 30

31 QUESTIONS 31

32 AUDITORS Summary 1. Appointment. 2. Term of Office. 3. Removal. 4. Replacement. 5. Resignation. 32

33 AUDITORS: APPOINTMENT Private Cos Public Cos (i) Board (at time of incorporation) [cl. 262(3)] (ii) Members by ordinary reso [cl. 262(4)] (iii) Registrar if the company fails to appoint [cl. 263] (i) Board (at time of incorporation) [cl. 267(3)] (ii) Members at the AGM [cl. 267(4)] (iii) Registrar if the company fails to appoint [cl. 267] 33

34 AUDITORS: TERM OF OFFICE PRIVATE CO. Will continue and deemed reappointed [cl.264(1)] UNLESS 1. Appointed by Board 2. Constitution 3. Members prevent 4. Members resolve no re-appointment Notice from 5% voting members can block reappointment [cl. 265] 34

35 AUDITORS: REMOVAL Members can remove by way of ordinary reso [cl. 271(1)] and special notice required. Almost similar procedure: [cl. 272] 1. Auditor can make written representations of reasonable length. Copy to be circulated. 2. Copies need not be circulated and read out if, on application of Company or other aggrieved person, the Registrar is satisfied that there is needless publicity or matter is defamatory or on some other reasonable grounds. 35

36 AUDITORS: REPLACEMENT Written resolution [cl. 274] General meeting of members [cl. 275] Almost similar procedure of allowing written representations and Registrar may prevent circulation and reading out of representations. 36

37 AUDITORS: RESIGNATION Auditor can now deposit notice in writing of resignation at company s registered office. Resignation effective after 21 days [cl.276] Upon receipt of resignation notice, company shall notify Registrar within 7 days [cl

38 AUDITORS: RESIGNATION (PUBLIC CO.) In addition, in a public co., auditor can also [cl.278(2), (3)]: 1. Deposit with the resignation notice, a signed requisition calling on directors to convene general meeting. Explanation on the resignation. 2. May request company to circulate auditor s statement. Within 21 days or receipt of requisition, directors to convene a general meeting within 28 days [cl.278(5)]. 38

39 QUESTIONS 39

40 CAPITAL REDUCTION 40

41 CAPITAL REDUCTION Court Process Route [cl. 115] Solvency Statement Route [cl.116] 41

42 CAPITAL REDUCTION: COURT PROCESS 42

43 CAPITAL REDUCTION: SOLVENCY STATEMENT Statutory test for solvency: [cl.111] Offences: If no reasonable ground to make the solvency statement, maximum of 5 years imprisonment or RM500, fine or both. 43

44 CAPITAL REDUCTION PROCESS Stage 1 1. Circulate proposed special resolution (either by WR or at meeting) with the solvency statement [cl.116(5)] and pass the resolution. 2. Company sends to IRB and CCM a notice (within 7 days) that the special resolution passed, text of the resolution and that solvency test met [cl.116(1)] 44

45 CAPITAL REDUCTION PROCESS Stage 1 Solvency requirements need not be met if purely cancellation of accumulated losses [cl.116(3)] Solvency statement made available for inspection by any creditors for 6 weeks from date of resolution [cl.116(5),(6)] NB: Advertisement? 45

46 CAPITAL REDUCTION PROCESS 46

47 CAPITAL REDUCTION PROCESS Stage 2: Six-week Wait 6 weeks from date of reso, any creditor can apply to Court for reso to be cancelled [cl.117(2)] Test: debt or claim not secured or inadequate safeguards [cl.119(2)] 47

48 CAPITAL REDUCTION PROCESS Stage 3: Beyond the Wait If no objections, then between 6-8 weeks, company shall lodge with CCM: 1. Copy of the resolution; 2. Copy of solvency statement (if applicable); 3. Statement confirming all requirements complied with and no application for cancellation made; and 4. Notice containing reduction information. 48

49 CAPITAL REDUCTION PROCESS Stage 3: Beyond the Wait If there were objections, then within 14 days of the end of legal proceedings: 1. Statement confirming all requirements complied with and application for cancellation brought to an end; 2. Copy of the Court Order dismissing the application; and 3. Notice containing the reduction information. 49

50 FINAL QUESTIONS? 50

51 THANK YOU LEE SHIH SHEBA GUMIS 51