The Companies Act 1965 (CA 1965) contained section 351 which allowed for an application for security for costs. The rationale for that section 351 was as follows.
When a company litigates against a party, and if that action were to fail, the defending party could find itself prejudiced if the company did not have enough money to pay the legal costs to that party. Hence, section 351 of the CA 1965 stated that if it appears by credible testimony that there is reason to believe that the company cannot pay the costs of the defendant, then the court can order that the company pay security for those costs.
Unfortunately, section 351 of the CA 1965 was not carried forward under the Companies Act 2016 (CA 2016). It was a useful provision to safeguard the interests of the defendant. Nonetheless, there are still other possible reliefs that a defendant can take to possibly apply for security for costs against a company. Continue reading
On Thursday 8 February 2018, I will be speaking at a one-day seminar organised by the Securities Industry Development Corporation (SIDC). The SIDC is the training and development arm of the Securities Commission Malaysia.
The seminar is titled ‘Changes in the Listing Requirements Post-Companies Act 2016: What to Look Out For’. You can find out more information and also register at the SIDC website.
The Federal Court issued its grounds of judgment in the Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Berhad case. This is a significant decision explaining the scope of directors’ duties. It gives guidance on when a director acts in the best interest of the company and the discretion afforded to a director when the director makes a business judgment.
This case update will set out the brief background facts of the case and the legal principles that were decided by the Federal Court. I also set out the key takeaways and points that directors should take note of. Continue reading
The Malaysian High Court in Tob Chee Hoong v Tob Chee Choong & Ors  MLJU 1303 has confirmed that the shareholders’ oppression remedy (section 181 of the Companies Act 1965, and section 346 of the Companies Act 2016) would extend to both the holding company and the subsidiary company.
An aggrieved shareholder may be a member of only the holding company but the oppressive conduct may only be at the subsidiary level. In line with other jurisdictions, this High Court decision confirms that the aggrieved shareholder can still seek relief. Continue reading
Under the Companies Act 2016 (CA 2016), there has now been a change in the law which may cause auditors to be conflicted or disqualified from a wider range of audit jobs. In particular, this may affect the larger audit firms.
Where an audit firm is appointed as the auditor of the company, every audit partner and now, with change in the law, every audit partner’s spouse cannot be an officer of the company. The CA 2016 defines an officer as including any director, secretary or employee of the company. Hence, an audit firm would appear to be conflicted from acting for a company where the spouse of an audit partner is merely an employee of the company. Continue reading
On 3 October 2017, the Companies Commission of Malaysia (SSM) is holding the SSM National Insolvency Conference 2017 entitled ‘Corporate Restructuring & Insolvency under Companies Act 2016: A Paradigm Change’. I have been involved in the organising of the sessions and it promises to be a very interesting conference. The registration fee is RM700.
I will be speaking and moderating Session 2 on ‘Corporate Rescue Mechanism: How It Will Work’. Joining me will be Mohamed Sufyan Mohamed Mokhtar from SSM and Victor Saw of PwC.
Under the Companies Act 2016, the corporate rescue mechanism is made up of corporate voluntary arrangement and judicial management. Although the corporate rescue mechanism provisions have not been brought into force yet, it is anticipated that these provisions will come into effect by May 2018. In the meantime, the new draft Corporate Rescue Mechanism Rules are close to being finalised as well.
In our Session 2, the speakers will be fleshing out the application of the corporate voluntary arrangement and judicial management through factual scenarios. That should assist in seeing the practical implementation of these new mechanisms.
The other topics covered at the National Insolvency Conference are:
- The World Bank’s Perspective on Debtors’ and Creditors’ Rights.
- New Guidelines in Striking Off of Companies and Asset Management of Dissolved Companies.
- Impact of the Companies Act 2016 on Winding Up.
- What It Takes to Become an Insolvency Practitioner.
The full brochure and registration form can be found here.
On 12 September 2017, I was invited to be a speaker at the MAICSA Annual Conference 2017. This was on the Plenary Session 2 on Companies Act 2016 – Key Insights and Implications for Directors/Shareholders. It was moderated by my co-author and chartered secretary, Kenneth Foo.
Having delivered my presentation, there were interesting questions from the floor as well as through my interactions with the audience members. I thought it would be useful to highlight 3 of the questions I received. They are an indication of the issues still concerning practitioners and companies . Continue reading