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 →
In the Court of Appeal’s grounds of judgment dated 10 August 2017 of Gan Bee San v Malayan Banking Berhad, the Court of Appeal allowed an appeal and set aside a winding up order. The decision confirms the growing list of appellate authorities where the Court has the inherent jurisdiction to set aside a winding up order. The brief facts are below.
On 4 August 2017, the Companies Commission of Malaysia, or SSM (its Malay acronym), has brought into force audit exemption for certain categories of private companies. SSM has issued Practice Directive No. 3/2017 to set out the qualifying criteria for private companies to be exempted from appointing an auditor for a financial year. SSM’s FAQ document has also been updated as at 4 August 2017 to address questions regarding audit exemption.
The following types of private companies can decide to opt for audit exemption:
Zero-revenue companies; and
Threshold-qualified companies – annual revenue of RM100,000 or less, total assets of RM300,000 or less, and 5 employees or less.
[this article will be published in an upcoming issue of SKRINE’s Legal Insights]
By Lee Shih and Khong Siong Sie
The Companies Act 2016 (“Act”) has come into force on 31 January 2017, except for the provisions on registration of company secretaries and corporate rescue. This article will highlight five tax implications on companies as a result of the Act.
(1) SME OR NON-SME
The Act’s introduction of no-par value shares may have an impact on the preferential tax rates enjoyed by certain small and medium enterprises (“SMEs”).
Resident SMEs with a paid-up capital in respect of ordinary shares of RM2.5 million and below at the beginning of the basis period for a year of assessment are taxed at a preferential tax rate of 18% (instead of the normal rate of 24%) for the first RM500,000 of its chargeable income. Such SMEs must not be part of a group of companies where any of their related companies have a paid-up capital of more than RM2.5 million.
With the introduction of no-par value shares, the moneys in the share premium account and capital redemption reserve become part of the company’s share capital, subject to a transitional period of 24 months. This merging of share premium and capital redemption reserve may result in some SMEs losing the preferential tax rate once their merged share capital in respect of ordinary shares exceeds RM2.5 million.
Losing such preferential tax rate may translate into liability for an additional tax of up to RM30,000.00. Further, there may be a loss of other benefits such as the unlimited claim on special allowances for small value assets and exemption from having to provide an estimate of tax payable for the first two years of operations. Continue reading →