After my earlier introduction and summary of the new Companies Bill, I will be writing a series of articles on the new Companies Bill. I aim to release an article every few weeks or so, touching on the different areas of the new law. For ease of reference, I will continue to refer to it as the Companies Bill and insert the clause references in brackets.
I kick off this series by focusing on 3 things existing companies should already look out for under the Companies Bill. While the Companies Bill may only come into force in the next 6-12 months or so, I highlight 3 areas companies should start preparing for right now.
In summary, these 3 areas are:
Your existing Memorandum and Articles of Association: Do you need to fine-tune the provisions?
The new law will shift to a no-par value regime: Impact on your existing share premium account.
Putting in place checklists and guidelines for the new internal processes.
In my earlier post, I had set out a summary of the winding up law in Malaysia. Now, I touch on the three possible pitfalls and liabilities which directors may face if their company is wound up. The list is by no means exhaustive but I will only deal with three topics:
The impact on the director’s credit rating.
The need to cooperate with the liquidator.
The possibility of being personally liable for the debts of the wound up company.
As an introduction, the term ‘director’ means any person who holds the position of director by whatever name called. A question I am sometimes asked, especially by the director in trouble, is whether the law will differentiate between an “ordinary” director, and a managing director or executive director. For the purposes of the potential risks and liabilities, the law will not differentiate between any of such directors. All directors can potentially face the same level of liability. Continue reading →
I was interviewed by The Edge Financial Daily and I shared my views on some of the challenges that directors will face under the upcoming Companies Bill.
“It’s not an easy balancing act to be done. But if you are speaking from the perspective of minority shareholders or even shareholders, I would say they will be welcoming these changes because there is more information, and the directors have to allow a platform for the shareholders to discuss, query, ask questions, even if it’s not contained specifically in any audited accounts.
“Free flow of information is quite welcomed,” Lee told The Edge Financial Daily after presenting his paper “New Companies Bill: Upcoming Changes and Impact on Directors and Shareholders” at the Malaysia Legal and Corporate Conference on Oct 7.
Although Lee welcomed the greater flow of information and interaction between the board and the shareholders, he warned of the possibility of shareholders abusing the new privileges to the detriment of the company and its operations.”
My views in The Edge were also briefly discussed on the BFM Morning Run on 19 October 2015.
It appears from the Parliament website that the Companies Bill 2015 was tabled for its First Reading on 19 October 2015 and for the Second Reading on 20 October 2015. So we are now in the process of ushering in the new laws.