Companies 1

LAWS OF MALAYSIA

Act 777

COMPANIES ACT 2016

Laws of Malaysia2 Act 777

Date of Royal Assent  ... ... 31 August 2016

Date of publication in the
Gazette ... ... ... 15 September 2016

Publisher’s Copyright   C
PERCETAKAN NASIONAL MALAYSIA BERHAD
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means
electronic, mechanical, photocopying, recording and/or otherwise without the prior permission of Percetakan Nasional Malaysia Berhad
(Appointed Printer to the Government of Malaysia).

Companies 3

LAWS OF MALAYSIA

Act 777

COMPANIES ACT 2016

ARRANGEMENT OF SECTIONS

Part I

PRELIMINARY

 Section

 1. Short title and commencement

 2. Interpretation

 3. Definition of “corporation”

 4. Definition of “subsidiary and holding company”

 5. Definition of “ultimate holding company”

 6. Definition of “wholly-owned subsidiary”

 7. When corporations deemed to be related to each other

 8. Interests in shares

Part II

FORMATION AND ADMINISTRATION OF COMPANIES

Division 1

Types of Companies

 9. Essential requirements of a company

 10. Types of companies

 11. Private or public company

 12. Prohibition on companies limited by guarantee with a share capital

 13. Prohibition for unincorporated associations, etc.

Division 2

Incorporation and Its Effects

 14. Application for incorporation

 15. Registration for incorporation

Laws of Malaysia4 Act 777

 16. Power to refuse registration of incorporation

 17. Certificate of incorporation

 18. Effect of incorporation

 19. Notice of registration as conclusive evidence

 20. Separate legal entity

 21. Companies have unlimited capacity

Division 3

Restriction on Subsidiary Being Member of Its Holding Company

 22. Membership of holding company

 23. Subsidiary acting as a participating dealer

 24. Protection of third parties in other cases where a subsidiary acts as a
dealer in securities

Division 4

Name of Company

 25. Name of company

 26. Availability of name

 27. Confirmation of availability and reservation of name

 28. Change of name

 29. Power of Registrar to direct a change of name

 30. Publication of name

Division 5

Constitution of a Company

 31. Constitution of a company

 32. Company may adopt a constitution

 33. Effect of constitution

 34. Form of constitution

 35. Contents of a company’s constitution

 36. Company may alter or amend constitution

 Section

Companies 5

 37. Court may alter or amend constitution

 38. Company limited by guarantee shall have a constitution

 39. Non-application of doctrine of constructive notice

Division 6

Conversion of Company Status

 40. Conversion from an unlimited company to a limited company

 41. Conversion from public companies to private companies or private
companies to public companies

Division 7

Provisions Applicable to Certain Types of Companies

 42. Private companies

 43. Prohibition of private companies to offer shares or debentures or invite
to deposit money

 44. Offer to the public

 45. Company limited by guarantee

Division 8

Registered Office and Registers

 46. Registered office and office hours

 47. Documents to be kept at registered office

 48. Inspection of documents and records kept by company

 49. Forms of documents and other means for recording of documents

 50. Register of members

 51. Duty to notify of particulars and changes in the register of members

 52. Index of members of company

 53. Branch register of members

 54. Place where register of members and index to be kept

 55. Inspection and closing of register of members and index

 56. Power of company to require disclosure of beneficial interest in its voting
shares

 Section

Laws of Malaysia6 Act 777

 57. Register of directors, managers and secretaries

 58. Duty to notify of particulars and changes of director, manager and
secretary

 59. Register of directors’ shareholdings, etc.

 60. Register of debenture holders and copies of trust deed

Division 9

Execution of Documents

 61. Company seals

 62. Official seal for use abroad

 63. Official seal for share certificates, etc.

 64. Company contracts

 65. Pre-incorporation contract

 66. Execution of documents

 67. Execution of deeds

Division 10

Annual Return

 68. Duty to lodge annual return

Part III

MANAGEMENT OF COMPANY

Division 1

Share and Capital Maintenance

Subdivision 1

Share Capital

 69. Types of shares

 70. Nature of shares

 71. Rights and powers attached to shares

 72. Preference shares

 73. Prohibition to issue bearer’s share warrants

 Section

Companies 7

 74. No par value shares

 75. Exercise of power of directors to allot shares or grant rights

 76. Allotment of shares or grant of rights with company approval

 77. Registration of allotment in the register of members

 78. Return of allotment

 79. General prohibition of commissions, discounts and allowances

 80. Permitted commissions

 81. Differences in calls and payments, etc.

 82. Calls on shares

 83. Forfeiture of shares

 84. Power of company to alter its share capital

 85. Pre-emptive rights to new shares

 86. Conversion of shares into stock

 87. Rights and privileges of stockholders

 88. Rights attached to shares

 89. Classes of shares

 90. Description of shares of different classes

 91. Variation of class rights

 92. Notifying shareholders of variation

 93. Disallowance or confirmation of variation by Court

 94. Delivery of order of Court to Registrar

 95. Notifying Registrar of variation

 96. Variation includes abrogation

Subdivision 2

Share Certificate, Title, Transfer and Transmission

 97. Issuance of share certificate

 98. Application for issuance of share certificate

 99. Delivery of share certificate

 100. Numbering of shares

 Section

Laws of Malaysia8 Act 777

 101. Registration of members constitute as evidence of legal title

 102. Duty of secretary to enter issuance and transfer of shares in the register
of members

 103. Rectification

 104. Loss or destruction of certificates

 105. Requirement for instrument of transfer

 106. Registration of transfer or refusal of registration

 107. Order of Court for registration

 108. Validation of shares improperly issued

 109. Registration of transmission of shares or debentures

 110. Limitation of liability of trustee, etc., registered as owner of shares

 111. Lien on shares

Subdivision 3

Solvency Statement

 112. Solvency test

 113. Solvency statement

 114. Offences regarding solvency statement

Subdivision 4

Reduction of Share Capital

 115. Company may reduce its share capital

 116. Reduction of share capital by Court

 117. Reduction of share capital by private or public company

 118. Creditor’s right to object to the reduction of the share capital by the
company

 119. Position at end of period for objection by creditor

 120. Power of Court in relation to objection by creditor

 121. Offences for making groundless or false statements

 122. Liability of members on reduced shares

 Section

Companies 9

Subdivision 5

Assistance by a Company in the Purchase of Its Own Shares

 Section

 123. Financial assistance by a company in dealings in its shares, etc.

 124. Consequences of failing to comply with this Subdivision

 125. General exceptions

 126. Financial assistance not exceeding ten per centum of shareholders’ funds

 127. Purchase by a company of its own shares, etc.

 128. Options to take up unissued shares

 129. Register of options to take up unissued shares in a company

 130. Power of company to pay interest out of capital in certain cases

Subdivision 6

Dividends

 131. Distribution out of profit

 132. Distribution only if company is solvent

 133. Recovery of distribution

Subdivision 7

Substantial Shareholdings

 134. Application and interpretation

 135. Persons obliged to comply with Subdivision

 136. Substantial shareholdings and substantial shareholders

 137. Substantial shareholder to notify company of his interests

 138. Substantial shareholder to notify company of change in his interests

 139. Person who ceases to be substantial shareholder to notify company

 140. References to operation of interests in shares

 141. Copy of notice to be served on the Registrar

 142. Notice to non-residents

 143. Registrar may extend time for giving notice under this Subdivision

 144. Company to keep and maintain register of substantial shareholders

 145. Powers of Court with respect to defaulting substantial shareholders

Laws of Malaysia10 Act 777

Subdivision 8

The Central Depository System—a Book-Entry or Scripless System for the
Transfer of Securities

 Section

 146. Interpretation

 147. Depositor deemed to be member

 148. Transfer of securities is by way of book entry

 149. Rectification of record of depositors

 150. Non-application of section 472 to disposition made by way of book entry

 151. Exemption from this Subdivision

Subdivision 9

Prospectus

 152. Application of Subdivision 9

 153. Power of Minister to exempt the application of Subdivision 9

 154. Requirement to register and lodge prospectus

 155. Registration of prospectus

 156. Refusal to register a prospectus

 157. Keeping of documents relating to prospectus

 158. Invitations to the public to lend money to or to deposit money with a
corporation

 159. Form and content of prospectus

 160. Consent from person to issue prospectus containing his statement

 161. Relief from requirements as to form and content of prospectus

 162. Retention of over-subscription in issuance of debenture

 163. Certain advertisements deemed to be prospectuses

 164. Document containing offer of shares for sale to be deemed prospectus

 165. Information memorandum deemed to be prospectus

 166. Supplemental prospectus or replacement prospectus

 167. Civil liability for misstatement in prospectus

 168. Criminal liability for misstatement in prospectus

 169. Persons not to be taken to have authorized or caused issue of prospectus

 170. Stop order

Companies 11

Subdivision 10

Debentures

 Section

 171. Application of Subdivision 10

 172. Specific performance of contracts

 173. Perpetual debentures

 174. Power to re-issue redeemed debentures

 175. Deposit of debentures to secure advances

 176. Qualifications of trustee for debenture holders

 177. Duties of trustee

 178. Retirement of trustee

 179. Contents of trust deed

 180. Power of Court in relation to certain irredeemable debentures

 181. Power of trustee to apply to Court for directions, etc.

 182. Obligations of borrowing corporation

 183. Obligation of guarantor corporation to furnish information

 184. Loans and deposits to be immediately refundable on certain events

 185. Liability of trustee for debenture holders

Subdivision 11

Restrictions on Allotment and Commencement of Business

 186. Prohibition of allotment unless minimum subscription received

 187. Application for moneys to be held in trust until allotment

 188. Restriction on allotment in certain cases

 189. Requirements as to statements in lieu of prospectus

 190. Restrictions on commencement of business in certain circumstances

 191. Restriction on varying contracts referred to in prospectus, etc.

Division 2

Members, Directors and Officers of Companies

Subdivision 1

Members

 192. Liability of members

Laws of Malaysia12 Act 777

 193. Liability for calls and forfeiture

 194. Shareholders not bound to acquire additional shares by alteration to
constitution

 195. Members’ rights for management review

Subdivision 2

Directors

 196. Directors of company

 197. Persons connected with directors

 198. Persons disqualified from being a director

 199. Power of Court to disqualify persons from acting as director or promoter

 200. Power of Registrar to remove name of disqualified director

 201. Directors’ consent required

 202. Named directors and subsequent directors

 203. Appointment of directors of public company to be voted on individually

 204. Validity of acts of directors and officers

 205. Retirement of directors

 206. Removal of directors

 207. Right to be heard for directors of public company against removal

 208. Vacation of office of director

 209. Resignation, vacation or death of sole director or last remaining director

Subdivision 3

Directors’ Duties and Responsibilities

 210. Interpretation

 211. Functions of Board

 212. Proceedings of Board

 213. Duties and responsibilities of directors

 214. Business judgment rule

 215. Reliance on information provided by others

 Section

Companies 13

 216. Responsibility for actions of delegatee

 217. Responsibility of a nominee director

 218. Prohibition against improper use of property, position, etc.

 219. General duty to make disclosure

 220. Effect of other rules of law on duties of directors

 221. Disclosure of interest in contracts, proposed contracts, property, offices,
etc.

 222. Interested director not to participate or vote

 223. Approval of company required for disposal by directors of company’s
undertaking or property

 224. Loans to director

 225. Prohibition of loans to persons connected with directors

 226. Prohibition of tax free payments to directors

 227. Payment to directors for loss of office, etc.

 228. Transactions with directors, substantial shareholders or connected persons

 229. Exception to section 228

 230. Approvals for fees of directors

 231. Directors’ service contracts

 232. Copy of contracts to be available for inspection

 233. Right of member to inspect and request copy

 234. Contract with sole member who is also a director

Subdivision 4

Secretary

 235. Requirement for a secretary

 236. Appointment of a secretary

 237. Resignation of a secretary

 238. Disqualification to act as a secretary

 239. Removal of a secretary

 240. Office of secretary shall not be left vacant

 241. Requirement to register with Registrar

 242. Prohibition to act in dual capacity

 Section

Laws of Malaysia14 Act 777

Division 3

Accounts and Audit

Subdivision 1

Financial Statements and Report

 Section

 243. Interpretation

 244. Compliance with approved accounting standards

 245. Accounts to be kept

 246. System of internal control

 247. Accounting periods of companies within same group

 248. Directors shall prepare financial statements

 249. General requirements for financial statements

 250. Subsidiaries to be included in consolidated financial statements

 251. Financial statements to be approved by the Board

 252. Directors shall prepare directors’ report

 253. Contents of directors’ report

 254. Form and content of directors’ report and financial statement of a banking
corporation, etc.

 255. Relief from requirements as to form and content of financial statements
and directors’ report

 256. Power of Registrar to require a statement of valuation of assets

 257. Duty to circulate copies of financial statements and reports

 258. Time allowed for sending out copies of financial statements and reports

 259. Duty to lodge financial statements and reports with the Registrar

 260. Duty to lodge certificate relating to exempt private company

 261. Auditor’s statements

Subdivision 2

Auditors

 262. Definition of “outgoing auditor”

 263. Company auditors to be approved by Minister charged with responsibility
for finance

 264. Company auditors

 265. Registration of firms of auditors

 266. Powers and duties of auditors

Companies 15

Chapter I
Provisions relating to Auditor of Private Company

 Section

 267. Appointment of auditors of private company

 268. Power of Registrar to appoint auditors of private company

 269. Term of office of auditors of private company

 270. Prevention by members of deemed re-appointment of auditor

Chapter II

Provisions relating to Auditor of Public Company

 271. Appointment of auditors of public company

 272. Power of the Registrar to appoint auditors of public company

 273. Term of office of auditors of public company

Chapter III

General Provisions relating to Auditors

 274. Fixing of auditor’s remuneration

 275. Obligation to furnish particulars of payment made to auditors

 276. Resolution to remove auditor from office

 277. Special notice required for resolution to remove auditor from office

 278. Notice to Registrar of resolution to remove auditor from office

 279. Procedure to appoint auditor by written resolution

 280. Procedure to appoint auditor at a meeting of members

 281. Resignation of auditor

 282. Notice of resignation of auditor to Registrar

 283. Rights of resigning auditor of a public company

 284. Duty to inform upon cessation of office

 285. Attendance of auditors at general meetings where financial statements
are laid

 286. Auditor and other person to enjoy qualified privilege in certain circumstances

 287. Duties of auditors to trustee for debenture holders

Laws of Malaysia16 Act 777

Division 4

Indemnity and Insurance for Officers and Auditors

 Section

 288. Provisions indemnifying directors or officers

 289. Indemnity and insurance for officers and auditors

Division 5

Meetings

Subdivision 1

Meetings and Resolutions for Members

 290. Passing a resolution

 291. Ordinary resolutions

 292. Special resolutions

 293. General rules on voting

 294. Votes by proxy

 295. Votes of joint holders of shares

 296. Right to object to a person’s entitlement to vote

Subdivision 2

Written Resolutions of Private Companies

 297. Written resolutions of private companies

 298. Eligibility of members to receive written resolution

 299. Circulation date

 300. Manner in which a written resolution to be circulated

 301. Circulation of written resolutions proposed by directors

 302. Members’ power to require circulation of written resolution

 303. Circulation of written resolution proposed by members

 304. Expenses of circulation

 305. Application not to circulate a member’s written resolution

 306. Procedure for signifying agreement to written resolution

 307. Period for agreeing to written resolution

 308. Sending of documents relating to written resolutions by electronic means

Companies 17

Subdivision 3

Passing Resolutions at Meetings of Members

 Section

 309. Resolutions at meetings of members

 310. Power to convene meetings of members

 311. Power to require directors to convene meetings of members

 312. Directors’ duty to call meetings required by members

 313. Power of members to convene meeting of members at company’s expense

 314. Power of Court to order meeting

 315. Resolution passed at adjourned meeting

Subdivision 4

Notice of Meetings

 316. Notice required for meetings of members

 317. Contents of notices of meetings of members

 318. Notice of adjourned meetings of members

 319. Manner in which notice to be given

 320. Notification of publication of notice of meeting on website

 321. Persons entitled to receive notice of meetings of members

 322. Resolution requiring special notice

 323. Power of members to require circulation of statements

 324. Director’s duty to circulate members’ statement

 325. Power of Court to order non-circulation of members’ statement

 326. Sending documents relating to a meeting by electronic means

Subdivision 5

Procedure at Meetings

 327. Meetings of members at two or more venues

 328. Quorum at meetings

 329. Chairperson of meetings of members

 330. Declaration by chairperson on a show of hands

 331. Right to demand a poll

 332. Voting on a poll

 333. Representation of corporations at meetings of members

Laws of Malaysia18 Act 777

Subdivision 6

Proxies
 Section

 334. Appointment of proxies

 335. Notice of meetings of members to contain statement of rights to appoint
proxies

 336. Proxy as a chairperson of a meeting of members

 337. Right of proxy to demand for a poll

 338. Termination of a person’s authority to act as a proxy

Subdivision 7

Class Meetings

 339. Application to class meetings

Subdivision 8

Additional Requirements for Public Companies

 340. Annual general meeting

Subdivision 9

Record of Resolutions and Meetings

 341. Records of resolutions and meetings

 342. Inspection of records of resolutions and meetings

 343. Records as evidence of resolutions

 344. Details of decisions provided by a sole member

Division 6

Remedies

 345. Interpretation

 346. Remedy in cases of an oppression

 347. Derivative proceedings

 348. Leave of Court

 349. Effect of ratification

 350. Powers of the Court

 351. Injunction

Companies 19

Division 7

Charges, Arrangement and Reconstructions and Receivership

Subdivision 1

Charges

 Section

 352. Registration of charges

 353. Types of charges require registration

 354. Registration of charges created over property outside Malaysia

 355. Registration of charges in series of debentures

 356. Duty of company to register charges existing on property acquired

 357. Register of charges to be kept by Registrar

 358. Endorsement of certificate of registration on debentures

 359. Assignment and variation of charge

 360. Satisfaction and release of property from charge

 361. Extension of time and rectification of register of charges

 362. Company to keep instruments of charges and register of charges

 363. Documents made out of Malaysia

 364. Application of this Subdivision to foreign company

Subdivision 2

Arrangements and Reconstructions

 365. Interpretation

 366. Power of Court to order compromise or arrangement with creditors and
members

 367. Power of Court to appoint an approved liquidator

 368. Power of Court to restrain proceedings

 369. Information as to compromise or arrangement with creditors and members

 370. Reconstruction and amalgamation of companies

 371. Right of offeror to buy out

Subdivision 3

Receivers and Receivers and Managers

 372. Qualification for appointment of receiver or receiver and manager

 373. Disqualification for appointment as receiver or receiver and manager

Laws of Malaysia20 Act 777

 374. Appointment of receiver or receiver and manager

 375. Appointment of receiver or receiver and manager under instrument

 376. Appointment of receiver or receiver and manager by Court

 377. Notice of appointment of receiver or receiver and manager

 378. Vacancy in office of receiver or receiver and manager

 379. Notice of cessation of office

 380. Statement relating to appointment of receiver or receiver and manager

 381. Liability of receiver or receiver and manager

 382. Liability for contract

 383. Power of receiver or receiver and manager

 384. Application to Court for directions

 385. Appointment of liquidator as receiver or receiver and manager in cases
of winding up

 386. Powers of receiver or receiver and manager on liquidation

 387. Power of Court to fix remuneration of receiver or receiver and manager

 388. Provisions as to information if receiver or receiver and manager appointed

 389. Obligations of company and directors to provide information to receiver
or receiver and manager

 390. Submission of statement of affairs

 391. Lodging of accounts of receiver or receiver and manager

 392. Payments of certain debts subject to floating charge in priority to claims
under charge

 393. Enforcement of duty of receiver or receiver and manager, etc., to make
returns

Division 8

Corporate Rescue Mechanism

 394. Interpretation

Subdivision 1

Corporate Voluntary Arrangement

 395. Non-application of this Subdivision

 396. Persons who may propose voluntary arrangement

 397. Proposal for voluntary arrangement

 398. Moratorium

 Clause

Companies 21

 399. Summoning of meetings

 400. Decisions of meetings

 401. Implementation of proposal

 402. Arrangements coming to an end prematurely

Subdivision 2

Judicial Management

 403. Non-application of this Subdivision

 404. Application to Court for a company to be placed under judicial management
and for appointment of a judicial manager

 405. Power of Court to make a judicial management order and appoint a
judicial manager

 406. Duration of judicial management order and its extension

 407. Nomination of judicial manager

 408. Notice of application for judicial management order

 409. Dismissal of application for judicial management order

 410. Effect of application for a judicial management order

 411. Effect of judicial management order

 412. Notification that a company is under judicial management order

 413. Vacancy in appointment of judicial manager

 414. General powers and duties of judicial manager

 415. Power to deal with charged property, etc.

 416. Agency and liability for contracts

 417. Vacation of office and release

 418. Information to be given by and to judicial manager

 419. Company’s statement of affairs

 420. Statement of proposals

 421. Consideration of proposals by creditors’ meeting

 422. Committee of creditors

 423. Duty to manage company’s affairs, etc., in accordance with approved
proposals

 424. Duty to apply for discharge of judicial management order

 425. Protection of interests of creditors and members

 426. Undue preference in judicial management

 Clause

Laws of Malaysia22 Act 777

 427. Delivery and seizure of property

 428. Duty to co-operate with judicial manager

 429. Inquiry into company’s dealings, etc.

 430. Application of provisions of winding up of a company under judicial
management

Part IV

CESSATION OF COMPANIES

Division 1

Voluntary and Compulsory Winding Up

Subdivision 1

Preliminary

 431. Application of winding up provisions

 432. Modes of winding up

 433. Qualification of liquidator

 434. Government bound by certain provisions

Subdivision 2

Contributories

 435. Liability as contributories of present and past members

 436. Nature of liability of contributory

 437. Contributories in the case of death of member

 438. Contributories in case of bankruptcy of member

Subdivision 3

Voluntary Winding Up

 439. Circumstances in which company may be wound up voluntarily

 440. Interim liquidators

 441. Date of commencement of winding up

 442. Effect of voluntary winding up

 443. Declaration of solvency

 444. Distinction between “members” and “creditors” voluntary winding up

 Section

Companies 23

Subdivision 4

Members’ Voluntary Winding Up

 Section

 445. Appointment and removal of liquidator

 446. Power to fill vacancy in office of liquidator

 447. Duty of liquidator to call for creditors’ meeting in case of insolvency

 448. Conversion to creditors’ voluntary winding up

Subdivision 5

Creditors’ Voluntary Winding Up

 449. Meeting of creditors

 450. Liquidators in creditors voluntary winding up

 451. Property and proceedings

Subdivision 6

Provisions Applicable to Every Voluntary Winding Up

 452. Distribution of property of company

 453. Appointment or removal of liquidator by Court

 454. Remuneration of liquidators in voluntary winding up

 455. Act of liquidator valid, etc.

 456. Powers of liquidator in a voluntary winding up

 457. Power of liquidator to accept shares, etc., as consideration for sale of
property of company

 458. Annual meeting of members and creditors

 459. Final meeting and dissolution

 460. Arrangement binding on creditors

 461. Application to Court to have questions determined or powers exercised

 462. Costs

 463. Limitation on right to wind up voluntarily

Subdivision 7

Winding Up by Court

 464. Petition of winding up

 465. Circumstances in which company may be wound up by Court

Laws of Malaysia24 Act 777

 466. Definition of “inability to pay debts”

 467. Commencement of winding up by the Court

 468. Payment of preliminary costs by petitioner

 469. Powers of Court on hearing petition for winding up

 470. Power of Court to stay or restrain proceedings against company prior to
order of winding up

 471. Action or proceeding stayed after winding up order

 472. Avoidance of dispositions of property or certain attachment, etc.

 473. Petition to be lis pendens

 474. Lodgement of winding up order

 475. Effect of winding up order

Subdivision 8

Provisions relating to Liquidators in Winding Up by Court

 476. Interim liquidator

 477. Appointment, style, etc., of liquidators

 478. Appointment of other person as liquidator other than Official Receiver

 479. Remuneration of liquidators in winding up by Court

 480. Control of approved liquidator by Official Receiver

 481. Control of Official Receiver by Minister

 482. Resignation or removal of liquidator in winding up by Court

 483. Custody and vesting of company’s property

 484. Submission of statement of affairs of company

 485. Report by liquidator

 486. Powers of liquidator in winding up by Court

 487. Exercise and control of liquidator’s powers

 488. Liquidator to pay moneys received into bank account

 489. Settlement of list of contributories and application of assets

 490. Release of liquidators and dissolution of company

 491. Orders of release or dissolution

Subdivision 9

General Powers of Court in Winding Up by Court

 492. Power of Court to stay winding up

 Section

Companies 25

 493. Power of Court to terminate winding up

 494. Matters relating to stay and termination of winding up

 495. Debts due by contributory to company and extent of set off

 496. Power of Court to make calls

 497. Payment of moneys due to company into named bank

 498. Order on contributory conclusive evidence

 499. Appointment of special manager

 500. Claims of creditors and distribution of assets

 501. Inspection of books and papers by creditors and contributories

 502. Power to summon persons connected with company

 503. Power to order public examination of promoters, directors, etc.

 504. Power to arrest absconding contributory

 505. Delegation of powers of Court to liquidator

 506. Powers of Court cumulative

Division 2

Provisions Applicable to Every Winding Up

Subdivision 1

General

 507. Investment of surplus funds on general account

 508. Unclaimed assets to be paid to receiver of revenue

 509. Books and papers to be kept by liquidator

 510. Control of Court over liquidators

 511. Delivery of property to liquidator

 512. Powers of Official Receiver where no committee of inspection

 513. Notice of appointment and address of liquidator

 514. Liquidator’s accounts

 515. Liquidator to make good defaults

 516. Notification that a company is in liquidation

 517. Appeal against decision of liquidator

 518. Books and papers of company

 519. Expenses of winding up where assets insufficient

 Section

Laws of Malaysia26 Act 777

 520. Resolutions passed at adjourned meetings of creditors and contributories

 521. Meetings to ascertain wishes of creditors or contributories

 522. Special commission for receiving evidence

Subdivision 2

Proof and Ranking of Claims

 523. Description of debts provable in winding up

 524. Rights and duties of secured creditors

 525. Rights and duties of unsecured creditors

 526. Mutual credit and set off

 527. Priorities

Subdivision 3

Effect on Other Transactions

 528. Undue preference

 529. Effect of floating charge

 530. Liquidator’s right to recover in respect of certain sales to or by company

 531. Disclaimer of onerous property

 532. Interpretation

 533. Restriction of rights of creditor as to execution or attachment

 534. Duties of bailiff as to goods taken in execution

 535. Power of Court to declare dissolution of company void

Subdivision 4

Offences

 536. Offences by officers of companies in liquidation

 537. Inducement to be appointed as liquidator, etc.

 538. Falsification of books, etc.

 539. Liability where proper accounts not kept

 540. Responsibility for fraudulent trading

 541. Power of Court to assess damages against delinquent officers, etc.

 542. Prosecution of delinquent officers and members of company

 Section

Companies 27

Division 3

Winding Up of Unregistered Companies

 Section

 543. Provisions of Division cumulative

 544. Unregistered company

 545. Winding up of unregistered companies

 546. Contributories in winding up of unregistered company

 547. Power of Court to stay or restrain proceedings

 548. Outstanding assets of a dissolved unregistered company

Division 4

Striking Off and Management of Assets of Dissolved Companies

Subdivision 1

Striking Off

 549. Power of Registrar to strike off company

 550. Application to strike off company

 551. Notice of intention to strike off company

 552. Objection to striking off

 553. Withdrawal of striking off application

 554. Effect of striking off

 555. Power of Court to reinstate struck off company into register

Subdivision 2

Management of Assets of Dissolved Companies

 556. Power of Registrar to represent dissolved company in certain circumstances

 557. Outstanding assets of dissolved or struck off company to vest in Registrar

 558. Disposal of outstanding interests in property

 559. Liability of Registrar and Government as to property vested in Registrar

 560. Accounts and audit

Laws of Malaysia28 Act 777

Part V

MISCELLANEOUS

Division 1

Foreign Companies

 Section

 561. Prohibition on carrying on business in Malaysia

 562. Registration of foreign companies

 563. Requirement for foreign companies to have agent

 564. Name of foreign company and its publication

 565. Obligation to state name of foreign company, whether limited, and place
where incorporated

 566. Requirement to have a registered office

 567. Return to be filed where documents, etc., altered

 568. The branch register

 569. Registration of shares in branch register

 570. Removal of shares from branch register

 571. Index of members, inspection and closing of branch registers

 572. Transfer of shares and rectification

 573. Branch register to be prima facie evidence

 574. Accounts to be kept by foreign companies

 575. Financial statements

 576. Annual return

 577. Service of notice

 578. Cessation of business in Malaysia

 579. Power of foreign companies to hold immovable property

Division 2

Enforcement and Sanctions

Subdivision 1

Enforcement of the Act

 580. As to rights of witnesses to legal representation

 581. Power to grant relief

 582. Irregularities in proceedings

Companies 29

 583. Disposal of shares of shareholder whose whereabouts unknown

 584. Furnishing of information and particulars of shareholding

 585. Court may compel compliance

 586. Translations of instruments

 587. Protection to certain officers who make disclosures

 588. General penalty

 589. Proceedings how and when taken

 590. Investigation of affairs of company at direction of Minister

Subdivision 2

General Offences

 591. False and misleading statements

 592. False reports

 593. False report or statement to the Registrar

 594. Fraudulently inducing persons to invest money

 595. Fraud by officer

 596. Restriction on offering shares, debentures, etc., for subscription or
purchase

 597. Restriction on the use of words “Limited”, “Berhad” and “Sendirian”

 598. Prosecution of delinquent officers of company

Division 3

General Provisions

 599. Evidentiary value of copies certified by Registrar

 600. Evidence of statutory requirements

 601. Registers and inspection of register

 602. Rectification of registers

 603. Disposal of old records

 604. Electronic lodgement of documents

 605. Issuing document electronically

 606. Electronic information, etc. certified by Registrar admissible in evidence

 607. Enforcement of duty to make returns

 608. Relodging of lost or destroyed documents

 Section

Laws of Malaysia30 Act 777

 609. Time for lodging documents and extension of time

 610. Particulars and manner of information required to be lodged under this
Act

 611. Time for compliance with the requirements under this Act

 612. Methods of communication between company and members

 613. Power to make regulations

 614. Power to impose terms and conditions

 615. Exemption

 616. Rules

 617. Power to amend Schedules

Division 4

Saving and Transitional

 618. Transitional provisions relating to abolition of nominal value

 619. General transitional provisions

 620. Repeal and savings

  First schedule

  second schedule

  third schedule

  Fourth schedule

  FiFth schedule

  sixth schedule

  seventh schedule

  eighth schedule

  ninth schedule

  tenth schedule

  eleventh schedule

  twelFth schedule

  thirteenth schedule

 Section

Companies 31

An Act to provide for the registration, administration and dissolution
of companies and corporations and to provide for related matters.

 [ ]

ENACTED by the Parliament of Malaysia as follows:

Part I
PRELIMINARY

Short title and commencement

1. (1) This Act may be cited as the Companies Act 2016.

 (2) This Act comes into operation on a date to be appointed by
the Minister by notification in the Gazette, and the Minister may
appoint different dates for the coming into operation of different
provisions of this Act.

Interpretation

2. (1) In this Act, unless the context otherwise requires—

 “accounting records”, in relation to a corporation, includes
invoices, receipts, orders for payment of money, bills of exchange,
cheques, promissory notes, vouchers and other documents of prime
entry and also includes such working papers and other documents
as are necessary to explain the methods and calculations by which
accounts are prepared;

LAWS OF MALAYSIA

Act 777

COMPANIES ACT 2016

Laws of Malaysia32 Act 777

 “annual general meeting”, in relation to a public company,
means a meeting of the company required to be held by
section 340;

 “annual return” means the return required to be lodged under
section 68, and includes any document accompanying the return;

 “approved company auditor” means a person who has been
approved under section 263 as an auditor and whose approval
has not been revoked;

 “approved liquidator” means a person who has been approved
under section 433 as a liquidator and whose approval has not
been revoked;

 “banking corporation” means a licensed bank, licensed investment
bank, licensed Islamic bank and licensed international Islamic
bank;

 “beneficial owner” means the ultimate owner of the shares and
does not include a nominee of any description;

 “Board”, in relation to a company, means—

 (a) directors of the company who number not less than the
required quorum acting as a board of directors; or

 (b) if the company has only one director, that director;

 “books” includes any register or other record of information and
any accounts or accounting records, however compiled, recorded
or stored, and also includes any document;

 “borrowing corporation” means a corporation that is or will
be under a liability, whether or not such liability is present or
future, to repay any money received or to be received by it in
response to an invitation to the public to subscribe for or purchase
debentures of the corporation in accordance with the provisions
of Subdivision 10 of Division 1 of Part III;

 “branch register” means—

 (a) in relation to a company—

 (i) a branch register of members of the company
kept under section 53; or

Companies 33

 (ii) a branch register of debenture holders kept under
section 60,

  as the case may require; and

 (b) in relation to a foreign company, a branch register of
members of the company kept under section 568;

 “Central Bank of Malaysia” means the Bank as defined in
section 3 of the Central Bank of Malaysia Act 2009 [Act 701];

 “certified”, in relation to a copy of a document, means certified
in the manner determined by the Registrar to be a true copy of
the document and, in relation to a translation of a document,
means certified in the manner determined by the Registrar to be
a correct translation of the document into the national language
or into the English language, as the case requires;

 “charge” includes a mortgage and any agreement to give or
execute a charge or mortgage whether upon demand or otherwise;

 “Commission” means the Companies Commission of Malaysia
established under the Companies Commission of Malaysia Act
2001 [Act 614];

 “company” means a company incorporated under this Act or
under any corresponding previous written law;

 “company having a share capital” includes an unlimited company
with a share capital;

 “constitution” means a document referred to in section 34;

 “contributory”, in relation to a company, means a person liable
to contribute to the assets of the company in the event of its
being wound up, and includes the holder of fully paid shares in
the company and, prior to the final determination of the persons
who are contributories, includes any person alleged to be a
contributory;

 “corresponding previous written law” means any written law
relating to companies which has been at any time in force in any
part of Malaysia and which corresponds with any provision of
this Act;

Laws of Malaysia34 Act 777

 “Court” means the High Court or a judge of the High Court;

 “creditors’ voluntary winding up” means a winding up under
Subdivision 5 of Division 1 of Part IV;

 “debenture” includes debenture stock, bonds, sukuk, notes and
any other securities of a corporation whether constituting a charge
on the assets of the corporation or not;

 “director” includes any person occupying the position of
director of a corporation by whatever name called and includes
a person in accordance with whose directions or instructions the
majority of directors of a corporation are accustomed to act and
an alternate or substitute director;

 “Director General of Inland Revenue Board” means the Director
General of Inland Revenue as provided in section 134 of the
Income Tax Act 1967 [Act 53];

 “Division” means a Division of a Part of this Act and a reference
to a specified Division is a reference to that Division of the Part
of this Act in which the reference occurs;

 “document” has the meaning assigned to it in the Evidence
Act 1950 [Act 56];

 “equity share” means any share which is not a preference share;

 “exempt private company” means a private company in the
shares of which no beneficial interest is held directly or indirectly
by any corporation and which has not more than twenty members
none of whom is a corporation;

 “expert” includes engineer, valuer, accountant and any other
person whose profession or reputation gives authority to a statement
made by him;

 “financial statements” has the same meaning as set out in the
approved accounting standards issued or approved by the Malaysian
Accounting Standards Board under the Financial Reporting Act
1997 [Act 558];

Companies 35

 “financial year” means the period in respect of which any
financial statements of a corporation is made up whether that
period is a year or not;

 “foreign company” means—

 (a) a company, corporation, society, association or other body
incorporated outside Malaysia; or

 (b) an unincorporated society, association or other body which
under the law of its place of origin may sue or be sued,
or hold property in the name of the secretary or other
officer of the body or association duly appointed for
that purpose and which does not have its head office
or principal place of business in Malaysia;

 “guarantor corporation”, in relation to a borrowing corporation,
means a corporation that has guaranteed or has agreed to guarantee
the repayment of any money received or to be received by the
borrowing corporation in response to an invitation to the public to
subscribe for or purchase debentures of the borrowing corporation;

 “interest” includes returns or compensation as recognized under
Shariah principles;

 “insolvency practitioner” means a person who is an approved
liquidator other than the Official Receiver;

 “licensed business” has the meaning assigned to it in the
Financial Services Act 2013 [Act 758] or the Islamic Financial
Services Act 2013 [Act 759], as the case may be;

 “licensed institution” means a licensed bank, licensed investment
bank, licensed Islamic bank, licensed international Islamic bank,
licensed insurer, licensed takaful operator and licensed international
takaful operator;

 “liquidator” includes the Official Receiver when acting as the
liquidator of a corporation;

 “lodged” means lodged or filed under this Act or any corresponding
previous written law;

Laws of Malaysia36 Act 777

 “manager”, in relation to a company, means the principal
executive officer of the company for the time being by whatever
name called and whether or not he is a director;

 “member” means—

 (a) in the case of a company limited by shares, a person
whose name is entered in the register of members as
the holder for the time being of one or more shares in
the company; or

 (b) in the case of a company limited by guarantee, a person
whose name is entered in the register of members;

 “members’ voluntary winding up” means a winding up under
Subdivision 4 of Division 1 of Part IV, where a declaration has
been made and lodged under section 443;

 “minimum subscription”—

 (a) in relation to any shares of an unlisted recreational club
which are offered to the public for subscription, means
the amount stated in the prospectus relating to the offer
as stated in the First Schedule;

 (b) in relation to any issue of, offer for subscription or purchase
of, or invitation to subscribe for or purchase, shares
made under the Capital Markets and Services Act 2007
[Act 671], means the amount stated in the prospectus
relating to the issue, offer or invitation in accordance
with the requirements of the Securities Commission
relating to contents of prospectuses,

as the minimum amount which in the opinion of the directors
must be raised by the issue of the shares so offered;

 “Minister” means the Minister charged with the responsibility
for companies;

 “office copy”, in relation to any Court order or other Court
document, means a copy authenticated under the hand or seal of
the Registrar of the Court or other proper officer of the Court;

Companies 37

 “officer”, in relation to a corporation, includes—

 (a) any director, secretary or employee of the corporation;

 (b) a receiver and manager of any part of the undertaking
of the corporation appointed under a power contained
in any instrument; and

 (c) any liquidator of a company appointed in a voluntary
winding up,

but does not include—

 (i) any receiver who is not also a manager;

 (ii) any receiver and manager appointed by the Court;
or

 (iii) any liquidator appointed by the Court or by the
creditors;

 “Official Receiver” means the Director General of Insolvency,
Deputy Director General of Insolvency, Directors of Insolvency,
Deputy Directors of Insolvency, Senior Assistant Directors of
Insolvency, Assistant Directors of Insolvency, Insolvency officers
and any other officer appointed under the Bankruptcy Act 1967
[Act 360];

 “preference share” means a share by whatever name called, which
does not entitle the holder to the right to vote on a resolution
or to any right to participate beyond a specified amount in any
distribution whether by way of dividend, or on redemption, in a
winding up, or otherwise;

 “prescribed” means prescribed by the Minister under this Act;

 “principal register”, in relation to a company, means the register
of members of the company kept under section 50;

 “printed” includes typewritten or lithographed or reproduced
by any mechanical means;

Laws of Malaysia38 Act 777

 “private company” means—

 (a) any company which immediately prior to the commencement
of this Act was a private company under any corresponding
previous written law;

 (b) any company incorporated as a private company under
this Act; or

 (c) any company converted into a private company under
section 41,

being a company which has not ceased to be a private company
under section 42;

 “profit and loss account” includes income and expenditure
account, revenue account or any other account showing the results
of the business of a corporation for a period;

 “promoter”, in relation to a prospectus issued by or in connection
with a corporation, means a promoter of the corporation who was
a party to the preparation of the prospectus or of any relevant
portion of the prospectus; but does not include any person by
reason only of his acting in a professional capacity;

 “property”, in relation to a corporation, includes land, money,
goods, chose in action, things in action, goodwill and every valuable
thing, whether corporal or incorporeal, movable or immovable,
and whether situated in Malaysia or elsewhere and also includes
obligations, servitudes, and every description of estate, interest
and profit, present or future, vested or contingent, arising out of
or incident to the property;

 “prospectus” means any prospectus, notice, circular, advertisement
or invitation inviting applications or offers from the public to
subscribe for or purchase or offering to the public for subscription
or purchase any shares in or debentures of or any units of
shares in or units of debentures of a corporation or proposed
corporation and, in relation to any prospectus registered under the
Capital Markets and Services Act 2007, means a prospectus as
defined in that Act;

 “public company” means a company other than a private
company;

Companies 39

 “registered” means registered under this Act or any corresponding
previous written law;

 “Reg is t ra r”  means  the  Reg i s t ra r  des igna ted  under
subsection 20a(1) of the Companies Commission of Malaysia
Act 2001 [Act 614];

 “regulations” means regulations under this Act;

 “related corporation”, in relation to a corporation, means a
corporation which is deemed to be related to the first-mentioned
corporation by virtue of section 7;

 “rules” means any rules made by the Rules Committee under
section 616;

 “securities” has the meaning assigned to it in the Capital
Markets and Services Act 2007;

 “Securities Commission” means the Securities Commission
established under section 3 of the Securities Commission
Act 1993 [Act 498];

 “service address”, in relation to a director, means an address,
electronic or otherwise, provided to the company to which any
communication may be sent;

 “share” means issued share capital of a corporation and includes
stock except where a distinction between stock and shares is
expressed or implied;

 “stock exchange” has the meaning assigned to it in the
Capital Markets and Services Act 2007;

 “substantial shareholder” means the person referred to in
subsection 136(2);

 “substantial shareholding” has the meaning assigned to it in
section 136;

 “this Act” includes any subsidiary legislation made under this
Act;

Laws of Malaysia40 Act 777

 “unit”, in relation to a share, debenture or other interest, means
any right or interest therein, by whatever term called;

 “unlisted recreational club” has the meaning assigned to it in
the Capital Markets and Services Act 2007;

 “voting share”, in relation to a body corporate, means an issued
share of the body corporate—

 (a) to which there is attached a right to vote in all circumstances;
or

 (b) not being a share to which a right to vote is limited only
to one or more of the following circumstances:

 (i)  during a period in which a dividend, or part of
a dividend, in respect of the share is in arrears;

 (ii)  upon a proposal to reduce the share capital of
the body corporate;

 (iii)  upon a proposal affecting the rights attached to
the share;

 (iv)  upon a proposal to wind up the body corporate;

 (v)  upon a proposal for the disposal of the whole of
the property, business and undertakings of the
body corporate;

 (vi)  during the winding up of the body corporate.

 (2) A person shall not be regarded as a person in accordance
with whose directions or instructions the directors of a company
are accustomed to act by reason only that the directors act on
advice given by him in a professional capacity.

 (3)  A statement included in a prospectus or statement in lieu
of prospectus shall be deemed to be untrue if it is misleading in
the form and context in which it is included.

Companies 41

 (4)  A statement shall be deemed to be included in a prospectus
or statement in lieu of prospectus if it is contained in any
report or memorandum appearing on the face of or by reference
incorporated in or issued with the prospectus or statement in lieu
of prospectus.

 (5)  Any invitation to the public to deposit money with or to
lend money to a corporation shall be deemed to be an invitation
to subscribe for or purchase debentures of the corporation and
any document that is issued or intended or required to be issued
by a corporation acknowledging or evidencing or constituting an
acknowledgment of the indebtedness of the corporation in respect
of any money that is or may be deposited with or lent to the
corporation in response to such an invitation shall be deemed to
be a debenture, but an invitation to the public by a prescribed
corporation as defined in subsection 158(8) shall not be deemed
to be an invitation to the public to deposit money with or to
lend money to the corporation for the purpose of the Interest
Schemes Act 2016 [Act 778];

 (6)  Any reference in this Act to offering shares or debentures to
the public shall, unless the context otherwise requires, be construed
as including a reference to offering shares or debentures to any
section of the public, whether selected as clients of the person
issuing the prospectus or in any other manner; but a bona fide
offer or invitation with respect to shares or debentures shall not
be deemed to be an offer to the public if it is—

 (a) an offer or invitation to enter into an underwriting
agreement;

 (b) made to a person whose ordinary business is to buy or
sell shares or debentures whether as principal or agent;

 (c) made to existing members or debenture holders of a
corporation and relates to shares in or debentures of that
corporation and is not an offer to which section 233 of
the Capital Markets and Services Act 2007 applies; or

 (d)  made to existing members of a company within the meaning
of section 457 and relates to shares in the corporation
within the meaning of that section.

Laws of Malaysia42 Act 777

 (7) Unless the context otherwise requires, any reference in
this Act to a person being or becoming bankrupt or to a person
assigning his estate for the benefit of his creditors or making an
arrangement with his creditors under any written law relating to
bankruptcy or to a person being an undischarged bankrupt or to
any status, condition, act, matter or thing under or in relation to
the law of bankruptcy shall be construed as including a reference
to a person being or becoming bankrupt or insolvent or to a person
making any such assignment or arrangement or to a person being
an undischarged bankrupt or insolvent or to the corresponding
status, condition, act, matter or thing, as the case requires, under
any written law relating to bankruptcy or insolvency.

Definition of “corporation”

3. Any reference to “corporation” in this Act means any body
corporate formed or incorporated or existing in Malaysia or outside
Malaysia and includes any foreign company, limited liability
partnership and foreign limited liability partnership but does not
include—

 (a) any body corporate that is incorporated in Malaysia and
is by notice of the Minister published in the Gazette,
declared to be a public authority or an instrumentality or
agency of the Government of Malaysia or of any State
or to be a body corporate which is not incorporated for
commercial purposes;

 (b) any corporation sole;

 (c) any society registered under any written law relating to
co-operative societies; or

 (d) any trade union registered under any written law as a
trade union.

Definition of “subsidiary and holding company”

4. (1) Subject to subsection (3), a corporation shall be deemed
to be a subsidiary of another corporation, but only if—

 (a) the other corporation—

 (i) controls the composition of the board of directors
of the corporation;

Companies 43

 (ii) controls more than half of the voting power of
the corporation; or

 (iii) holds more than half of the issued share capital of
the corporation, excluding any part of the share
capital which consists of preference shares; or

 (b) the corporation is a subsidiary of any corporation which
is that other corporation’s subsidiary.

 (2) For the purposes of subparagraph (1)(a)(i), the composition
of a corporation’s board of directors shall be deemed to be
controlled by another corporation if that other corporation can
appoint or remove all or a majority of the directors and for the
purposes of this provision, the holding company shall be deemed
to have the power to make such an appointment if—

 (a) a person cannot be appointed as a director without the
exercise of such a power in his favour by that other
corporation; or

 (b) a person’s appointment as a director follows necessarily
from his being a director or other officer of that other
corporation.

 (3) In determining whether one corporation is a subsidiary of
another corporation—

 (a) any shares held or power exercisable by that other
corporation in a fiduciary capacity shall be treated as
not held or exercisable by it;

 (b) subject to paragraphs (c) and (d), any shares held or
power exercisable—

 (i) by any person as a nominee for that other
corporation, except where that other corporation
is concerned only in a fiduciary capacity; or

 (ii) by, or by a nominee for, a subsidiary of that
other corporation, not being a subsidiary which
is concerned only in a fiduciary capacity,

Laws of Malaysia44 Act 777

  shall be treated as held or exercisable by that other
corporation;

 (c) any shares held or power exercisable by any person
by virtue of the provisions of any debentures of the
corporation or of a trust deed for securing any issue of
such debentures shall be disregarded; and

 (d) any shares held or power exercisable by, or by a nominee
for, that other corporation or its subsidiary, not being held
or exercisable as mentioned in paragraph (c), shall be
treated as not held or exercisable by that other corporation
if the ordinary business of that other corporation or its
subsidiary, as the case may be, includes the lending of
money and the shares are held or power is exercisable
as aforesaid by way of security only for the purposes
of a transaction entered into in the ordinary course of
that business.

 (4) A reference in this Act to the holding company of a
company or other corporation shall be read as a reference to a
corporation of which that company or corporation is a subsidiary.

Definition of “ultimate holding company”

5. A corporation shall be deemed to be the ultimate holding
company of another corporation if—

 (a) the other corporation is a subsidiary of the corporation;
and

 (b) the corporation is not itself a subsidiary of any corporation.

Definition of “wholly-owned subsidiary”

6. A corporation is a “wholly-owned subsidiary” of another
corporation if it has no members except—

 (a) that other corporation or its nominee; or

 (b) a wholly-owned subsidiary of that other corporation or
its nominee.

Companies 45

When corporations deemed to be related to each other

7. A corporation is deemed to be related to each other if—

 (a) it is the holding company of another corporation;

 (b) it is a subsidiary of another corporation; or

 (c) it is a subsidiary of the holding company of another
corporation.

Interests in shares

8. (1) This section shall have effect for the purposes of
sections 56, 59, Subdivision 7 of Division 1 of Part III and
section 219 respectively.

 (2) Where any property held in trust consists of or includes
shares in which a person knows or has reasonable grounds for
believing that he has an interest in the shares, he shall be deemed
to have such interest.

 (3) A right does not constitute an interest in a share where—

 (a) the right is being issued or offered to the public for
subscription or purchase of interest under the Interest
Schemes Act 2016;

 (b) the public was invited to subscribe for or purchase such a
right, and the right was so subscribed for or purchased;

 (c) such right is held by the management company and was
issued for the purpose of an offer to the public under
the Interest Schemes Act 2016; or

 (d) such right is a right which has been prescribed, after
consultation with the Minister charged with the
responsibility for finance, as not being an interest in a
share.

Laws of Malaysia46 Act 777

 (4) A person shall be deemed to have an interest in a share
where a body corporate has an interest in a share and—

 (a) the body corporate is, or its directors are accustomed,
or is under an obligation, whether formal or informal,
to act in accordance with the directions, instructions or
wishes of that person in relation to that share;

 (b) that person has a controlling interest in the body corporate;
or

 (c) that person or his associates, or that person and his
associates are entitled to exercise or control the exercise
of not less than twenty per centum of the votes attached
to the voting shares in the body corporate.

 (5) For the purposes of paragraph (4)(c), a person is an associate
of another person if the person is—

 (a) a corporation which is a related corporation;

 (b) a person in accordance with whose directions, instructions
or wishes that other person is accustomed, or is under
an obligation, whether formal or informal, to act in
relation to the share referred to in subsection (4);

 (c) a person who is accustomed, or is under an obligation,
whether formal or informal, to act in accordance with
the directions, instructions or wishes of that other person
in relation to that share;

 (d) a body corporate which is, or the directors of which
are, accustomed or under an obligation whether formal
or informal, to act in accordance with the directions,
instructions or wishes of that other person in relation
to that share; or

 (e) a body corporate in accordance with the directions,
instructions or wishes of which, or of the directors of
which, that other person is accustomed or under an
obligation whether formal or informal, to act in relation
to that share.

Companies 47

 (6) A person shall be deemed to have an interest in a share in
any one or more of the following circumstances where he—

 (a) has entered into a contract to purchase a share;

 (b) has a right, otherwise than by reason of having an interest
under a trust, to have a share transferred to himself or
to his order, whether the right is exercisable presently
or in the future and whether on the fulfilment of a
condition or not;

 (c) has the right to acquire a share or an interest in a share,
under an option, whether the right is exercisable presently
or in the future and whether on the fulfilment of a
condition or not;

 (d) is entitled, otherwise than by reason of his having been
appointed a proxy or representative to vote at a meeting
of members of a corporation or of a class of its members,
to exercise or control the exercise of a right attached to
a share, not being a share of which he is the registered
holder.

 (7) A person shall be deemed to have an interest in a share if
that share is held jointly with another person.

 (8) For the purpose of determining whether a person has an
interest in a share, it is immaterial that the interest cannot be
related to a particular share.

 (9) For the purposes of this section, an interest in a share shall
be disregarded as an interest if it is—

 (a) an interest of a person who holds the share as bare trustee;

 (b) an interest of a person whose ordinary business includes
the lending of money or the giving of financing if he
holds the interest only by way of security for the purposes
of a transaction entered into in the ordinary course of
business in connection with the lending of money or
the giving of financing;

 (c) an interest of a person being an interest held by him by
reason of his holding a prescribed office; and

Laws of Malaysia48 Act 777

 (d) a prescribed interest being an interest of such person, or
of the persons included in such class of persons, as is
prescribed.

 (10) An interest in a share shall not be disregarded by reason
only of—

 (a) its remoteness;

 (b) the manner in which it arose;

 (c) the fact that the exercise of a right conferred by the interest
is, or is capable of being made subject to restraint or
restriction; or

 (d) the fact that it is held by, or in the name of, a central
depository or its nominee company under the Securities
Industry (Central Depositories) Act 1991 [Act 453].

Part II

FORMATION AND ADMINISTRATION OF COMPANIES

Division 1

Types of Companies

Essential requirements of a company

9. A company shall have—

 (a) a name;

 (b) one or more members, having limited or unlimited liability
for the obligations of the company;

 (c) in the case of a company limited by shares, one or more
shares; and

 (d) one or more directors.

Companies 49

Types of companies

10. (1) A company may be incorporated as—

 (a) a company limited by shares;

 (b) a company limited by guarantee; or

 (c) an unlimited company.

 (2) A company is limited by shares if the liability of its
members is limited to the amount, if any, unpaid on shares held
by the members.

 (3) A company is limited by guarantee if the liability of its
members is limited to such amount as the members undertake to
contribute in the event of its being wound up.

 (4) A company is an unlimited company if there is no limit
on the liability of its members.

Private or public company

11. (1) A company limited by shares shall either be a private
company or a public company.

 (2) A company limited by guarantee shall be a public company.

 (3) An unlimited company shall either be a private company
or a public company.

Prohibition on companies limited by guarantee with a share
capital

12. No company shall be formed as, or become, a company
limited by guarantee with a share capital.

Prohibition for unincorporated associations, etc.

13. No association or partnership consisting of more than twenty
persons shall be formed for the purpose of carrying on any
business for profit, unless it is incorporated as a company under
this Act, or is formed under any other written laws.

Laws of Malaysia50 Act 777

Division 2
Incorporation and Its Effects

Application for incorporation

14. (1) A person who desires to form a company shall apply
for incorporation to the Registrar.

 (2) A company shall not be formed for any unlawful purpose.

 (3) The application for incorporation under this section shall
include a statement by every person who desires to form a
company containing the following particulars:

 (a) the name of the proposed company;

 (b) the status of whether the company is private or public;

 (c) the nature of business of the proposed company;

 (d) the proposed address of the registered office of the
proposed company;

 (e) the name, identification, nationality and the ordinary place
of residence of every person who is to be a member of
the company and, where any of these persons is a body
corporate, the corporate name, place of incorporation,
registration number and the registered office of the body
corporate;

 (f) the name, identification, nationality and the principal place
of residence of every person who is to be a director;

 (g) the name, identification, nationality and the principal
place of residence of the secretary, if any;

 (h) in the case of a company limited by shares, the details of
class and number of shares to be taken by a member;

 (i) in the case of a company limited by guarantee, the amount
up to which the member undertakes to contribute to the
assets of the company in the event of its being wound
up; and

 (j) any other information as the Registrar may require.

Companies 51

 (4) The application for incorporation shall be accompanied
by a statement from each promoter or director confirming—

 (a) his consent to act as a promoter or to his appointment
as a director, as the case may be; and

 (b) that he is not disqualified under this Act to act as a
promoter or a director, as the case may be.

Registration for incorporation

15. If the Registrar is satisfied that the requirements of this Act
as to the application for incorporation are complied with and
upon payment of the prescribed fee, the Registrar shall—

 (a) enter the particulars of the company in the register;

 (b) assign a registration number to the company as its company
registration number; and

 (c) issue a notice of registration in the form and manner as
the Registrar may determine.

Power to refuse registration of incorporation

16. (1) Without prejudice to the powers of the Registrar under
section 15, the Registrar shall not register an application unless
he is satisfied that all the requirements of this Act in respect of
the registration and any matter relating to the registration has
been complied with.

 (2)  The Registrar shall refuse to register the application of a
proposed company where he is satisfied that the proposed company
is likely to be used for an unlawful purpose or for purposes
prejudicial to public order, morality or security of Malaysia.

Certificate of incorporation

17. Upon an application by a company and on payment of a
prescribed fee, the Registrar may issue to the company a certificate
of incorporation in the form and manner as the Registrar may
determine.

Laws of Malaysia52 Act 777

Effect of incorporation

18. (1) Upon the date of incorporation specified in the notice
of registration issued under section 15, there shall be a company
by the name and registration number as stated in the principal
register kept by the Registrar for this purpose.

 (2)  Every person whose name is stated as a member in the
application for incorporation and on the incorporation of the
company shall be entered as members in the register of members,
together with such other persons who may become members of
the company from time to time, are a body corporate by the name
stated in the notice of registration.

 (3)  In the case of a company having a share capital, every
person whose name is stated in the application for incorporation
becomes the shareholder as specified in the application.

 (4)  The details of the registered office of the company are as
stated in, or in connection with, the application for registration.

 (5)  The person named in the statement as a director or a
secretary, if any, shall be deemed to have been appointed to that
office.

Notice of registration as conclusive evidence

19. The notice of registration is conclusive evidence that the
requirements of this Act in respect of registration and matters
precedent and incidental to such registration have been complied
with and that the company is duly registered under this Act.

Separate legal entity

20. A company incorporated under this Act is a body corporate
and shall—

 (a) have legal personality separate from that of its members;
and

 (b) continue in existence until it is removed from the register.

Companies 53

Companies have unlimited capacity

21. (1) A company shall be capable of exercising all the functions
of a body corporate and have the full capacity to carry on or
undertake any business or activity including—

 (a) to sue and be sued;

 (b) to acquire, own, hold, develop or dispose of any property;
and

 (c) to do any act which it may do or to enter into transactions.

 (2) A company shall have the full rights, powers and privileges
for the purposes mentioned in subsection (1).

Division 3
Restriction on Subsidiary Being Member of Its Holding

Company

Membership of holding company

22. (1) A corporation shall not be a member of a company which
is its holding company and any allotment or transfer of shares
in a holding company to its subsidiary shall be void.

 (2) Subsection (1) shall not apply where the subsidiary
concerned is a personal representative or a trustee, unless the
holding company or its subsidiary is beneficially interested under
the trust.

 (3) For the purposes of subsection (2) and in determining if a
holding company or a subsidiary is interested, any interest held
by way of security for the purposes of a transaction entered into
by the holding company or a subsidiary in the ordinary course
of a business which includes the lending of money shall be
disregarded.

 (4) This section shall not prevent a subsidiary from continuing
to be a member if, at the time it becomes a subsidiary, it already
holds shares in the holding company.

 (5) For the purposes of subsection (4), a subsidiary—

 (a) shall have no right to vote at meetings of the holding
company or any class of members of the holding company;
and

Laws of Malaysia54 Act 777

 (b) shall, in the case of a subsidiary referred to in subsection
(4), dispose of all of its shares in the holding company
within twelve months after becoming a subsidiary or
such longer period as the Registrar may allow.

 (6) Subject to subsection (2), subsections (1), (4) and (5)
shall apply in relation to a nominee for a corporation which
is a subsidiary as if references in those subsections to such a
corporation include references to a nominee for it.

 (7) This section shall not operate to prevent the allotment
of shares in a holding company to a subsidiary which already
lawfully holds shares in the holding company if—

 (a) the allotment is made by way of capitalization of reserves
of the holding company; and

 (b) the allotment is made to all members of the holding
company on a basis which is in direct proportion to the
number of shares held by each member in the holding
company.

 (8) Where, due to the operation of this section, a subsidiary is
prevented from subscribing shares in the holding company which
the subsidiary is entitled to subscribe, the holding company may,
on behalf of the subsidiary, sell those shares.

 (9)  In relation to a holding company that is either a company
limited by guarantee or an unlimited company, the reference
in this section to shares, whether or not it has a share capital,
shall be construed as including a reference to the interest of its
members in whatever form.

Subsidiary acting as a participating dealer

23. (1) The prohibition under subsection 22(1) shall not apply
where the shares are acquired or held by the subsidiary in
the ordinary course of its business as a participating dealer as
provided in the guidelines relating to exchange-traded fund issued
by the Securities Commission under the Capital Markets and
Services Act 2007.

Companies 55

 (2)  For the purposes of subsection (1), a “participating dealer”
refers to a person appointed by the management company of an
exchange-traded fund and is responsible for the in-kind creation
and redemption of exchange-traded fund units.

Protection of third parties in other cases where a subsidiary
acts as a dealer in securities

24. (1) This section shall apply where—

 (a) a subsidiary that is a dealer in securities has purportedly
acquired shares in its holding company in contravention
of the prohibition in section 22; and

 (b) a person acting in good faith has agreed, for value and
without notice of the contravention, to acquire shares
in the holding company—

 (i) from the subsidiary; or

 (ii) from any person who has purportedly acquired
the shares after the disposal of shares by the
subsidiary.

 (2) A transfer of the shares referred to in paragraph (1)(a) to
any person shall have the same effect as it would have had if
the original acquisition of the shares by the subsidiary had not
been in contravention of the prohibition.

Division 4
Name of Company

Name of company

25. (1) The name of a company shall end with the following:

 (a) for a public company, the word “Berhad” or the abbreviation
“Bhd.”;

 (b) for a private company, the word “Sendirian Berhad” or
the abbreviation “Sdn. Bhd.”; or

Laws of Malaysia56 Act 777

 (c) for an unlimited company, the word “Sendirian” or the
abbreviation “Sdn.”.

 (2) A company may have as its name—

 (a) an available name; or

 (b) any such expression as the Registrar may assign upon its
incorporation.

Availability of name

26. (1) A name is available if it is not—

 (a) undesirable or unacceptable;

 (b) identical to an existing company, corporation or business;

 (c) identical to a name that is being reserved under this Act;
or

 (d) a name of a kind that the Minister has directed the
Registrar not to accept for registration.

 (2)  The Registrar shall have the power to determine whether
a name referred to in paragraph (1)(a), (b) or (c) is undesirable,
unacceptable or identical, as the case may be.

 (3)  The Registrar shall publish in the Gazette any direction
referred to in paragraph (1)(d).

Confirmation of availability and reservation of name

27. (1) A person shall apply to the Registrar to confirm the
availability of a proposed name.

 (2)  If the Registrar is satisfied that the proposed name is a
name which is not subject to subsection 26(1), the Registrar shall
confirm the availability of the proposed name.

Companies 57

 (3)  If a person is aggrieved with the decision of the Registrar
under subsection (2), he may, within thirty days from the date
of the decision of the Registrar, appeal to the Minister whose
decision shall be final.

 (4)  A person may apply to the Registrar for the reservation of
a name as—

 (a) the name of the proposed company prior to its incorporation;
or

 (b)  the name to which a company proposes to change its
name under section 28.

 (5)  Upon being satisfied that the name is not one which may
be refused on any ground referred to in subsection 26(1) and
upon payment of the prescribed fee, the Registrar may reserve
the name for a period of thirty days from the date of lodgement
of the application or such longer period as the Registrar may
allow.

 (6)  The confirmation of availability of name or the reservation
of name under this section does not in itself entitle the intended
company, company or foreign company to be registered by that
name, either originally or on a change of name.

 (7)  Subject to this Act, the Registrar shall not be liable for
any loss or damage suffered by any person by reason of error or
omission of whatever nature or however arising, if such error or
omission was made in good faith and in the discharge of duties
under this section.

Change of name

28. (1) A company may resolve that its name be changed by
special resolution.

 (2)  The company shall notify the Registrar of the change of
its name within thirty days from the date the special resolution
was passed.

Laws of Malaysia58 Act 777

 (3)  If the Registrar is satisfied that the new name complies
with the provisions of this Act and upon payment of a prescribed
fee, the Registrar shall—

 (a) enter the new name of the company on the register in
place of the former name; and

 (b) issue a notice of registration of the new name.

 (4)  A change of name of a company shall take effect from the
date the notice of registration of new name has been issued.

 (5)  A change of name of a company shall not—

 (a) affect the rights or obligations of the company; and

 (b) render defective any legal proceedings by or against the
company.

 (6)  Any proceedings that might have been continued or
commenced by or against a company by its former name may
be continued or commenced by or against it, by its new name.

 (7)  Where the winding up of a company commences within
one year after the company has changed its name, the former
name as well as the existing name of the company shall appear
on all notices and advertisements in relation to the winding up.

 (8) The company and every officer who contravene the requirement
under this section commit an offence and shall, on conviction,
be liable to a fine not exceeding fifty thousand ringgit.

Power of Registrar to direct a change of name

29. (1) If the Registrar believes on reasonable grounds that
a name under which a company is registered should not have
been registered, he shall serve a written notice to the company
to change its name within sixty days or a longer period as he
deems fit.

Companies 59

 (2)  If a company fails to change its name within the period as
stated in the notice issued under subsection (1), the Registrar shall
have the power to change the company’s name to its company
registration number or any such expression as assigned under
subsection 25(2) by altering the company’s registration details
to reflect the change.

 (3)  The company and every officer who contravene the direction
of the Registrar under this section commit an offence.

Publication of name

30. (1) A company shall display its registered name and company
registration number at—

 (a) its registered office;

 (b) every place where its business is carried on; and

 (c) every place where its books are kept.

 (2)  A company shall disclose its registered name and company
registration number on—

 (a) its business letters, notices and other official publications,
including in electronic form;

 (b) its websites;

 (c) its bills of exchange, promissory notes, endorsements and
order forms;

 (d) cheques purporting to be signed by or on behalf of the
company;

 (e) orders invoices and other demands for payment, receipts
and letters of credit purporting to be issued or signed
by or on behalf of the company; and

 (f) all other forms of its business correspondence and
documentation.

Laws of Malaysia60 Act 777

 (3)  The Registrar shall determine the manner a registered name
is to be displayed or disclosed by a company.

 (4)  For the purposes of subsection (2), where a company
changed its name under section 28 or 29, the former name of
the company shall appear beneath its present registered name
for a period of not less than twelve months from the date of the
change.

 (5)  The company and every officer who contravene this section
commit an offence.

Division 5
Constitution of a Company

Constitution of a company

31. (1) A company, other than company limited by guarantee,
may or may not have a constitution.

 (2)  If a company has a constitution, the company, each director
and each member of the company shall have the rights, powers,
duties and obligations set out in this Act, except to the extent
that such rights, powers, duties and obligations are permitted to
be modified in accordance with this Act, and are so modified by
the constitution of the company.

 (3)  If a company has no constitution, the company, each director
and each member of the company shall have the rights, powers,
duties and obligations as set out in this Act.

Company may adopt a constitution

32. (1) A company may adopt a constitution for the company
and the adoption shall be by way of special resolution.

 (2) The constitution of a company has no effect to the extent
that it contravenes or is inconsistent with the provisions of this
Act.

Companies 61

 (3)  Subject to the provisions of this Act, the constitution
adopted under subsection (1) shall be binding on the company,
its directors and its members.

 (4)  The company shall lodge the constitution with the Registrar
within thirty days from the adoption of a constitution under
subsection (1).

 (5)  The company and every off icer  who contravene
subsection (4) commit an offence and shall, on conviction, be
liable to a fine not exceeding fifty thousand ringgit and, in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Effect of constitution

33. (1) The constitution shall, when adopted, bind the company
and the members to the same extent as if the constitution had
been signed and sealed by each member and contained covenants
on the part of each member to observe all the provisions of the
constitution.

 (2)  All moneys payable by any member to the company under
the constitution shall be a debt due from such member to the
company.

Form of constitution

34. The constitution of a company—

 (a) in the case of a company limited by shares incorporated
under this Act, is a document adopted as its constitution
under section 32;

 (b) in the case of a company limited by guarantee incorporated
under this Act, is a document lodged for registration of
the company under section 38; or

Laws of Malaysia62 Act 777

 (c) in the case of a company registered under the corresponding
previous written law, is the memorandum and articles
of association as originally registered or as altered in
accordance with the corresponding previous written law,

and includes any alteration or amendment made under
section 36 or 37, if any, as the case may be.

Contents of a company’s constitution

35. (1) Subject to the provisions of this Act, the constitution of
a company may contain provisions relating to—

 (a) the objects of the company;

 (b) the capacity, rights, powers or privileges of the company
if the provision restricts such capacity, rights, powers
or privileges;

 (c) matters contemplated by this Act to be included in the
constitution; and

 (d) any other matters as the company wishes to include in
its constitution.

 (2)  For the purposes of paragraph (1)(a), if the constitution
sets out the objects of a company—

 (a) the company shall be restricted from carrying on any
business or activity that is not within those objects; and

 (b) the company shall have full capacity and powers to
achieve such objects, unless the constitution provides
otherwise.

Company may alter or amend constitution

36. (1) A company having a constitution may, by a special
resolution, alter or amend its constitution unless the constitution
itself prohibits the alteration or amendment.

Companies 63

 (2)  Upon the date of the special resolution was passed or a later
date as specified in the resolution, any alteration or amendment
to the constitution shall bind the company and the members
accordingly.

 (3)  The company shall notify the Registrar of the alteration or
amendment of its constitution and lodge a copy of the constitution
as altered or amended within thirty days from the date the special
resolution was passed.

 (4)  The company and every off icer  who contravene
subsection (3) commit an offence and shall, on conviction, be
liable to a fine not exceeding ten thousand ringgit and, in the
case of a continuing offence, to a further fine not exceeding
five hundred ringgit for each day during which the offence
continues after conviction.

Court may alter or amend constitution

37. (1) The Court may, on the application of a director or member
of a company, if it is satisfied that it is not practicable to alter
or amend the constitution of the company using the procedures
set out in this Act or in the constitution itself, make an order
to alter and amend the constitution of a company on such terms
and conditions as it thinks fit.

 (2)  The company shall ensure that an office copy of an order
made under subsection (1) together with a copy of the constitution
as altered or amended is lodged with the Registrar for registration
within thirty days from the date of the order.

 (3)  The company and every officer who contravene subsection (2)
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Company limited by guarantee shall have a constitution

38. (1) A company limited by guarantee shall have a constitution.

Laws of Malaysia64 Act 777

 (2)  The constitution of a company limited by guarantee
shall be signed by the person intending to incorporate such a
company and lodged with the Registrar at the time the company
is incorporated.

 (3)  The constitution shall state—

 (a) that the company is a company limited by guarantee;

 (b) the objects of the company;

 (c) the capacity, rights, powers and privileges of the company;

 (d) the number of members with which the company proposed
to be incorporated;

 (e) matters contemplated by this Act to be included in the
constitution; and

 (f) any other matters as the company wishes to include in
its constitution.

 (4)  Any provision in the constitution of a company limited by
guarantee that purports to divide the company’s undertaking into
shares or interests is a provision for a share capital and shall be
void.

 (5)  Any provision in the constitution of a company limited by
guarantee that purports to give any person a right to participate
in the divisible profits of the company shall be void.

 (6)  A constitution lodged with the Registrar under this section
shall be binding on the company and its members to the same
extent as if it was signed by each member and contained covenants
on each member to observe all provisions in the constitution.

Non-application of doctrine of constructive notice

39. No person shall be deemed to have notice or knowledge of
the contents of the constitution or any other document relating
to a company, due to the fact—

 (a) that the constitution or document has been registered by
the Registrar; or

Companies 65

 (b) that it is available for inspection at the registered office
of the company,

with the exception of documents relating to instrument of charges.

Division 6
Conversion of Company Status

Conversion from an unlimited company to a limited company

40. (1) Subject to this section, an unlimited company may convert
to a limited company by passing a special resolution and shall
lodge with the Registrar a notice for conversion and specifying
an appropriate alteration to its name.

 (2)  Upon the lodgement of the notice for conversion, the
Registrar shall—

 (a) make such endorsements in or alterations to the register
to record the conversion; and

 (b) issue to the company a notice of conversion and cancel
the previous notice of registration or certificate of
incorporation of the company, as the case may be.

 (3) Upon the issuance of the notice of conversion, the Registrar
may notify the company in writing that it is being dispensed
from lodging any document that had been lodged at the time of
its incorporation as an unlimited company or subsequent to it.

 (4)  The conversion shall take effect on the issue of the notice
of conversion under subsection (2) and the constitution, if any,
shall thereupon be altered in accordance with the terms of the
resolution.

 (5)  A conversion of a company under this section shall not—

 (a) affect the identity of the company or any rights or
obligations of the company; or

 (b) render defective any legal proceedings by or against the
company.

Laws of Malaysia66 Act 777

 (6) Any legal proceedings that could have been continued or
commenced by or against the company prior to the conversion
may, notwithstanding the conversion, be continued or commenced
by or against the company after the conversion.

Conversion from public companies to private companies or
private companies to public companies

41. (1) A public company having a share capital may convert
to a private company by passing a special resolution and shall
lodge with the Registrar a notice of conversion and specifying
an appropriate alteration to its name.

 (2)  A private company may convert to a public company by
a special resolution and shall lodge with the Registrar—

 (a) a notice for conversion and specifying an appropriate
alteration to its name;

 (b) a statement in lieu of prospectus; and

 (c) a statutory declaration verifying that paragraph 190(2)(b)
has been complied with.

 (3)  Subject to this Act, upon the lodgement of the notice for
conversion, the Registrar shall—

 (a) make such endorsements in or alterations to the register
to record the conversion; and

 (b) issue to the company a notice of conversion and cancel
the previous notice of registration or certificate of
incorporation of the company, as the case may be.

 (4)  The conversion shall take effect on the issue of the notice
of conversion under paragraph (3)(b).

 (5) A conversion of a company under this section shall not—

 (a) affect the identity of the company or any rights or
obligations of the company; or

 (b) render defective any legal proceedings by or against the
company.

Companies 67

 (6) Any legal proceedings that could have been continued or
commenced by or against the company prior to the conversion may,
notwithstanding any change in the company’s name or capacity
in consequence of the conversion, be continued or commenced
by or against the company after the conversion.

Division 7
Provisions Applicable to Certain Types of Companies

Private companies

42. (1) A company limited by shares having not more than fifty
shareholders may—

 (a) be registered as a private company;

 (b) change its status into a private company; or

 (c) remain registered as a private company.

 (2) A private company shall restrict the transfer of its shares.

 (3) For the purposes of subsection (1), in determining the
number of shareholders in a private company—

 (a) joint holders of shares shall be considered as one person;
and

 (b) a shareholder who is or was an employee of the company
or its subsidiary when they became a shareholder shall
not be counted.

 (4)  Where a private company—

 (a) ceases to restrict the transfer of its shares;

 (b)  ceases to have a share capital; or

 (c) has more than fifty shareholders,

the Registrar shall serve a notice to the company that on such
date as specified in the notice, the company ceased to be a
private company.

Laws of Malaysia68 Act 777

 (5)  Where, under this section, the Registrar determines that a
company has ceased to be a private company—

 (a) the company shall be a public company and shall be
deemed to have been a public company on and from
the date specified in the notice;

 (b) the company shall, on the date so specified be deemed to
have changed its name by the omission from the name
of the word “Sendirian” or the abbreviation “Sdn.”, as
the case requires; and

 (c) the company shall, within fourteen days from the date of
the notice, lodge with the Registrar—

 (i) a statement in lieu of prospectus; and

 (ii) a statutory declaration verifying that paragraph
190(1)(b) has been complied with.

 (6)  By virtue of a determination made under this section, a
company that has become a public company shall not convert to
a private company without the leave of the Court.

 (7)  The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit, and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Prohibition of private companies to offer shares or debentures
or invite to deposit money

43. (1) A private company limited by shares shall not—

 (a) offer to the public any shares or debentures of the company;

 (b) allot or agree to allot any shares or debentures of the
company with a view to offer such securities to the
public; or

 (c) invite the public to deposit money with the company for
fixed periods or payable at call, whether bearing or not
bearing interest.

Companies 69

 (2) Unless the contrary is proved, an allotment or agreement
to allot shares or debentures is presumed to such shares or
debentures being offered to the public if an offer of the shares
or debentures, or any of the shares or debentures, to the public
is made—

 (a) within six months after the allotment or agreement to
allot; or

 (b) before the receipt by the company of the whole of the
consideration to be received by it in respect of the shares
or debentures.

 (3) A company does not contravene this section if—

 (a) it acts in good faith in accordance with the arrangements
under which it is to convert to a public company before
the shares or debentures are allotted;

 (b) as part of the terms of the offer it undertakes to convert
to a public company within a specified period, and that
undertaking is complied with; or

 (c) the offer is made in accordance with the arrangements as
prescribed by the Securities Commission to any person
on a stock market, derivatives market, exempt stock
market or exempt derivatives market that is approved,
registered or regulated under the Capital Markets and
Services Act 2007.

 (4) For the purposes of paragraph (3)(b), the specified period
shall be—

 (a) in the case where an offer is made on the same day, a
period ending not later than six months after the day
on which the offer is made; or

 (b) in the case where an offer is made on different days, a
period ending not later than six months after the day
on which the offer is first made.

 (5)  The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine
not exceeding three million ringgit or to both.

Laws of Malaysia70 Act 777

Offer to the public

44. (1) An offer to the public referred to in section 43 includes
an offer made in any manner to any section of the public.

 (2)  An offer is not regarded as an offer to the public if it is—

 (a) not being calculated to result, directly or indirectly, in
shares or debentures of the company becoming available
to persons other than those receiving the offer; or

 (b) otherwise being a private concern of the person receiving
the offer and the person making the offer.

 (3)  An offer is to be regarded, unless the contrary is proved,
as being a private concern between the person receiving the offer
and the person making the offer if—

 (a) the offer is made to a person already connected with the
company and, where the offer is made on terms allowing
that person to renounce his rights, the rights may only be
renounced in favour of another person already connected
with the company; or

 (b) it is an offer to subscribe for securities to be held under
an employees’ share scheme and, where the offer is made
on terms allowing that person to renounce his rights,
the rights may only be renounced in favour of—

 (i) another person entitled to hold securities under
the scheme; or

 (ii)  a person already connected with the company.

 (4)  For the purposes of this section, “person already connected
with the company” means—

 (a) an existing member or employee of the company;

 (b) a member of the family of a person who is or was a
member or employee of the company;

 (c) an existing debenture holder of the company; or

Companies 71

 (d) a trustee, acting in his capacity as such, of a trust of
which the principal beneficiary is a person within any
of paragraphs (a) to (c).

Company limited by guarantee

45. (1) No company other than a company limited by guarantee
shall be formed with the following objects:

 (a) providing recreation or amusement;

 (b) promoting commerce and industry;

 (c) promoting art;

 (d) promoting science;

 (e) promoting religion;

 (f) promoting charity;

 (g) promoting pension or superannuation schemes; or

 (h) promoting any other object useful for the community or
country.

 (2) A company limited by guarantee shall—

 (a) apply its profits or other income in achieving or promoting
its objects;

 (b) prohibit the payment of any dividend to its members; and

 (c) require all the assets that would otherwise be available
to its members generally be transferred on its winding
up either—

 (i) to another body with objects similar to its own;
or

 (ii) to another body the objects of which are the
promotion of charity and anything incidental or
conducive to such objects.

Laws of Malaysia72 Act 777

 (3)  A company limited by guarantee may apply to the Minister
for a licence to omit the word “Berhad” or the abbreviation “Bhd.”
from its name.

 (4) A company limited by guarantee shall not hold land unless
a licence has been obtained from the Minister.

 (5) For the purposes of approving licences under this section,
the Minister may prescribe regulations or impose any conditions
as he thinks fit.

Division 8
Registered Office and Registers

Registered office and office hours

46. (1) A company shall at all times have a registered office
in Malaysia to which all communications and notices may be
addressed.

 (2) The registered office shall be open and accessible to the
public during ordinary business hours.

 (3) The Registrar shall be notified of any change in the address
of the registered office within fourteen days of such change.

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding fifty thousand ringgit.

Documents to be kept at registered office

47. (1) A company shall keep at its registered office—

 (a) notice of registration issued under section 15;

 (b) the constitution of the company, if any;

 (c) certificates given under this Act or corresponding previous
written law, if any;

 (d) all registers, books, records and documents as required
under this Act;

Companies 73

 (e) minutes of all meetings of members and resolutions of
members;

 (f) minutes of all meetings and resolutions of the Board and
committees of the Board;

 (g) copies of all written communications to all members or
all holders of the same class of shares;

 (h) copies of all financial statements and group financial
statement;

 (i) the accounting records of the company required under
section 245;

 (j) copies of all instruments creating or evidencing charges
as required under section 357; and

 (k) such other documents required to be kept by the Registrar.

 (2) Any document referred to in subsection (1), other than
documents referred to in paragraph (1)(f), may be kept at a place
other than at the registered office of a company provided notice
to that effect has been given to the Registrar.

 (3) The company shall notify the Registrar of any changes to
the address of the place referred to in subsections (1) and (2)
within fourteen days from the date of such change.

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Inspection of documents and records kept by company

48. (1) Any document and record that is to be made available for
inspection under this Act, shall be made available for inspection
by any person who is entitled to inspect such document and
record at the registered office of a company or any other place
allowed by this Act.

Laws of Malaysia74 Act 777

 (2) A company shall provide proper facilities to enable the
documents and records to be inspected.

 (3) The person who is entitled under this Act to inspect the
documents and records referred to in subsection (1) shall be
allowed to make copies or take extracts from the documents and
records.

Forms of documents and other means for recording of documents

49. (1) The documents and records of a company referred to in
section 47 shall be—

 (a) in a written form; or

 (b) in any other form or manner, electronic or otherwise,
that allows the documents and information to be easily
accessible and reproduced into written form.

 (2) A company shall take reasonable precautions to prevent
documents and records kept in the form referred to in subsection (1)
from being falsified.

 (3)  If a company discovers that a document or record has been
falsified, the company shall immediately inform the Registrar and
the Registrar shall have the power to direct the company to—

 (a) amend, rectify or vary the document or record; or

 (b) take any other actions as the Registrar thinks fit.

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit or to imprisonment
for a term not exceeding five years or to both.

Register of members

50. (1) Every company shall keep a register of its members and
record in the register—

 (a) the names, addresses, number of the identity card issued
under the National Registration Act 1959 [Act 78], if
any, nationality and the usual place of residence of every

Companies 75

person who is to be a member and, where any of the
member is a corporation, the corporate name, place of
incorporation, establishment or origin, registration number
and registered office of the corporation and any other
relevant information and particulars of the members;

 (b) in the case of a company having a share capital, a statement
of the shares held by each member, distinguishing each
share by an appropriate number, or by the number of
the certificate, if any, and of the amount paid or agreed
to be considered as paid on the shares of each member;

 (c) the date at which the name of each person was entered
in the register as a member;

 (d) the date at which any person who ceased to be a member
during the previous seven years so ceased to be a member;
and

 (e) in the case of a company having a share capital, the date
of every allotment of shares to members and the number
of shares comprised in each allotment.

 (2) Notwithstanding subsection (1)—

 (a) where the company has converted any of its shares
into stock and given notice of the conversion to the
Registrar, the company shall alter the register to show
the amount of stock or number of stock units held by
each member instead of the number of shares and the
particulars relating to shares specified in paragraph (1)(b);

 (b) a company may keep the names and particulars relating to
persons who have ceased to be members of the company
separately and the names and particulars relating to
former members need not be supplied to any person who
applies for a copy of the register unless he specifically
requests the names and particulars of former members.

 (3) The register of members shall be prima facie evidence of
any matters inserted in the register as required or authorized by
this Act.

Laws of Malaysia76 Act 777

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Duty to notify of particulars and changes in the register of
members

51. (1) A company shall notify the Registrar of the changes
in the particulars in the register within fourteen days from the
date—

 (a) of the change of any shareholder contained in the register;

 (b) after a person ceases to be, or becomes, a shareholder of
the company; or

 (c) the information required under section 56 is received by
the company or is recorded in the register.

 (2) The Registrar shall determine the form, manner and extent
of the information to be lodged under subsection (1).

 (3) This section is not applicable to a company whose shares
are quoted on a stock exchange.

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding twenty thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Index of members of company

52. (1) Every company having more than fifty members shall
keep an index in a convenient form of the names of the members,
unless the register of members is in such a form of an index.

 (2) The company shall make any necessary changes in the
index if there is any change in the particulars in the register of
members within fourteen days from the date of the change.

Companies 77

 (3) The index shall in respect of each member contain a
sufficient indication to enable the account of that member in the
register to be readily accessible.

 (4) This section is not applicable to a company whose shares
are quoted on a stock exchange.

 (5) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Branch register of members

53. (1) A company having a share capital may cause to be
kept a branch register of members which shall be deemed to be
part of the company’s register of members in any place outside
Malaysia.

 (2) The company shall lodge with the Registrar—

 (a) a notice of the address of the office where any branch
register is kept and of any change in its address; and

 (b) a notice of the discontinuance of the office where the
branch register is kept, if it is discontinued,

within thirty days from the opening of the office or of the change
or discontinuance, as the case may be.

 (3) A branch register shall be kept in the same manner in
which the principal register is required to be kept.

 (4) The company shall transmit a copy of every entry in its
branch register to the office at which its principal register is kept
within fourteen days from the entry is made and shall cause to
be kept a duly updated copy of its branch register at that office.

 (5) Subject to this section, with respect to the copy register, the
shares registered in a branch register shall be distinguished from
the shares registered in the principal register and no transaction
with respect to any shares registered in a branch register shall
be registered during the continuance of that registration.

Laws of Malaysia78 Act 777

 (6) Where the company discontinue a branch register, all entries
in that register shall be transferred to some other branch register
kept by the company in the same place or to the principal register.

 (7) If by virtue of the law in force in any other country, any
corporation incorporated under that law keeps a branch register
of its members in Malaysia, the Minister may by order declare
that the provisions of this Act relating to inspection, place of
keeping and rectification of registers of members shall, subject
to any modifications specified in the order, apply accordingly to
such branch register.

 (8) The company and every officer who contravene this
section and every person who, in accordance with paragraph 54(1)(b)
has arranged to make up the principal register commit an offence
and shall, on conviction, be liable to a fine not exceeding ten
thousand ringgit and, in the case of a continuing offence, to a
further fine not exceeding five hundred ringgit for each day during
which the offence continues after conviction.

Place where register of members and index to be kept

54. (1) The register of members and index shall be kept at the
registered office of the company, but—

 (a) if the register and index are prepared at another office
of the company within Malaysia, the register and index
may be kept at that other office; or

 (b) if the company arranges with any person to prepare the
register and index on its behalf, the register and index
may be kept at the office of that person at which the
work is done if that office is within Malaysia.

 (2) Where, by virtue of paragraph (1)(b), the register of
members is kept at the office of that agent, other than the
company, and by reason of his default the company contravenes
subsection (1) or any requirements of this Act as to the
production of the register, the agent shall be liable to the same
penalties as if he were an officer of the company, and the power
of the Court under section 585 shall extend to the making of
orders against the agent and officers and servants of the agent.

Companies 79

 (3) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding ten thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Inspection and closing of register of members and index

55. (1) The register and index shall be open for inspection by any
member without charge and to any other person on payment for
each inspection of ten ringgit or such lesser sum as the company
requires.

 (2) Any member or other person may request the company
to furnish him with a copy of the register, or of any part the
register, but only so far as it relates to names, addresses, number
of shares held and amounts paid on shares, on payment in advance
of ten ringgit or such lesser sum as the company requires for
every hundred words or fractional part of the register required
to be copied and the company shall cause any copy requested
by any person to be sent to that person within a period of
twenty-one days or within such period as the Registrar considers
reasonable from the day on which the request is received by the
company.

 (3) A company may close the register of members or any
class of members by giving at least fourteen days’ notice to the
Registrar.

 (4) No part of the register shall be closed for more than thirty
days in the aggregate in any calendar year.

 (5) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Laws of Malaysia80 Act 777

Power of company to require disclosure of beneficial interest
in its voting shares

56. (1) Any company may, by notice in writing, require any
member of the company within such reasonable time as is specified
in the notice—

 (a) to inform the company whether the member holds any
voting shares in the company as beneficial owner or as
trustee; and

 (b) if the member holds the voting shares as trustee, so far
as it is possible to do so, to indicate the persons for
whom the member holds the voting shares by name and
by other particulars sufficient to enable those persons
to be identified and the nature of their interest.

 (2) Where a company is informed that any other person has an
interest in any of the voting shares in a company, the company
may by notice in writing require that other person within such
reasonable time as is specified in the notice—

 (a) to inform the company whether the person holds an
interest as beneficial owner or as trustee; and

 (b) if the person holds the interest as trustee, so far as it is
possible to do so, to indicate the persons for whom the
person holds the interest by name and by other particulars
sufficient to enable them to be identified and the nature
of their interest.

 (3) Any company may, by notice in writing, require any
member of the company to inform the company, within a
reasonable time as is specified in the notice, whether any of the
voting rights carried by any voting shares in the company held
by the member are the subject of an agreement or arrangement
under which another person is entitled to control the member’s
exercise of those rights and, if so, to give particulars of the
agreement or arrangement and the parties to the agreement or
arrangement.

 (4) Whenever a company receives information from a person in
accordance with a requirement imposed on such person under this
section with respect to shares held by a member of the company,

Companies 81

the company shall be under an obligation to inscribe against the
name of that member in a separate part of the register kept by
it under section 50—

 (a) the fact that the requirement was imposed and the date
on which it was imposed; and

 (b) the information received in accordance with the
requirement.

 (5) Section 50 applies in relation to the part of the register
referred to in subsection (4) as the provisions apply in relation to
the remainder of the register and as if references to subsection 50(1)
include references to subsection (4).

 (6) The Registrar, a stock exchange or the Securities Commission
may, by notice in writing, direct a company to invoke its powers
under subsections (1) and (2) and to immediately provide it with
the information so obtained.

 (7) Subject to subsection (8), any person who—

 (a) contravenes a notice under this section; or

 (b) in purported compliance with such a notice makes any
statement which he knows to be false in a material
particular or recklessly makes any statement which is
false in a material particular,

commits an offence.

 (8) The company and every officer who contravenes the direction
of the Registrar, a stock exchange or the Securities Commission
commit an offence.

 (9) A person shall not be guilty of an offence under
paragraph (7)(a) if he proves that the information in question was
already in the possession of the company or that the requirement
to give it was for any other reason that is frivolous or vexatious.

Laws of Malaysia82 Act 777

Register of directors, managers and secretaries

57. (1) Every company shall keep at its registered office a
register of its directors, managers and secretaries containing, but
not limited to, the following particulars:

 (a) in respect of a director—

 (i) his name, residential address, service address, date
of birth, business occupation and identification;
and

 (ii) particulars of any other directorships of public
companies or companies which are subsidiaries
of public companies held by the director, but it
shall not be necessary for the register to contain
particulars of directorships held by a director in
a company that by virtue of section 7 is deemed
to be related to that company;

 (b) in respect of a manager and secretary, his full name,
identification and residential address, business address,
if any, and other occupation.

 (2) For the purposes of paragraph (1)(a), if a person is a director
in one or more subsidiaries of the same holding company, it shall
be sufficient if it is disclosed that the person is the holder of one
or more directorships in that group of companies and the group
may be described by the name of the holding company with the
addition of the word “Group”.

 (3) The register shall be open for inspection of any member of
the company without charge and of any other person on payment
of ten ringgit, or such lesser sum as the company requires, for
each inspection.

 (4) If there is any change in the particulars of a director,
manager or secretary the company shall effect the change in the
register within fourteen days from the change.

 (5) A certificate of the Registrar stating that from any return
lodged with the Registrar under this section it appears that at
any time specified in the certificate any person was a director,

Companies 83

manager or secretary of a specified company shall be admissible
in evidence in any proceedings and shall be prima facie evidence
of the facts stated in the certificate.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

 (7) In this section—

 “identification” means, in the case of any person issued with
an identity card, the number of the identity card, in the case of
a person not issued with an identity card, particulars of passport
or such other similar evidence of identification as is available;

 “director” includes an alternate, substitute or local director.

Duty to notify of particulars and changes of director, manager
and secretary

58. (1) A company shall notify the Registrar within fourteen
days from the date—

 (a) after its incorporation, the particulars required to be
specified under section 57;

 (b) of any change in the name, residential address and other
prescribed particulars of any director, manager or secretary
or the service address of any director;

 (c) after a person ceases to be, or becomes, a director of the
company, the particulars required to be specified in the
register required under section 57;

 (d) after a person becomes a manager or secretary of the
company, specifying the full name, address and other
occupation, if any, of that person; and

 (e) after a person ceases to be a manager or secretary of the
company.

Laws of Malaysia84 Act 777

 (2) The Registrar shall determine the form, manner and extent
of the information to be lodged under subsection (1).

 (3) Notice of a person having become a director of the company
shall—

 (a) contain a statement of the particulars of the new director
as set out in paragraph 57(1)(a); and

 (b) be accompanied with a consent to act in that capacity by
that person.

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Register of directors’ shareholdings, etc.

59. (1) A company shall keep a register showing with respect
to each director of the company particulars of—

 (a) shares in the company or in a related corporation being
shares in which the director has an interest and the
nature and extent of that interest;

 (b) debentures of or participatory interests made available by
the company or a related corporation being debentures
or participatory interests in which the director has an
interest and the nature and extent of that interest;

 (c) rights or options of the director or of the director and
other person in respect of the acquisition or disposal of
shares in, debentures of or participatory interests made
available by the company or a related corporation; and

 (d) contracts to which the director is a party or under which
he is entitled to a benefit being contracts under which
a person has a right to call for or to make delivery of
shares in, debentures of or participatory interests made
available by the company or a related corporation.

Companies 85

 (2) A company need not disclose in its register any particulars
of shares of director’s interest in a wholly owned subsidiary of
a company which is deemed to be a related corporation under
section 7.

 (3) A wholly-owned subsidiary company shall be deemed to
have complied with this section in relation to its director if the
particulars required by this section are shown in the register of
the holding company.

 (4) A company shall enter in its register in relation to the
director the particulars referred to in subsection (1) including
the number and description of shares, debentures, participatory
interests, rights, options and contracts to which the notice relates
and in respect of shares, debentures, participatory interests, rights
or options acquired or contracts entered into after he became a
director within three days after receiving notice from a director
under paragraph 219(1)(a)—

 (a) the price or other consideration for the transaction by
reason of which an entry is required to be made under
this section; and

 (b) the date of—

 (i) the agreement for the transaction or if it is later,
the completion of the transaction; or

 (ii) where there was no transaction, the occurrence
of the event by reason of which an entry is
required to be made under this section.

 (5) A company shall enter in its register the particulars of the
change referred to in the notice under paragraph 219(1)(b) within
three days after receiving the notice from the director.

 (6) A company is not deemed to have notice of or to be put
upon inquiry as to the right of a person to or in relation to, a
share in, debenture of or participatory interest made available by
the company.

 (7) The register shall be open for inspection by a member of
the company without charge and by any other person on payment
of twenty ringgit or such lesser amount as the company requires.

Laws of Malaysia86 Act 777

 (8) Any person may request a company to furnish him with
a copy of its register or any part of its register on payment of
twenty ringgit and the company shall send the copy to that person
within twenty-one days or such longer period as the Registrar
thinks fit from the day on which the request is received by the
company.

 (9) The Registrar may, at any time in writing, require a
company to furnish him with a copy of its register or any part of
its register and the company shall furnish the copy within seven
days from the day on which the requirement is received by the
company.

 (10) A public company shall produce its register to all persons
attending the meeting at the commencement of each annual general
meeting of the company and keep it open and accessible during
the meeting.

 (11) In this section—

 (a) a reference to a participatory interest is a reference to
an interest within the meaning of the Interest Schemes
Act 2016;

 (b) a reference to a person who holds or acquires shares,
debentures or participatory interests or an interest in
shares, debentures or participatory interests includes
a reference to a person who under an option holds
or acquires a right to acquire or dispose of a share,
debenture or participatory interest or an interest in a
share, debenture or participatory interest; and

 (c) a reference to a director shall include the spouse of a
director who is not a director of the company and a child
of a director, including adopted child or stepchild who
is not a director of the company and the interest of the
spouse or child shall be treated as the interest of the
director in the shares or debentures of the company after
the relevant facts have come to the director’s knowledge.

 (12) Section 8, except for subsections (1) and (3), has effect
in determining whether a person has an interest in a debenture
or participatory interest and in applying those provisions, a
reference to a share shall be read as a reference to a debenture
or participatory interest.

Companies 87

 (13) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable
to a fine not exceeding five hundred thousand ringgit or to
imprisonment for a term not exceeding ten years, or to both
and, in the case of a continuing offence, to a further fine not
exceeding one thousand ringgit for each day during which the
offence continues after conviction.

Register of debenture holders and copies of trust deed

60. (1) Every company which issues debentures, not being
debentures transferable by delivery, shall keep a register of
debenture holders.

 (2) The company shall notify the Registrar of the issuance
of debentures in accordance with subsection (1) within fourteen
days from the date of issuance.

 (3) The register shall, except if duly closed, be open to the
inspection of the registered holder of any debentures and of any
holder of shares in the company and shall contain particulars of
the names and addresses of the debenture holders and the amount
of debentures held by the debenture holders.

 (4) For the purposes of this section, a register shall be deemed
to be duly closed during the periods not exceeding in the aggregate
thirty days in any calendar year if it is closed in accordance with
the provisions and period specified in the constitution or in the
debentures or debenture stock certificates, or in the trust deed or
other document relating to or securing the debentures.

 (5) The company shall, at the request of every registered
debenture holder and every shareholder in a company,
supply a copy of the register of the debenture holders of the
company or any part of the register on payment of five ringgit for
every page or part of the register required to be copied but the
copy need not include any particulars as to any debenture holder
other than his name and address and the debentures held by him.

 (6) A copy of any trust deed relating to or securing any issue
of debentures shall be forwarded by the company to a holder
of those debentures at his request on payment of ten ringgit for
every page or such lesser sum as is fixed by the company, or,

Laws of Malaysia88 Act 777

where the copy has to be specially made to meet the request on
payment of five ringgit for every page or part of the register
required to be copied.

 (7) A company which issues debentures may cause to be kept in any
place outside Malaysia a branch register of debenture holders which
shall be deemed to be part of the company’s register of debenture
holders and sections 50, 51, 52, 53, 54, 55 and 601 of this Act
shall apply with necessary modification in relation to the keeping
of a branch register of debenture holders.

 (8) The company and every officer who refused an inspection,
or refused to forward a copy within thirty days after a request
has been made under this section commit an offence.

 (9) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
twenty thousand ringgit and, in the case of a continuing offence,
to a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

Division 9

Execution of Documents

Company seals

61. (1) A company may or may not have a common seal.

 (2) A company which has a common seal shall have its name
and registration number engraved in legible romanised characters
on the seal.

 (3) The company and every officer who contravene subsection (2)
commit an offence.

 (4) An officer of a company, or a person acting on behalf of
a company, commits an offence if he uses, or authorizes the use
of, a seal purporting to be a seal of the company on which its
name is not engraved as required by subsection (2) and shall,
on conviction, be liable to a fine not exceeding fifty thousand
ringgit.

Companies 89

Official seal for use abroad

62. (1) Subject to the conditions or limitations in the constitution,
a company that has a common seal may have an official seal for
use outside Malaysia.

 (2) The official seal shall be an exact copy of the company’s
common seal, with the addition on its face of the place where it
is to be used.

 (3) The official seal when duly affixed to a document has the
same effect as the company’s common seal.

 (4) A company having an official seal for use outside Malaysia
may in writing under its common seal authorize any person
appointed for the purpose to affix the official seal to any deed
or other document to which the company is a party.

 (5) The person affixing the official seal shall certify in writing
on the deed or other document to which the seal is affixed the
date and place it is affixed.

Official seal for share certificates, etc.

63. (1) Subject to the conditions or limitations in the constitution,
a company that has a common seal may have an official seal to
seal—

 (a) securities issued by the company; or

 (b) documents creating or evidencing securities so issued.

 (2) The official seal—

 (a) shall be an exact copy of the company’s common seal,
with the addition on its face of the word “Securities”;
and

 (b) when duly affixed to the document has the same effect
as the company’s common seal.

Laws of Malaysia90 Act 777

Company contracts

64. (1) A contract may be made—

 (a) by a company, in writing under its common seal;

 (b) on behalf of a company, by a person acting under its
authority, express or implied; or

 (c) on behalf of a company, orally, by any person acting
under its authority, express or implied.

 (2) Any formalities required by law in the case of a contract
made by an individual shall apply, unless the context otherwise
requires, to a contract made by or on behalf of a company.

Pre-incorporation contract

65. (1) A contract or transaction that purports to be made by
or on behalf of a company at a time when the company has not
been formed has effect as a contract or transaction made with the
person purporting to act for the company or as agent for it, and
he is personally liable on the contract or transaction accordingly.

 (2) Notwithstanding subsection (1), a contract or transaction
referred to in that subsection may be ratified by the company
after its incorporation and the company shall be bound by the
contract or transaction as if the company had been in existence
at the date of the contract or transaction and had been a party
to the contract or transaction.

Execution of documents

66. (1) A document is executed by a company—

 (a) by the affixing of its common seal, subject to the conditions
or limitations in the constitution; or

 (b) by signature in accordance with this section.

Companies 91

 (2) A document is validly executed by a company if it is
signed on behalf of the company—

 (a) by at least two authorized officers, one of whom shall
be a director; or

 (b) in the case of a sole director, by that director in the
presence of a witness who attests the signature.

 (3) A document signed in accordance with subsection (2) shall
have the same effect as if the document is executed under the
common seal of the company.

 (4) A document or proceeding requiring authentication by a
company may be signed by an authorized officer and need not
be made under the common seal.

 (5) For the purposes of this section, “authorized officer”
means—
 (a) a director of the company;

 (b) a secretary of the company; or

 (c) any other person,

approved by the Board.

Execution of deeds

67. (1) A document is validly executed by a company as a
deed if—

 (a) it is duly executed by the company; and

 (b) it is delivered as a deed.

 (2) For the purposes of paragraph (1)(b), a document is presumed
to be delivered upon it being validly executed under subsection (1),
unless a contrary intention is proved.

 (3) Notwithstanding subsection (1), a company may, by instrument
executed as a deed, empower a person, either generally or in
respect of specified matters, to execute deeds or other documents
on its behalf.

Laws of Malaysia92 Act 777

 (4) A deed or other document executed by the person referred
to in subsection (3) shall have effect as if the deed or document
is executed by the company.

Division 10

Annual Return

Duty to lodge annual return

68. (1) A company shall lodge with the Registrar an annual
return for each calendar year not later than thirty days from the
anniversary of its incorporation date.

 (2) The requirement under subsection (1) is not applicable to
a company in the calendar year which it is incorporated.

 (3) The annual return of a company shall contain the following
particulars:

 (a) the address of its registered office;

 (b) the nature of its business;

 (c) the address of the places where its business is carried on
including branch, if any;

 (d) the address at which its register of members is kept, if
not kept at the registered office;

 (e) the address at which its financial records are kept, if not
kept at the registered office;

 (f) in the case of a company with a share capital, the summary
of its shareholding structure, including debentures;

 (g) the total amount of its indebtedness;

 (h) the particulars of directors, managers, secretaries and
auditors;

Companies 93

 (i) the list of its members; and

 (j) such other information as the Registrar may require.

 (4) The Registrar shall have the power to determine the form
and manner in which the annual return is to be lodged.

 (5) The annual return shall be signed by a director or secretary
of the company.

 (6) If the particulars required under subsection (3) are unchanged
from the last preceding annual return, the company shall be
allowed to lodge a statement signed by a director or a secretary
certifying that there is no change in any of the matters stated
from previous years.

 (7) A public company which has more than five hundred
members and provides reasonable opportunities and facilities for
a person to inspect and take copies of its list of members and
its particulars of shares transferred need not comply with the
requirement under paragraph (3)(i) if it is included in the annual
return—

 (a) a certificate by the secretary that the company is of a
kind to which this subsection applies; and

 (b) a list showing the prescribed particulars of the twenty
largest holders of each class of equity shares.

 (8) The Registrar may strike a company off the register as
provided in section 549, if the company fails to lodge an annual
return for three or more consecutive years.

 (9) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding one thousand ringgit for
each day during which the offence continues after conviction.

Laws of Malaysia94 Act 777

Part III

MANAGEMENT OF COMPANY

Division 1

Share and Capital Maintenance

Subdivision 1

Share Capital

Types of shares

69. Subject to the constitution of the company, shares in a
company may—

 (a) be issued in different classes;

 (b) be redeemable in accordance with section 72;

 (c) confer preferential rights to distributions of capital or
income;

 (d) confer special, limited or conditional voting rights; or

 (e) not confer voting rights.

Nature of shares

70. A share or other interest of a member in a company is personal
property and transferable in accordance with section 105.

Rights and powers attached to shares

71. (1) A share in a company, other than preference shares,
confers on the holder—

 (a) the right to attend, participate and speak at a meeting;

Companies 95

 (b) the right to vote on a show of hands on any resolution
of the company;

 (c) the right to one vote for each share on a poll on any
resolution of the company;

 (d) the right to an equal share in the distribution of the
surplus assets of the company; or

 (e) the right to an equal share in dividends authorized by
the Board.

 (2) Notwithstanding paragraph (1)(e), the right to dividends
as specified therein may be negated, altered or added to by the
constitution of the company or in accordance with the terms on
which the share is issued.

Preference shares

72. (1) Subject to its constitution, a company having a share
capital may issue preference shares.

 (2) Subject to this section and if authorized by its constitution,
a company may issue preference shares which are liable, or at
the option of the company are to be liable, to be redeemed in
accordance with the constitution.

 (3) The redemption of the preference shares shall not be taken
as reducing the amount of share capital of the company.

 (4)  The shares shall be redeemable only if the shares are fully
paid up and the redemption shall be out of—

 (a) profits;

 (b) a fresh issue of shares; or

 (c) capital of the company.

 (5) Where any such shares are redeemed otherwise than out
of the proceeds of a fresh issue, there shall, out of profits which
would otherwise have been available for dividend, be transferred
into the share capital accounts of the company, a sum equal to
the amount of the shares redeemed.

Laws of Malaysia96 Act 777

 (6) The redemption of shares out of the capital referred
to in paragraph (4)(c) shall only be redeemed subject to the
following:

 (a) all the directors have made a solvency statement under
section 113 in relation to such redemption; and

 (b) the company has lodged a copy of the solvency statement
with the Registrar.

 (7) The company shall  give notice to the Registrar
specifying the shares redeemed within fourteen days from the
redemption.

Prohibition to issue bearer’s share warrants

73. (1) No company shall have the power to issue a bearer’s
share warrant.

 (2) A bearer of share warrant shall surrender the warrant for
cancellation to have the bearer’s name entered in the register
of members of the company within twelve months upon the
commencement of this Act.

 (3) Notwithstanding subsection (2), a bearer of share warrant
may apply to the Court for an order to have his name entered
in the register of members of the company.

 (4) The company shall be responsible for any loss incurred by
any person by reason of the company entering in the register of
members, the name of a bearer of a share warrant issued without
the warrant being surrendered and cancelled.

No par value shares

74. All shares issued before or upon the commencement of this
Act shall have no par or nominal value.

Companies 97

Exercise of power of directors to allot shares or grant
rights

75. (1) Unless the prior approval by way of resolution by the
company has been obtained, the directors of a company shall not
exercise any power—

 (a) to allot shares in the company;

 (b) to grant rights to subscribe for shares in the company;

 (c) to convert any security into shares in the company; or

 (d)  to allot shares under an agreement or option or offer.

 (2) Subsection (1) shall not apply to—

 (a) an allotment of shares, or grant of rights, under an offer
made to the members of the company in proportion to
the members’ shareholdings;

 (b) an allotment of shares, or grant of rights, on a bonus issue
of shares to the members of the company in proportion
to the members’ shareholdings;

 (c) an allotment of shares to a promoter of a company that
the promoter has agreed to take; or

 (d) shares which are to be issued as consideration or part
consideration for the acquisition of shares or assets by
the company and members of the company have been
notified of the intention to issue the shares at least
fourteen days before the date of issue of the shares.

 (3) For the purposes of paragraph (2)(d), members of the
company are deemed to have been notified of the intention to
issue shares of the company if—

 (a) a copy of the statement explaining the purpose of the
intended issue of shares has been sent to every member
at his last known address according to the register of
members; and

Laws of Malaysia98 Act 777

 (b) the copy of the statement has been advertised in one
widely circulated newspaper in Malaysia in the national
language and one widely circulated newspaper in Malaysia
in the English language.

 (4) Any issue of shares made by a company in contravention of
this section shall be void and consideration given for the shares
shall be recoverable accordingly.

 (5)  Any director who knowingly contravenes, or permits or
authorizes the contravention of, or fails to take all reasonable
steps to prevent the contravention of this section with respect
to any issue of shares commits an offence and shall be liable
to compensate the company and the person to whom the shares
were issued for any loss, damages or costs which the company
or that person may have sustained or incurred.

 (6) Notwithstanding the Limitation Act 1953 [Act 254], no
proceedings to recover any such loss, damages or costs shall be
commenced after the expiration of three years from the date of
the issue.

Allotment of shares or grant of rights with company approval

76. (1) For the purposes of subsection 75(1), approval may be
confined to a particular exercise of that power or may apply to
the exercise of that power generally and any such approval may
be unconditional or subject to conditions.

 (2) An approval made under subsection (1) shall be lodged with
the Registrar within fourteen days from the date of the approval.

 (3) An approval expires—

 (a) in the case where a company is required to hold an annual
general meeting—

 (i)  at the conclusion of the annual general meeting
held next after the approval was given; or

 (ii) at the expiry of the period within which the next
annual general meeting is required to be held
after the approval was given,

Companies 99

whichever is the earlier; or

 (b) in the case where the company is not required to hold an
annual general meeting, not more than twelve months
after the approval was given.

 (4) Notwithstanding subsection (3), an approval may be
revoked or varied at any time by a resolution of the company.

 (5) The directors may allot shares or grant rights after an
approval has expired if—

 (a) the shares are allotted, or the rights are granted, under
an agreement, option or offer made or granted by the
company before the approval expires; and

 (b) the approval allowed the company to make or grant an
agreement, option or offer that would or might require
shares to be allotted, or rights to be granted, after the
approval expires.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

Registration of allotment in the register of members

77. (1) A company shall register an allotment of shares in the
register of members referred to in section 50 within fourteen days
from the date of the allotment.

 (2) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding fifty thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Laws of Malaysia100 Act 777

Return of allotment

78. (1) A company shall lodge with the Registrar a return of
the allotment within fourteen days from an allotment of shares.

 (2) The return of the allotment shall include a statement of
capital as at the date of the allotment and shall state—

 (a) the number and amount of the shares comprised in the
allotment;

 (b) the amount, if any, paid, deemed to be paid, or due and
payable on the allotment of each share;

 (c) where the capital of the company is divided into shares
of different classes, the class of shares to which each
share comprised in the allotment belongs; and

 (d) the full name and the address of each of the allottees
and the number and class of shares allotted to him.

 (3) The particulars mentioned in paragraph (2)(d) need not be
included in the return of the allotment of a public company to
which subsection 68(7) applies which has allotted shares—

 (a) for cash; or

 (b) for a consideration other than cash,

where the number of persons to whom the shares have been
allotted exceeds five hundred.

 (4) Where shares are allotted or deemed to have been allotted
as fully or partly paid up otherwise than in cash and the allotment
is made under a contract in writing, the company shall lodge
together with the return the contract evidencing the entitlement of
the allottee or a copy of any such contract certified in a manner
as may be determined by the Registrar.

 (5) If a certified copy of a contract is lodged, the original
contract duly stamped shall be produced at the same time to the
Registrar if requested by the Registrar.

Companies 101

 (6) Where shares are allotted or are deemed to have been
allotted as fully or partly paid up otherwise than in cash and the
allotment is made—

 (a) under a contract not reduced to writing;

 (b) under the constitution;

 (c) in satisfaction of a dividend declared in favour of, but
not payable in cash to the shareholders; or

 (d) upon the application of moneys held by the company in
an account or reserve in paying up unissued shares to
which the shareholders have become entitled,

the company shall lodge together with the return a statement
containing such particulars as may be determined by the Registrar.

 (7) Where shares are allotted under a scheme of arrangement
approved by the Court under section 366, the company may lodge
an office copy of the order of the Court in lieu of the statement
referred to in subsection (6) in a manner as may be determined
by the Registrar.

 (8) Any shares issued to any person without formal allotment
for the purpose of incorporation of a company shall be deemed
to have been allotted on the date of the incorporation.

 (9) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

General prohibition of commissions, discounts and allowances

79. (1) A company shall not apply any of its shares or cash, either
directly or indirectly, in payment of any commission, discount or
allowance to a person in consideration of the person—

 (a) subscribing or agreeing to subscribe, whether absolutely
or conditionally, for shares in the company; or

Laws of Malaysia102 Act 777

 (b) procuring or agreeing to procure subscriptions, whether
absolutely or conditionally, for shares in the company.

 (2) For the purposes of subsection (1), it is immaterial how
the shares or cash are applied, whether by being added to the
purchase money of property acquired by the company or to the
contract price of work to be executed for the company, or being
paid out of the nominal purchase money or contract price, or
otherwise.

 (3) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding ten thousand
ringgit for each day during which the offence continues after
conviction.

Permitted commissions

80. (1) Notwithstanding section 79, a company may apply any
of its shares or cash, either directly or indirectly, in payment
of a commission to a person for the purpose of subscribing or
agreeing to subscribe or procuring or agreeing to procure—

 (a) shares of an unlisted recreational club which are offered
to the public for subscription or shares other than of
an unlisted recreational club which are offered for
subscription or purchase in accordance with a prospectus
that is registered under the Capital Markets and
Services Act 2007; or

 (b) shares not offered under paragraph (a).

 (2) The payment of the commission shall—

 (a) be authorized by the constitution of a company; and

 (b) not exceed—

 (i) ten per centum of the price at which the shares
are issued; or

 (ii)  the amount or rate authorized by the constitution,

whichever is lesser.

Companies 103

 (3) The rate of the commission referred to in paragraph (2)(b)
and the number of shares which a person has agreed for a
commission to subscribe shall be disclosed—

 (a) in the prospectus;

 (b) in the statement in lieu of prospectus;

 (c) in a statement as may be determined by the Registrar
signed as like manner as a statement in lieu of prospectus
and lodged with the Registrar; or

 (d) in the case where a circular or notice, not being a
prospectus, inviting subscription for shares is issued,
in the circular or notice.

 (4) A vendor to, promoter of, or other person who receives
payment in cash or shares from a company may apply any part
of the cash or shares received in payment of any commission
the payment of which if made directly by the company would
be permitted by this section.

 (5) For the purposes of this section, commission includes
brokerage and the rates referred to in paragraph (2)(b) shall not
apply to brokerage.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit and, in the case of
a continuing offence for non-compliance under paragraph (3)(c),
to a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

Differences in calls and payments, etc.

81. (1) Unless otherwise provided in the constitution, a company
may—

 (a) make arrangements on the issue of shares for varying
the amounts and times of payment of calls as between
shareholders;

Laws of Malaysia104 Act 777

 (b) accept from any shareholder the whole or a part of the
amount remaining unpaid on any shares although no
part of that amount has been called up; and

 (c) pay dividends in proportion to the amount paid up on
each share where a larger amount is paid up on some
shares than on others.

 (2) The director may, if he thinks fit, receive from any shareholder
willing to advance payment all or any part of the money uncalled
and unpaid upon any shares held by the shareholder.

 (3) Upon all or any part of the money advanced referred to in
subsection (2) is received by the directors from the shareholder
become payable, the company may pay interest or return at a
rate not exceeding eight per centum per annum as may be agreed
upon between the directors and the shareholder paying the sum
in advance, unless the company in a general meeting otherwise
directs.

Calls on shares

82. (1) The directors may make calls upon the shareholders in
respect of any money unpaid on the shares of the shareholders
and not by the conditions of allotment of shares made payable
at fixed date.

 (2) A sum which, by the terms of issue of a share, becomes
payable on allotment or at any fixed date shall be deemed to be a
call duly made and payable on the date on which by the terms of
issue the shares becomes payable and in the case of non-payment,
all the relevant provisions of this Act as to payment of interest
and expenses, forfeiture or otherwise shall apply as if the sum
had become payable by virtue of a call duly made and notified.

 (3) Subject to the company’s constitution—

 (a) no call shall exceed one-fourth of the issued price of the
share or be payable at less than thirty days from the
date fixed for the payment of the last preceding call;
and

Companies 105

 (b) each member shall, subject to receiving at least fourteen
days’ notice specifying the date, time and place of
payment, pay to the company the amount called on his
shares.

 (4) A call shall be deemed to have been made at the time when
the resolution of the directors authorizing the call was passed and
such resolution may authorize the call to be paid by instalments.

 (5)  The joint holders of a share shall be jointly and severally
liable to pay all calls in respect of their shares.

 (6) If a sum called in respect of a share is not paid before or
on the day appointed for payment of the sum, the person from
whom the sum is due shall not be required to pay any interest
or compensation on that sum unless stated in the constitution of
the company.

 (7) For the purposes of subsection (6), the rate stated in the
constitution shall not exceed eight per centum per annum from
the day appointed for the payment of the sum to the time of
actual payment as the directors may determine.

 (8) The directors may waive payment of the interest due wholly
or in part from the person referred to in subsection (6).

 (9) A call may be revoked or postponed as the directors may
determine.

Forfeiture of shares

83. (1) If a shareholder fails to pay any call or instalment of a
call within the stipulated time, the directors may serve a notice on
the shareholder requiring payment of the amount unpaid together
with any interest or compensation which may have accrued.

 (2) The notice in subsection (1) shall—

 (a) specify a date on or before which the payment is required
to be made; and

 (b) state that in the event of non-payment on or before the
specified date, the shares in respect of which the call
was made is liable to be forfeited.

Laws of Malaysia106 Act 777

 (3) Upon failure to comply with the notice served under
subsection (1), the share in respect of which the notice has been
given shall be forfeited by a resolution of the directors unless
the payment as required by the notice has been made before such
resolution.

 (4) For the purposes of subsection (3), the forfeiture shall
include all dividends declared in respect of the forfeited shares
and not actually paid before the forfeiture.

 (5) A person whose shares have been forfeited under subsection (3)
shall cease to be a member in respect of the forfeited shares.

 (6) Notwithstanding subsection (5), the person shall remain
liable to pay to the company all money which at the date of
forfeiture was payable by him to the company in respect of
the shares together with interest or compensation at the rate of
eight per centum per annum from the date of the forfeiture on
the money for the time being unpaid if the directors think fit to
enforce payment of the interest or compensation, and the liability
shall cease if and when the company receives payment in full of
all such money in respect of the shares.

 (7) A statutory declaration in writing by a director or secretary
that a share in the company has been duly forfeited on a date
stated in the declaration shall be conclusive evidence of the facts
stated in the declaration against all persons claiming to be entitled
to the share.

 (8) A forfeited share may be sold or otherwise disposed of on
such terms and in such manner as the directors think fit.

 (9) The company may receive the consideration, if any, given
for a forfeited share on any sale or disposition of the share and
may execute a transfer of the share in favour of the person to
whom the share is sold or disposed of and such person shall—

 (a) be registered as the shareholder; and

 (b) not have his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the
forfeiture, sale or disposal of the share.

Companies 107

 (10) The forfeiture may be cancelled on such terms as the
directors think fit at any time before a sale or disposition of the
forfeited shares.

 (11) This section shall apply in the case of non-payment of any
sum which, by the terms of issue of a share, becomes payable to
the company at a fixed date, as if the shares had been payable
by virtue of a call duly made and notified.

Power of company to alter its share capital

84. (1) Unless otherwise provided in the constitution, a company
may alter its share capital in any one or more of the following
ways by passing a special resolution to—

 (a) consolidate and divide all or any of its share capital, the
proportion between the amount paid and the amount,
if any, unpaid on each subdivided share shall be the
same as it was in the case of the share from which the
subdivided share is derived;

 (b) convert all or any of its paid-up shares into stock and
may reconvert that stock into paid-up shares; or

 (c) subdivide its shares or any of the shares, whatever is in
the subdivision, the proportion between the amount paid
and the amount, if any, unpaid on each subdivided share
shall be the same as it was in the case of the share from
which the subdivided share is derived.

 (2) The company shall lodge with the Registrar the notice
of any alteration referred to in subsection (1) in the form and
manner as may be determined by the Registrar within fourteen
days from the date of the alteration.

 (3) In the case of the registration of an unlimited company
having a share capital as a limited company, the unlimited company
may pass a resolution—

 (a) to increase the amount of its share capital subject to the
condition that no part of the increased capital shall be
capable of being called up except in the event and for
the purposes of the company being wound up; or

Laws of Malaysia108 Act 777

 (b) to provide that a specified portion of its uncalled share
capital shall not be capable of being called up except
in the event and for the purposes of the company being
wound up.

Pre-emptive rights to new shares

85. (1) Subject to the constitution, where a company issues
shares which rank equally to existing shares as to voting or
distribution rights, those shares shall first be offered to the holders
of existing shares in a manner which would, if the offer were
accepted, maintain the relative voting and distribution rights of
those shareholders.

 (2) An offer under subsection (1) shall be made to the holders
of existing shares in a notice specifying the number of shares
offered and the time frame of the offer within which the offer,
if not accepted, is deemed to be declined.

 (3) If the offer is not accepted after the expiry of the period
specified in the notice under subsection (2), the directors may
dispose those shares in such manner as the directors think most
beneficial to the company.

Conversion of shares into stock

86. (1) Subject to the constitution, a company may by resolution
convert any paid-up shares into stock and reconvert any stock
into paid-up shares of any number.

 (2) The stockholders may transfer the shares or any part of the
shares in the same manner as the transfer of shares from which
the stock arose may, before the conversion, have been transferred
or be transferred in the closest manner as the circumstances allow.

 (3) The directors may fix the minimum amount of stock
transferable and may restrict or forbid the transfer of fractions
of that minimum.

 (4) For the purposes of this section, any reference in this Act
applicable to paid-up shares shall apply to stock, and the words
“share” and “shareholder” shall include “stock” and “stockholder”
respectively.

Companies 109

Rights and privileges of stockholders

87. (1) The stockholders shall, according to the amount of the
stock held by the stockholders, have the same rights, privileges
and advantages with regards to dividends, voting at meetings of
the company and other matters as if the stockholders held the
shares from which the stock arose.

 (2) Notwithstanding subsection (1), no privilege or advantage
except participation in the dividends and profits of the company
and in the assets on winding up shall be conferred by any such
part of stock which would not, if existing shares have conferred
that privilege or advantage.

Rights attached to shares

88. In this Act, a reference to the rights attached to a share
in a class of shares in a company is a reference to the rights of
the holder of that share as a member of the company.

Classes of shares

89. (1) For the purposes of this Act, shares are in the same class
if the rights attached to the shares are identical in all respects.

 (2) Subject to the constitution of a company, the rights attached
to shares are not to be regarded as different from those attached
to other shares in the same class only because they do not carry
the same rights to dividends in the twelve months immediately
following the allotment.

Description of shares of different classes

90. (1) A company that has different classes of shares shall, in
its constitution, state prominently the following:

 (a) that the company’s share capital is divided into different
classes of shares; and

 (b) the voting rights attached to shares in each class.

Laws of Malaysia110 Act 777

 (2) If a company has a class of shares of which the holders
are not entitled to vote at general meetings of the company—

 (a) the descriptive title of shares in the class shall include
the words “non-voting”; and

 (b) the company shall ensure that those words appear legibly
on any share certificate, prospectus or directors’ report
issued by the company.

 (3) Subsection (2) shall not apply to shares that are described
as preference shares.

 (4)  No company shall allot any preference shares or convert
any issued shares into preference shares unless provided by the
constitution and the constitution shall set out the rights of the
shareholders with respect to repayment of capital, participation in
surplus assets and profits, cumulative or non-cumulative dividends,
voting and priority of payment of capital and dividend in relation
to other shares or other classes of preference shares.

 (5)  The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit.

Variation of class rights

91. (1) Without prejudice to any other restrictions on the variation
of the rights, the rights attached to shares in a class of shares in
a company may be varied only—

 (a) in accordance with the constitution for the variation of
those rights; or

 (b) if there are no such provisions, with the consent of
shareholders in that class given in accordance with this
section.

 (2)  For the purposes of paragraph (1)(b), the consent of the
shareholders required for the purposes of this section shall be—

 (a) a written consent representing not less than seventy five
per centum of the total voting rights of the shareholders
in the class; or

Companies 111

 (b) a special resolution passed by shareholders in the class
sanctioning the variation.

 (3) A variation of class rights takes effect—

 (a) if no application is made under section 93 for it to be
disallowed, at the expiration of the period in which
applications may be made under that section; or

 (b) if an application is made within that period, at the time
the application is finally determined, unless the variation
is disallowed.

 (4) If an application is withdrawn before the expiry of the
period referred to in subsection 93(2), the variation shall only
take effect at the expiry of such period.

 (5) The issue by a company of preference shares ranking equally
with existing preference shares issued by the company shall be
deemed to be a variation of the rights attached to those existing
preference shares unless the issue of the preference shares was
authorized by the terms of issue of the existing preference shares
or by the constitution of the company in force at the time the
existing preference shares were issued.

Notifying shareholders of variation

92. (1) If the rights attached to shares in any class of shares
in a company are varied, the company shall give written notice
of the variation to each shareholder in that class within fourteen
days from the date on which the variation is made.

 (2)  The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit.

Disallowance or confirmation of variation by Court

93. (1) If the rights attached to shares in any class of shares in
a company are varied, the shareholders representing at least ten
per centum of the total voting rights in the class may apply to
the Court to have the variation disallowed.

Laws of Malaysia112 Act 777

 (2) An application under subsection (1)—

 (a) shall be made within thirty days from the date on which
the variation is made; and

 (b) may be made on behalf of the shareholders by any
shareholder appointed in writing by all shareholders in
that class.

 (3) The Court shall, upon hearing of the application made
under subsection (1), make the following order:

 (a) if the Court is satisfied that the variation would unfairly
prejudice the shareholders represented by the applicant,
disallow the variation; or

 (b) if the Court is satisfied that the variation would not unfairly
prejudice the shareholders, confirm the variation.

Delivery of order of Court to Registrar

94. (1) The company shall lodge a copy of the order made under
subsection 93(3) with the Registrar within fourteen days from the
making of the order by the Court.

 (2) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding ten thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Notifying Registrar of variation

95. (1) If the rights attached to shares in any class of shares in a
company are varied, the company shall lodge with the Registrar,
within thirty days from the date on which the variation takes
effect—

 (a) a copy of the resolution or other document that authorized
the variation; and

Companies 113

 (b) a notice as may be determined by the Registrar including
a statement of capital, as at the date on which the
variation takes effect.

 (2) Paragraph (1)(a) does not apply if the company is required
to lodge a copy of the resolution or other document with the
Registrar under other provision of this Act.

 (3) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Variation includes abrogation

96. (1) A reference to a variation of class rights under this
Division or the company’s constitution includes an abrogation
of those rights.

 (2)  This section shall not operate so as to limit or derogate
from the rights of shareholders in that class to obtain relief under
any remedy in cases of oppression.

Subdivision 2

Share Certificate, Title, Transfer and Transmission

Issuance of share certificate

97. (1) A company shall not be required to issue a share certificate
unless an application by a shareholder for a certificate relating
to the shareholder’s shares in a company has been received or
otherwise provided by its constitution.

 (2) Any share certificate issued by a company shall be issued
in accordance with this Subdivision.

Laws of Malaysia114 Act 777

Application for issuance of share certificate

98. (1) A company shall, within sixty days from receipt of an
application under subsection 97(1), send a share certificate to the
shareholder stating—

 (a) the name of the company;

 (b) the class of shares held by that person; and

 (c) the number of shares held by that person.

 (2) Notwithstanding section 104, where a share certificate
has been issued, a transfer of shares to which it relates shall
not be registered by the company unless the form of transfer is
accompanied with the share certificate relating to the share or
by evidence as to its loss or destruction and, if required, any
amount as set out under section 104.

 (3) Subject to subsection (1), where shares to which a share
certificate relates are to be transferred and the share certificate is
sent to the company to enable the registration of the transfer, the
share certificate shall be cancelled and no further share certificate
shall be issued except at the request of the transferee.

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding ten thousand ringgit.

Delivery of share certificate

99. (1) If a company fails to deliver share certificate in accordance
with section 98, a person entitled to the share certificate may
serve a notice on the company requiring the company to deliver
the certificate to the person within fourteen days from the service
of such notice.

 (2) If a company contravenes subsection (1), the person may
apply to the Court for an order directing the company and any
officer of the company to deliver the certificate to the person
within the period specified in the order.

Companies 115

 (3) The order may provide that all costs of and incidental to
the application are to be borne by the company or by any officer
who fails to deliver the certificate to the person within the period
specified in the order.

Numbering of shares

100. (1) Where a company issues share certificates, each share
shall be distinguished by an appropriate number, except as provided
by subsection (2) or (3).

 (2) If—

 (a) all the issued shares in a company are fully paid up and
rank equally for all purposes; or

 (b) all the issued shares of a particular class in a company
are fully paid up and rank equally for all purposes,

none of those shares is required to have a distinguishing number as
long as it remains fully paid up and ranks equally for all purposes
with all shares of the same class issued and fully paid up.

 (3)  If new shares are issued by a company on the terms that,
within a period not exceeding twelve months, the new shares
will rank equally for all purposes with all the existing shares or
with all the existing shares of a particular class, in the company,
neither the new shares nor the existing shares are required to have
distinguishing numbers as long as all of the shares are fully paid
up and rank equally for all purposes.

Registration of members constitute as evidence of legal title

101. (1) In absence of evidence to the contrary, the entry of
the name of a person in the register of members as shareholder
is prima facie evidence that legal title to the share is vested in
that person.

 (2)  Subject to section 147, a company may treat the registered
shareholder as the only person entitled to—

 (a) exercise the right to vote attached to the share;

Laws of Malaysia116 Act 777

 (b) receive notices;

 (c) receive a distribution in respect of the share, if any; and

 (d) exercise the other rights and powers attached to the share.

Duty of secretary to enter issuance and transfer of shares in
the register of members

102. (1) The secretary shall cause the register of members to
be properly kept and maintained regularly and all the particulars
on issuance and transfer of shares are entered into the register.

 (2) A secretary who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Rectification

103. (1) If the name of a person is wrongly entered in, or omitted
from, the register of members, the person aggrieved may apply
to the Court for—

 (a) rectification of the register of members;

 (b) compensation for loss sustained; or

 (c) both rectification and compensation.

 (2) On an application under this section, the Court may order—

 (a) the rectification of the register of members by the company;

 (b) the payment of compensation by the company or an
officer who has caused the error or omission for any
loss sustained; or

 (c) the rectification and payment of compensation.

Companies 117

Loss or destruction of certificates

104. (1) Where a certificate or other document of title to shares
or debentures is lost or destroyed, the company shall, on payment
of a fee not exceeding fifty ringgit, issue a duplicate certificate
or document to the owner on his application.

 (2) Where the value of the debentures represented by the
certificate or document is greater than five hundred ringgit, the
directors of the company may, before accepting an application
for the issue of a duplicate certificate or document, require the
applicant—

 (a) to cause an advertisement to be inserted in a newspaper
circulating in a place specified by the directors stating
that the certificate or document has been lost or destroyed
and that the owner intends after the expiration of fourteen
days after the publication of the advertisement to apply
to the company for a duplicate; or

 (b) to furnish a bond for an amount equal to at least the
current market value of the debentures indemnifying
the company against loss following on the production
of the original certificate or document,

or may require the applicant to do both of those things.

Requirement for instrument of transfer

105. (1) Subject to other written laws, any shareholder or debenture
holder may transfer all or any of his shares or debentures in the
company by a duly executed and stamped instrument of transfer
and shall lodge the transfer with the company.

 (2) Subsection (1) shall not apply to a transfer of securities in
a company that has been removed from the official list of a stock
exchange from the central depository as defined in section 146
to the persons named in the record of depositors referred to
in subsection 147(1), provided that such transfer is effected in
accordance with the rules of the central depository as defined in
section 146.

Laws of Malaysia118 Act 777

 (3) For the purpose of effecting the transfer of shares or
debentures, the company shall enter the name of the transferee
in the register of members or register of debenture holders in
accordance with this section.

 (4) Subsection (1) shall not affect any power of a company to
register a person as a shareholder or debenture holder to whom
the right to shares or debentures has been transmitted by operation
of law.

 (5) For the purposes of this section, “instrument of transfer”
includes a written application for transmission of a share, debenture
or other interest to a personal representative.

Registration of transfer or refusal of registration

106. (1) A company shall enter or cause to be entered the name
of the transferee in the register of members as shareholder within
thirty days from the receipt of the instrument of transfer under
subsection 105(1) unless—

 (a) this Act or the constitution of the company expressly
permits the directors to refuse or delay registration for
the reasons stated;

 (b) the directors passed a resolution to refuse or delay the
registration of the transfer within thirty days from the
receipt of the instrument of transfer and the resolution
sets out in full the reasons for refusing or delaying the
registration; and

 (c) the notice of the resolution, and in the case of a public
company including the reasons referred to in paragraph (b)
is sent to the transferor and to the transferee within
seven days of the resolution being passed.

 (2) Subject to the constitution, the directors may refuse or
delay the registration of a transfer of shares under subsection (1)
where the shareholder fails to pay the company an amount due
in respect of those shares, whether by way of consideration for
the issue of the shares or in respect of the sums payable by the
shareholder in accordance with the constitution.

Companies 119

 (3) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Order of Court for registration

107. (1) If a company refuses to register a transfer, the transferee
or the transferor may apply to the Court for an order under this
section.

 (2) On an application under subsection (1), the Court may order
the company to register the transfer, if the Court is satisfied that
the application is well-founded.

Validation of shares improperly issued

108. (1) The Court may make an order validating the issue
or allotment of the shares or confirming the terms of issue
or allotment of the shares or both upon an application by the
company or a shareholder or mortgagee of any of the shares or
by a creditor of the company, if the Court is satisfied that in all
the circumstances it is just and equitable to do so.

 (2) The Court may make the order under subsection (1) if a
company has purported to issue or allot shares and the creation,
issue or allotment of the shares is invalid due to—

 (a) any provision in this Act or any other written law;

 (b) the constitution of the company or otherwise; or

 (c) the terms of issue or allotment were inconsistent with or
unauthorized by any such provision.

 (3) The shares shall be deemed to have been validly issued
or allotted on the terms of the issue or allotment of the shares
upon an order of the Court being lodged with the Registrar.

Laws of Malaysia120 Act 777

Registration of transmission of shares or debentures

109. (1) This section applies if the right to shares or debentures
is transmitted to a person by operation of law and the person
notifies the company in writing that the person wishes to be
registered as a shareholder or debenture holder of the company
in respect of the shares or debentures.

 (2) Notwithstanding subsection (1), if the person referred to in
that subsection elects to have another person registered, he shall
testify his election by executing to that person a transfer of the
share or debenture, as the case may be.

 (3) All limitations, restrictions and provisions of this Subdivision
relating to the right to transfer and the registration of transfers
of shares or debentures referred to in subsection (2) shall be
applicable to any notice or transfer as if the death or bankruptcy
of the shareholder or debenture holder had not occurred and the
notice or transfer were signed by that shareholder or debenture
holder.

 (4) Any document which is by law sufficient evidence of probate
of the will or letters of administration of the estate of a deceased
person having been granted to a person shall be accepted by the
company as sufficient evidence of the grant.

 (5) The company shall register the person as a shareholder
or debenture holder of the company in respect of the shares or
debentures within sixty days from receiving the notification.

 (6) The registration of transmission of shares or debentures
under this section shall entitle the registered holder to the same
dividends and other advantages and to the same rights in relation
to meetings of the company or to voting or otherwise.

 (7) For the purposes of subsection (1), in case of the death
of a member, the persons recognized as having any title to his
interest in the shares or debentures shall be—

 (a) where the deceased was a sole holder, the legal personal
representatives; and

Companies 121

 (b) where the deceased was a joint holder, the survivor,

but nothing in this section shall release the estate of a deceased
joint holder from any liability in respect of any share which had
been jointly held by him with other persons.

 (8) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Limitation of liability of trustee, etc., registered as owner of
shares

110. (1) Any trustee, executor or administrator of the estate of
any deceased person who was registered in a register or branch
register kept in Malaysia as the holder of a share in any corporation
may become registered as the holder of that share as trustee,
executor or administrator of that estate and shall, in respect of
that share, be subject to the same liabilities and no more as he
would have been subject to if the share had remained registered
in the name of the deceased person.

 (2) Any trustee, executor or administrator of the estate of any
deceased person who was beneficially entitled to a share in any
corporation, being a share registered in a register or branch register
kept in Malaysia may, with the consent of the corporation and
of the registered holder of that share, become registered as the
holder of the share as trustee, executor or administrator of that
estate and shall, in respect of the share, be subject to the same
liabilities and no more as he would have been subject to if the
share had been registered in the name of the deceased person.

 (3) Shares in a corporation registered in a register or branch
register kept in Malaysia and held by a trustee in respect of
a particular trust may, with the consent of the corporation, be
marked in the register or branch register in such a way as to
identify the shares as being held in respect of the trust.

 (4) Except as provided in this Act, no notice of any trust
expressed, implied or constructive shall be entered on a register or
branch register or be receivable by the Registrar and no liabilities

Laws of Malaysia122 Act 777

shall be affected by anything done under subsection (1), (2) or (3)
or under the law of any other place which corresponds to this
section and the corporation concerned shall not be affected with
notice of any trust by anything so done.

Lien on shares

111. (1) Unless provided otherwise in the constitution, a company
shall be entitled to a lien, in priority to any other claim, over—

 (a) a partly paid issued share; and

 (b) any dividend payment on the share,

for all money due by the shareholder to the company by way of
money called or payable at a fixed date.

 (2) A company may sell any share over which the company
has a lien in a manner as the directors consider appropriate.

 (3) The sale of any shares by a company referred to in subsection (2)
shall not be made unless—

 (a) a sum in respect of which the lien exists is presently
payable; and

 (b) until the expiry of fourteen days from a written notice,
stating and demanding payment of such part of the
amount in respect of which the privilege or lien exists
as is presently payable has been given to the registered
holder for the time of the share, or the person entitled
to the share by reason of the death or bankruptcy of
the registered holder.

 (4) For the purposes of giving effect to any sale under subsection (2),
the directors may authorize a person to transfer the shares sold
to the purchaser of the shares who shall be registered as the
shareholder comprised in any such transfer and the directors shall
not be bound to see to the application of the purchase money.

 (5) The title of the purchaser to the share sold under subsection (2)
shall not be affected by any irregularity or invalidity in the
proceedings relating to the sale.

Companies 123

 (6) The proceeds of the sale shall be received by the company
and applied in payment of such part of the amount in respect
of which the lien exists as is presently payable, and any residue
shall be paid to the person entitled to the share at the date of
the sale, subject to a similar lien for sums not presently payable
which exists over the shares before the sale.

 (7) The directors may decline to register the transfer of a share
over which the company has a lien, unless otherwise provided in
the constitution.

Subdivision 3

Solvency Statement

Solvency test

112. (1) For the purposes of provisions relating to redemption
of preference shares, reduction of share capital and financial
assistance, a company satisfies the solvency test in relation to a
transaction if—

 (a) immediately after the transaction there will be no ground
on which the company could be found to be unable to
pay its debts;

 (b) either—

 (i)  it is intended to commence the winding up of the
company within twelve months after the date of
the transaction, the company will be able to pay
its debts in full within twelve months after the
commencement of the winding up; or

 (ii)  in any other case, the company will be able to
pay its debts as the debts become due during the
period of twelve months immediately following
the date of the transaction; and

 (c) the asset of the company is more than the liability of the
company at the date of the transaction.

Laws of Malaysia124 Act 777

 (2)  For the purpose of share buyback, a company satisfies the
solvency test if—

 (a) the share buyback would not result in the company being
insolvent and its capital being impaired at the date of
the solvency statement; and

 (b) the company will remain solvent after each buyback
during the period of six months after the date of the
declaration made under subsection 113(5).

 (3) For the purposes of subsection (2)—

 (a) a company shall be deemed to be solvent if it is able to
continue to meet its debts as and when the debts become
due without any substantial disposition of its assets
outside the ordinary course of its business, restructuring
its debts, externally forced revisions of its operations or
other similar actions;

 (b) the capital of a company shall be deemed to be impaired
when the value of its net assets is less than the aggregate
amount of all the shares of the company after the share
buyback.

Solvency statement

113. (1) A solvency statement shall be made by the directors—

 (a) in a manner as may be determined by the Registrar;

 (b) stating—

 (i) the date on which the statement is made; and

 (ii)  the name of each director making the statement;
and

 (c) which shall be—

 (i) signed by each director making the statement;
and

Companies 125

 (ii) supported by a declaration to the effect that the
directors have made an inquiry into the affairs
of the company.

 (2) A solvency statement referred to in subsection (1) shall be
made by—

 (a) in the case of a transaction relating to a reduction of
share capital or redemption of preference shares, all of
the directors; and

 (b) in the case of a transaction relating to a financial assistance
or share buyback, the majority of the directors.

 (3) A solvency statement in relation to a transaction is a
statement that each director making the statement has formed the
opinion that the company satisfies the solvency test in relation
to the transaction.

 (4)  In forming an opinion for the purpose of making a solvency
statement, a director shall—

 (a) inquire into the company’s state of affairs and prospects;
and

 (b) take into account all the liabilities of the company,
including contingent liabilities.

 (5) Where a company proposes to purchase its own shares
under a share buyback, the directors shall make a declaration
that—

 (a) it is necessary for the company to buy back its own
shares; and

 (b) the share buyback is made in good faith and in the
interests of the company.

Offences regarding solvency statement

114. A director who makes a solvency statement without having
reasonable grounds for the opinion expressed in the statement
commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine
not exceeding five hundred thousand ringgit or to both.

Laws of Malaysia126 Act 777

Subdivision 4

Reduction of Share Capital

Company may reduce its share capital

115. Unless otherwise provided in the constitution, a company
may reduce its share capital by—

 (a) a special resolution and confirmation by the Court in
accordance with section 116; or

 (b) a special resolution supported by a solvency statement
in accordance with section 117.

Reduction of share capital by Court

116. (1) Subject to confirmation by the Court, a company may,
by a special resolution, reduce the share capital of the company
in any way which includes all or any of the following:

 (a) by extinguishing or reducing the liability on any of the
shares of the company in respect of unpaid share capital;

 (b) by cancelling any paid-up share capital which is lost or
unrepresented by available assets;

 (c) by returning to the shareholders any paid-up share capital
which in excess of the needs of the company.

 (2) Where the proposed reduction of share capital involves
either diminution of liability in respect of unpaid share capital
or the payment to any shareholder of any paid-up share capital,
and in any other case if directed by the Court—

 (a) every creditor of the company who, at the date fixed
by the Court, is entitled to any debt or claim which
would be admissible in proof against the company as
if that date were the date of the commencement of the
winding up of the company shall be entitled to object
to the reduction of the share capital;

Companies 127

 (b) the Court shall settle a list of creditors who are entitled to
object, unless the Court is satisfied on affidavit that there
are no such creditors shall ascertain as far as possible
without requiring an application from any creditor the
names, the nature and the amount of debts or claims of
those creditors, and may publish notices fixing a final
day on or before which creditors not entered in the list
may claim to be so entered; and

 (c) where a creditor entered in the list whose debt or claim
is not discharged or has not been determined does not
consent to the reduction, the Court may dispense with
the consent of that creditor on the company securing
payment of his debt or claim by appropriating as the
Court directs—

 (i)  if the company admits the full amount of the debt
or claim or though not admitting it is willing
to provide for it, the full amount of the debt or
claim; or

 (ii)  if the company does not admit and is not willing
to provide for the full amount of the debt or
claim or if the amount is contingent or not
ascertained, an amount fixed by the Court after
the similar inquiry and adjudication as if the
company were being wound up by the Court.

 (3) Notwithstanding subsection (2), the Court may, after
considering any special circumstances of any case, direct that all
or any of the provisions of that subsection shall not apply with
regards to any class of creditors.

 (4) The Court may, on such terms and conditions as the Court
thinks fit, make an order confirming the reduction if the Court is
satisfied with respect to every creditor who under subsection (2)
is entitled to object, that—

 (a) his consent to the reduction has been obtained; or

 (b) his debt or claim has been discharged, determined or
secured.

Laws of Malaysia128 Act 777

 (5)  An order made under subsection (4) shall specify the
following matters:

 (a) the amount of the share capital of the company as altered
by the order;

 (b) the number of shares into which the share is to be divided;
and

 (c) the amount, if any, deemed to be paid-up on each share
at the date of the order.

 (6)  The resolution for reducing share capital as confirmed by
the order of the Court shall take effect upon lodgement of such
order with the Registrar.

 (7)  A notice confirming the reduction of share capital issued by
the Registrar shall be conclusive evidence that all the requirements
of this Act with respect to reduction of share capital have been
complied with and that the share capital of the company is as
stated in the order.

 (8)  Upon the lodgement of the order of the Court, the particulars
shown in the order under subsection (5) shall be deemed to
substitute the corresponding particulars in the constitution, if
any, and such substitution and any addition ordered by the Court
to be made to the name of the company shall be deemed to be
alterations of the constitution for the purposes of this Act for
such period as is specified in the order of the Court.

 (9) Where the name of any creditor entitled to object to the
reduction is not entered in the list of creditors by reason of his
ignorance of the proceedings for reduction or the nature and
effect of the proceedings with respect to his claim and after the
reduction, the company is unable to pay the amount of his debt
or claim within the meaning of the provisions of this Act with
respect to winding up by the Court—

 (a) every person who was a member of the company at the
date of the lodging of the copy of the order for reduction
shall be liable to contribute for the payment of that debt
or claim an amount not exceeding the amount which he

Companies 129

would have been liable to contribute if the company had
commenced to be wound up on the day before the date
of the lodging of the copy of the order for reduction;
and

 (b) if the company is wound up, on the application of any such
creditor and proof of his ignorance of the proceedings
for reduction or the nature and effect of the proceedings
with respect to his claim, the Court may, if it thinks
fit—

 (i) settle accordingly a list of persons liable to
contribute; and

 (ii) make and enforce calls and orders on the
contributories settled on the list as if the persons
liable to contribute were ordinary contributories
in a winding up.

 (10) The rights of the contributories shall not be affected
notwithstanding the reduction of the share capital under subsection (9).

 (11)  This section shall not apply to an unlimited company, but
nothing in this Act shall preclude an unlimited company from
reducing its share capital in any manner.

 (12) Every officer of the company who—

 (a) wilfully conceals the name of any creditor entitled to
object to the reduction;

 (b) wilfully misrepresents the nature of amount of the debt
or claim of any creditor; or

 (c) aids, abets or is privy to any such concealment or
misrepresentation,

commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine
not exceeding three million ringgit or to both.

Laws of Malaysia130 Act 777

Reduction of share capital by private or public company

117. (1) A company may reduce its share capital by a special
resolution if the company—

 (a) sends a notice to the Director General of the Inland
Revenue Board referred to in section 134 of the
Income Tax Act 1967 [Act 53] and the Registrar within
seven days of the date of the resolution and the notice
shall state that the resolution has been passed and contain
the text of the resolution and the resolution date; and

 (b) meets the solvency requirements under subsection (3).

 (2)  The resolution and the reduction of the share capital shall
take effect in accordance with section 119.

 (3)  The company meets the solvency requirements if—

 (a) all directors of the company make a solvency statement
in relation to the reduction of share capital;

 (b) the statement is made—

 (i)  in the case of a private company, within the
period of fourteen days ending with the date of
the resolution but shall be within time to comply
with subsection (5); or

 (ii) in the case of a public company, within the period
of twenty-one days ending with the date of the
resolution but shall be within time to comply
with subsection (6); and

 (c) a copy of the solvency statement is lodged with the
Registrar together with the notice required to be lodged
under paragraph (1)(a).

 (4) Notwithstanding subsection (1), a company need not meet
the solvency requirements if the reduction of share capital is
solely by way of cancellation of any paid-up share capital which
is lost or unrepresented by available assets.

Companies 131

 (5) Subject to subsection (4), a private company shall—

 (a) if the resolution for reducing share capital is a special
resolution to be passed by a written resolution, ensure
that every copy of the resolution served is accompanied
with a copy of the solvency statement; or

 (b) if the resolution for reducing share capital is a special
resolution to be passed in a general meeting, make the
solvency statement or a copy of the solvency statement
available for inspection by the members throughout that
meeting; and

 (c) make the solvency statement or a copy of the solvency
statement available at the company’s registered office
for inspection free of charge by any creditor of the
company for a period of six weeks from the date of the
resolution.

 (6) Subject to subsection (4), a public company shall—

 (a) make the solvency statement or a copy of the solvency
statement available for inspection by the members at the
meeting throughout the meeting at which the resolution
is to be passed; and

 (b) make the solvency statement or a copy of the solvency
statement available at the company’s registered office
for inspection free of charge by any creditor of the
company for a period of six weeks from the date of the
resolution.

 (7) Every  off icer  of  the  company who contravenes
subsection (5) or (6) commits an offence.

 (8)  Notwithstanding subsection (7), the resolution shall
not become invalid by virtue only of a contravention of
subsection (5) or (6).

 (9)  Any requirement under paragraph (3)(c), (5)(c) or (6)(b)
ceases to have effect if the resolution is revoked.

Laws of Malaysia132 Act 777

 (10) A company shall advertise a notice of the reduction of
the share capital in one widely circulated newspaper in Malaysia
in the national language and one widely circulated newspaper in
Malaysia in the English language not later than seven days from
the date of the passing of the special resolution.

 (11) The company and every officer who contravene
subsection (10) commit an offence.

Creditor’s right to object to the reduction of the share capital
by the company

118. (1) This section shall apply to a company which has passed
a special resolution for reducing share capital under section 117.

 (2) Any creditor of the company may apply to the Court for
the resolution to be cancelled within six weeks from the date of
the resolution.

 (3) Subsection (2) shall apply to a creditor of the company
who is entitled to any debt or claim which would be admissible
as proof against the company at the date of his application to
the Court if such date were the commencement of the winding
up of the company.

 (4) When an application is made under subsection (2)—

 (a) the creditor shall as soon as possible serve the application
on the company; and

 (b) the company shall as soon as possible give to the Registrar
notice of the application.

Position at end of period for objection by creditor

119. (1) If no application for cancellation of the resolution is
made under subsection 118(2) for the reduction of share capital
to take effect, the company shall lodge with the Registrar after
the end of six weeks, and before the end of eight weeks, from
the date of the resolution—

 (a) a copy of the resolution;

Companies 133

 (b) a copy of the solvency statement under subsection 117(3),
if applicable;

 (c) a statement made by the directors confirming that the
requirements under subsection 117(1) and the solvency
requirements under subsection 117(3), if applicable,
have been complied with, and that no application for
cancellation of the resolution has been made; and

 (d) a copy of the notice of the reduction of share capital
referred to in subsection 117(10).

 (2) If one or more applications for cancellation of the
resolution made under subsection 118(2) are made for the
reduction of share capital to take effect, the proceedings for all
the applications shall have been brought to an end due to being
dismissed, withdrawn or brought to an end due to any reason
as the Registrar may allow, the company shall lodge with the
Registrar within fourteen days beginning with the date on which
the last such applications were dismissed, withdrawn or otherwise
brought to an end—

 (a) a statement made by the directors confirming that the
requirements under subsection 117(1), the solvency
requirements under subsection 117(3), if applicable, and
subsection 117(5) or (6), as the case may be, have been
complied with, and that the application were dismissed,
withdrawn or brought to an end due to any reason as
the Registrar may allow or without determination;

 (b) in relation to each such application which has been
dismissed by the Court, a copy of the order of the Court
dismissing the application; and

 (c) a notice containing the information relating to the reduction
of share capital.

 (3) The reduction of the share capital shall take effect when
the Registrar has recorded the information lodged with him in
the appropriate register.

 (4) A notice confirming the reduction of share capital issued by
the Registrar shall be conclusive evidence that all the requirements
of this Act with respect to reduction of share capital have been
complied with and that the share capital of the company is as
stated in the order.

Laws of Malaysia134 Act 777

Power of Court in relation to objection by creditor

120. (1) An application by a creditor under section 118 shall
be determined by the Court in accordance with this section.

 (2) The Court shall make an order cancelling the resolution
if, at the time the application is considered, the resolution has
not been cancelled previously, any debt or claim on which the
application was based is outstanding and the Court is satisfied
that—

 (a) the debt or claim has not been secured and the applicant
does not have other adequate safeguards for the debt or
claim; and

 (b) it is not the case that security or other safeguards are
unnecessary in view of the assets that the company
would have after the reduction.

 (3) If the Court is not satisfied to make an order under
subsection (2), the Court shall dismiss the application.

 (4) Where the Court makes an order under subsection (2), the
company shall lodge a copy of the order to the Registrar within
fourteen days from the date the order is made.

 (5) For the purposes of this section—

 (a) a debt is outstanding if it has not been discharged; and

 (b) a claim is outstanding if it has not been terminated.

 (6) The company and every off icer  who contravene
subsection (4) commit an offence.

Offences for making groundless or false statements

121. A director making a statement under paragraph 119(2)(a)
commits an offence if the statement—

 (a) is false; or

 (b) is not believed by him to be true,

Companies 135

and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding three million
ringgit or to both.

Liability of members on reduced shares

122. Where the share capital of a company is reduced under
any provision of this Subdivision, a past or present member of
the company shall not be liable in respect of the issue price of
any share to any call or contribution greater in amount than the
difference, if any, between—

 (a) the issue price of the share; and

 (b) the aggregate of the amount paid up on the share, if any,
and the amount reduced on the share.

Subdivision 5

Assistance by a Company in the Purchase
of Its Own Shares

Financial assistance by a company in dealings in its shares, etc.

123. (1) Unless otherwise provided in this Act, a company shall
not give any financial assistance, whether directly or indirectly
and whether by means of a loan, guarantee or the provision of
security or otherwise, for the purpose of or in connection with a
purchase or subscription made or to be made by any person of
or for—

 (a) any shares in the company; or

 (b) in the case where the company is a subsidiary, any shares
in its holding company, or in any way purchase, deal
in or lend money on its own shares.

 (2) Unless otherwise provided in this Act, a company shall not
give financial assistance directly or indirectly for the purpose of
reducing or discharging the liability, if—

 (a) a person has acquired shares in the company or its
holding company; and

Laws of Malaysia136 Act 777

 (b) the liability has been incurred by any person for the
purpose of the acquisition of the shares.

 (3) Any  o f f i ce r  o f  t he  company  who  con t r avenes
subsection (1) or (2) commits an offence and shall, on conviction,
be liable to a fine not exceeding three million ringgit or to
imprisonment for a term not exceeding five years or to both.

 (4) Where a person is convicted of an offence under this section
and the Court, by which the person is convicted is satisfied that
the company or another person has suffered loss or damage as a
result of the contravention that constituted the offence, the Court
may, in addition to imposing a penalty under subsection (3),
order the convicted person to pay compensation to the company
or the person, as the case may be, such amount as the Court may
specify, and such order may be enforced as if it were a judgment
of the Court.

 (5) Nothing in this section shall operate to prevent the company
or any person recovering the amount of any loan made in
contravention of this section or any amount for which it becomes
liable either on account of any financial assistance given or under
any guarantee entered into or in respect of any security provided
in contravention of this section.

Consequences of failing to comply with this Subdivision

124. If a company gives financial assistance in contravention of
this Subdivision, the validity of the financial assistance and of
any contract or transaction connected with the financial assistance
is not affected only because of the contravention.

General exceptions

125. Section 123 shall not prohibit—

 (a) the lending of money by the company in the ordinary
course of its business if the lending of money is part
of the ordinary business of a company;

 (b) the provision by a company, in accordance with any
scheme for the time being in force, of money for the
purchase of or subscription for fully-paid shares in the

Companies 137

company or its holding company, being a purchase or
subscription by trustees of or for shares to be held by
or for the benefit of employees of the company or a
subsidiary of the company, including any director holding
a salaried employment or office in the company or a
subsidiary of the company;

 (c) the giving of financial assistance by a company to persons,
other than directors, bona fide in the employment of the
company or of a subsidiary of the company with a view
to enabling those persons to purchase fully-paid shares
in the company or its holding company to be held by
such persons by way of beneficial ownership; or

 (d) the making of a loan or the giving of a guarantee or the
provision of security in connection with one or more
loans made by one or more other persons by a company
in the ordinary course of its business where the activities
of that company are regulated by any written law relating
to banking, insurance or takaful or which are subject
to the supervision of the Securities Commission and
where—

 (i)  the lending of money or the giving of guarantees
or the provision of security in connection with
loans made by other persons, is done in the
course of such activities; and

 (ii)  the loan that is made by the company, or, where the
guarantee is given or the security is provided in
respect of a loan, such loan is made on ordinary
commercial terms as to the rate of interest or
returns, the terms of repayment of principal and
payment of the interest or returns.

Financial assistance not exceeding ten per centum of shareholders’
funds

126. (1) This section shall not apply to a company whose shares
are quoted on a stock exchange.

Laws of Malaysia138 Act 777

 (2) A company may, by a special resolution, give financial
assistance for the purpose of the acquisition of a share in the
company or its holding company or for the purpose of reducing
or discharging a liability incurred for such an acquisition if—

 (a) the directors resolve, before the assistance is given,
that—

 (i)  the company may give the assistance;

 (ii)  the giving of the assistance is in the best interest
of the company; and

 (iii)  the terms and conditions under which the assistance
is to be given are just and reasonable to the
company;

 (b) on the same day that the directors passed the resolution,
the directors who voted in favour of the resolution make
a solvency statement that complies with provisions in
relation to the giving of the assistance;

 (c) the aggregate amount of the assistance and any other
financial assistance given under this section that has
not been repaid does not exceed ten per centum of the
aggregate amount received by the company in respect of
the issue of shares and the reserves of the company, as
such aggregate amount is disclosed in the most recent
audited financial statements of the company;

 (d) the company receives fair value in connection with the
giving of the assistance; and

 (e) the assistance is given not more than twelve months after
the day on which the solvency statement is made under
paragraph (b).

 (3)  The resolution of the directors under paragraph (2)(a) shall
set out in full the grounds for the conclusions of the directors
made under that paragraph.

 (4)  A reference in paragraph (2)(c) to any other financial
assistance given under this section that has not been repaid
includes the amount of any financial assistance given in the form
of a guarantee or security for which the company remains liable
at the time the financial assistance in question is given.

Companies 139

 (5)  Within fourteen days from giving financial assistance
under this section, the company shall send to each member of
the company a copy of the solvency statement made under
paragraph (2)(b) and a notice containing the following information:

 (a) the class and number of shares in respect of which the
assistance was given;

 (b) the consideration paid or payable for those shares;

 (c) the name of the person receiving the assistance and, if
a different person, the name of the beneficial owner of
those shares;

 (d) the nature, the terms and, if quantifiable, the amount of
the assistance.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding three million ringgit or imprisonment not exceeding
five years or to both and, in the case of a continuing offence, to
a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

Purchase by a company of its own shares, etc.

127. (1) Notwithstanding section 123, a company whose shares
are quoted on a stock exchange may purchase its own shares if
so authorized by its constitution.

 (2) A company shall not purchase its own shares unless—

 (a) the company is solvent at the date of the purchase and
will not become insolvent by incurring the debts involved
in the obligation to pay for the shares so purchased;

 (b) the purchase is made through the stock exchange on which
the shares of the company are quoted and in accordance
with the relevant rules of the stock exchange; and

 (c) the purchase is made in good faith and in the interests
of the company.

Laws of Malaysia140 Act 777

 (3) Notwithstanding paragraph (2)(b), a company may purchase
its own shares otherwise than through a stock exchange if the
purchase is—

 (a) permitted under the relevant rules of the stock exchange;
and

 (b) made in accordance with such requirements as may be
determined by the stock exchange.

 (4) Where a company has purchased its own shares, the directors
of the company may resolve—

 (a) to cancel the shares so purchased;

 (b) to retain the shares so purchased in treasury which is
referred to as “treasury shares” in this Act; or

 (c) to retain part of the shares so purchased as treasury shares
and cancel the remainder of the shares.

 (5) Shares that are purchased by a company under this section,
unless held in treasury, shall be deemed to be cancelled immediately
on purchase.

 (6) Where shares are held as treasury shares, the company shall
hold such shares in a securities account in accordance with the
relevant rules of the stock exchange or the central depository as
defined in section 146, as the case may be.

 (7) Where such shares are held as treasury shares, the directors
of the company may—

 (a) distribute the shares as dividends to shareholders, such
dividends to be known as “share dividends”;

 (b) resell the shares or any of the shares in accordance with
the relevant rules of the stock exchange;

 (c) transfer the shares, or any of the shares for the purposes
of or under an employees’ share scheme;

 (d) transfer the shares, or any of the shares as purchase
consideration;

Companies 141

 (e) cancel the shares or any of the shares; or

 (f) sell, transfer or otherwise use the shares for such other
purposes as the Minister may by order prescribe.

 (8) The holder of treasury shares which are held under
subsection (5) shall not confer—

 (a) the right to attend or vote at meetings and any purported
exercise of such rights is void; and

 (b) the right to receive dividends or other distribution, whether
cash or otherwise, of the company’s assets including any
distribution of assets upon winding up of the company.

 (9) While the shares are held as treasury shares, the treasury
shares shall not be taken into account in calculating the number
or percentage of shares or of a class of shares in the company
for any purposes including, without limiting the generality of
this provision, the provisions of any law or requirements of
the constitution of the company or the listing requirements of a
stock exchange on substantial shareholding, takeovers, notices,
the requisitioning of meetings, the quorum for a meeting and the
result of a vote on a resolution at a meeting.

 (10) Where the directors decide to distribute the treasury
shares as share dividends, the costs of the shares on the original
purchase shall be applied in the reduction of the funds otherwise
available for distribution as dividends.

 (11) This section shall not be taken to prevent—

 (a) an allotment of shares as fully paid bonus shares in respect
of the treasury shares; or

 (b) the subdivision of any treasury shares into treasury shares
of a larger number, or consolidation of any treasury
shares into treasury shares of a smaller number.

 (12) In the circumstances in which subsection (2) applies,
any shares allotted as fully paid bonus shares in respect of the
treasury shares shall, for the purposes of this Act, be treated as
if the shares were purchased by the company at the time the
shares were allotted.

Laws of Malaysia142 Act 777

 (13) Where the directors resolve to cancel the shares so
purchased or to cancel any treasury shares, the costs of the shares
shall be applied in the reduction of the profits otherwise available
for distribution as dividends.

 (14)  Where the directors resolve to cancel the shares so
purchased, or cancel any treasury shares, the issued capital of
the company shall be diminished by the shares so cancelled.

 (15) A cancellation of shares made under paragraph (4)(a) or
paragraph (7)(e) shall not be deemed to be a reduction of share
capital within the meaning of this Act.

 (16) A company shall lodge with the Registrar and the stock
exchange a notice of the purchase of the shares in a manner to
be determined by the Registrar within fourteen days from the
purchase of the shares.

 (17)  The company, every officer and any other person or
individual who contravene subsection (2) commit an offence and
shall, on conviction, be liable to a fine not exceeding five hundred
thousand ringgit or to imprisonment for a term not exceeding five
years or to both.

 (18) The company and every officer who contravene
subsection (16) commit an offence and shall, on conviction, be
liable to a fine not exceeding fifty thousand ringgit and, in the
case of a continuing offence, to a further fine not exceeding one
thousand ringgit for each day during which the offence continues
after conviction.

Options to take up unissued shares

128. (1) A public company may grant an option to any person
to take up unissued shares for a period of not more than ten
years from the date on which the option was granted.

 (2) Subsection (1) shall not apply in any case where the debenture
holders have an option to take up shares of the company by way
of redemption of the debentures.

Companies 143

Register of options to take up unissued shares in a company

129. (1) A company shall maintain a register of options granted
to persons to take up unissued shares in the company.

 (2) The company shall, within fourteen days from the grant
of an option to take up unissued shares in the company, enter in
the register the following particulars:

 (a) the name, address and the number of the identity card
issued under the National Registration Act 1959, or the
passport number or other identification number and the
nationality of the holder of the option;

 (b) the date on which the option was granted;

 (c) the number and description of the shares in respect of
which the option was granted;

 (d) the period during which, the time at which or the
occurrence upon the happening of which the option may
be exercised;

 (e) the consideration, if any, for the grant of the option;

 (f) the consideration, if any, for the exercise of the option
or the manner in which that consideration is to be
ascertained or determined; and

 (g) such other particulars as may be determined by the
Registrar.

 (3) Sections 50 to 55 shall apply to a register kept under this
section as if the register were the register of members.

 (4) A company shall maintain a copy of every instrument by
which an option to take up shares in the company is granted at
the place where the register under this section is kept and such
records shall be deemed to be part of the register.

 (5) The rights in respect of the option shall not be affected
by failure of the company to comply with this section.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit and, in the case of a

Laws of Malaysia144 Act 777

continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

Power of company to pay interest out of capital in certain
cases

130. (1) Where any shares of a company are issued for the
purpose of raising money to defray the expenses of the construction
of any works or buildings or the provision of any plant which
cannot be made profitable for a long period, the company may
pay interest or returns on the amount of such share capital as
is for the time being paid up and charge the interest or returns
paid to share capital as part of the cost of the construction or
provision.

 (2) For the purposes of subsection (1)—

 (a) the payment shall not be made unless it is authorized by
the constitution or by special resolution and is approved
by the Court;

 (b) the payment shall be made only for such period as
determined by the Court not exceeding the period of
twelve months after the works or buildings have been
actually completed or the plant provided;

 (c) the rate of interest or returns shall not exceed five per
centum per annum or such other rate as for the time
being prescribed; and

 (d) the payment of the interest or returns shall not operate
as a reduction of the amount paid-up on the shares in
respect of which it is paid.

 (3) Before approving of any payment under paragraph (2)(a),
the Court may, at the expense of the company—

 (a) appoint a person to inquire and report as to the circumstances
of the case; and

 (b) require the company to give security for the payment of
the costs of the inquiry.

Companies 145

Subdivision 6

Dividends

Distribution out of profit

131. (1) Subject to section 132, a company may only make a
distribution to the shareholders out of profits of the company
available if the company is solvent.

 (2) The company, every officer and any other person or individual
who contravene this section commits an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding
five years or to a fine not exceeding three million ringgit or to
both.

Distribution only if company is solvent

132. (1) Before a distribution is made by a company to any
shareholder, such distribution shall be authorized by the directors
of the company.

 (2) The directors may authorize a distribution at such time
and in such amount as the directors consider appropriate, if the
directors are satisfied that the company will be solvent immediately
after the distribution is made.

 (3) For the purposes of this section, the company is regarded
as solvent if the company is able to pay its debts as and when
the debts become due within twelve months immediately after
the distribution is made.

 (4) If, after a distribution is authorized and before it is made,
the directors cease to be satisfied on reasonable grounds that the
company will be solvent immediately after the distribution is
made, the directors shall take all necessary steps to prevent the
distribution from being made.

 (5) Without prejudice to any other liability, every director or
officer of the company who wilfully pays or permits to be paid or
authorizes the payment of any improper or unlawful distribution
shall, on conviction, be liable to imprisonment for a term not
exceeding five years or a fine not exceeding three million ringgit
or to both.

Laws of Malaysia146 Act 777

Recovery of distribution

133. (1) The company may recover from a shareholder any
amount of distribution paid to the shareholder which exceeds the
value of any distribution that could properly have been made,
unless the shareholder—

 (a) has received the distribution in good faith; and

 (b) has no knowledge that the company did not satisfy the
solvency test required under subsection 132(3).

 (2) Every director or manager of a company who wilfully
pays or permits to be paid any dividend in contravention of
section 131 or 132, which he knows from his knowledge is not
profits shall also be liable to the company to the extent of the
amount exceeded the value of any distribution of dividends that
could properly have been made.

 (3) If the whole amount is recovered from one director or
manager, the director or manager may recover contribution against
any other person liable who has directed or consented to the
payment.

 (4) The liability imposed on any person under this section shall
not extend or pass to his executors, administrators or the estate
of such person upon his death.

Subdivision 7

Substantial Shareholdings

Application and interpretation

134. (1) This section shall not prejudice the operation of any
other provisions of this Act.

 (2) In this Subdivision, a reference to a company is a
reference—

 (a) to a company whose shares or any of the shares are
quoted on a stock exchange;

Companies 147

 (b) to a public company whose shares are not quoted on a
stock exchange;

 (c) to a body corporate incorporated in Malaysia, that is
declared by the Minister by notification in the Gazette
to be a company for the purposes of this Subdivision;
or

 (d) to a body, not being a body corporate formed in Malaysia,
that is for the time being declared by the Minister by
notification in the Gazette, to be a company for the
purposes of this Subdivision.

 (3) The Minister may vary or revoke a notification published
under subsection (2) by notification in the Gazette.

 (4) In relation to a company, the whole or a portion of the
share capital of which consists of stock, an interest of a person
in any such stock shall be deemed to be an interest in an issued
share in the company having the same amount as the amount
of that stock and having attached to it the same rights as are
attached to that stock.

 (5) A reference to the definition of “voting share” to a body
corporate in subsection 2(1) includes a reference to a body referred
to in paragraph (2)(d).

Persons obliged to comply with Subdivision

135. (1) The obligation to comply with this Subdivision applies
to—

 (a) a natural person, whether resident or non-resident in
Malaysia or whether a Malaysian citizen or non-citizen;
and

 (b) a body corporate, whether incorporated or carrying on
business in Malaysia or otherwise.

 (2) This Subdivision applies to acts done or omitted to be done
outside Malaysia.

Laws of Malaysia148 Act 777

Substantial shareholdings and substantial shareholders

136. (1) For the purposes of this Subdivision, a person has a
substantial shareholding in a company—

 (a) if the person has an interest in one or more voting shares
in the company and the number or the aggregate number
of such shares is not less than five per centum of the
total number of all the voting shares included in the
company; or

 (b) being a company the share capital of which is divided
into—

 (i) two or more classes of the shares, if the person
has an interest in one or more voting shares
include in one of those classes; and

 (ii) the number or the aggregate number of such
shares is not less than five per centum of the
aggregate number of the total number of all the
voting shares included in that class of shares.

 (2) A person who has a substantial shareholding in a company
is a substantial shareholder in such company.

Substantial shareholder to notify company of his interests

137. (1) A substantial shareholder in a company shall give notice
in writing to the company if he has any interest related to any
particular shares.

 (2) The notice shall—

 (a) contain the name, nationality, address and full particulars
of the voting shares in which the substantial shareholder
has an interest; and

 (b) include, unless the interest cannot be related to a particular
shares—

 (i) the name of the person who is registered as the
shareholder; and

Companies 149

 (ii) the full particulars and the circumstances by
reason of which the substantial shareholder has
the interest.

 (3) The substantial shareholder shall give the notice referred
to in subsection (1) to the company—

 (a) in the case of a company whose shares are quoted on
a stock exchange, within three days after the person
becomes a substantial shareholder; or

 (b) in any other case, within five days after the person
becomes a substantial shareholder.

 (4) The notice shall be given notwithstanding that the person
has ceased to be a substantial shareholder before the expiration
of the period referred to in subsection (2).

 (5) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
one million ringgit and, in the case of a continuing offence, to
a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

Substantial shareholder to notify company of change in his
interests

138. (1) A substantial shareholder shall give notice to the
company in writing if there is a change of his interest in voting
shares in the company—

 (a) in the case of a company whose shares are quoted on a
stock exchange, within three days after the date of the
change; or

 (b) in any other case, within five days after the date of the
change.

 (2) The notice under subsection (1) shall contain—

 (a) the name and full particulars of the substantial
shareholder; and

Laws of Malaysia150 Act 777

 (b) the date and circumstances by reason of which that
change has occurred.

 (3) For the purposes of subsection (1), where a substantial
shareholder in a company acquires or disposes of voting shares
in the company, the acquisition or disposal shall be deemed to be
a change in the interest of the substantial shareholder in voting
shares in the company.

 (4) Any substantial shareholder who contravenes this section
commits an offence and shall, on conviction, be liable to a fine
not exceeding one million ringgit and, in the case of a continuing
offence, to a further fine not exceeding one thousand ringgit for
each day during which the offence continues after conviction.

Person who ceases to be substantial shareholder to notify
company

139. (1) A person shall give notice to the company in writing
if he ceases to be a substantial shareholder in a company—

 (a) in the case of a company whose shares are quoted on a
stock exchange, within three days after the person ceased
to be a substantial shareholder; or

 (b) in any other case, within five days after the person ceased
to be a substantial shareholder.

 (2) The notice shall contain—

 (a) the name and date of which the person ceased to be a
substantial shareholder; and

 (b) the full particulars of the circumstances by reason of
which the person ceased to be a substantial shareholder.

 (3) Any substantial shareholder who contravenes this section
commits an offence and shall, on conviction, be liable to a fine
not exceeding one million ringgit and, in the case of a continuing
offence, to a further fine not exceeding one thousand ringgit for
each day during which the offence continues after conviction.

Companies 151

References to operation of interests in shares

140. The circumstances required to be stated in a notice under
section 137, 138 or 139 include circumstances by reason of which
having regard to the operation of interests in share—

 (a) a person has an interest in voting shares;

 (b) a change has occurred in an interest in voting shares; or

 (c) a person has ceased to be a substantial shareholder in a
company,

respectively.

Copy of notice to be served on the Registrar

141. A person who gives a notice under section 137, 138 or 139
to a company referred to in paragraph 134(2)(a) shall serve a
copy of the notice to the Registrar on the day on which such
person gives that notice.

Notice to non-residents

142. (1) A person who holds voting shares in a company, being
voting shares in which a non-resident has an interest shall—

 (a) give a notice to the non-resident in the form and manner
as determined by the Registrar; or

 (b) if the person knows or has reasonable grounds for believing
that an interest of the non-resident in the shares is an
interest that the non-resident holds for another person—

 (i) give a notice to the non-resident in a form and
manner as determined by the Registrar; and

 (ii) direct the non-resident to give the notice or a
copy of the notice to that other person.

 (2) The notice shall be given by the person within fourteen
days from becoming the holder of the voting shares.

Laws of Malaysia152 Act 777

 (3) In this section, “non-resident” means a person who is not a
resident in Malaysia or a body corporate that is not incorporated
in Malaysia.

 (4) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
one million ringgit and, in the case of a continuing offence, to
a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

Registrar may extend time for giving notice under this
Subdivision

143. (1) The Registrar may, in his discretion, extend the time for
giving the notice specified in this Subdivision upon an application
of the person who is required to give a notice.

 (2) Notwithstanding that the period referred to in subsection (1)
has expired, the Registrar may exercise his power to further
extend the time for giving the notice by such person.

Company to keep and maintain register of substantial
shareholders

144. (1) A company shall keep a register and shall forthwith
enter—

 (a) the names of persons in alphabetical order from whom
the company receives a notice under section 137 and
the information given in the notice against each name
entered in the register; and

 (b) the information given in such notice if the company
receives a notice under section 138 or 139.

 (2) The register shall be kept at the registered office of the
company and shall be open for inspection by any member of the
company without charge and by any other person on payment of
ten ringgit for each inspection or such lesser sum as the company
requires.

Companies 153

 (3) The Registrar may at any time in writing require the
company to furnish him a copy of the register or any part of
the register within fourteen days from the day on which the
requirement is received by the company.

 (4) A company shall not—

 (a) be deemed for any purpose to have notice of; or

 (b) be put upon inquiry as to,

the right of a person to or in relation to a share in the company
by reason of anything done under this Subdivision.

 (5) The company and every officer who contravene this
section commit an offence.

Powers of Court with respect to defaulting substantial
shareholders

145. (1) Where a person is a substantial shareholder in a
company and fails to comply with section 137, 138 or 139, the
Court may, whether or not the failure continues, on the application
of the Registrar, make one or more of the following orders:

 (a) an order restraining the substantial shareholder from
disposing of any interest in shares in the company in
which he is or has been a substantial shareholder;

 (b) an order restraining a person who is or is entitled to be
registered as the shareholder referred to in paragraph (a)
from disposing of any interest in the shares;

 (c) an order restraining the exercise of any voting or other
rights attached to any share in the company in which
the substantial shareholder has or has had an interest;

 (d) an order directing the company not to make payment,
or to defer making payment, of any sum due from the
company in respect of any share in which the substantial
shareholder has or has had an interest;

Laws of Malaysia154 Act 777

 (e) an order directing the sale of all or any of the shares in
the company in which the substantial shareholder has
or has had an interest;

 (f) an order directing the company not to register the transfer
or transmission of specified shares;

 (g) an order that any exercise of the voting or other rights
attached to specified shares in the company in which
the substantial shareholder has or has had an interest
be disregarded;

 (h) for the purposes of securing compliance with any other
order made under this section, an order directing the
company or any other person to do or refrain from doing
a specified act.

 (2) An order under this section may—

 (a) include such ancillary or consequential provisions as the
Court thinks just; or

 (b) if the order directs for the sale of a share—

 (i) provide that the sale be made within such time;

 (ii) subject to a condition that the sale shall not be
made to a person who is, or as a result of the
sale, would become a substantial shareholder in
the company; and

 (iii) provide for any other conditions as the Court
thinks fit.

 (3) The Court may direct that the share is vested in the Registrar
if the share is not sold in accordance with an order of the Court
under this section.

 (4) Before making an order under this section and in determining
the terms of such an order, the Court shall satisfy itself, so far as
the Court can reasonably do so, that the order would not unfairly
prejudice any person.

Companies 155

 (5) The Court shall not make an order under this section,
other than an order restraining the exercise of voting rights, if
the Court is satisfied that—

 (a) the failure of the substantial shareholder to comply as
mentioned in subsection (1) was due to his inadvertence
or mistake or to his not being aware of a relevant fact
or occurrence; and

 (b) the failure ought to be excused in all the circumstances.

 (6) Before making an order under this section, the Court may
direct that a notice of the application be given to such persons
as the Court thinks fit or direct that notice of the application be
published in such manner as the Court thinks fit.

 (7) The Court may rescind, vary or discharge an order made
by the Court under this section or suspend the operation of such
an order.

 (8) Section 557 applies in relation to a share that is vested
in the Registrar under this section in the same manner as that
section applies in relation to an estate or interest in property.

 (9)  Subsection (10) does not affect the powers of the Court in
relation to the punishment for contempt of the Court.

 (10) A person who contravenes an order under this section
commits an offence.

Subdivision 8

The Central Depository System — A Book-Entry or Scripless
System for the Transfer of Securities

Interpretation

146. In this Subdivision, unless the context otherwise requires—

 “central depository” has the meaning assigned to it in
subsection 2(1) of the Securities Industry (Central Depositories)
Act 1991 [Act 453];

Laws of Malaysia156 Act 777

 “deposited securities” has the meaning assigned to it in
subsection 2(1) of the Securities Industry (Central Depositories)
Act 1991;

 “depositor” has the meaning assigned to it in subsection 2(1)
of the Securities Industry (Central Depositories) Act 1991;

 “security” has the meaning assigned to it in subsection 2(1) of
the Securities Industry (Central Depositories) Act 1991;

 “stock exchange” has the meaning assigned to it in subsection 2(1)
of the Securities Industry (Central Depositories) Act 1991.

Depositor deemed to be member

147. (1) A depositor whose name appears in the record of
depositors maintained by the central depository in accordance
with section 34 of the Securities Industry (Central Depositories)
Act 1991 in respect of the securities of a company which have
been deposited with the central depository shall be deemed to be
a shareholder, debenture holder or option holder of the company,
as the case may be, and shall, subject to the provisions of the
Securities Industry (Central Depositories) Act 1991 and any
regulations made under that Act, be entitled to the number of
securities stated in the record of depositors.

 (2) Notwithstanding section 101, all rights, benefits, powers
and privileges are subject to all liabilities, duties and obligations
in respect of, or arising from, such securities, whether conferred
or imposed by this Act or the constitution of the company.

 (3) Nothing in this Subdivision shall be construed as affecting
the obligation of the company to keep—

 (a) a register of its members under sections 50 and 52;

 (b) a register of debenture holders under section 60; and

 (c) a register of option holders under section 129,

Companies 157

and to open the registers referred to in paragraphs (a), (b) and
(c) for inspection in accordance with this Act except that the
company shall not be obliged to enter in such registers the
names and particulars of depositors who are deemed to be the
shareholders, debenture holders or option holders.

 (4) Notwithstanding any other provision of this Act, a depositor
shall not be regarded as a member of a company entitled to attend
any general meeting and to speak and vote at the general meeting
unless his name appears on the record of depositors which is
dated not less than three market days before the general meeting.

 (5) The record of depositors shall be prima facie evidence of
any matters inserted in the record as required or authorized by
this Act.

 (6) For the purposes of this section, “market day” means any
day between Mondays and Fridays which is not a market holiday
of the stock exchange or public holiday.

Transfer of securities is by way of book entry

148. (1) The transfer of any securities or class of securities of a
company whose securities or any class of whose securities have
been deposited with a central depository shall be by way of book
entry by the central depository in accordance with the rules of the
central depository and notwithstanding section 105, 106 or 110,
such company shall be precluded from registering and effecting
any transfer of securities or class of securities which have been
deposited for such company.

 (2) Subsection (1) shall not apply to a transfer of securities to
a central depository or its nominee company or from the central
depository or its nominee company to the depositors.

Rectification of record of depositors

149. (1) Notwithstanding anything in this Act or any written
law, no order shall be made by the Court for the rectification of
the record of depositors except in the circumstances and subject
to the conditions specified in subsection (2).

Laws of Malaysia158 Act 777

 (2) The Court may award to the depositor referred to in
paragraph (a) or any person who would have been entitled to be
registered as having the title to such securities, as the case may
be, on such terms as the Court deems to be equitable or make
such other order as the Court deems fit, including an order for
the transfer of such securities to such depositor or person, if it
is satisfied that—

 (a) a depositor did not consent to a transfer of any securities;
or

 (b) a depositor should not have been registered as having
title to any securities.

Non-application of section 472 to disposition made by way
of book entry

150. (1) Subsection 472(1) shall not apply to a disposition of
property made by way of book entry by a central depository.

 (2) Notwithstanding subsection (1), if the Court is satisfied
that a party to the disposition other than the central depository
had notice that a petition has been presented for the winding up
of the other party to the disposition, the Court may—

 (a) award damages against the party on such terms as the
Court thinks equitable; or

 (b) make such other orders as the Court thinks fit, including
an order for the transfer of deposited securities by the
party, except an order for the rectification of the record
of depositors.

Exemption from this Subdivision

151. The Minister may, by notice published in the Gazette—

 (a) exempt any company or class of companies from complying
with all or any provisions of this Subdivision in relation
to any securities of a company or any class of companies
to which this Subdivision applies subject to such terms
and conditions as he deems fit to impose; and

 (b) revoke or vary the notice in such manner as the Minister
thinks fit.

Companies 159

Subdivision 9

Prospectus

Application of Subdivision 9

152. (1) Unless otherwise provided in this Act, this Subdivision
shall apply to an offer made to the public or any section of the
public with regards to—

 (a) an offer or invitation in respect of shares or debentures
made by an unlisted recreational club; and

 (b) an offer or invitation to deposit money with or lend
money to a corporation as specified in section 158.

 (2)  This Subdivision shall not apply to an offer or invitation
to subscribe for or purchase any securities of a corporation,
including any excluded offer or excluded invitation as defined
in the Capital Markets and Services Act 2007.

Power of Minister to exempt the application of Subdivision 9

153. (1) The Minister may, on the application in writing by
any person interested and subject to the recommendation of
the Registrar, by order declare that the whole or any part of
this Subdivision shall not apply to any person making an offer
of shares or debentures to the public, either unconditionally or
subject to such terms and conditions as the Minister thinks fit
to impose.

 (2) The Registrar may make recommendation to the Minister
if the Registrar is of the opinion that—

 (a) the cost of providing a prospectus outweighs the resulting
protection to investors; or

 (b) it would not be prejudicial to the public interest if a
prospectus were dispensed with.

Laws of Malaysia160 Act 777

Requirement to register and lodge prospectus

154. (1) A prospectus to which this Subdivision applies shall
not be issued, circulated or distributed by any person unless—

 (a) the prospectus has first been registered by the Registrar;
and

 (b) the prospectus has complied with the provisions of this
Act.

 (2) A prospectus registered with the Securities Commission
under the Capital Markets and Services Act 2007 shall be lodged
with the Registrar before the date of issue of the prospectus.

 (3) A person shall not issue, circulate or distribute any form of
application for shares in or debentures of a corporation unless—

 (a) he is authorized in writing by the Registrar; and

 (b) the form is accompanied with a copy of a prospectus
which has been registered by the Registrar.

 (4) Subsection (2) shall not apply to the form of application
if—

 (a) the form is issued, circulated or distributed in connection
with shares or debentures which are not offered to the
public;

 (b) the form is issued, circulated or distributed in connection
with a take-over offer which complies with the provisions
of the relevant law applicable to such offers; or

 (c) the form is issued, circulated or distributed in connection
with shares which are offered for purchase or subscription
by employees of a corporation or its related corporation
in accordance with a scheme approved by the Registrar.

 (5) Any person who contravenes this section commits an offence
and shall on conviction, be liable to imprisonment not exceeding
five years or to a fine not exceeding one million ringgit or to
both.

Companies 161

Registration of prospectus

155. A prospectus shall be registered if—

 (a) a copy of the prospectus signed by every director and every
person who is named in the prospectus as a proposed
director of the corporation or by his agent authorized
in writing is lodged with the Registrar on or before the
date of the issue of the prospectus; and

 (b) the prospectus is submitted to the Registrar together
with—

 (i)  a written application for the registration of the
prospectus;

 (ii)  copies of all consents required under section 160
from any person named in the prospectus as
having made a statement that is included in the
prospectus or on which a statement made in the
prospectus is based;

 (iii)  copies of all material contracts referred to in
the prospectus or, in the case of a contract not
reduced into writing, a memorandum giving full
particulars of the contract, verified in accordance
with any requirements specified by the Registrar;
and

 (iv)  any other information or documents as may be
required by the Registrar.

Refusal to register a prospectus

156. (1) The Registrar shall refuse to register a prospectus if—

 (a) the Registrar is of the opinion that the prospectus does
not comply with any provision of this Act;

 (b) the issue or invitation in respect of the shares or debentures
to which the prospectus relates does not comply with
this Act; or

Laws of Malaysia162 Act 777

 (c) the Registrar is of the opinion that the prospectus contains
any statement or information that is false or misleading or
that the prospectus contains any statement or information
from which there is a material omission.

 (2) If the Registrar is of the opinion that the corporation or
the directors of the corporation making such offer or invitation
is not a fit and proper person to make such an issue or
invitation to the public, the Registrar may refuse to register the
prospectus.

 (3) For the purposes of subsection (2), a director shall include
a proposed director named in the prospectus and any other person
falling under the definition of a director.

Keeping of documents relating to prospectus

157. (1) A corporation shall cause a copy of—

 (a) any consent required under section 160 in relation to the
issue of the prospectus; and

 (b) every material contract or document referred to in the
prospectus,

to be deposited at the registered office of the corporation in Malaysia,
and if the corporation has no registered office in Malaysia, at
the address specified in the prospectus for that purpose, within
three days after the registration of the prospectus.

 (2) The corporation shall keep a copy of the documents referred
to in subsection (1) for a period as may be specified by the
Registrar for inspection by any person without charge.

 (3) Any person who contravenes this section commits an offence
and shall, on conviction, be liable to a fine not exceeding two
hundred and fifty thousand ringgit or to imprisonment for a term
not exceeding three years or to both.

Companies 163

Invitations to the public to lend money to or to deposit money
with a corporation

158. (1) An invitation to the public to deposit money with or
lend money to a corporation or proposed corporation shall not
be issued, circulated or distributed by the corporation or by any
other person unless a prospectus in relation to the invitation has
been registered by the Registrar under sections 154 and 155.

 (2) For the purposes of this Division, any corporation which
accepts or agrees to accept from any person any money on deposit
or loan shall be deemed to make an invitation to the public to
deposit money with or lend money to the corporation or proposed
corporation.

 (3) Notwithstanding subsection (2), a corporation is not required
to issue a prospectus if—

 (a) the corporation is not under a present or future liability
to repay any money accepted by the corporation on
deposit or loan from more than ten persons; or

 (b) any money accepted by the corporation on deposit or
loan is fully guaranteed by the Government.

 (4) If a corporation has accepted from any person any money as
a deposit or loan upon an invitation referred to in subsection (1),
the corporation shall, within two months after the acceptance of
the money, issue to that person a document which—

 (a) acknowledges  or  ev idences  or  cons t i tu tes  an
acknowledgement of the indebtedness of the corporation
in respect of that deposit or loan; and

 (b) complies with the other requirements of this section.

 (5)  The document shall be described or referred to in the
prospectus and in any other document, whether constituting
or relating to the invitation and in the document itself, as an
unsecured note or an unsecured deposit note unless the document
is and may be otherwise described under subsection (6) or (7).

Laws of Malaysia164 Act 777

 (6) The document may be described or referred to in the
prospectus or in such other document or in the document itself
as—

 (a) a mortgage debenture or certificate of mortgage debenture
stock unless there is included in the prospectus the
statements and the valuation referred to in the First
Schedule; or

 (b) a debenture or certificate of debenture stock unless—

 (i) the document may be, but is not, described or
referred to in that prospectus or document as a
mortgage debenture or certificate of mortgage
debenture stock under paragraph (a); or

 (ii) there is included in the prospectus the statement
and the summary referred to in the First Schedule.

 (7)  This section shall not apply to a prescribed corporation and
shall not require a prospectus to be issued in connection with
any invitation to the public to deposit money with a prescribed
corporation.

 (8)  In this section, “prescribed corporation” means—

 (a) a banking corporation; or

 (b) a corporation or a corporation of a class which, on the
recommendation of the Central Bank of Malaysia, has been
declared by the Minister charged with the responsibility
for finance by notice in the Gazette to be a prescribed
corporation for the purposes of this section.

 (9)  The Minister charged with the responsibility for finance
may, by notice published in the Gazette—

 (a) specify terms and conditions subject to which subsection (7)
shall have effect in relation to a corporation specified
in paragraph (8)(b); or

 (b) vary or revoke any declaration or specification made
under this section.

Companies 165

 (10) For the purposes of this section, a document issued by
a borrowing corporation certifying that a person named in the
document in respect of any deposit with or loan to the corporation,
the registered holder of a specified number or value—

 (a) of unsecured notes or unsecured deposit notes;

 (b) of mortgage debentures or mortgage debenture stock; or

 (c) of debentures or debenture stock,

issued by the corporation upon or subject to the terms and
conditions contained in a trust deed referred to or identified in
the certificate, the document shall be deemed to be a document
evidencing the indebtedness of that corporation in respect of that
deposit or loan.

 (11) The corporation and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine
not exceeding three million ringgit or to both.

Form and content of prospectus

159. (1) Every prospectus issued under this Subdivision shall
comply with the requirements relating to the form and content
of a prospectus as specified in the First Schedule.

 (2) If a prospectus relating to any shares in or debentures of
a corporation is issued and the prospectus does not comply with
this section, each director of the corporation and other person
responsible for the prospectus commit an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding
five years or to a fine not exceeding one million ringgit or to
both.

 (3) In the event of non-compliance with or contravention of this
section, a director or other person responsible for the prospectus
shall not incur any liability by reason of the non-compliance or
contravention, if—

 (a) with regards to any matter not disclosed, the director or
other person proves that he has no knowledge of the
non-compliance or contravention;

Laws of Malaysia166 Act 777

 (b) the director or other person proves that the non-compliance
or contravention arose from an honest mistake on his
part concerning the facts; or

 (c) the non-compliance or contravention is in respect of
matter which in the opinion of the Court dealing with
the case is immaterial or is otherwise in the opinion of
the Court reasonable to be excused upon considering all
the circumstances of the case.

 (4) A condition requiring or binding an applicant for shares
in or debentures of a corporation to waive compliance with any
requirement of this section, or purporting to affect the applicant
with notice of any contract document or matter not specifically
referred to in the prospectus shall be void.

 (5)  Nothing in this section shall limit or diminish any liability
which any person may incur in any other provisions under this
Act or any other written law.

Consent from person to issue prospectus containing his
statement

160. (1) A prospectus which includes a statement purporting to
be made by an expert, or to be based on a statement made by
such person shall not be issued unless—

 (a) the person has given his written consent to the issue of
the prospectus with the statement made in the form and
context in which the consent is included and has not
withdrawn such consent before the date of issue of the
prospectus; and

 (b) there appears in the prospectus a statement that the
person has given and has not withdrawn his consent.

 (2) Subsection (1) shall not apply to a statement which is an
extract of an official statement or any other statement as may be
specified by the Registrar.

 (3) If any prospectus is issued in contravention of this section,
the corporation and every person who is knowingly a party to
the issue commit an offence and shall, on conviction, be liable
to imprisonment for a term not exceeding five years or to a fine
not exceeding one million ringgit or to both.

Companies 167

Relief from requirements as to form and content of prospectus

161. (1) The Registrar may, on the application in writing by
any person required to comply with subsection 154(1), relieve
the person or approve any variation from the requirements of this
Act relating to the form and content of a prospectus.

 (2) In granting the relief or approving the variation under
subsection (1), the Registrar may impose such terms and conditions
as the Registrar thinks fit.

 (3) The Registrar shall not grant the relief or approve the
variation under subsection (1) unless he has considered the nature
and objectives of the corporation and is satisfied that—

 (a) the relief or variation does not cause the non-disclosure
to the public of information necessary for the assessment
of the investment in the shares or debentures of the
corporation, as the case may be; and

 (b) the compliance with the requirements, for which the relief
or variation is applied for, would impose unreasonable
burden on the applicant.

 (4) A prospectus shall be deemed to have complied with all
the requirements of this Act relating to the form and content
of a prospectus if the prospectus is issued in compliance with
subsection (1).

Retention of over-subscription in issuance of debenture

162. (1) A corporation shall not accept or retain subscriptions
to a debenture issue in excess of the amount of the issue as
disclosed in the prospectus unless the corporation has specified
in the prospectus—

 (a) that the corporation expressly reserves the right to accept
or retain over-subscriptions; and

 (b) a limit expressed as a specific sum of money on the
amount of over-subscriptions that may be accepted or
retained being an amount not more than twenty-five
per centum in excess of the amount of the issue as
disclosed in the prospectus.

Laws of Malaysia168 Act 777

 (2) Subject to the First Schedule, if a corporation specifies in
a prospectus relating to a debenture issue that the corporation
reserves the right to accept or retain over-subscriptions—

 (a) the corporation shall not make, authorize or permit any
statement of or reference as to the asset-backing for
the issue to be made or contained in any prospectus
relating to the issue, other than a statement or reference
to the total tangible assets and the total liabilities of the
corporation and of its guarantor corporations; and

 (b) the prospectus shall contain a statement or reference
as to what the total assets and total liabilities of the
corporation would be if over-subscriptions to the limit
specified in the prospectus were accepted or retained.

 (3) The corporation that contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
one million ringgit.

Certain advertisements deemed to be prospectuses

163. (1) Every advertisement offering or calling attention to
an offer or intended offer to the public in respect of shares or
debentures shall be deemed to be a prospectus unless it—

 (a) only contains the following information:

 (i) the number and description of the shares or
debentures concerned;

 (ii) the name and date of registration of the corporation
and its paid up share capital;

 (iii) a concise statement of the general nature of the
main business or proposed main business of the
corporation;

 (iv) the names, addresses and occupations of the
directors or proposed directors, the brokers or
underwriters to the issue and in the case of
debentures, the trustee for the debenture holders;

 (v) the name of the stock exchange of which the
brokers or underwriters to the issue are members;
and

Companies 169

 (vi) particulars of the opening and closing dates of
the offer and the time and place at which copies
of the full prospectus and forms of application
for the shares or debentures may be obtained;
and

 (b) states that applications for shares or debentures will proceed
only on one of the forms of application being referred
to, and attached to a printed copy of the prospectus.

 (2) A statement in the advertisement that, or to the effect that,
the advertisement is not a prospectus shall not affect the operation
of this section.

 (3) This section shall apply to advertisements published or
disseminated in Malaysia by newspaper, broadcasting, television,
cinematograph or any other means.

 (4) If an advertisement is deemed to be a prospectus by virtue
of subsection (1), the provisions under this Subdivision regarding
the contents of prospectus and liability in respect of false or
misleading statements and material omissions shall apply and
have effect accordingly.

 (5) If—

 (a) an advertisement offering or calling attention to an offer or
intended offer of shares in or debentures of a corporation
or proposed corporation to the public for subscription
or purchase is published or disseminated;

 (b) the person who published or disseminated the advertisement
before so doing, obtained a certificate signed by at
least two directors of the corporation, or two proposed
directors of the proposed corporation, that the proposed
advertisement is an advertisement that will not be deemed
to be a prospectus by virtue of subsection (1); and

 (c) the advertisement is not patently an advertisement that is
deemed to be a prospectus by virtue of that subsection,

only the corporation and every person who signed the certificate
shall be deemed to be the persons who published or disseminated
the advertisement.

Laws of Malaysia170 Act 777

 (6) Any person who has obtained a certificate referred to in
paragraph (5)(b) shall forthwith deliver the certificate to the
Registrar when so requested by the Registrar.

 (7)  Any person who contravenes subsection (6) commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding three years or to a fine not exceeding two
hundred and fifty thousand ringgit or to both and, in the case of
a continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

 (8) Where an advertisement that is deemed to be a prospectus by
virtue of subsection (1) does not comply with the requirements of
this Act as to prospectus, the person who published or disseminated
the advertisement, and every officer of the corporation concerned,
or other person, who knowingly authorized or permitted the
publication or dissemination, commits an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding
five years or to a fine not exceeding one million ringgit or to
both.

 (9) Nothing in this section shall limit or diminish any liability
which any person may incur in any other provisions under this
Act or any other written law.

Document containing offer of shares for sale to be deemed
prospectus

164. (1) Where a corporation allots or agrees to allot to any
person any shares or debentures of the corporation with a view to
all or any of the shares being offered for sale to the public, any
document of the offer for sale made to the public shall, for all
purposes, be deemed to be a prospectus issued by the corporation.

 (2) If the documents are deemed to be prospectus for the
purposes of subsection (1), the provisions under this Subdivision
regarding the contents of prospectus and liability in respect of
false or misleading statements and material omissions shall be
applicable and have effect accordingly as if—

 (a) the shares or debentures has been offered to the public;
and

Companies 171

 (b) the persons accepting the offer in respect of any shares
or debentures were subscribers,

but without prejudice to the liability, if any, of the persons making
the offer in respect of false or misleading statements and material
omission in the document or otherwise.

 (3) Unless the contrary is proved, an allotment of or an
agreement to allot shares or debentures that is made with a view
to the shares or debentures being offered for sale to the public
shall be evidence if it is shown that—

 (a) an offer of the shares or debentures or of any of the shares
or debentures for sale to the public is made within six
months after the allotment or agreement to allot; or

 (b) at the date when the offer was made the whole consideration
to be received by the corporation in respect of the shares
or debentures has not been received.

 (4) The provisions of this Subdivision relating to the prospectus
shall have effect as if the persons making an offer under this
section were persons named in the prospectus as directors of a
corporation.

 (5) In addition to other requirements in this Subdivision, the
document making the offer shall state—

 (a) the net amount of the consideration received or to be
received by the corporation in respect of shares or
debentures to which the offer relates; and

 (b) the place and time at which a copy of the contract under
which the shares or debentures have been or are to be
allotted may be inspected.

 (6) Where an offer to which this section relates is made by
a corporation or a firm, it shall be sufficient if the document
referred to in subsection (1) is signed on behalf of the corporation
or firm by two directors of the corporation or not less than half
of the members of the firm, as the case may be, and any such
director or member may authorize any agent in writing to sign
on his behalf.

Laws of Malaysia172 Act 777

Information memorandum deemed to be prospectus

165. (1) Any information memorandum purporting to describe
the business affairs of the person making the offer issued by the
person or his agent shall be deemed to be a prospectus, in so
far as regarding the liability of the person or his agent, for any
untrue statement or non-disclosure of material information.

 (2) A copy of the memorandum referred to in subsection (1)
shall be lodged with the Registrar within seven days from the
date the memorandum is first issued.

Supplemental prospectus or replacement prospectus

166. (1) This section applies if, after the registration of a
prospectus but before its issue, the person who lodged or registered
the prospectus becomes aware that—

 (a) a significant new matter has arisen being a matter, the
information of which is required by this Act to be
disclosed in a prospectus;

 (b) there is a significant change affecting a matter disclosed
in the prospectus;

 (c) the prospectus contained a material statement that is
false or misleading; or

 (d) there is a material omission from the prospectus.

 (2) After becoming aware of the matters referred to in subsection (1),
the person shall, as soon as practicable, lodge or register a
supplemental or replacement prospectus with the Registrar, as
the case may be.

 (3) A supplemental prospectus shall—

 (a) clearly identify the prospectus to which the supplemental
prospectus relates; and

Companies 173

 (b) contain a statement in bold or coloured print on each
page of the supplemental prospectus stating that—

 (i) the supplemental prospectus is a supplemental
prospectus to be read in conjunction with the
original prospectus; and

 (ii) if other supplemental prospectus has been issued
in relation to the same original prospectus, both
the original prospectus and previous supplemental
prospectus.

 (4) A supplemental prospectus shall be deemed to be part of
the original prospectus to which the supplemental prospectus
relates and the provisions under this Subdivision regarding the
contents of prospectus and liability in respect of false or misleading
statements and material omissions in a prospectus shall apply and
have effect accordingly.

 (5) Where a supplemental prospectus has been registered with
the Registrar under subsection (1), every copy of the original
prospectus shall be issued together with a copy of the supplemental
prospectus.

 (6) A replacement prospectus shall—

 (a) clearly identify the prospectus which the replacement
prospectus replaces;

 (b) contain a statement in bold or coloured print at the
beginning of the prospectus stating that it is a replacement
prospectus; and

 (c) be regarded as replacing the original prospectus previously
registered under section 155.

 (7) Notwithstanding that the original prospectus to which the
supplemental or replacement prospectus relates or replaces has
been issued, a supplemental or replacement prospectus may be
registered for the purposes of subsection (1) if—

 (a) the original prospectus relates to an invitation or offer
which is addressed to an identifiable category of persons
to whom the original prospectus is directly communicated
by the person making the invitation or offer or by his

Laws of Malaysia174 Act 777

appointed agent, and a copy of the supplemental or
replacement prospectus is sent to each of the persons
in accordance with subsection (8); or

 (b) the original prospectus relates to an invitation or offer to
the public and a copy of the supplemental or replacement
prospectus is advertised in every newspaper which
originally advertised the invitation or offer or calling
attention to the invitation or offer in accordance with
subsection (8).

 (8) For the purposes of subsection (7), a notice shall—

 (a) in the case of paragraph (7)(a), be sent together with a
copy of the supplemental or replacement prospectus to
every person referred to in that subsection; and

 (b) in the case of paragraph (7)(b), be advertised together
with the supplemental or replacement prospectus stating
that—

 (i) a copy of the supplemental or replacement
prospectus has been registered with the Registrar;
and

 (ii) every person who has submitted his application
prior to the date of the notice is entitled to
withdraw his application within fourteen days
from the date of the notice and all application
money received in respect of the shares or
debentures will be refunded in full without
interest or profit.

 (9) Any supplemental or replacement prospectus that has
been registered with the Securities Commission under the
Capital Markets and Services Act 2007 shall be lodged with
the Registrar immediately upon registration with the Securities
Commission together with a notice indicating which original
prospectus the supplemental or replacement prospectus relates to
or replaces, as the case may be.

 (10) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding five years or to a fine not exceeding one
million ringgit or to both.

Companies 175

Civil liability for misstatement in prospectus

167. (1) A person who subscribes for or purchases any shares
or debentures and suffers loss or damage as a result of any
statement or information contained in a prospectus that is false
or misleading or any statement or information contained in a
prospectus from which there is a material omission, may recover
the amount of loss or damage from the following persons:

 (a) the corporation and each director of the corporation at
the time of the issue of the prospectus;

 (b) a person who consented or caused himself to be named
and is named in the prospectus as a director or as having
agreed to become a director, either immediately or after
an interval of time;

 (c) a promoter, for any loss or damage arising from the
prospectus or any relevant portion of the prospectus in
respect of which he is a party to the preparation of the
prospectus;

 (d) a person named in the prospectus with his consent as having
made a statement that is included in the prospectus or
on which a statement made in the prospectus is based,
for any loss or damage caused by the inclusion of the
statement in the prospectus; or

 (e) a person who authorized or caused the issue of a
prospectus in contravention of section 168, for any loss
or damage caused by such contravention.

 (2) No person shall be liable under subsection (1) if he proves
that—

 (a) having consented to become a director of the corporation,
he withdrew his consent before the issue of the prospectus
and that the prospectus was issued without his authority
or consent;

 (b) the prospectus was issued without his knowledge or
consent and he gave reasonable notice to the public
after he becomes aware of its issue;

Laws of Malaysia176 Act 777

 (c) after the issue of the prospectus and before the allotment
or sale of the shares or debentures, he has withdrawn his
consent after he becomes aware of any false or misleading
statement in the prospectus and gives reasonable notice
to the public of the withdrawal together with the reason;
or

 (d) in relation to every false or misleading statement—

 (i) he has reasonable ground to believe that the
statement is true up to the time of the allotment
or sale of the shares or debentures;

 (ii) purporting to be a statement, or based on a
statement, or contained in what purports to be
a copy of or extract from a report of valuation
of an expert, and that he has reasonable ground
to believe that the person making the statement
is an expert and competent to make the true
statement up to the time of the issue of the
prospectus and that person has given the consent
required under section 160 to the issue of the
prospectus and has not withdrawn that consent
before delivery of a copy of the prospectus for
registration or before any allotment or sale of
the shares or debentures; and

 (iii)  purporting to be a statement made by an official
person or contained in what purports to be a copy
of or extract from a public official document,
the statement is a true and fair representation
of the statement or copy of or extract from the
document.

 (3) Subsection (2) shall not apply in the case of a person
liable, by reason of his having given a consent required of him by
section 160, as a person who has authorized or caused the issue
of the prospectus in respect of a false and misleading statement
purporting to have been made by him as an expert.

 (4) A person who, apart from this subsection would under
subsection (1) be liable, by reason of his having given a consent
required by him by section 160 as a person who has authorized

Companies 177

the issue of a prospectus in respect of a false or misleading
statement purporting to be made by him as an expert shall not
be liable if he proves that—

 (a) he withdrew his consent in writing before a copy of the
prospectus was lodged with the Registrar;

 (b) after a copy of the prospectus was lodged with the
Registrar and before allotment or sale of the shares or
debentures, he withdrew his consent in writing after he
becomes aware of the false or misleading statement and
gives reasonable notice to the public of the withdrawal
together with the reason; or

 (c) he is competent to make the statement and that he has
reasonable ground to believe that the statement is true
up to the time of the allotment or sale of the shares or
debentures.

 (5) Where—

 (a) the prospectus contains the name of a person as a director
of the corporation, or a person who has agreed but has
not consented to become a director or has withdrawn his
consent before the issue of the prospectus and has not
authorized or consented to the issue of the prospectus;
or

 (b) the consent of a person is required under section 160 to
the issue of the prospectus and he either has not given
the consent or has withdrawn the consent before the
issue of the prospectus,

the directors of the corporation except those without their knowledge
or consent the prospectus is issued, and any other person who
authorized or caused the issuance of the prospectus shall be liable
to indemnify the person so named or whose consent is required
against all damages, costs and expenses to which he may be
made liable by reason of his name having been inserted in the
prospectus or of the inclusion in the prospectus of a statement
purporting to be made by him, or in defending himself against
any action or legal proceeding brought against him in respect of
the prospectus.

Laws of Malaysia178 Act 777

Criminal liability for misstatement in prospectus

168. (1) No person shall authorize or cause the issuance of a
prospectus that contains—

 (a) any statement or information that is false or misleading;
or

 (b) a material omission from any statement or information.

 (2) For the purposes of this section, it shall be a defence for
a person if he proves that—

 (a) the statement or omission is immaterial; or

 (b) he has made all enquiries as are reasonable in the
circumstances and after making such enquiries, he
has reasonable grounds to believe and did believe the
statement is true or the omission is immaterial up to
the time of the issue of the prospectus.

 (3) Any person who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding five years or to a fine not exceeding one
million ringgit or to both.

Persons not to be taken to have authorized or caused issue
of prospectus

169. (1) For the purposes of this Part, the Registrar shall not be
taken to have been involved in the preparation of a prospectus
or authorized or caused the issuance of the prospectus for any
reason including when he performs his functions or exercises his
powers under this Act.

 (2) For the purposes of sections 167 and 168, a person shall
not be deemed to have authorized or caused the issuance of a
prospectus by reason of—

 (a) his having given a consent as required under section 160;
and

 (b) his name being included in the prospectus as a trustee
for debenture holders, auditor, banker, advocate and
solicitor or stock or share broker.

Companies 179

Stop order

170. (1) Where the prospectus has been registered by the Registrar
and the Registrar is of the opinion that—

 (a) a prospectus does not comply with or is not prepared in
accordance with any provision of this Act;

 (b) a prospectus contains a statement or information that is
false or misleading;

 (c) a prospectus contains a statement or information from
which there is a material omission; or

 (d) the corporation has contravened any provision of this
Act,

the Registrar may, by stop order in writing served on the corporation
or such other person as the Registrar may determine, direct the
corporation or such other person not to allot, issue, offer, make
an invitation to subscribe for or purchase or sell, further shares or
debentures to which the prospectus relates, as the case requires.

 (2) Subject to subsections (3) and (4), the Registrar shall not
make a stop order under subsection (1) unless the Registrar has
given a reasonable opportunity to be heard to any affected person
as to whether a stop order shall be made.

 (3) If the Registrar considers that by giving an opportunity
to be heard would cause a delay that will be prejudicial to the
public interest, the Registrar may make an interim stop order
without giving the opportunity to be heard.

 (4) An interim stop order under subsection (3) shall, unless
sooner revoked, have effect until the end of twenty-one days from
the day on which the interim stop order is made or the conclusion
of the hearing in subsection (2), whichever date is the later.

 (5) Where a stop order made under subsection (1) or an interim
stop order made under subsection (3) is in force, this Part shall
apply as if the prospectus has not been registered.

Laws of Malaysia180 Act 777

 (6) An interim stop order made under subsection (3) may be
revoked in writing if the Registrar is satisfied that the circumstances
that resulted in the making of the order no longer exists.

 (7) Where an application to subscribe for or purchase shares or
debentures to which the prospectus relates has been made prior
to the stop order made under subsection (1)—

 (a) if the shares or debentures have not been issued to the
applicant—

 (i) the application shall be deemed to have been
withdrawn and cancelled and the corporation
or such other person who receives the moneys
shall forthwith refund all moneys received from
the applicant without interest or returns; and

 (ii) if the money is not refunded within fourteen days
of the stop order, the corporation shall be liable
to refund such moneys with interest at the rate
of ten per centum per annum or at such other
rate as may be specified by the Registrar from
the expiration of fourteen days; or

 (b) if the shares or debentures have been issued to the
applicant, the issue of the shares and debentures shall
be deemed to be void and the corporation or such other
person shall—

 (i) forthwith refund without interest all moneys
received from the applicant and if any such
moneys is not refunded within fourteen days
of the date of service of the stop order, the
corporation shall be liable to refund such moneys
with interest or returns at the rate of ten per
centum per annum or at such other rate as may
be specified by the Registrar from the expiration
of fourteen days; and

 (ii) take necessary steps to effect the stop order.

Companies 181

 (8) Any person who contravenes a s top order  made
under subsection (1) or an interim stop order made under
subsection (3) commits an offence and shall, on conviction, be
liable to imprisonment for a term not exceeding five years or to
a fine not exceeding one million ringgit or to both.

Subdivision 10

Debentures

Application of Subdivision 10

171. (1) Unless provided otherwise in this Act, this Subdivision
shall be applicable to an offer made to the public, including an
offer made to any section of the public however selected, with
regards to—

 (a) an offer or invitation in respect of shares or debentures
made by an unlisted recreational club; and

 (b) an offer or invitation to deposit money with or lend
money to a corporation as specified under section 158.

 (2) This Subdivision shall not apply to an offer or invitation
to subscribe for or purchase any securities of a corporation,
including any excluded offer or excluded invitation as provided
for in the Capital Markets and Services Act 2007.

Specific performance of contracts

172. A contract with a company to take up and pay for any
debentures of the company may be enforced by a Court order
for specific performance.

Perpetual debentures

173. Notwithstanding any other law, a condition contained in a
debenture or in a trust deed for securing a debenture, whether
the debenture or trust deed is issued or made before or after the
commencement of this Act shall not be invalid by reason that

Laws of Malaysia182 Act 777

the debentures are made irredeemable or redeemable only on the
happening of a contingency however remote or on the expiration
of a period however long.

Power to re-issue redeemed debentures

174. (1) A company may re-issue the debentures which have
been redeemed either by re-issuing the same debentures or issuing
new debentures in place of the redeemed debentures, unless—

 (a) provided otherwise, either expressly or impliedly in the
constitution or in any contract made by the company;
or

 (b) the company has manifested its intention that the debentures
shall be cancelled by passing a resolution to that effect
or by some other act.

 (2) If redeemed debentures are re-issued, the person entitled to
the debentures shall have and shall be deemed always to have the
same priorities as if the debentures have never been redeemed.

Deposit of debentures to secure advances

175. Where a company has deposited any of its debentures to
secure advances on current account or otherwise, the debentures
are not treated as redeemed by reason only of the company’s
account having ceased to be in debit while the debentures remained
deposited.

Qualifications of trustee for debenture holders

176. (1) Every borrowing corporation which offers debentures
to the public for subscription or purchase in Malaysia shall make
provision for the appointment of a trustee corporation as a trustee
for the debenture holders in such debentures or in a trust deed
relating to the debentures.

 (2) Where a borrowing corporation is required to appoint a
trustee for the debenture holders in accordance with subsection (1),
the borrowing corporation shall not allot any of the debentures

Companies 183

until the appointment has been made and the trustee corporation
has consented to act as trustee.

 (3) A trustee corporation shall not be appointed, hold office or
act as trustee for the debenture holders of a borrowing corporation
without leave of the Court if the trustee corporation is—

 (a) a shareholder who beneficially holds shares in the
borrowing corporation;

 (b) beneficially entitled to moneys owed by the borrowing
corporation to the trustee corporation;

 (c) a corporation that has entered into a guarantee in respect
of the principal debt secured by the debentures or in
respect of interest in the principal debt; or

 (d) a corporation that is by virtue of section 7 deemed to be
related to—

 (i) any corporation of a kind referred to in
paragraphs (a), (b) and (c); or

 (ii) the borrowing corporation.

 (4) Subsection (3) shall not prevent a trustee corporation from
being appointed, holding office or acting as a trustee for the
debenture holders of a borrowing corporation by reason only
that—

 (a) the borrowing corporation owes to the trustee corporation
or to a corporation that is deemed by virtue of section 7
to be related to the trustee corporation any moneys so
long as such moneys are—

 (i) moneys, excluding the moneys referred to in
subparagraphs (ii) and (iii), which does not exceed
ten per centum of the amount of the debentures
proposed to be offered to the public at the time
of the appointment or within the period of three
months after the debentures are first offered to
the public, and which does not exceed ten per
centum of the amount owed by the borrowing
corporation to the debenture holders at any time
after the expiration of that period;

Laws of Malaysia184 Act 777

 (ii)  moneys that are secured only by a first mortgage
over land of the borrowing corporation, or by any
debentures issued by the borrowing corporation
to the public or by any debentures not issued
to the public which are issued under the same
trust deed that creates other debentures issued
at any time by the borrowing corporation to the
public or by any debentures to which the trustee
corporation, or a corporation that is deemed
to be related to the trustee corporation is not
beneficially entitled by virtue of section 7; or

 (iii)  moneys to which the trustee corporation, or a
corporation that is entitled to be appointed as a
trustee for the debenture holders of the borrowing
corporation in accordance with the terms of the
debentures or of the relevant trust deed by virtue
of section 7 deemed to be related to the trustee
corporation; or

 (b) the trustee corporation, or a corporation that is deemed to
be a shareholder of the borrowing corporation in respect
of shares that trustee corporation beneficially holds by
virtue of section 7 to be related to the trustee corporation
so long as the shares in the borrowing corporation which
are beneficially held by the trustee corporation and by
all other corporations that are deemed to be related to
the borrowing corporation by virtue of section 7 do not
carry the right to exercise more than five per centum of
the voting power at any general meeting of the borrowing
corporation.

 (5) Nothing in subsection (3) shall—

 (a) affect the operation of any debentures or trust deed
issued or executed before the commencement of this
Act; or

 (b) apply to or in relation to the trustee for the holders of
any such debentures,

unless under any such debentures or trust deed a further offer
of debentures is made to the public after the commencement of
this Act.

Companies 185

 (6) The corporation and every officer who contravene this
section commits an offence and shall, on conviction, be liable to
a fine not exceeding twenty thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

Duties of trustee

177. (1) A trustee for debenture holders shall—

 (a) exercise reasonable diligence to ascertain whether or not
the assets of the borrowing corporation and of each of
its guarantor corporations which are or may be available
whether by way of security or otherwise are sufficient
or are likely to be or become sufficient to discharge the
principal debt as and when it becomes due;

 (b) satisfy itself that each prospectus relating to the debentures
does not contain any matter which is inconsistent with
the terms of the debentures or with the relevant trust
deed;

 (c) ensure that the borrowing corporation complies with
Subdivision 1 of Division 7 of Part III so far as the
Subdivision relates to the debentures and is applicable;

 (d) exercise reasonable diligence to ascertain whether or not
the borrowing corporation and each of its guarantor
corporations have committed any breach of the covenants,
terms and provisions of the debentures or the trust deed;

 (e) take all steps and do all such things as the trustee for
debenture holders is empowered to do to cause the
borrowing corporation and any of its guarantor corporations
to remedy any breach of those covenants, terms and
provisions, except where it is satisfied that the breach
will not materially prejudice the security, if any, for the
debentures or the interests of the debenture holders;

 (f) where the borrowing corporation or any of its guarantor
corporations fails to remedy any breach of the covenants,
terms and provisions of the debentures or the trust deed

Laws of Malaysia186 Act 777

if so required by the trustee, the trustee may place the
matter before the meeting of debenture holders, submit
such proposals for the protection of the debenture
holders’ investment as the trustee considers necessary
or appropriate and obtain the directions of the debenture
holders in relation to the investment; and

 (g) where the borrowing corporation submits to the debenture
holders a compromise or an arrangement, give to the
debenture holders a statement explaining the effect of
the compromise or arrangement and, if the trustee thinks
fit, recommend to the debenture holders an appropriate
course of action to be taken by the debenture holders
in relation to the compromise or arrangement.

 (2) Where, after due inquiry, the trustee is of the opinion that
the assets of the borrowing corporation and of any of its guarantor
corporations which are available whether by way of security
or otherwise are insufficient or likely to become insufficient
to discharge the principal debt as and when the principal debt
becomes due, the trustee may apply to the Minister for an order
under this subsection.

 (3) On an application referred to in subsection (2), after giving
the borrowing corporation an opportunity of making representations
in relation to such application, the Minister, by order in writing—

 (a) may serve on the corporation at its registered office in
Malaysia and impose such restrictions on the activities of
the corporation, including restrictions on advertising for
deposits or loans and on borrowing by the corporation
as the Minister thinks necessary for the protection of
the interests of the debenture holders; or

 (b) may direct the trustee to apply to the Court for an order
under subsection (4) and if the borrowing corporation
requires the trustee to do so, the Minister shall direct
the trustee to apply accordingly.

 (4) Where—

 (a) after due inquiry, the trustee at any time is of the opinion
that the assets of the borrowing corporation and of any
of its guarantor corporations which are or should be

Companies 187

available whether by way of security or otherwise are
insufficient or likely to become insufficient to discharge
the principal debt as and when the principal debt becomes
due; or

 (b) the corporation contravenes or fails to comply with an
order made by the Minister under subsection (3),

the trustee may, and if the borrowing corporation requires the
trustee to do so, the trustee shall apply to the Court for an order
under subsection (5).

 (5) Where an application is made to the Court under subsection (3)
or (4), the Court may, by order, after giving the borrowing
corporation an opportunity to be heard, do all or any of the
following:

 (a) direct the trustee—

 (i) to convene a meeting of the debenture holders for
the purpose of placing the information before
the debenture holders relating to the interests
and proposals for the protection of the debenture
holders as the trustee considers necessary or
appropriate;

 (ii) to obtain directions of the debenture holders in
relation to the interests and proposals for the
protection of the debenture holders; and

 (iii) to give any direction in relation to the conduct
of the meeting as the Court thinks fit;

 (b) stay all or any actions or proceedings before any Court
by or against the borrowing corporation;

 (c) restrain the payment of any moneys by the borrowing
corporation to the debenture holders of the corporation
or to any class of debenture holders;

 (d) appoint a receiver or receiver and manager of such
property which constitutes the security, if any, for the
debentures; and

Laws of Malaysia188 Act 777

 (e) give further directions to the members of the borrowing
corporation or any of its guarantor corporations or the
public as may be necessary to protect the interests of
the debenture holders.

 (6) The Court shall consider the rights of all creditors of the
borrowing corporation upon making the order and may vary or
rescind any order made under subsection (5) as the Court thinks
fit.

 (7) Upon making an application to the Minister under
subsection (2) or (3) or to the Court under subsection (4), a
trustee shall—

 (a) consider the nature and kind of the security given when
the debentures are offered to the public; and

 (b) if no security is given, consider the position of the
debenture holders as unsecured creditors of the borrowing
corporation.

 (8) A trustee may rely upon any certificate or report given
or statement made by any advocate, auditor or officer of the
borrowing corporation or guarantor corporation if the trustee
has reasonable grounds for believing that the advocate, auditor
or officer is competent to give or make the certificate, report or
statement.

Retirement of trustee

178. (1) Notwithstanding anything contained in any Act or in
the relevant debentures or trust deed, a trustee for the debenture
holders shall not cease to be the trustee until a corporation
qualified under section 176 for the appointment as a trustee for
the debenture holders has been appointed and has taken office.

 (2) Where—

 (a) a provision has been made in the debentures or in the
relevant trust deed for the appointment of a successor to
a trustee for the debenture holders upon retirement, the
successor may be appointed in accordance with section 176;
or

Companies 189

 (b) no provision has been made in the debentures or in the
relevant trust deed for the appointment of a successor
to a retiring trustee, the borrowing corporation may
appoint a successor which is qualified to be appointed
under section 176.

 (3) Notwithstanding anything in this Act or in any debentures
or trust deed, a borrowing corporation may, with the consent of an
existing trustee for the debenture holders, appoint any corporation
which is qualified for appointment under section 176 and which
is deemed by virtue of section 7 to be related to the existing
trustee as successor to the existing trustee.

 (4) Where the trustee for the debenture holders has ceased to
exist or ceased to be qualified under section 176 or fails or refuses
to act or is disqualified under that section, the Court may, on the
application of the borrowing corporation or the trustee for the
debenture holders or any debenture holder or the Minister, appoint
any corporation qualified under section 176 to be the trustee in
place of the trustee which has ceased to exist or to be qualified
or which fails or refuses to act as trustee or is disqualified.

 (5) Where a successor is appointed to be a trustee in place of
any trustee, the successor shall lodge with the Registrar a notice
within thirty days from the appointment in the form and manner
as determined by the Registrar.

 (6) The successor who contravenes subsection (5) commits an
offence and shall, on conviction, be liable to a fine not exceeding
twenty thousand ringgit and, in the case of a continuing offence,
to a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

Contents of trust deed

179. (1) Where a corporation offers debentures to the public
for subscription in Malaysia, the debentures or the relevant trust
deed shall contain a limitation on the amount that the borrowing
corporation may borrow and shall contain covenants by the
borrowing corporation which shall have the following effects:

 (a) the borrowing corporation shall use its best endeavours
to carry on and conduct its business in a proper and
efficient manner;

Laws of Malaysia190 Act 777

 (b) to the same extent as if the trustee for the debenture
holders or any approved company auditor appointed
by the trustee were a director of the corporation, the
borrowing corporation shall—

 (i)  make available for inspection all accounting or
other records of the borrowing corporation; and

 (ii)  give to the borrowing corporation any information
as the borrowing corporation requires with respect
to all matters relating to the accounting or other
records of the borrowing corporation; and

 (c) on the application of persons holding not less than
ten per centum in value of the issued debentures to
which the covenant relates delivered to its registered
office, the borrowing corporation shall—

 (i) summon a meeting of the debenture holders to
consider the accounts and balance sheet which
were last lodged with the trustee for the debenture
holders by the borrowing corporation; and

 (ii) give to the trustee directions in relation to the
exercise of the trustee’s powers, such meeting
to be held at a time and place specified in the
notice and advertisement under the chairpersonship
of a person nominated by the trustee or such
other person as is appointed in that behalf by
the debenture holders present at the meeting.

 (2) The notice of the meeting referred to in paragraph (1)(c)
shall be—

 (a) given to each of the debenture holders, other than
debentures payable to bearer, at his address as specified
in the register of debentures; and

 (b) by an advertisement in at least one widely circulated
newspaper in Malaysia in the national language and one
widely circulated newspaper in Malaysia in the English
language addressed to all debenture holders.

 (3) If the debentures or the trust deed does not expressly
contain covenants by the borrowing corporation, the debentures
or the trust deed shall be deemed to contain the covenants
as mentioned in subsection (1).

Companies 191

 (4) The corporation and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding one million ringgit.

Power of Court in relation to certain irredeemable debentures

180. (1) Notwithstanding anything in any debenture or trust
deed, the security for any debentures which are irredeemable or
redeemable only on the happening of a contingency shall, if the
Court so orders, be enforceable, forthwith or at such other time
as the Court directs.

 (2) In making an order under subsection (1), on the application
by the trustee for the debenture holders or where there is no
trustee, by the holder of any of the debentures, the Court shall
be satisfied that—

 (a) at the time of the issue of the debentures the assets of
the corporation which constituted or were intended to
constitute the security therefor were sufficient or likely
to become sufficient to discharge the principal debt and
any interest on the debt;

 (b) the security, if realized under the circumstances existing
at the time of the application, would be likely to bring
not more than sixty per centum of the principal sum of
moneys outstanding regard being had to all prior charges
and charges ranking equally, if any; and

 (c) the assets covered by the security, on a fair valuation on
the basis of a going concern after allowing a reasonable
amount for depreciation are worth less than the principal
sum and the borrowing corporation is not making sufficient
profit to pay the interest due on the principal sum or
where no definite rate of interest is payable, interest on
the sum at such rate as the Court considers would be a
fair rate to expect from a similar investment.

 (3) Subsection (1) shall not affect any power to vary rights or
accept any compromise or arrangement created by the terms of
the debentures or the relevant trust deed or under a compromise
or arrangement between the borrowing corporation and creditors.

Laws of Malaysia192 Act 777

Power of trustee to apply to Court for directions, etc.

181. (1) The trustee for the debenture holders may apply to the
Court—

 (a) for directions in relation to any matter arising in connection
with the performance of the functions of the trustee; or

 (b) to determine any question in relation to the interests of
the debenture holders.

 (2) Upon application made under subsection (1), the Court
may—

 (a) give such directions to the trustee as the Court thinks fit;

 (b) accede wholly or partially to the application on such
terms and conditions if the Court is satisfied that the
determination of the question will be just and beneficial
or make such other order as the Court thinks just; or

 (c) order a meeting of all or any of the debenture holders to
be called to consider any matters in which the debenture
holders are concerned and to advise the trustee on
the matters concerned and may give such ancillary or
consequential directions as the Court thinks fit.

 (3) The meeting referred to in paragraph (2)(c) shall be held
and conducted in such manner as the Court directs under the
chairpersonship of a person nominated by the trustee or such
other person as the meeting may appoint.

Obligations of borrowing corporation

182. (1) Where there is a trustee for the debenture holders of a
borrowing corporation, the directors of the borrowing corporation
shall prepare a report—

 (a) at the end of a period not exceeding three months ending
on a day, not later than six months after the date of
the relevant prospectus which the trustee is required to
notify the borrowing corporation in writing; and

Companies 193

 (b) at the end of each succeeding period, being a period of
three months or such shorter time as the trustee may,
in any special circumstances allow.

 (2) The report relating to the period referred to in subsection (1)
shall comply with subsection (3) and a copy of the report shall
be lodged with the Registrar and the trustee within thirty days
from the end of each period.

 (3) The report referred to in subsection (1) shall be signed by
not less than two of the directors of the borrowing corporation
and shall set out in detail any matters adversely affecting the
security or the interests of the debenture holders as follows:

 (a) whether or not the limitations on the amount that the
corporation may borrow have been exceeded;

 (b) whether or not the borrowing corporation and each of its
guarantor corporations have observed and performed all
the covenants and provisions binding on the borrowing
corporation and each of its guarantor corporations
respectively under the debentures or any trust deed;

 (c) whether or not any event has happened which has caused
or could cause the debentures or any provision of the
relevant trust deed to become enforceable and if so,
particulars of that event;

 (d) whether or not any circumstances affecting the borrowing
corporation, its subsidiaries or its guarantor corporations
or any of the corporation, its subsidiaries or its guarantor
corporations have occurred which materially affect
any security or charge included in or created by the
debentures or any trust deed and if so, the particulars
of the circumstances;

 (e) whether or not there has been any substantial change in
the nature of the business of the borrowing corporation or
any of its subsidiaries or any of its guarantor corporations
since the debentures were first issued to the public which
has not previously been reported upon as required by
this section and if so, the particulars of such change;
and

Laws of Malaysia194 Act 777

 (f) where the borrowing corporation has deposited money
with or lent money to or assumed any liability of a
corporation which is deemed to be related to the borrowing
corporation under section 7, the particulars of—

 (i)  the total amounts deposited or loaned and the
extent of any liability assumed during the period
covered by the report; and

 (ii)  the total amounts owing to the borrowing
corporation in respect of money deposited or
loaned and the extent of any liability assumed as
at the end of the period covered by the report,

  distinguishing between the secured and unsecured
deposits, loans and assumptions of liabilities.

 (4) The moneys referred to in paragraph (3)(f) shall not include
any deposit with or loan to or any liability assumed on behalf of
a corporation if the corporation has guaranteed the repayment of
the debentures of the borrowing corporation and has secured the
guarantee by a charge over its assets in favour of the trustee for
debenture holders of the borrowing corporation.

 (5) If there is a trustee for the debenture holders, the borrowing
corporation and each of the guarantor corporations which has
guaranteed the repayment of the moneys raised by the issue of
the debentures shall furnish the trustee—

 (a) within twenty-one days from the date of the creation
of any charge by the corporation or the guarantor
corporation, as the case requires, the particulars of
the charge created, whether or not any demand for the
repayment has been made; and

 (b) if the amount to be advanced on the security of the
charge is indeterminate—

 (i) within seven days of any advances made, the
particulars of the amount advanced; or

 (ii) if the advances made are merged in a current
account with bankers or trade creditors, once
every three months, the particulars of the net
amount outstanding in respect of any such
advances made.

Companies 195

 (6) The directors of every borrowing corporation and the
directors of every guarantor corporation shall cause to be prepared
a financial statement for the period from the end of that financial
year until the expiration of six months after the end of that
financial year and lodged with the Registrar and trustee for the
debenture holders, if any, at some date not later than nine months
after the expiration of each financial year of the corporation.

 (7) Sections 249, 250, 252 and subsections 266(1), (2) and (6)
shall, with such modifications as are necessary, be applicable to
every financial statement prepared and lodged under subsection (6)
as if that financial statement were a financial statement referred
to in those sections.

 (8) If the directors of a borrowing corporation do not lodge
with the trustee for the debenture holders a report as required by
subsection (1) or if the directors of a borrowing corporation or the
directors of a guarantor corporation do not lodge with the trustee
the financial statement and reports as required by subsection (6)
within the time prescribed, the trustee shall forthwith lodge notice
of that fact with the Registrar.

 (9) Any director of the borrowing corporation who contravenes
subsection (1) commits an offence and shall, on conviction, be
liable to a fine not exceeding twenty thousand ringgit and, in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

 (10) Any director of a borrowing corporation or a guarantor
corporation who contravenes subsection (2) or (6) commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Obligation of guarantor corporation to furnish information

183. (1) For the purpose of the preparation of a report required
by this Act to be signed by or on behalf of the directors of a
borrowing corporation or any of the directors of a borrowing
corporation, the corporation may, by notice in writing, require

Laws of Malaysia196 Act 777

any of its guarantor corporations to furnish the corporation with
any information relating to the guarantor corporation which is
required to be contained in the report.

 (2) The guarantor corporation shall furnish the information
referred to in subsection (1) to the borrowing corporation not
later than fourteen days from the date as specified in the notice.

 (3) The corporation and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding twenty thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

Loans and deposits to be immediately refundable on certain
events

184. (1) Where in any prospectus issued in connection with an
invitation to the public to subscribe for or to purchase debentures
of a corporation there is a statement as to any particular purpose
or project for which the moneys received by the corporation in
response to the invitation are to be applied, the corporation shall
make periodic reports to the trustee for the debenture holders as
to the progress that has been made towards achieving the purpose
or completing the project.

 (2) Each such report shall be included in the report required
to be furnished to the trustee for the debenture holders under
subsection 182(1).

 (3) When it appears to the trustee for the debenture holders
that the purpose or project has not been achieved or completed
within the time stated in the prospectus within which the purpose
or project is to be achieved or completed or, where no such time
was stated, within a reasonable time, the trustee may and, if in his
opinion it is necessary for the protection of the interests of the
debenture holders, shall give notice in writing to the corporation
requiring it to refund the moneys so received by the corporation
and within thirty days from the notice is given, lodge with the
Registrar a copy of the notice.

Companies 197

 (4) The trustee shall not give a notice under subsection (3) if
the trustee is satisfied that—

 (a) the purpose or project has been substantially achieved
or completed;

 (b) the interests of the debenture holders have not been
materially prejudiced by the failure to achieve or
complete the purpose or project within the time stated
in the prospectus or within a reasonable time; or

 (c) the failure to achieve the purpose or project is due to
the circumstances beyond the control of the corporation
that could not reasonably have been foreseen by the
corporation at the time the prospectus is issued.

 (5) Upon receipt of a notice referred to in subsection (3)
by the corporation, the corporation shall be liable to refund
and, on demand in writing by the trustee, the corporation shall
immediately refund to any person entitled to any money owing to
the corporation as a result of a loan or deposit made in response
to the invitation unless—

 (a) before the moneys were accepted by the corporation,
the corporation has given notice in writing to the
persons from whom the moneys were received specifying
the purpose or project for which the moneys would
in fact be used and the moneys were accepted by the
corporation accordingly; or

 (b) the corporation served a notice in writing on the
debenture holders stating—

 (i)  the purpose or project for which the moneys
would in fact be applied by the corporation; and

 (ii)  to offer to refund the moneys to the debenture
holders and the person has not demanded from
the corporation refund of the money in writing
within fourteen days from the receipt of the
notice, or such longer time as specified in the
notice.

Laws of Malaysia198 Act 777

 (6) If the corporation has given a notice in writing specifying
the purpose or project for which the moneys will in fact be applied
by the corporation under subsection (5), this section shall apply
and have effect as if the purpose or project specified in the notice
is the particular purpose or project specified in the prospectus as
the purpose or project for which the moneys were to be applied.

Liability of trustee for debenture holders

185. (1) Subject to this section, any provision contained in a
trust deed relating to or securing an issue of debentures, or in
any contract with the debenture holders secured by a trust deed
shall be void so far as the trust deed would have the effect of
exempting a trustee from or indemnifying the trustee against
liability for breach of trust where the trustee fails to show the
degree of care and diligence required as trustee.

 (2) Subsection (1) shall not invalidate—

 (a) any release of the trust deed otherwise validly given
in respect of anything done or omitted to be done by a
trustee before the giving of the release; or

 (b) any provision enabling the release of the trust deed
to be given—

 (i)  on the agreement of a majority of not less than
three-fourths in nominal value of the debenture
holders present and voting in person or, where
proxies are permitted, by proxy at a meeting
summoned for the purpose; and

 (ii)  either with respect to specific acts or omissions
or on the dissolution of the trustee or on the
trustee ceasing to act.

 (3) Subsection (1) shall not operate—

 (a) to invalidate any provision in force at the commencement
of this Act so long as any trustee then entitled to the
benefit of that provision remains a trustee of the trust
deed in question; or

Companies 199

 (b) to deprive any trustee of any exemption or right to be
indemnified in respect of anything done or omitted to
be done by the trustee while any such provision is in
force.

Subdivision 11

Restrictions on Allotment and Commencement of Business

Prohibition of allotment unless minimum subscription
received

186. (1) No allotment shall be made of any shares of a company
offered to the public or offered for subscription or purchase or
where an invitation to subscribe for or purchase shares is made
under a prospectus that is registered under the Capital Markets
and Services Act 2007 unless—

 (a) the minimum subscription has been subscribed; and

 (b) the amount payable on application for the shares so
subscribed has been received by the company,

but if a cheque for the sum payable has been received by the
company, the sum shall be deemed not to have been received
by the company until the cheque is paid by the bank on which
the cheque is drawn.

 (2) The minimum subscription shall be—

 (a) calculated on the offer price of each share; and

 (b) reckoned exclusively of any amount payable otherwise
than in cash.

 (3) The amount payable on application on each share offered to
the public or offered under a prospectus that is registered under
the Capital Markets and Services Act 2007 shall not be less than
five per centum of the offer price of the share.

Laws of Malaysia200 Act 777

 (4) If the conditions referred to in paragraphs (1)(a) and (b)
have not been satisfied on the expiration of four months after
the first issue of the prospectus—

 (a) all moneys received from applicants for shares shall
be forthwith refunded to the applicants without interest
or returns; and

 (b) if such money is not refunded within five months after
the issue of the prospectus, the directors of the company
shall be jointly and severally liable to refund that money
with interest or returns at the rate of ten per centum per
annum from the expiration of the period of five months,
but a director shall not be liable if the director proves
that the default in the repayment of the money was not
due to any misconduct or negligence on his part.

 (5) Notwithstanding that the company is in the course of being
wound up, an allotment made by a company to an applicant
in contravention of this section or subsection 188(1) shall be
voidable at the option of the applicant which may be exercised
by a written notice served on the company not later than thirty
days from the date of the allotment.

 (6) Any condition requiring or binding any applicant for shares
to waive compliance with any requirements of this section shall
be void.

 (7) If an allotment of—

 (a) shares or debentures is made on the basis of a prospectus
after the expiration of six months or such longer period
as the Registrar may allow from the date of issue of the
prospectus; or

 (b) securities is made on the basis of a prospectus that
is registered under the Capital Markets and Services
Act 2007 later than the period after the date of issue of
the prospectus as the Securities Commission may specify,

the allotment shall not by reason only of that fact be voidable
or void.

Companies 201

 (8) A company, officer or promoter of that company or a
proposed company shall not authorize or permit an allotment of—

 (a) any shares or debentures to the public on the basis of a
prospectus after the expiration of six months or such
longer period as the Registrar may allow from the date
of issue of the prospectus; or

 (b) any securities as defined in the Capital Markets and
Services Act 2007 on the basis of a prospectus that
is registered under that Act later than the period after
the date of issue of the prospectus as the Securities
Commission may specify.

 (9) The company and every officer or any promoter of a
company or a proposed company who contravene subsection (8)
commit an offence and shall, on conviction, be liable—

 (a) in the case of the company, to a fine not exceeding five
million ringgit; and

 (b) in the case of the officer or promoter of a company or
a proposed company, to imprisonment for a term not
exceeding five years or to a fine not exceeding five
million ringgit or to both.

 (10) Every director of a company who knowingly contravenes
or permits or authorizes the contravention of this section or
subsection 190(1) shall, on conviction, be liable to imprisonment
for a term not exceeding five years or to a fine not exceeding
one million ringgit or to both and, in addition, shall be liable
to compensate the company and the allottee respectively for any
loss, damages or costs which the company or the allottee has
sustained or incurred but no proceedings for the recovery of any
such compensation shall be commenced after the expiration of
two years from the date of the allotment.

Application for moneys to be held in trust until allotment

187. (1) All applications and other moneys paid prior to the
allotment by any applicant on account of shares or debentures
offered to the public or any securities for which a prospectus is
required under the Capital Markets and Services Act 2007 shall

Laws of Malaysia202 Act 777

be held upon trust for the applicant by the company or in the case
of a proposed company by the persons named in the prospectus
as proposed directors and by the promoters.

 (2) There shall be no obligation or duty imposed on any bank
or third person with whom any such moneys have been deposited
to inquire into or to see the proper application of the moneys so
long as the bank or person acts in good faith.

 (3) A company and every officer who, or a proposed company
and every person named in the prospectus as a proposed director
and every promoter who knowingly and wilfully authorizes or
permits the default commit an offence and shall, on conviction,
be liable—

 (a) in the case of the company or a proposed company,
to a fine not exceeding five million ringgit; and

 (b) in the case of the person named in the prospectus as a
proposed director or the promoter, to imprisonment for a
term not exceeding five years or to a fine not exceeding
one million ringgit or to both.

Restriction on allotment in certain cases

188. (1) A public company having a share capital which does
not issue a prospectus on or with reference to its formation shall
not allot any of its shares or debentures unless a statement in
lieu of prospectus which complies with the requirements of this
Act has been lodged with the Registrar at least three days before
the first allotment of either shares or debentures.

 (2) If there is a contravention of this section, the company
and every officer commit an offence and shall, on conviction,
be liable—

 (a) in the case of the company, to a fine not exceeding five
million ringgit; and

 (b) in the case of an officer, to imprisonment for a term not
exceeding five years or to a fine not exceeding one
million ringgit or to both.

Companies 203

Requirements as to statements in lieu of prospectus

189. (1) A statement in lieu of prospectus lodged by or on
behalf of a company shall—

 (a) be signed by every person who is named in the statement
as a director or a proposed director of the company or
by his agent authorized in writing;

 (b) contain matters specified in Part I of the Second
Schedule and set out the reports specified in Part II
of that Schedule in the form and manner as determined
by the Registrar; and

 (c) where the persons making any report specified in Part II
of the Second Schedule have made the report or have,
without giving the reasons, indicated in the report any
adjustments as mentioned in paragraph 3 of Part III
of that Schedule, shall have endorsed in the report or
attached a written statement signed by those persons
setting out the adjustments and giving the reasons for
the adjustments.

 (2) The Registrar shall not accept any statement in lieu of
prospectus for registration unless the statement appears to him
complies with this Act.

 (3) If there is any untrue statement or wilful non-disclosure in
any statement in lieu of prospectus, any director who signed the
statement commits an offence and shall, on conviction, be liable
to imprisonment for a term not exceeding five years or to a fine
not exceeding one million ringgit or to both, unless the director
proves either the untrue statement or wilful non-disclosure was
immaterial or the director had reasonable ground to believe that
the untrue statement was true or the wilful non-disclosure was
immaterial at the time of the delivery of the statement in lieu of
prospectus for registration.

Restrictions on commencement of business in certain
circumstances

190. (1) Where a public company having a share capital has issued
a prospectus inviting the public to subscribe for its shares or has
issued a prospectus under the Capital Markets and Services Act 2007

Laws of Malaysia204 Act 777

in relation to its shares, the public company shall be entitled
to commence any business or exercise any borrowing powers—

 (a) if no money is or may become liable to be repaid to
applicants for any shares or debentures offered for
public subscription by reason of any failure to apply
for or obtain permission for listing for quotation on any
stock exchange;

 (b) if—

 (i) the shares held subject to the payment of the
whole amount in cash have been allotted to an
amount not less in the whole than the minimum
subscription; and

 (ii) every director has paid to the company on each
of the shares taken or contracted to be taken
by the director, and for which the director is
liable to pay in cash, a proportion equal to the
proportion payable on application and allotment
on the shares offered for public subscription.

 (2) Where a public company having a share capital has not
issued a prospectus inviting the public to subscribe for its
shares or has not issued a prospectus under the Capital Markets
and Services Act 2007, the public company shall be entitled to
commence any business or exercise any borrowing power if—

 (a) a statement in lieu of prospectus which complies with
this Act has been lodged with the Registrar; and

 (b) every director of the company has paid to the company
on each of the shares taken or contracted to be taken by
the director and for which the director is liable to pay
in cash, a proportion equal to the proportion payable
on application and allotment on the shares payable in
cash.

 (3) A company referred to in subsection (1) or (2) shall lodge
with the Registrar a statutory declaration by the secretary or
one of the directors of the company verifying that paragraphs
(1)(a) and (b) or 2(a) and (b), as the case may be, have been

Companies 205

complied with, and the company shall become entitled to commence
business or exercise any borrowing powers from and after the
lodgement of the statutory declaration.

 (4) The statutory declaration referred to in subsection (3)
shall be supported with a statement containing the following
particulars:

 (a) an abstract of receipts and payments relating to the
shares and debentures issued under the prospectus or
statement in lieu of prospectus and particulars concerning
the balance remaining in hand, and an account or estimate
of the preliminary expenses;

 (b) the particulars of any contract which is entered into by
the company before the commencement of business;
and

 (c) such other information as the Registrar may require.

 (5) Any contract made by a company before the date on which
it is entitled to commence business shall be provisional only and
shall only be binding on the company to commence business.

 (6) Nothing in this section shall prevent the receipt by the
company of any money payable on application for the debentures
if shares and debentures are offered simultaneously by a company
for subscription.

 (7) If any company commences business or exercises
borrowing powers in contravention of this section, every person
who is responsible for the contravention commits an offence and
shall, on conviction, be liable to a fine not exceeding twenty
thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

 (8) The company and every officer who contravene subsection (3)
commit an offence and shall, on conviction, be liable to a
fine not exceeding ten thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding of five hundred
ringgit for each day during which the offence continues after
conviction.

Laws of Malaysia206 Act 777

Restriction on varying contracts referred to in prospectus,
etc.

191. A company shall not vary the terms of a contract referred
to in the prospectus or statement in lieu of prospectus before
the lodgement of statutory declaration under subsection 190(3)
unless the variation is made subject to the approval of the general
meeting.

Division 2

Members, Directors and Officers of Companies

Subdivision 1

Members

Liability of members

192. (1) A member shall not be liable for an obligation of a
company by reason only of being a member of the company.

 (2) The liability of a member of a company is limited to—

 (a) in the case of a company limited by shares, any amount
unpaid on a share held by the member;

 (b) in the case of a company limited by guarantee, any
amount which the member has undertaken to contribute
to the company in the event of it being wound up;

 (c) any liability expressly provided for in the constitution
of the company; and

 (d) any liability as provided for under this Act.

Liability for calls and forfeiture

193. (1) If a share renders its holder liable to calls or imposes
a liability on its holder, that liability attaches to the shareholder
for the time being, whether or not the liability became enforceable
before the share was registered in the name of that shareholder
and is not attached to a prior shareholder.

Companies 207

 (2) Subject to sections 82 and 83, if all or part of the consideration
payable in respect of the issue of a share remains unsatisfied
and the person to whom the share was issued no longer holds
that share, the liability in respect of the unsatisfied consideration
remains with the person to whom the share was issued or any
other person who assumed that liability at the time of issue and
does not attach to the subsequent shareholders.

Shareholders not bound to acquire additional shares by
alteration to constitution

194. Unless a shareholder agrees in writing, the shareholder
is not bound by an alteration of the constitution of a company
that—

 (a) requires the shareholder to acquire or hold additional
shares in the company more than the number held on
the date the alteration is made; or

 (b) increases the liability of the shareholder to the
company.

Members’ rights for management review

195. (1) The chairperson of a meeting of members of a company
shall allow a reasonable opportunity for members at the meeting
to question, discuss, comment or make recommendation on the
management of the company.

 (2) A meeting of members may pass a resolution under this
section which makes recommendations to the Board on matters
affecting the management of the company.

 (3) Any recommendation made under subsection (2) shall not
be binding on the Board, unless the recommendation is in the
best interest of the company, provided that—

 (a) the rights to make recommendations is provided for in
the constitution; or

 (b) passed as a special resolution.

Laws of Malaysia208 Act 777

Subdivision 2

Directors

Directors of company

196. (1) A company shall have a minimum number of directors
as follows:

 (a) in the case of a private company, one director; or

 (b) in the case of a public company, two directors.

 (2) A director shall be a natural person who is at least
eighteen years of age.

 (3) A director of a company shall not resign or vacate his
office if by his resignation or vacation from office, the number of
directors of the company is reduced below the minimum number
required under subsection (1) and any purported resignation or
vacation of office in contravention of this section shall be deemed
to be ineffective unless a person is appointed in his place.

 (4) For the purposes of this section, the minimum number of
directors—

 (a) shall ordinarily reside in Malaysia by having a
principal place of residence in Malaysia; and

 (b) shall not include an alternate or substitute director.

Persons connected with directors

197. (1) A person shall be deemed to be connected with a
director if the person is—

 (a) a member of the director’s family;

 (b) a body corporate which is associated with that director;

 (c) a trustee of a trust, other than a trustee for an employee
share scheme or pension scheme, under which that
director or a member of the director’s family is a
beneficiary; or

Companies 209

 (d) a partner of that director or a partner of a person
connected with that director.

 (2) For the purposes of this section—

 (a) “a member of the director’s family” means the director’s
spouse, parent, child, including adopted child and
stepchild, brother, sister and the spouse of the director’s
child, brother or sister;

 (b) a body corporate is associated with a director if—

 (i) the body corporate is accustomed or is under
an obligation, whether formal or informal, or
the majority of directors of the body corporate
is accustomed, to act in accordance with the
directions, instructions or wishes of that director;

 (ii) that director has a controlling interest in the body
corporate; or

 (iii) that director, or persons connected with that
director, or that director and persons connected
with him, are entitled to exercise, or control the
exercise of, not less than twenty per centum of
the votes attached to voting shares in the body
corporate.

Persons disqualified from being a director

198. (1) A person shall not hold office as a director of a company
or whether directly or indirectly be concerned with or takes part
in the management of a company, if the person—

 (a) is an undischarged bankrupt;

 (b) has been convicted of an offence relating to the promotion,
formation or management of a corporation;

 (c) has been convicted of an offence involving bribery,
fraud or dishonesty;

Laws of Malaysia210 Act 777

 (d) has been convicted of an offence under sections 213,
217, 218, 228 and 539; or

 (e) has been disqualified by the Court under section 199.

 (2) The circumstances referred to in paragraphs (1)(a), (b),
(c) and (d) shall be applicable to circumstances in or outside
Malaysia.

 (3) Notwithstanding subsection (1), a person who has been
disqualified under paragraph (1)(a) may be appointed or hold
office as a director with the leave of—

 (a) the Official Receiver; or

 (b) the Court provided that a notice of intention to apply for
leave has been served on the Official Receiver and the
Official Receiver is heard on the application.

 (4) Notwithstanding subsection (1), a person who has been
disqualified under paragraph (1)(b), (c), (d) or (e) may be
re-appointed or hold office as a director with the leave of the
Court.

 (5) A person intending to apply for a leave of the Court under
paragraph (3)(b) or subsection (4) shall—

 (a) give the Registrar a notice of not less than fourteen
days of the person’s intention to do so; and

 (b) make the Registrar a party to the proceedings under
subsection (3).

 (6) For the purposes of subsection (5), any person referred to
in paragraph (1)(b), (c), (d) or (e) shall not be required to obtain
a leave from Court after the expiry of five years calculated from
the date he is convicted or if he is sentenced to imprisonment,
from the date of his release from prison.

 (7) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding five years or to a fine not exceeding one
million ringgit or to both.

Companies 211

Power of Court to disqualify persons from acting as director
or promoter

199. (1) The Court may, on an application by the Registrar,
make an order to disqualify any person from acting or holding
office as a director or promoter of a company, or be concerned
with or taking part in the management of a company whether
directly or indirectly, if—

 (a) within the last five years, the person has been a director
of two or more companies which went into liquidation
resulting from the company being insolvent due to his
conduct as a director which contributed wholly or partly
to the liquidation;

 (b) due to his contravention of the duties of a director; or

 (c) due to his habitual contravention of this Act.

 (2) An application arising from the circumstances referred
to in paragraph (1)(a) may be made by the Official Receiver and
the Registrar shall be made a party to the proceedings.

 (3) Before making an order under subsection (1), the Court
may require any person—

 (a) to furnish the Court with such information with respect
to the company’s affairs; and

 (b) to produce and permit inspection of such books or
documents relevant to the company.

 (4) After considering the application and the additional
information and documents received under subsection (3), if any,
the Court may make an order to disqualify the person from acting
or holding office as a director or promoter of a company, or be
concerned with or taking part in the management of a company
whether directly or indirectly for such period not exceeding five
years commencing from the date of the order.

 (5) The Registrar or the Official Receiver shall give notice of not
less than fourteen days to the person referred to in subsection (1)
notifying his intention to apply for an order under this section.

Laws of Malaysia212 Act 777

Power of Registrar to remove name of disqualified director

200. Notwithstanding any provision in this Act or the constitution
of a company, the Registrar shall have the power to remove the
name of a director who has been disqualified under section 198
or 199 from the register kept by the Registrar for that purpose.

Directors’ consent required

201. A person shall not be appointed as a director of a company
unless he has consented in writing to be a director and make a
declaration that he is not disqualified from being appointed or
holding office as a director of a company under this Act.

Named directors and subsequent directors

202. (1) A person named as a director in an application for
incorporation of a company shall hold office as a director from
the date of incorporation until that person ceases to hold office
as a director in accordance with this Act.

 (2) All subsequent directors of a company may be appointed
by ordinary resolution.

 (3) Subject to the constitution, the Board may, at any time,
appoint a director in addition to existing director and the director
so appointed shall hold office—

 (a) in the case of a public company, until the next annual
general meeting; or

 (b) in the case of a private company, in accordance with the
terms of appointment.

Appointment of directors of public company to be voted on
individually

203. (1) At a general meeting of a public company, a motion
for the appointment of two or more persons as directors by a
single resolution shall not be made unless a resolution that the
motion shall be so made has first been agreed to by the meeting
without any vote being given against it.

Companies 213

 (2) A resolution passed in accordance with a motion made in
contravention of this section shall be void, whether or not the
resolution being moved was objected to at the time.

 (3) The provision for the automatic reappointment of retiring
directors referred to in subsection 205(6) shall not apply where
a resolution passed in accordance with a motion was made in
contravention of this section.

 (4) A motion for approving a person’s appointment or for
nominating a person for appointment shall be treated as a motion
for his appointment.

 (5) A resolution passed under this section shall not be construed
as amending the constitution.

Validity of acts of directors and officers

204. The acts of a director or manager or secretary shall be
valid notwithstanding any defect that is discovered after his
appointment or in his qualification.

Retirement of directors

205. (1) The provision under this section shall apply with regards
to the retirement of directors unless there is specific provision in
the company’s constitution or the term of appointment regarding
retirement of directors.

 (2) Notwithstanding subsection (1), a private company may
pass a written resolution in accordance with section 297 to
determine the retirement of a director.

 (3) The directors shall retire as follows:

 (a) at the first annual general meeting of a public company,
all directors shall retire from office at the conclusion
of the meeting; and

Laws of Malaysia214 Act 777

 (b) at the annual general meeting in every subsequent year,
one-third of the directors for the time being, or, if their
number is not three or a multiple of three, then the
number nearest to one-third, shall retire from office at
the conclusion of the meeting.

 (4) The directors to retire in every year shall be the directors
who have been longest in office since the directors’ last election,
but as between persons who became directors on the same day,
the directors to retire shall be determined by lot, unless they
otherwise agreed among themselves.

 (5) A retiring director shall be eligible for re-election as if he
is not disqualified under this Act.

 (6) Unless otherwise provided in the constitution, the
company may appoint any person who is not disqualified under
this Act to fill in the vacancy at the annual general meeting at
which a director so retires, and if no appointment was made to
fill the vacancy, the retiring director shall, if he offers himself
for re-election, be deemed to have been re-elected, unless—

 (a) at that meeting the company expressly resolved not to
fill the vacated office; or

 (b) a resolution for the re-election of the director is put to
the meeting and lost.

Removal of directors

206. (1) A director may be removed before the expiration of
the director’s period of office as follows:

 (a) subject to the constitution, in the case of a private company,
by ordinary resolution; or

 (b) in the case of a public company, in accordance with this
section.

 (2) Notwithstanding anything in the constitution or any
agreement between a public company and a director, the company
may by ordinary resolution at a meeting remove the director
before the expiration of the director’s tenure of office.

Companies 215

 (3) Special notice is required of a resolution to remove a
director under this section or to appoint another person instead
of the director at the same meeting.

 (4) Notwithstanding paragraph (1)(b), if a director of a public
company was appointed to represent the interests of any particular
class of shareholders or debenture holders, the resolution to remove
the director shall not take effect until the director’s successor has
been appointed.

 (5) A person appointed as director in place of a person removed
under this section shall be treated, for the purpose of determining
the time at which he or any other director is to retire, as if he
had become a director on the day on which the person in whose
place he is appointed was last appointed a director.

Right to be heard for directors of public company against
removal

207. (1) On receipt of special notice for a resolution to remove
a director under subsection 206(3), the company shall forthwith
send to the director a copy of the special notice.

 (2) The director shall be given the right to make oral
representation or written representation not exceeding a
reasonable length on the resolution to remove him.

 (3) Where the director makes written representation and
requests the written representation be notified to the members,
the company shall, unless the representation is received too late
for the company to do so—

 (a) state the fact of the representation having been made
in the notice of the resolution given to members of the
company; and

 (b) send a copy of the representation to every member of the
company to whom the notice of the meeting is sent.

 (4) If a copy of the representations is not sent as required under
subsection (3) due to the representations received too late by the
company or due to the default of the company, the director may,
without prejudice to his right to be heard orally, require that the
representations shall be read out at the meeting.

Laws of Malaysia216 Act 777

 (5) Copies of the representations need not be sent out and the
representations need not be read out at the meeting if, on the
application either of the company or of any other person who
claims to be aggrieved, the Court is satisfied that the rights
conferred by this section are being abused.

 (6) The Court may order the company’s costs on an application
under subsection (5) to be paid in whole or in part by the director,
notwithstanding that he is not a party to the application.

 (7) The constitution of a private company may provide the
rights accorded under this section to its directors.

Vacation of office of director

208. (1) The office of a director of a company shall be vacated
if the person holding that office—

 (a) resigns in accordance with subsection (2);

 (b) has retired in accordance with this Act or the constitution
of the company but is not re-elected;

 (c) is removed from office in accordance with this Act or
the constitution of the company;

 (d) becomes disqualified from being a director under
section 198 or 199;

 (e) becomes of unsound mind or a person whose person or
estate is liable to be dealt with in any way under the
Mental Health Act 2001 [Act 615];

 (f) dies; or

 (g) otherwise vacates his office in accordance with the
constitution of the company.

 (2) Subject to subsection 196(3) and section 209, a director
may resign his office by giving a written notice to the company
at its registered office.

Companies 217

 (3) A notice under subsection (2) shall be effective when it
is delivered at the address of the registered office or at a later
date specified in the notice.

 (4) If a vacancy is created resulting from circumstances referred
to in subsection (1), the Board shall have the power, at any time,
to appoint any person to be a director to fill such casual vacancy
and the director so appointed shall hold office—

 (a) in the case of a public company, until the next annual
general meeting; or

 (b) in the case of a private company, in accordance with the
terms of appointment.

Resignation, vacation or death of sole director or last remaining
director

209. (1) Subject to subsection 196(3), where a company has
only one director or the last remaining director, that director
shall not resign office until that director has called a meeting of
members to receive the notice of the resignation and to appoint
one or more new directors.

 (2) Subsection (1) is also applicable to a company whose sole
director is also the sole shareholder.

 (3) For the purpose of appointing a new director, in the event
of the office of a sole director or the last remaining director of
the company being vacated due to the circumstances referred to
in paragraph 208(1)(d), (e), (f) or (g), the secretary shall, as soon
as practicable, call a meeting of the next of kin, other personal
representatives or a meeting of members, as the case may be.

 (4) The secretary shall be entitled to be indemnified by the
company in relation to any reasonable costs and expenses of the
meeting convened under subsection (3).

 (5) Where the next of kin, personal representatives or members
fail to appoint a director within six months of the death of the
last director, the Registrar may direct the company to be struck
off in accordance with Subdivision 1 of Division 4 of Part IV.

Laws of Malaysia218 Act 777

 (6) Where a sole director who is also the sole shareholder of
a company is unable to manage the affairs of the company by
reason of his mental incapacity, the committee appointed under
the Mental Health Act 2001 to manage his estate may appoint a
person as a director.

Subdivision 3

Directors’ Duties and Responsibilities

Interpretation

210. F o r  t h e  p u r p o s e s  o f  t h i s  S u b d i v i s i o n ,  i n
sections 213, 214, 215, 216, 217, 218, 223 and 228, in addition to
the definition of “director” in section 2, “director” includes chief
executive officer, chief financial officer, chief operating officer
or any other person primarily responsible for the management
of the company.

Functions of Board

211. (1) The business and affairs of a company shall be managed
by, or under the direction of the Board.

 (2) The Board has all the powers necessary for managing and
for directing and supervising the management of the business and
affairs of the company subject to any modification, exception
or limitation contained in this Act or in the constitution of the
company.

Proceedings of Board

212. Subject to the constitution, the provisions set out in the
Third Schedule shall govern the proceedings of the Board.

Duties and responsibilities of directors

213. (1) A director of a company shall at all times exercise his
powers in accordance with this Act, for a proper purpose and in
good faith in the best interest of the company.

Companies 219

 (2) A director of a company shall exercise reasonable care,
skill and diligence with—

 (a) the knowledge, skill and experience which may
reasonably be expected of a director having the same
responsibilities; and

 (b) any additional knowledge, skill and experience which
the director in fact has.

 (3) A director who contravenes this section commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding five years or to a fine not exceeding three
million ringgit or to both.

Business judgment rule

214. (1) A director who makes a business judgment is deemed
to meet the requirements of the duty under subsection 213(2)
and the equivalent duties under the common law and in equity
if the director—

 (a) makes the business judgment for a proper purpose and
in good faith;

 (b) does not have a material personal interest in the subject
matter of the business judgment;

 (c) is informed about the subject matter of the business
judgment to the extent the director reasonably believes
to be appropriate under the circumstances; and

 (d) reasonably believes that the business judgment is in the
best interest of the company.

 (2) For the purposes of this section, “business judgment”
means any decision on whether or not to take action in respect
of a matter relevant to the business of the company.

Laws of Malaysia220 Act 777

Reliance on information provided by others

215. (1) A director in exercising his duties as a director may rely
on information, professional or expert advice, opinions, reports
or statements including financial statements and other financial
data, prepared, presented or made by—

 (a) any officer of the company whom the director believes
on reasonable grounds to be reliable and competent on
the matters concerned;

 (b) as to matters involving skills or expertise, any other
person retained by the company in relation to matters
that the director believes on reasonable grounds to be
within the person’s professional or expert competence;

 (c) another director in relation to matters within the director’s
authority; or

 (d) any committee to the board of directors on which the
director did not serve in relation to matters within the
committee’s authority.

 (2) The director’s reliance made under subsection (1) is deemed
to be made on reasonable grounds if it was made—

 (a) in good faith; and

 (b) after making an independent assessment of the information
or advice, opinions, reports or statements, including
financial statements and other financial data, having
regard to the director’s knowledge of the company and
the complexity of the structure and operation of the
company.

Responsibility for actions of delegatee

216. (1) Except as is otherwise provided by this Act, the
constitution or any resolution of the Board or members of the
company, the directors may delegate any power of the Board to
any committee of the Board, director, officer, employee, expert
or any other person.

Companies 221

 (2) Where the directors have delegated any power, the
directors are responsible for the exercise of the power by the
delegatee as if the power had been exercised by the directors
themselves.

 (3) The directors are not responsible under subsection (2)
if—

 (a) the directors believed on reasonable grounds at all times
that the delegatee would exercise the power in conformity
with the duties imposed on the directors under this Act
and the constitution of the company, if any; and

 (b) the directors believed on reasonable grounds, in good faith
and after making a proper inquiry, if the circumstances
indicated the need for the inquiry, that the delegatee
was reliable and competent in relation to the power
delegated.

Responsibility of a nominee director

217. (1) A director who was appointed by virtue of his position
as an employee of a company, or who was appointed by or as a
representative of a member, employer or debenture holder, shall
act in the best interest of the company and in the event of any
conflict between his duty to act in the best interest of the company
and his duty to his nominator, he shall not subordinate his duty
to act in the best interest of the company to his nominator.

 (2) A director who contravenes this section commits an offence
and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or a fine not exceeding three million
ringgit or to both.

Prohibition against improper use of property, position, etc.

218. (1) A director or officer of a company shall not, without
the consent or ratification of a general meeting—

 (a) use the property of the company;

 (b) use any information acquired by virtue of his position as
a director or officer of the company;

Laws of Malaysia222 Act 777

 (c) use his position as such director or officer;

 (d) use any opportunity of the company which he became
aware of, in the performance of his functions as the
director or officer of the company; or

 (e) engage in business which is in competition with the
company,

to gain directly or indirectly, a benefit for himself or any other
person, or cause detriment to the company.

 (2) Any person who contravenes this section commits an offence
and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or a fine not exceeding three million
ringgit or to both.

General duty to make disclosure

219. (1) A director of a company shall give notice in writing
to the company—

 (a) of the particulars relating to the shares, debentures,
participatory interests, rights, options and contracts
as are necessary for the purposes of compliance with
section 59 by the company;

 (b) of particulars of any change in respect of the particulars
referred to in paragraph (a) of which notice has been
given to the company including the consideration, if
any, received as a result of the event giving rise to the
change; and

 (c) of such events and matters affecting or relating to
himself as are necessary for the purposes of compliance
with the requirements of this Act by the company.

 (2) A person required to give notice under subsection (1) shall
give the notice, within fourteen days—

 (a) in the case of a notice under paragraph (1)(a)—

 (i) from the date on which the director became a
director; or

Companies 223

 (ii) from the date on which the director acquired an
interest in the shares, debentures, participatory
interests, rights, options or contracts;

 (b) in the case of a notice under paragraph (1)(b), from the
occurrence of the event giving rise to the change; and

 (c) in the case of a notice under paragraph (1)(c), from
the date of such events and matters referred to in that
paragraph.

 (3) For the purposes of paragraphs (2)(a) and (b), in the
case of a company whose shares are quoted on a stock exchange,
the notice period shall be five days.

 (4) A company shall, send a copy of the notice to each of the
other directors of the company within seven days from receiving
a notice under subsection (1).

 (5) For the purposes of this section—

 (a) a reference to a participatory interest means a reference
to an interest within the meaning of the Interest Schemes
Act 2016; and

 (b) in determining whether a person has an interest in a
debenture or participatory interest, section 8, except for
subsections 8(1) and (3), have effect and in applying
those provisions, a reference to a share shall be construed
as a reference to a debenture or participatory interest.

 (6) A director who contravenes subsection (1) or (2) commits
an offence and shall, on conviction, be liable to—

 (a) in the case of subsection (1), imprisonment for a term
not exceeding five years or a fine not exceeding three
million ringgit or both; and

 (b) in the case of subsection (2), a fine not exceeding twenty
five thousand ringgit and in the case of a continuing
offence, to a further fine of one thousand ringgit for
each day during which the offence continues.

Laws of Malaysia224 Act 777

 (7) A company which contravenes subsection (4) commits
an offence and shall, on conviction, be liable to a fine not
exceeding twenty five thousand ringgit and in the case of a
continuing offence, to a further fine of one thousand ringgit for
each day during which the offence continues.

Effect of other rules of law on duties of directors

220. Sections 214 to 219 shall be in addition to and not in
derogation of any other written law relating to the duty or liability
of directors or officers of a company.

Disclosure of interest in contracts, proposed contracts, property,
offices, etc.

221. (1) Subject to this section, every director of a company
who is in any way, whether directly or indirectly, interested in
a contract or proposed contract with the company shall, as soon
as practicable after the relevant facts have come to the director’s
knowledge, declare the nature of his interest at a meeting of the
board of directors.

 (2) The requirements of subsection (1) shall not apply in the
case where the interest of the director being a member or creditor
of a corporation interested in a contract or proposed contract with
the first mentioned company if the interest of the director may
be regarded as not being a material interest.

 (3) A director of a company shall not be deemed to be interested
or to have been at any time interested in any contract or proposed
contract by reason only—

 (a) in a case where the contract or proposed contract relates to
any loan to the company that the director has guaranteed
or joined in guaranteeing the repayment of the loan or
any part of the loan; or

 (b) in the case where the contract or proposed contract has
been or will be made with or for the benefit of or on
behalf of a corporation which by virtue of section 7
is deemed to be related to the company that he is the
director of that corporation,

Companies 225

and this subsection shall have effect not only for the purposes
of this Act but also for the purposes of other written laws, but
this subsection shall not affect the operation of any provision in
the constitution of the company.

 (4) For the purposes of subsection (1), a general notice given
to the board of directors by a director to the effect that the
director is an officer or member of a specified corporation or a
member of a specified firm and is to be regarded as interested
in any contract which may, after the date of the notice, be made
with that corporation or firm shall be deemed to be a sufficient
declaration of interest in relation to any contract made if the notice
specifies the nature and extent of the director’s interest in the
specified corporation or firm and the interest is not different in
nature or greater in extent than the nature and extent so specified
in the general notice at the time any contract is so made.

 (5) The notice referred to in subsection (4) shall be of no
effect unless the notice is given at a meeting of the directors or
the director takes reasonable steps to ensure that the notice is
brought up and read at the next meeting of the directors after it
is given.

 (6) Every director of a company who holds any office or
possesses any property where duties or interests may be created
in conflict with his duties or interests as director shall declare
the fact and the nature, character and extent of the conflict at a
meeting of the directors of the company.

 (7) The declaration shall be made at the first meeting of the
directors held—

 (a) after he becomes a director; or

 (b) if already a director, after he commenced to hold the
office or to possess the property,

as the case requires.

 (8) The secretary of the company shall record every declaration
made under this section in the minutes of the meeting at which
the declaration was made.

Laws of Malaysia226 Act 777

 (9) For the purposes of this section, an interest in the shares
or debenture of a company—

 (a) of the spouse of a director who is not a director of the
company; or

 (b) of a child, including adopted child or stepchild, of a
director of a company who is not a director of the
company,

shall be treated as an interest in the contract and proposed
contract.

 (10)  A contract entered into in contravention of this section
shall be voidable at the instance of the company except if it is in
favour of any person dealing with the company for any valuable
consideration and without any actual notice of the contravention.

 (11) Except as provided in subsection (3), this section shall
be in addition to and not in derogation of the operation of any
provision in the constitution restricting a director from having any
interest in contracts with the company or from holding offices
or possessing properties involving duties or interests in conflict
with his duties or interests as a director.

 (12) Every officer and any other person or individual who
contravene this section commit an offence and shall, on conviction,
be liable to imprisonment for a term not exceeding five years or
to a fine not exceeding three million ringgit or to both.

Interested director not to participate or vote

222. (1) Subject to section 221, a director of a company who is
in any way, whether directly or indirectly, interested in a contract
entered into or proposed to be entered into by the company, unless
the interest is one that need not be disclosed under section 221,
shall be counted only to make the quorum at the meeting of the
Board but shall not participate in any discussion while the contract
or proposed contract is being considered during the meeting and
shall not vote on the contract or proposed contract.

 (2) Subsection (1) shall not apply to—

 (a) a private company unless it is a subsidiary to a public
company;

Companies 227

 (b) a private company which is a wholly-owned subsidiary of
a public company, in respect of any contract or proposed
contract to be entered into by the private company with
the holding company or with another wholly-owned
subsidiary of that same holding company;

 (c) any contract or proposed contract of indemnity against
any loss which any director may suffer by reason of
becoming or being a surety for a company; and

 (d) any contract or proposed contract entered into or to be
entered into by a public company or a private company
which is a subsidiary of a public company, with another
company in which the interest of the director consists
solely of—

 (i) in him being a director of the company and the
shareholder not more than the number or value
as is required to qualify him for the appointment
as a director; or

 (ii) in him having an interest in not more than five
per centum of its paid up capital.

 (3) A contract entered in contravention of subsection (1) shall
be voidable at the instance of the company except if it is in
favour of any person dealing with the company for a valuable
consideration and without any actual notice of the contravention.

 (4) A director who contravenes this section commits an offence
and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding three million
ringgit or to both.

Approval of company required for disposal by directors of
company’s undertaking or property

223. (1) Notwithstanding anything in the constitution, the
directors shall not enter or carry into effect any arrangement or
transaction for—

 (a) the acquisition of an undertaking or property of a
substantial value; or

Laws of Malaysia228 Act 777

 (b) the disposal of a substantial portion of the company’s
undertaking or property unless—

 (i) the entering into the arrangement or transaction
is made subject to the approval of the company
by way of a resolution; or

 (ii) the carrying into effect of the arrangement or
transaction has been approved by the company
by way of a resolution.

 (2) For the purposes of subsection (1)—

 (a) the term “undertaking or property” includes the whole
or substantially the whole of the rights, including
developmental rights, benefits or control in the undertaking
or property;

 (b) in the case of a company where all or any of its shares
are quoted on a stock exchange, or its subsidiary, the
term “substantial value” or “substantial portion” shall mean
the same value prescribed in the listing requirements of
the stock exchange where approval of the shareholders
at a general meeting is required;

 (c) in the case of an unlisted subsidiary whose holding
company is a listed company, the directors of such
holding company shall procure the shareholders’ approval
of the holding company in a general meeting for the
arrangement or transaction by the unlisted subsidiary
in addition to the shareholders’ approval of the unlisted
subsidiary in a general meeting procured by the directors
of the unlisted subsidiary.

 (3) In the case of any company other than a company to
which subsection (2) applies, an undertaking or property shall
be considered to be of a substantial value and a portion of the
company’s undertaking or property shall be considered to be a
substantial portion if—

 (a) its value exceeds twenty-five per centum of the total
assets of the company;

Companies 229

 (b) the net profits, after deducting all charges except
taxation and excluding extraordinary items, attributed to
it amounts to more than twenty-five per centum of the
total net profit of the company; or

 (c) its value exceeds twenty-five per centum of the issued
share capital of the company,

whichever is the highest.

 (4) The Court may, on the application of any member of the
company, restrain the directors from entering into or carrying into
effect an arrangement or transaction which is in contravention of
subsection (1).

 (5) An arrangement or transaction which is in contravention
of subsection (1) shall be void except in favour of any person
dealing with the company for valuable consideration and without
actual notice of the contravention.

 (6) This section shall not apply to proposals for disposing of
the whole or substantially the whole of the company’s undertaking
or property made by a receiver or receiver and manager of any
part of the undertaking or property of the company appointed
under a power contained in any instrument or by a Court or a
liquidator of a company appointed in a voluntary winding up.

 (7) Any director who contravenes this section commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding five years or to a fine not exceeding three
million ringgit or to both.

Loans to director

224. (1) A company shall not—

 (a) make a loan to a director of the company or of a company
which by virtue of section 7 is deemed to be related to
that company; or

 (b) enter into any guarantee or provide any security in
connection with a loan made to such a director by any
other person.

Laws of Malaysia230 Act 777

 (2) Nothing in this section shall apply—

 (a) to an exempt private company;

 (b) subject to subsection (3), to anything done to provide
such director with funds to meet the expenditure
incurred or to be incurred by him for the purposes of the
company or for the purpose of enabling him properly to
perform his duties as an officer of the company;

 (c) subject to subsection (3), to anything done to provide such
a director who is engaged in the full-time employment
of the company or its holding company, as the case
may be, with funds to meet expenditure incurred or to
be incurred by him in purchasing or otherwise acquiring
a home; or

 (d) to any loan made to such a director who is engaged in
the full-time employment of the company or its holding
company, as the case may be, where the company has
passed a resolution to approve a scheme for the making
of loans to employees of the company and the loan is
in accordance with that scheme.

 (3) Paragraph (1)(a) or (b) shall not authorize the making of
any loan, or the entering into any guarantee or the provision of
any security except with the prior approval of the company on
the resolution in which the purpose of the expenditure and the
amount of the loan or the extent of the guarantee or security, as
the case may be, are disclosed.

 (4) If there is no prior approval given under subsection (2), the
company may authorize the making of any loan or the entering
into any guarantee or the provision of any security—

 (a) in the case of a public company, at or before the next
following annual general meeting; or

 (b) in the case of a private company, within six months from
the making of the loan, the entering into any guarantee,
or the provision of any security.

Companies 231

 (5) If there is no authorization given by company under
subsection (3), the loan shall be repaid or the liability under the
guarantee or security shall be discharged, as the case may be—

 (a) in the case of a public company, after six months from
the conclusion of the annual general meeting referred
to in paragraph 4(a); or

 (b) in the case of a private company, after twelve months from
the making of the loan, the entering into any guarantee,
or the provision of any security.

 (6) Where the approval of the company is not given as required
by any such condition, the directors authorizing the making of
the loan or the entering into the guarantee or the provision of
the security shall be jointly and severally liable to indemnify the
company against any loss incurred.

 (7) Nothing in this section shall operate to prevent the company
from recovering the amount of any loan or amount for which it
becomes liable under any guarantee entered into or in respect of
any security given contrary to this section.

 (8) This section shall not apply to the extent that a financial
institution in the ordinary course of business makes a loan to
a director of a financial institution or of a company which by
virtue of section 7 is deemed to be related to that financial
institution, or enter into any guarantee or provide any security
in connection with a loan made to such a director by any
other person, in accordance with specifications made by the
Central Bank of Malaysia under the laws enforced by it.

 (9) For purposes of this section, “financial institution” refers to a
licensed institution and a development financial institution prescribed
under the Development Financial Institutions Act 2002 [Act 618].

 (10) If a company contravenes this section, any director
who authorizes the making of any loan, the entering into of
any guarantee or the providing of any security contrary to this
section commits an offence and shall, on conviction, be liable
to imprisonment for a term not exceeding five years or to a fine
not exceeding three million ringgit or to both.

Laws of Malaysia232 Act 777

Prohibition of loans to persons connected with directors

225. (1) Subject to the provisions of this section, a company,
other than an exempt private company, shall not—

 (a) make a loan to any person connected with a director of
the company or of its holding company; or

 (b) enter into any guarantee or provide any security in
connection with a loan made to such person by any
other person.

 (2) Subsection (1) shall not apply—

 (a) where the loan is made, or the guarantee or security is
provided in relation to a loan made to a subsidiary or
holding company or a subsidiary of its holding company;

 (b) to a company whose ordinary business includes the
lending of money or the giving of guarantees in connection
with loans made by other persons, or to anything done
by the company in the ordinary course of that business,
if the activities of that company are regulated by any
written law relating to banking, insurance or takaful or
are subject to the supervision of the Central Bank of
Malaysia; or

 (c) to any loan made to a person connected with a director
who is engaged in the full-time employment of a company
or its related corporation, as the case may be—

 (i) for the purpose of meeting the expenditure
incurred or to be incurred by him in purchasing
or otherwise acquiring a home; or

 (ii) in accordance with a scheme for the making of
loans to employees approved by the company.

 (3) Nothing in this section shall operate to prevent the company
or any person from recovering the amount of any loan or the
amount for which it becomes liable under any guarantee entered
into or in respect of any security provided in contravention of
this section.

Companies 233

 (4) If a company contravenes this section, any director who
authorizes the making of any loan or the entering into any
guarantee contrary to this section commits an offence and shall,
on conviction, be liable to imprisonment for a term not exceeding
five years or to a fine not exceeding three million ringgit or to
both.

Prohibition of tax free payments to directors

226. (1) A company shall not pay a director any remuneration,
whether as director or otherwise, free of income tax, or otherwise
calculated by reference to or varying with the amount of his
income tax, or the rate of income tax.

 (2) Any provision contained in the constitution or any
resolution of the Board or members of the company for payment
to a director of remuneration free of income tax or otherwise
calculated by reference to or varying with the amount of his
income tax or the rate of income tax shall have effect as if the
provision or resolution, as the case may be provide for payment
as a gross sum subject to income tax, of the net sum for which
it actually provides.

 (3) The company and every officer and any other person or
individual who contravene this section commit an offence and
shall, on conviction, be liable to imprisonment for a term not
exceeding five years or to a fine not exceeding three million
ringgit or to both.

Payment to directors for loss of office, etc.

227. (1) It shall not be lawful—

 (a) for a company to make to any director any payment by
way of compensation for loss of office as an officer of
that company or of a subsidiary of that company or as
consideration for or in connection with his retirement
from any such office; or

 (b) for any payment to be made to any director of a company
in connection with the transfer of the whole or any part
of the undertaking or property of the company,

Laws of Malaysia234 Act 777

unless particulars with respect to the proposed payment including
the amount, have been disclosed to the members of the company
and the resolution for the proposal has been approved by the
members and when any such payment has been unlawfully made
the amount received by the director shall be deemed to have been
received by him in trust for the company.

 (2) In the case of a public company, the director who
is  interested in  the proposed payment  referred to  in
paragraph (1)(a) or (b) and persons connected with the director
shall abstain from voting on the resolution.

 (3) Where a payment is to be made to a director in connection
with the transfer to any person as a result of an offer made to
shareholders of all or any of the shares in the company, the director
shall take all reasonable steps to secure that particulars with
respect to the proposed payment, including the amount of the
proposed payment, shall be included in or sent with any notice of
the offer made for their shares which is given to any shareholders,
unless those particulars are furnished to the shareholders in
accordance with the relevant law applicable to takeovers.

 (4) If in connection with any such transfer the price to be paid
to a director of the company whose office is to be abolished
or who is to retire from office for any shares in the company
held by the director is in excess of the price which could at the
time have been obtained by other shareholders or any valuable
consideration is given to any such director, the excess or the money
value of the consideration, as the case may be, shall be deemed
to have been a payment made to him by way of compensation
for loss of office or as a consideration for or in connection with
his retirement from office.

 (5) Any reference in this section to payments to any director
of a company by way of compensation for loss of office or as
consideration for or in connection with his retirement from office
shall not include—

 (a) any payment under an agreement entered into before
the commencement of this Act;

 (b) any payment under an agreement, where particulars have
been disclosed to and approved by special resolution of
the company;

Companies 235

 (c) any bona fide payment by way of damages for breach
of contract;

 (d) any bona fide payment by way of pension or lump
sum payment in respect of past services including any
superannuation or retiring allowance, superannuation,
gratuity or similar payment, where the value or amount of
the pension or payment, except so far as it is attributable
to contributions made by the director, does not exceed
the total remuneration of the director in the three years
immediately preceding his retirement or death; or

 (e) any payment to a director under an agreement made
between the company and the director before he became
a director of the company as a consideration or part of
a consideration for the director agreeing to serve the
company as a director.

 (6) This section shall be in addition to and not in derogation
of any rule requiring disclosure to be made with respect to any
such payments or any other like payment.

 (7) In this section, “director” includes any person who has at
any time been a director of the company or of a corporation which
is by virtue of section 7 deemed to be related to the company.

 (8) In this section—

 (a) a person who contravenes subsection (2) commits an
offence; and

 (b) a director who contravenes subsection (3) and a person
who has been properly required by a director to include
in or send with any notice under this section the
particulars required by subsection (3) and who fails to
do so, commits an offence, and if the requirements of
this section are not complied with any sum received by
the director on account of the payment shall be deemed
to have been received by him in trust for any person
who has sold his shares as a result of the offer made.

Laws of Malaysia236 Act 777

Transactions with directors, substantial shareholders or
connected persons

228. (1) Subject to subsection (2) and section 229, a company
shall not enter or carry into effect any arrangement or transaction
where a director or a substantial shareholder of the company or
its holding company, or its subsidiary, or a person connected
with a director or substantial shareholder—

 (a) acquires or is to acquire shares or non-cash assets
of the requisite value, from the company; or

 (b) disposes of or is to dispose of shares or non-cash assets
of the requisite value, to the company,

unless—

 (A) the entering into the arrangement or transaction is made
subject to the approval of shareholders at a general
meeting; or

 (B) the carrying into effect of the arrangement or transaction
has been approved by shareholders at a general meeting.

 (2) An arrangement or transaction which is carried into effect
in contravention of subsection (1) shall be void unless there is
prior approval of the arrangement or transaction—

 (a) by a resolution of the company; or

 (b) by a resolution of the holding company, if the arrangement
or transaction is in favour of a director or substantial
shareholder of its holding company or person connected
with such director or substantial shareholder.

 (3) For the purposes of subsection (1), in the case of an unlisted
subsidiary whose holding company is a listed company, the
directors of such holding company shall procure the shareholders’
approval of the holding company in a general meeting for the
arrangement or transaction by the unlisted subsidiary in addition to
the shareholders’ approval of the unlisted subsidiary in a general
meeting procured by the directors of the unlisted subsidiary.

Companies 237

 (4) In the case of a public company or its holding company
or its subsidiary, the director or substantial shareholder or
person connected with the director or substantial shareholder
who is interested in the arrangement or transaction referred to in
paragraph (1)(a) or (b) shall abstain from voting on the resolution
at the general meeting to consider the arrangement or transaction
referred to in subsection (2).

 (5) Where an arrangement or transaction is entered or carried into
effect by a company in contravention of subsections (1) and (2),
the director, substantial shareholder or person connected with a
director or substantial shareholder and any director who knowingly
authorized the arrangement or transaction shall, in addition to
any other liability, be liable—

 (a) to account to the company for any gain which he had
made directly or indirectly by the arrangement or
transaction; and

 (b) jointly and severally with any person liable under this
subsection, to indemnify the company for any loss or
damage resulting from the arrangement or transaction.

 (6) The Court may, on the application of any member or
director of the company, restrain the company from entering or
carrying into effect an arrangement or transaction in contravention
of subsection (1).

 (7) A director or substantial shareholder of a company or
its holding company, or its subsidiary or a person connected
with such director or substantial shareholder, in whose favour
the company carries into effect an arrangement or transaction
and who knows that such arrangement or transaction is carried
into effect by a company in contravention of this section, or a
director who knowingly authorized the company to carry into
effect such arrangement or transaction, in contravention of this
section, commit an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine
not exceeding three million ringgit or to both.

Laws of Malaysia238 Act 777

 (8) For the purposes of subsection (1)—

 (a) “person connected with a substantial shareholder”
has the same meaning assigned to a “person connected
with a director” in section 197 save that all references
therein to a director shall be read as a reference to a
substantial shareholder;

 (b) “requisite value”, in the case of a company where all or
any of its shares are quoted on the stock exchange or its
subsidiary, shall be the same value as the value prescribed
in the listing requirements of the stock exchange where
approval of the shareholders at a general meeting is
required;

 (c) in the case of any company other than a company to which
paragraph (b) applies, non-cash asset is of the requisite
value if, at the time of the transaction, its value exceeds
two hundred and fifty thousand ringgit or if its value
does not exceed two hundred and fifty thousand ringgit
but exceeds ten per centum of the company’s net asset
value provided it is not less than fifty thousand ringgit,
where—

 (i) the value of the company’s assets is determined
by reference to the accounts prepared under
section 245 in respect of the last financial year
prior to the arrangement or transaction; or

 (ii) no accounts have been so prepared and laid before
that time, the amount of the company’s called
up share capital.

 (9) In this section—

 (a) a reference to the acquisition or disposal of a non-cash
asset includes the creation or extinction of an estate or
interests in, or a right over, any property and also the
discharge of any person’s liability, other than liability
for a liquidated sum;

 (b) “cash” includes foreign currency; and

Companies 239

 (c) “non-cash asset” means any property or interest in
property other than cash.

Exception to section 228

229. Section 228 shall not apply to an arrangement or transaction
for the acquisition or disposal of a non-cash asset entered into—

 (a) by a company—

 (i) and any of its wholly-owned subsidiaries;

 (ii) and its holding company which holds all the
issued shares of the company; or

 (iii) which is a wholly-owned subsidiary of a holding
company and another wholly-owned subsidiary
company of that same holding company;

 (b) by a company which is being wound up, unless the
winding up is a members’ voluntary winding up;

 (c) by a company which is an acquisition or disposal of an
asset in the ordinary course of business of the company
and is on terms not more favourable than those generally
available to the public or employees of the company;

 (d) by a company if such arrangement or transaction does
not involve transfer of cash or property and which shall
have no effect unless approved at a general meeting or
by a relevant authority;

 (e) by a company made in accordance with a scheme of
arrangement approved by the Court under section 366;
or

 (f) by a company in connection with a takeover offer made
in accordance with the relevant law applicable to such
offers.

Laws of Malaysia240 Act 777

Approvals for fees of directors

230. (1) The fees of the directors, and any benefits payable to
the directors including any compensation for loss of employment
of a director or former director—

 (a) of a public company; or

 (b) of a listed company and its subsidiaries,

shall be approved at a general meeting.

 (2) In the case of a private company, the Board may, subject
to the constitution approve the fees of the directors and any
benefits payable to the directors including any compensation for
loss of employment of a director or former director.

 (3) Any approval made under subsection (2) shall be recorded
in the minutes of the directors’ meeting and the Board shall notify
the shareholders of the approval of the fees within fourteen days
from the date of the approval.

 (4) Where a fee is made or other benefits payable to which
subsection (2) applies, members holding at least ten per centum
of the total voting rights and who consider that the payment
was not fair to the company, within thirty days after they have
knowledge of such payments, may require the company to pass
a resolution to approve the payment either by way of a written
resolution or at a general meeting.

 (5) Unless an approval has been obtained through a resolution
passed under subsection (4), the payment shall constitute a debt
due by the director to the company.

 (6) A company that contravenes subsection (1) commits an
offence and shall, on conviction, be liable to a fine not exceeding
three million ringgit and any payment in contravention of
subsection (1) shall constitute a debt due by the director to the
company.

 (7) The company and every officer who contravene subsection (3)
commit an offence and shall, on conviction, be liable to a fine
not exceeding two hundred and fifty thousand ringgit.

Companies 241

Directors’ service contracts

231. (1) For the purposes of this Division, a director’s “service
contract” in relation to a public company means a contract under
which—

 (a) a director of the company undertakes personally to
perform services, as a director or otherwise for the
public company or for a subsidiary of the public
company; or

 (b) services that a director of the public company undertakes
personally to perform as director or otherwise are made
available by a third party to the public company, or to
a subsidiary of the public company.

 (2) The provisions of this Division relating to directors’ service
contracts shall—

 (a) be applicable to the terms of a person’s appointment as
a director of a public company; or

 (b) not be restricted to contracts for the performance of
services outside the scope of the ordinary duties of a
director.

Copy of contracts to be available for inspection

232. (1) Subject to section 233, a public company shall keep
and maintain a copy of every director’s service contract with the
company or with its subsidiaries available for inspection.

 (2) All the copies of contracts shall be kept available for
inspection at the registered office of the company.

 (3) The copies of contracts shall be made available for inspection
for at least one year from the date of termination or expiry of
the contract.

 (4) The company shall give notice to the Registrar—

 (a) of the place at which the copies of the contracts are
kept available for inspection; and

Laws of Malaysia242 Act 777

 (b) of any change in that place,

unless the copies of the contracts have at all times been kept at
the registered office of the company.

 (5) The company and every off icer  who contravene
subsection (1), (2) or (3) commit an offence and shall, on
conviction, be liable to a fine not exceeding one million ringgit.

 (6) This section shall apply to a variation of a director’s
service contract as is applicable to the original contract.

Right of member to inspect and request copy

233. (1) Every copy of the contract required to be kept under
section 232 shall be made available for inspection by—

 (a) in the case of a public company having share capital,
by members holding at least five per centum of the
total paid up capital; or

 (b) in the case of a public company not having share
capital, by at least ten per centum of members.

 (2) Subject to subsection (1), the members so entitled to
inspect on request and on payment of such fee as may be prescribed
shall be entitled to be provided with a copy of any such contract.

 (3) The copy shall be provided within seven days from the
date the request is received by the company.

 (4) Every officer who refuses a request for inspection under
subsection (1) or contravenes subsection (2) commits an offence
and shall, on conviction, be liable to a fine not exceeding two
hundred and fifty thousand ringgit.

 (5) In the case of any such refusal or default, the Court may,
by order, compel an immediate inspection or, as the case may
be, direct that the copy required be sent to the person requiring
it.

Companies 243

Contract with sole member who is also a director

234. (1) This section applies where—

 (a) a limited company having only one member enters into
a contract with the sole member;

 (b) the sole member is also a director of the company; and

 (c) the contract is not entered into in the ordinary course of
the company’s business.

 (2) The company shall, unless the contract is in writing,
ensure that the terms of the contract are duly recorded in the
minutes of the meeting of the directors that immediately after
the making of the contract.

 (3) This section shall be in addition to and not in derogation
of any other law applying to contracts between a company and
a director of the company.

 (4) The company and every officer who contravenes this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding one million ringgit.

Subdivision 4

Secretary

Requirement for a secretary

235. (1) A company shall have at least one secretary who shall
be—

 (a) a natural person;

 (b) eighteen years of age and above; and

 (c) a citizen or permanent resident of Malaysia,

who shall ordinarily reside in Malaysia by having a principal
place of residence in Malaysia.

Laws of Malaysia244 Act 777

 (2) A secretary shall be—

 (a) a member of a body as  set out in the Fourth Schedule;
or

 (b) a person licensed by the Commission under section 20g
of the Companies Commission of Malaysia Act 2001.

 (3) For the purposes of paragraph (2)(a), the Minister may
prescribe any professional body or any other body by notification
in the Gazette and may impose any terms and conditions as he
thinks fit.

 (4) The company and every director who contravene this section
commit an offence.

Appointment of a secretary

236. (1) The Board shall appoint a secretary and determine the
terms and conditions of such appointment.

 (2) Notwithstanding subsection (1), the appointment of the
first secretary shall be made within thirty days from the date
of incorporation of a company.

 (3) No person shall be appointed as a secretary unless—

 (a) he has consented in writing to be appointed as a
secretary;

 (b) he is qualified under subsection 235(2); and

 (c) he is not disqualified under section 238.

 (4) The company and every person who contravene this
section commit an offence.

Resignation of a secretary

237. (1) Subject to the constitution or the terms of appointment,
a secretary may resign from his office by giving a notice to the
Board.

Companies 245

 (2) If  none of the directors of the company can be
communicated with at the last known residential address, the
secretary may, notwithstanding subsection 235(1), notify the
Registrar of that fact and of his intention to resign from the
office.

 (3) The secretary shall cease to be the secretary of the
company—

 (a) on the expiry of thirty days from the date of the notice
lodged under subsection (1) or the period specified in
the constitution or the terms of appointment, as the case
may be; or

 (b) on the expiry of thirty days from the date of the notice
to the Registrar under subsection (2).

 (4) Nothing in subsections (1) and (2) shall relieve the
secretary from liability for any act or omission done before the
secretary vacated that office.

Disqualification to act as a secretary

238. (1) A person shall be disqualified to act as a secretary
if—

 (a) he is an undischarged bankrupt;

 (b) he is convicted whether in or outside Malaysia of
any offence referred to in section 198; or

 (c) he ceases to be a holder of a practicing certificate
issued by the Registrar under section 241.

 (2) Notwithstanding subsection (1), if the Registrar is of
the opinion that a person has failed to act honestly or use
reasonable diligence in the discharge of his duties as a secretary,
the Registrar may require the person to show cause why his
practising certificate should not be revoked or why he should not
be disqualified from acting as a secretary of a company.

Laws of Malaysia246 Act 777

 (3) If a person continues to act as a secretary for a company
after the person is disqualified under this section without leave
of the Court, the secretary and every director who knowingly
permits the person to act in that capacity commit an offence.

Removal of a secretary

239. The Board may remove a secretary from his office in
accordance with the terms of appointment or the constitution.

Office of secretary shall not be left vacant

240. The office of the secretary of a company shall not be left
vacant for more than thirty days at any one time.

Requirement to register with Registrar

241. (1) Any person who is qualified to act as a secretary and
who desires to act as a secretary shall be registered under this
section before he can act as a secretary.

 (2) The Registrar shall cause a register of secretaries to be
kept and shall cause to be entered in the register in relation to
a secretary—

 (a) the name of the secretary;

 (b) the residential address and business address of the secretary;

 (c) the details of the qualifications referred to in
subsection 235(2); and

 (d) such other information as the Registrar may require.

 (3) The Registrar, before registering such person, may—

 (a) require him to produce any evidence to his satisfaction
of the qualification as stated under subsection 235(2);
or

 (b) impose any other conditions that he deems fit.

Companies 247

 (4) If the requirements under subsection (3) are satisfied,
the Registrar shall—

 (a) enter the particulars in the register of secretaries; and

 (b) issue a practising certificate in such form as the Registrar
may determine.

 (5) On or after the commencement of this Act, a person who
is a secretary of a company and who is not registered under
subsection (1) may continue to act as a secretary to the company
for a period of not more than twelve months or any longer period
as the Registrar may allow.

 (6) After the expiry of the period referred to in subsection (5),
a person who fails to comply with the requirement to register
shall be deemed to have not been registered under this section.

 (7) The Minister shall have the power to make regulations
on any matters relating to any practicing certificate issued under
this section.

 (8) Any person who contravenes subsection (1) commits an
offence.

Prohibition to act in dual capacity

242. A person is prohibited to act in a dual capacity as both a
director and a secretary in a situation that requires or authorizes
anything to be done by a director and a secretary.

Division 3

Accounts and Audit

Subdivision 1

Financial Statements and Report

Interpretation

243. For the purposes of this Division—

 “approved accounting standards” has the meaning assigned to
it in section 2 of the Financial Reporting Act 1997 [Act 558];

Laws of Malaysia248 Act 777

  “subsidiary”, except for section 246 has the meaning
assigned to it in the approved accounting standards issued
by the Malaysian Accounting Standards Board established
under the Financial Reporting Act 1997.

Compliance with approved accounting standards

244. (1) The approved accounting standards shall apply to the
financial statements of a company or the consolidated financial
statements of a holding company if, at the time when the financial
statements or consolidated financial statements are made out, the
approved accounting standards—

 (a) apply in relation to the financial year of the company or
the holding company to which the financial statements
or consolidated financial statements relate; and

 (b) are relevant to those financial statements or consolidated
financial statements.

 (2) Without prejudice to the generality of the provisions of
this Subdivision, the directors of a company shall ensure that
the financial statements of the company and, if the company is a
holding company for which consolidated financial statements are
required, the consolidated financial statements of the company are
made out in accordance with the applicable approved accounting
standards and shall—

 (a) in the case of a public company, be circulated to its
members and laid before the company at its annual
general meeting; or

 (b) in the case of a private company, be circulated  to its
members or laid before the company at a meeting of
members.

 (3) Notwithstanding subsection (2), the directors of a company or
holding company shall not be required to ensure that the financial
statements or consolidated financial statements, as the case may
be, are prepared in accordance with the approved accounting

Companies 249

standards if the directors are of the opinion that preparing the
financial statements or consolidated financial statements in
accordance with the approved accounting standard would not
give a true and fair view—

 (a) of the matters required under section 249 to be dealt
with in the financial statements or consolidated
financial statements; or

 (b) of the results of the business and the state of affairs of
the company and, if applicable, of all the companies
the affairs of which are dealt with in the consolidated
financial statements.

 (4) If the financial statements of a company or consolidated
financial statements of a holding company are not prepared in
accordance with a particular approved accounting standard under
subsection (3), the directors of the company shall—

 (a) disclose by way of a note on the financial statements
the reason for not making out the financial statements
or consolidated financial statements in accordance with
the approved accounting standards; and

 (b) give particulars in the note of the quantified financial
effect on the financial statements or consolidated
financial statements if the relevant approved accounting
standards was complied with.

 (5) Notwithstanding anything in this Act, if financial
statements are required to be prepared for or lodged with the
authorities referred to in section 26d of the Financial Reporting
Act 1997, those financial statements shall be prepared in
accordance with the approved accounting standards subject to
any specifications, guidelines or regulations as may be issued
by the authorities.

 (6) The information in the accounts or consolidated accounts of
persons reporting to the authorities as referred to in section 26d
of the Financial Reporting Act 1997 shall be deemed to
have complied with the requirements of this Division if the
financial statements are made out in accordance with that law.

Laws of Malaysia250 Act 777

 (7) If a conflict or inconsistency arises between the provisions
of an applicable approved accounting standard and this Act in their
respective applications to the financial statements of a company
or consolidated financial statements of a holding company, the
provisions of the applicable approved accounting standard shall
prevail.

Accounts to be kept

245. (1) A company, the directors and managers of a company
shall—

 (a) cause to be kept the accounting and other records to
sufficiently explain the transactions and financial
position of the company and enable true and fair profit
and loss accounts and balance sheets and any documents
required to be attached thereto to be prepared; and

 (b) cause the accounting and other records to be kept in a
manner as to enable the accounting and other records
to be conveniently and properly audited.

 (2) A company, the directors and managers of a company
shall cause appropriate entries to be made in the accounting
and other records within sixty days of the completion of the
transactions to which the entries relate.

 (3) The company shall retain the records referred to in
subsection (1) for seven years after the completion of the
transactions or operations to which the entries relate.

 (4) The records referred to in subsection (1) shall be kept at
the registered office of the company or at such other place as the
directors think fit, and shall at all times be open for inspection
by the directors.

 (5) Notwithstanding subsection (4), the accounting and other
records of operations outside Malaysia may be kept by the
company at a place outside Malaysia provided that such
accounting and other records shall be sent to and kept at a place
in Malaysia and be made available for inspection by the directors
at all times.

Companies 251

 (6) The accounting and other records referred to in subsection (5)
shall include such statements and returns with respect to the business
dealt with in the records so kept as to enable the preparation of
true and fair financial statements and any documents required to
be attached to the financial statements.

 (7) If any accounting and other records are kept at a place
outside Malaysia under subsection (4) or (5), the Registrar may
require the company to produce those records at a place in
Malaysia or determine the type and manner of the records to be
kept in Malaysia.

 (8) The Court may, in any particular case, order that the
accounting and other records of a company be open to inspection
by an approved company auditor acting for a director, subject to
a written undertaking given to the Court that information acquired
by the auditor during his inspection shall not be disclosed by him
except to that director.

 (9) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit or to imprisonment
for a term not exceeding three years or to both.

System of internal control

246. (1) The directors of a public company or a subsidiary of a
public company shall have in place a system of internal control
that will provide a reasonable assurance that—

 (a) the assets of the company are safeguarded against loss
from unauthorized use or disposition and to give a
proper account of the assets; and

 (b) all transactions are properly authorized and that the
transactions are recorded as necessary to enable the
preparation of true and fair view of the financial statements
of the company.

 (2) Any director who contravenes this section commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding three years or a fine not exceeding one
million ringgit or to both.

Laws of Malaysia252 Act 777

Accounting periods of companies within the same group

247. (1) Subject to subsections (10), (11) and (12), the directors
of every holding company that is not a foreign company shall
take such necessary steps to ensure that within two years after
any corporation becomes a subsidiary of the holding company,
the financial year of that corporation coincides with the financial
year of the holding company.

 (2) Where the financial year of a holding company that is not
a foreign company and that of each of its subsidiaries coincide,
the directors of the holding company shall at all times take
necessary steps to ensure that the financial year of the holding
company or any of its subsidiaries is not altered so that all the
financial years do not coincide with the holding company unless
the consent of the Registrar is obtained.

 (3) If the directors of the holding company are of the opinion
that there is good reason why the financial year of any of its
subsidiaries should not coincide with the financial year of the
holding company, the directors may apply in writing to the
Registrar for an order authorizing any subsidiary to continue to
have or to adopt, as the case requires, a financial year which
does not coincide with that of the holding company.

 (4) The application shall be supported by a statement by the
directors of the holding company stating their reasons for seeking
the order.

 (5) The Registrar may require the directors who make an
application under this section to supply any information relating
to the operation of the holding company and of any corporation
that is deemed by virtue of section 7 to be related to the holding
company as he thinks necessary for the purpose of determining
the application.

 (6) In determining the application, the Registrar, may at the
expense of the holding company of which the applicants are
directors, request any approved company auditor to investigate
and report on the application.

Companies 253

 (7) The Registrar may make an order granting or refusing the
application or granting the application subject to such limitations,
terms or conditions as he thinks fit and shall serve the order on
the holding company.

 (8) The applicants aggrieved by any order made by the Registrar
may appeal against the order to the Minister within two months
after the service of the order on the holding company.

 (9) The Minister shall determine the appeal and in determining
the appeal, may make any order that the Registrar had power to
make on the original application and may exercise any of the
powers that the Registrar may have exercised in relation to the
original application.

 (10) If the directors of a holding company have applied to
the Registrar for an order authorizing any subsidiary to continue
to have a financial year which does not coincide with that of
the holding company, the operation of subsection (1) shall be
suspended in relation to that subsidiary until the determination of
the application and of any appeal arising out of the application.

 (11) Where an order is made authorizing any subsidiary to
have a financial year which does not coincide with that of the
holding company, compliance with the terms of the order of the
Registrar or where there has been an appeal, compliance with the
terms of any order made on the determination of the appeal shall
be deemed to be a compliance with subsection (1) in relation to
that subsidiary.

 (12) Where an application for an order to authorize any
subsidiary to have a financial year which does not coincide
with that of the holding company and the appeal, if any, arising
out of that application are refused, the time within which the
directors of the holding company are required to comply with
subsection (1) in relation to that subsidiary shall be deemed to
be the period of twelve months after the date upon which the
order of the Registrar is served on the holding company or the
period of twelve months after the determination of the appeal,
as the case may be.

 (13) Where the directors of a holding company have applied
to the Registrar for an order authorizing any of its subsidiaries
to continue to have or to adopt a financial year which does not

Laws of Malaysia254 Act 777

coincide with that of the holding company and the application
and the appeal, if any, arising out of that application, has been
refused, the directors of the holding company shall not make a
similar application with respect to that subsidiary within three
years after the refusal of the application or where there is an
appeal, after the determination of that appeal unless the Registrar
is satisfied that there has been a substantial change in the relevant
facts or circumstances since the refusal of the former application
or the determination of the appeal, as the case may be.

 (14) Any director who contravenes this section commits an
offence.

Directors shall prepare financial statements

248. (1) The directors of every company shall prepare financial
statements—

 (a) wi th in  e ighteen months  f rom the  date  of  i t s
incorporation; and

 (b) subsequently, within six months of its financial year
end.

 (2) The financial statements referred to in subsection (1)
shall be duly audited before the financial statements are sent
to every member under section 257 or, in the case of a public
company, sent to every member under section 257 and laid before
an annual general meeting under section 340.

 (3) Any director of the company who contravenes this section
commits an offence and shall, on conviction, be liable to a fine
not exceeding five hundred thousand ringgit or imprisonment for
a term not exceeding one year or both.

General requirements for financial statements

249. (1) The annual financial statements for a financial year
shall give a true and fair view of the financial position as at the
end of the financial year and the financial performance for the
financial year of the company.

Companies 255

 (2) The annual consolidated financial statements for a financial
year shall—

 (a) give a true and fair view of the financial position
of the company and all its subsidiaries which are dealt
with in the consolidated financial statements as a whole
at the end of the financial year; and

 (b) give a true and fair view of the financial performance
of the company and all its subsidiaries which are dealt
with in the consolidated financial statements as a
whole for the financial year.

 (3) For the purposes of this Division, the Registrar may
require additional information as he deems fit apart from the
information required by the authorities referred to in section 26d of
the Financial Reporting Act 1997 in the financial statements of persons
reporting to such authorities as referred to in subsection 244(6).

 (4) Notwithstanding any relevant provisions of the applicable
approved accounting standards, the financial statements shall
contain, in the notes to the statements, the information as the
Registrar may determine and may include but not limited to the
following:

 (a) the directors’ remuneration;

 (b) the directors’ retirement benefits;

 (c) compensation to directors for loss of office;

 (d) loans, quasi-loans and other dealings in favour of
directors;

 (e) the total of the amount paid to or receivable by the
auditors as remuneration for their services as auditors,
inclusive of all fees, percentages or other payments or
consideration given by or from the company or by or
from any subsidiary of the company.

 (5) Any document, other than financial statements prepared
in accordance with this Act or advertisement published, issued
or circulated by or on behalf of a company, other than a banking

Laws of Malaysia256 Act 777

corporation, shall not contain any direct or indirect representation
that the company has any reserve unless the representation is
accompanied—

 (a) if the reserve is invested outside the business of the
company, with a statement showing the manner in
which it is invested and the security for such investment;
or

 (b) if the reserve is being used in the business of the
company, with a statement to the effect that the reserve
is being so used.

 (6) Where a company licensed under any written law relating
to insurance or takaful is required to prepare financial statements
in the form prescribed by that law, the company shall be
deemed to have complied with the requirements of the approved
accounting standards if its financial statements are prepared in
accordance with that law.

 (7) If the company carries on business other than insurance
or takaful business so far as that law does not require the
company to deal with any matters which are required to be dealt
with under approved accounting standards, the company shall
comply with this section and the approved accounting standards.

 (8) A holding company of any company licensed under any
written law relating to insurance or takaful shall be deemed to
have complied with the requirements of the approved accounting
standards relating to the preparation of its financial statements
provided that it carries no other business except as the holding
company.

Subsidiaries to be included in consolidated financial
statements

250. (1) The consolidated financial statements for a financial
year shall include all the subsidiaries of a company.

 (2) Where the consolidated financial statements do not deal with
a subsidiary of a company, the directors shall disclose by way
of a note on the financial statements the reason for not causing
the financial statements for such one or more subsidiaries to be
consolidated.

Companies 257

 (3) In the case of a subsidiary incorporated in a country outside
Malaysia, whether it has or has not established a place of business
in Malaysia, which country has been declared by the Minister by
notification published in the Gazette to be a country to which
this section applies, it shall be sufficient if the separate profit
and loss account or balance sheet, as the case may require, of the
subsidiary is in such form and is so reported upon by auditors
and contains such particulars and includes such documents, if
any, as the company is required to make out and lay before the
company in a general meeting in accordance with the law for
the time being applicable to the company in the place where it
is incorporated.

 (4) For the purposes of subsection (1), the holding company
shall have the power to request all relevant information from its
subsidiaries to secure compliance under this section.

 (5) Any director who fails to take all reasonable steps to secure
compliance under subsection (1) commits an offence.

Financial statements to be approved by the Board

251. (1) Financial statements shall be—

 (a) approved by the Board; and

 (b) accompanied with a statutory declaration by a director
or where the director is not primarily responsible for
the financial management of the company, by the
person responsible in setting forth his opinion as to the
correctness or otherwise of the financial statements and
where applicable, the consolidated financial statements.

 (2) The directors shall make a statement in accordance with
the resolution of the Board stating whether in their opinion
the financial statements or where applicable the consolidated
financial statements is or are drawn up, in accordance with the
applicable accounting standards, to give a true and fair view of
the financial position and financial performance of the company
and of the group.

Laws of Malaysia258 Act 777

 (3) The statement referred to in subsection (2) shall be signed
by at least two directors and in the case of a sole director, by
that director, and to be attached to the financial statements for
circulation in accordance with section 257.

(4) In respect of any financial statements a copy of which is
circulated, published or issued by a company, the company and
every officer who contravene this section commit an offence and
shall, on conviction, be liable to a fine not exceeding five hundred
thousand ringgit or imprisonment not exceeding one year or to
both.

Directors shall prepare directors’ report

252. (1) The directors of a company shall prepare for each
financial year a report and such report shall be attached to the
financial statements prepared under section 248.

 (2) A directors’ report—

 (a) shall be approved by the Board; and

 (b) shall be signed on the directors’ behalf by at least
two directors, or in the case of a single director, that
director.

 (3) Every copy of directors’ report laid before a company
in an annual general meeting under section 340, or sent to a
member under section 257 or otherwise circulated, published or
issued by the company shall state the name of the person who
signed the report on the directors’ behalf.

 (4) Any director who fails to take all reasonable steps to
secure compliance under subsection (1) commits an offence
and shall, on conviction, be liable to a fine not exceeding five
hundred thousand ringgit or imprisonment not exceeding one
year or to both.

 (5) The company and every off icer  who contravene
subsection (2) commit an offence and shall, on conviction,
be liable to a fine not exceeding twenty thousand ringgit.

Companies 259

Contents of directors’ report

253. (1) A directors’ report for a financial year in relation to
a company shall contain—

 (a) the name of every person who was a director of the
company—

 (i) during the financial year; and

 (ii) during the period commencing from the end
of the financial year and ending on the date of
the report;

 (b) the principal activities of the company in the course of
the financial year including its subsidiaries; and

 (c) the matters set out in the Fifth  Schedule.

 (2) This section shall have effect in relation to a directors’
report required to be prepared under section 252 as if a reference
to the company in subsection (1) or (2) were a reference to—

 (a) the company; and

 (b) the subsidiary undertakings included in the consolidated
financial statements for the financial year.

 (3) The directors’ report prepared under section 252 may include
a business review as set out in Part II of Fifth Schedule or any
other reporting as prescribed.

Form and content of directors’ report and financial statement
of a banking corporation, etc.

254. The provisions of this Act relating to the form and content
of the report of the directors and the financial statements for
a financial year shall apply to a licensed institution with such
modifications and exceptions as are determined either generally
or in any particular case by the Central Bank of Malaysia.

Laws of Malaysia260 Act 777

Relief from requirements as to form and content of financial
statements and directors’ report

255. (1) The directors of a company may apply to the
Registrar in writing for an order relieving the directors from
any requirement of this Act relating to the form and content of
the financial statements or consolidated financial statements or
to the form and content of the directors’ report required under
sections 252 and 253 and the Registrar may make such an order
either unconditionally or on  condition that the directors comply
with such other requirements relating to the form and content of
the financial statements or consolidated financial statements or
directors’ report as the Registrar thinks fit to impose.

 (2) The application for a relief order under subsection (1)
shall not be granted if the Registrar is of the opinion that the
order is not consistent with the approved accounting standards.

 (3) The Registrar may where he considers it appropriate
make an order in respect of any class of companies relieving
the directors of a company in that class from compliance with
any specified requirements of this Act relating to the form and
content of financial statements or consolidated financial statements
or to the form and content of the directors’ report required by
sections 252 and 253.

 (4) The order under subsection (3) may be made either
unconditionally or on condition that the directors of the company
comply with such other requirements relating to the form and
content of financial statements or consolidated financial statements
or directors’ report as the Registrar thinks fit to impose.

 (5) The Registrar shall not make an order under subsection (1)
unless he is of the opinion that compliance with the requirements
of this Act would—

 (a) render the financial statements or consolidated financial
statements or directors’ report, as the case may be,
misleading or inappropriate to the circumstances of the
company; or

 (b) impose unreasonable burdens on the company or any
officer of the company.

Companies 261

 (6) The Registrar may make an order under subsection (1) or (2)
which may be limited to a specific period and may make a decision
to vary, suspend or revoke any such order on the application by
the directors or without any such application, in which case the
Registrar shall give to the directors an opportunity to be heard.

Power of Registrar to require a statement of valuation of assets

256. (1) The Registrar may, with notice in writing, require the
directors of any company to supply a statement of valuation at
current value of assets and liabilities of the company within the
time specified in the notice.

 (2) The Registrar may, on the application of the company,
extend the period of time specified in the notice referred to in
subsection (1), if he considers appropriate.

Duty to circulate copies of financial statements and reports

257. (1) Every company shall send a copy of its financial
statements and reports for each financial year to—

 (a) every member of the company;

 (b) every person who is entitled to receive notice of general
meetings;

 (c) every auditor of the company; and

 (d) every debenture holder of the company on a request being
made to the company.

 (2) Copies of the financial statements and reports shall be sent
to the last known address provided to the company.

 (3) Any member or debenture holder to whom copies of the
financial statements and reports have not been sent shall, on a
request being made by the member or debenture holder to the
company be furnished with such copies without charge.

Laws of Malaysia262 Act 777

 (4) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding fifty thousand ringgit.

Time allowed for sending out copies of financial statements
and reports

258. (1) The circulation of financial statements and reports—

 (a) for a private company, shall be within six months of its
financial year end; and

 (b) for a public company, shall be at least twenty-one days
before the date of its annual general meeting.

 (2) In relation to a public company, the financial statements
and reports may be circulated at a shorter period if it was agreed
by all the members entitled to attend and vote at the annual
general meeting.

 (3) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding fifty thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Duty to lodge financial statements and reports with the
Registrar

259. (1) A company shall lodge with the Registrar for each
financial year the financial statements and reports required under
this Act—

 (a) in the case of a private company, within thirty days from
the financial statements and reports are circulated to its
members under section 258;

 (b) in the case of a public company, within thirty days from
its annual general meeting; and

Companies 263

 (c) all amounts shown in the financial statements and reports
lodged with the Registrar shall be quoted in Malaysian
currency, and if such financial statements and reports
are in a language other than the national language
or English language, there must be annexed to such
financial statements and reports a translation in the
national language or English language certified to be a
correct translation in the manner to be determined by
the Registrar.

 (2) If an application for extension is made before the expiry
of the period referred to in paragraph 1(a) or (b), the Registrar
may, as he considers fit, extend the period to such period as
specified in the notice of extension.

 (3) Every officer who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
fifty thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding one thousand ringgit for each day
during which the offence continues after conviction.

 (4) For the purposes of this section, “financial statements
and reports” includes “consolidated financial statements and
reports” in cases of holding companies.

Duty to lodge certificate relating to exempt private company

260. (1) An exempt private company may lodge with the
Registrar for each financial year a certificate relating to its
status as an exempt private company in lieu of the requirements
in paragraph 259(1)(a) within thirty days from the circulation
of the financial statements and reports are circulated under
section 258.

 (2) The certificate shall be signed by a director, auditor and
secretary of the company confirming that—

 (a) the company is and has at all relevant times been an
exempt private company;

 (b) a duly audited financial statements and reports required
under this Act has been circulated to its members; and

Laws of Malaysia264 Act 777

 (c) as at the date to which the financial statement has been
made up, the company appeared to have been able to
meet its liabilities as and when the liabilities fall due.

 (3) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to a
fine not exceeding twenty thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

Auditor’s statements

261. (1) A company that is not required by this Act to lodge
financial statements with the Registrar shall lodge with the
Registrar a statement relating to the financial statements of the
company required to be circulated to its members, signed by the
auditor of the company—

 (a) stating whether the company has in his opinion kept
proper accounting records and other books during the
period covered by those accounts;

 (b) stating whether the financial statements have been
audited in accordance with this Act;

 (c) stating whether the auditor’s report on the financial
statements was made subject to any qualification or
opinion under any applicable auditing standards, or
included any comment made under subsection 266(3)
and, if so, particulars of the qualification or comment;
and

 (d) stating whether as at the date to which the financial
statement has been made up, the company appeared to
have been able to meet its liabilities as and when the
liabilities fall due.

 (2) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to a
fine not exceeding twenty thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continued after
conviction.

Companies 265

Subdivision 2

Auditors

Definition of “outgoing auditor”

262. For the purpose of this Subdivision, “outgoing auditor”
means an auditor whose term of office has expired or is about
to expire.

Company auditors to be approved by Minister charged with
responsibility for finance

263. (1) Any person may apply to the Minister charged with the
responsibility for finance to be approved as a company auditor
for the purposes of this Act.

 (2) The Minister may, if he is satisfied that the applicant
is of good character and competent to perform the duties of
an auditor under this Act, upon payment of the prescribed fee,
approve the applicant as a company auditor.

 (3) Any approval granted by the Minister under subsection (2)
may be made subject to such limitations or conditions as
he thinks fit and may be revoked at any time by him by the
service of a notice of revocation on the approved person.

 (4) Every approval under this section including a renewal of
approval of a company auditor shall be in force for a period of
two years after the date of issue unless sooner revoked by the
Minister.

 (5) The Minister may delegate all or any of his powers under
this section to any person, or body of persons charged with the
responsibility for the registration or control of accountants in
Malaysia.

 (6) Any person who is aggrieved with any decision of the
Minister or with the decision of any person or body of persons
to whom such Minister has delegated all or any of his powers
under this section may appeal to the Court.

Laws of Malaysia266 Act 777

 (7) For the purposes of this section, “person” means a chartered
accountant as defined under the Accountants Act 1967 [Act 94].

Company auditors

264. (1) A person shall not—

 (a) knowingly consent to be appointed as an auditor for
any company;

 (b) knowingly act as an auditor for any company; and

 (c) prepare, for or on behalf of a company, any report
required by this Act to be prepared by an approved
company auditor if—

 (i) he is not an approved company auditor;

 (ii) he is indebted to the company or to a corporation
that is deemed to be related to that company
by virtue of section 7 in an amount exceeding
twenty-five thousand ringgit;

 (iii) he is—

 (A) or his spouse is an officer of the company;

 (B) a partner, employer or employee of an
officer of the company;

 (C) a partner or employee of an employee of
an officer of the company; or

 (D) a shareholder or his spouse is a shareholder
of a corporation whose employee is an
officer of the company;

 (iv) he is responsible for or if he is the partner,
employer or employee of a person responsible
for the keeping of the register of members or the
register of debenture holders of the company;

Companies 267

 (v) he is an undischarged bankrupt within or outside
Malaysia except with leave of the Court; or

 (vi) he has been convicted of any offence involving
fraud or dishonesty punishable with imprisonment
for three months or more.

 (2) For the purposes of subparagraph (1)(c)(iii), a person shall
be deemed to be an officer of a company if he is an officer of
a corporation that is deemed to be related to the company by
virtue of section 7 if he has been an officer or promoter of the
company or such a corporation at any time within the preceding
period of twelve months, unless the Minister directs otherwise.

 (3) For the purposes of this section, a person shall not be
deemed to be an officer by reason only of him having been
appointed as an auditor of a corporation.

 (4) A firm of auditors shall not knowingly consent to be
appointed, and shall not knowingly act, as an auditor for any
company and shall not prepare, for or on behalf of a company,
any report required by this Act to be prepared by an approved
company auditor unless—

 (a) all the partners of the firm resident in Malaysia are
approved company auditors and, where the firm is not
registered as a firm under any law for the time being
in force, a return showing the full names and addresses
of all the partners of the firm has been lodged with the
Registrar; and

 (b) no partner of the firm is disqualified under subsection (1)
from acting as the auditor of the company.

 (5) A company shall not appoint a person or a firm as an
auditor unless prior to the appointment—

 (a) that person has consented in writing to act as the
auditor; or

 (b) in the case of a firm, at least one partner of the firm
has consented in writing.

Laws of Malaysia268 Act 777

 (6) The appointment of a firm in the name of the firm as
auditors of a company shall take effect as an appointment as
auditors of the company of the persons who are partners of that
firm at the time of the appointment.

 (7)  The appointment of a firm in the name of the limited liability
partnership or foreign limited liability partnership as auditors of
a company shall take effect as an appointment as auditors of the
company as if—

 (a) the partners of the limited liability partnership, whether
the partners at the time the limited liability partnership
was appointed as auditor or later; and

 (b) employees of the limited liability partnership who are
approved company auditors in that limited liability
partnership, whether employed at the time the limited
liability partnership was appointed as auditor or later,

are appointed as auditors of the company.

 (8) Any person who is or any firm which is appointed as an
auditor contravenes subsection (1) or (4) respectively commits an
offence and shall, on conviction, be liable to a fine not exceeding
one hundred thousand ringgit.

Registration of firms of auditors

265. (1) A new firm of auditors shall notify the Registrar
the following particulars within thirty days from the date of
commencement of business:

 (a) the name of the firm;

 (b) the firm number;

 (c) the address of the principal place of business and the
address of each other’s place of business, if any;

 (d) the date of commencement of business;

 (e) the full names, addresses, approval numbers and other
particulars of all the partners; and

Companies 269

 (f) such other  part iculars  as  the Registrar  thinks
appropriate.

 (2)  The notification in subsection (1) shall be in the form as
determined by the Registrar.

 (3) The Registrar shall cause a register of firms of auditors to
be kept and shall cause to be entered in the register in relation
to a firm of auditors the particulars referred to in subsection (1).

 (4)  Where a firm of auditors is reconstituted by reason of
retirement, withdrawal or death of a partner or by reason of the
admission of a new partner or where there is a change in any
particulars relating to the firm or its partners, a notification shall
be lodged with the Registrar indicating the relevant alteration and
the date of the alteration within thirty days of such alteration.

 (5) A report or notice that purports to be made or given by a
firm appointed as an auditor of a company shall not be taken to
be duly made or given unless—

 (a) it is signed in the name of the firm and in his own
name by a partner of the firm who is an approved
company auditor; and

 (b) the firm number and the approval number of the
partner is legibly written or printed either under or beside
the signature of the firm and the partner respectively.

 (6) For the purposes of this section—

 (a) “approval number”, in relation to an auditor, is the
number allocated to that person on the approval
granted by the Minister charged with responsibility for
finance;

 (b) “firm number”, in relation to a firm of auditors, is the
number allocated by the Registrar to a firm of auditors
in the notification under subsection (1); and

 (c) “partner”, in relation to a firm of auditors, includes a
sole proprietor of a firm.

Laws of Malaysia270 Act 777

Powers and duties of auditors

266. (1) Every auditor of a company shall report to the
members on the financial statements and on the company’s
accounting and other records relating to those financial
statements and if it is a holding company for which consolidated
financial statements are prepared shall also report to the
members on the consolidated financial statements, and the report
shall be—

 (a) in the case of a public company, laid before the company
at its annual general meeting; or

 (b) in the case of a private company—

 (i) circulated to its members; or

 (ii) laid before the company at a meeting of members.

 (2) An auditor shall, in a report under this section, state—

 (a) whether the financial statements and, if the company is a
holding company for which consolidated financial statement
are prepared, the consolidated financial statements are
in his opinion properly drawn up—

 (i) so as to give a true and fair view of the matters
required by section 248 to be dealt with in the
financial statement and, if there are consolidated
financial statements, in the consolidated financial
statements;

 (ii) in accordance with this Act so as to give a true
and fair view of the company’s affairs; and

 (iii) in accordance with the applicable approved
accounting standards, or in the case where
financial statements are required to be prepared
for or lodged with the authorities referred to in
section 26d of the Financial Reporting Act 1997,
such financial statements shall be made in
accordance with the applicable approved
accounting standards subject to any specifications,
guidelines or regulations as may be issued by
such authorities;

Companies 271

 (b) if in his opinion the financial statements, and where
applicable the consolidated financial statements, have not
been drawn up in accordance with a particular applicable
approved accounting standard—

 (i) whether in his opinion the financial statements
or consolidated financial statements, as the case
may be, would, if drawn up in accordance with
that approved accounting standard, have given a
true and fair view of the matters required under
section 248 to be dealt with in the financial
statements or consolidated financial statements;

 (ii) if in his opinion the financial statements or
consolidated financial statements, as the case
may be, would not, if so drawn up, have given
a true and fair view of those matters, his reasons
for holding that opinion;

 (iii) if the directors have given the particulars of the
quantified financial effect under section 244,
his opinion concerning the particulars; and

 (iv) in a case to which neither subparagraph (ii) nor
(iii) applies, the particulars of the quantified
financial effect on the financial statements or
consolidated financial statements of the failure to
so draw up the financial statements or consolidated
financial statements, as the case may be;

 (c) in the case of consolidated financial statements, the
names of the subsidiaries, if any, of which he has not
acted as auditor;

 (d) any defect or irregularity in the financial statements or
consolidated financial statements and any matter not set
out in the financial statements or consolidated financial
statements without regard to which a true and fair view
of the matters dealt with by the financial statements or
consolidated financial statements would not be obtained;
and

 (e) if he is not satisfied as to any matter referred to in
paragraph (a), (b) or (c), his reasons for not being so
satisfied.

Laws of Malaysia272 Act 777

 (3) An auditor of a company shall have a duty to form an
opinion to each of the following matters:

 (a) whether he has obtained all the information and
explanations that he required;

 (b) whether proper accounting and other records, including
registers, have been kept by the company as required
by this Act;

 (c) whether the returns received from branch offices of the
company are adequate; and

 (d) whether the procedures and methods used by a holding
company or a subsidiary in arriving at the amount taken
into any consolidated accounts were appropriate to the
circumstances of the consolidation,

and the auditor shall state in his report the particulars of any
deficiency, failure or shortcoming in respect of any matter referred
to in this subsection.

 (4) An auditor of a company has a right of access at all
reasonable times to the accounting and other records, including
registers of the company and is entitled to require from any
officer of the company and any auditor of a related company
such information and explanations as he desires for the purposes
of audit.

 (5) An auditor of a holding company for which consolidated
financial statements are required—

 (a) has a right of access at all reasonable times to the
accounting and other records, including registers, of any
subsidiary, if necessary; and

 (b) is entitled to require from any officer or auditor of
any subsidiary included in the consolidated financial
statements, at the expense of the holding company, such
information and explanations in relation to the affairs of
such subsidiaries included in the consolidated financial
statements.

Companies 273

 (6) The auditor’s report shall be attached to or endorsed on
the financial statements or consolidated financial statements and
shall, if any member so requires, be read before the company in
general meeting and shall be open for inspection by any member
at any reasonable time.

 (7) An auditor of a company or his agent authorized by him in
writing is entitled to attend any general meeting of the company
and to receive all notices of, and other communications relating
to any general meeting which a member is entitled to receive,
and to be heard at any general meeting which he attends on any
part of the business of the meeting which concerns the auditor
in his capacity as auditor.

 (8) If an auditor, in the course of the performance of his duties
as auditor of a company, is satisfied that—

 (a) there has been a breach or non-observance of any of the
provisions of this Act; and

 (b) the circumstances are such that in his opinion the matter
has not been or will not be adequately dealt with by
comment in his report on the financial statements or
consolidated financial statements or by bringing the
matter to the notice of the directors of the company or,
if the company is a subsidiary, of the directors of its
holding company,

he shall forthwith report the matter in writing to the Registrar.

 (9) In addition to subsection (8), if an auditor in the course of
the performance of his duties as an auditor of a public company
or a company controlled by a public company is of the opinion
that a serious offence involving fraud or dishonesty is being or
has been committed against the company or this Act by officers
of the company, he shall forthwith report the matter in writing
to the Registrar.

 (10) No duty to which an auditor of a company may be
subjected to shall be regarded as having been contravened by
reason of his reporting the matter referred to in subsection (9)
in good faith to the Registrar.

Laws of Malaysia274 Act 777

 (11) For the purposes of subsection (9)—

 (a) a company is presumed, unless the contrary is established,
to be controlled by a public company if the public
company is entitled to exercise or control the exercise
of not less than twenty per centum of votes attached to
the voting shares of the company; and

 (b) “a serious offence involving fraud or dishonesty” means
an offence that is punishable by imprisonment for a
term that is not less than two years or the value of the
assets derived or likely to be derived or any loss suffered
by the company, member or debenture holder from the
commission of such an offence exceeds two hundred
and fifty thousand ringgit and includes offences under
sections 591, 592, 593, 594 and 595.

 (12) An officer of a corporation who refuses or fails without
lawful excuse to allow an auditor of the corporation, or an auditor
of a corporation who refuses or fails without lawful excuse to
allow an auditor of its holding company—

 (a) to have access to any accounting and other records,
including registers of the corporation in his custody or
control;

 (b) to give any information or explanation as and when
required under this section; or

 (c) otherwise hinders, obstructs or delays an auditor in the
performance of his duties or the exercise of his powers,

commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding three years or to a fine
not exceeding five hundred thousand ringgit or to both.

 (13) Any auditor who contravenes subsection (8) or (9)
commits an offence and shall, on conviction, be liable to
imprisonment to a term not exceeding five years or to a fine not
exceeding three million ringgit or to both.

Companies 275

Chapter I

Provisions relating to Auditor of Private Company

Appointment of auditors of private company

267. (1) A private company shall appoint an auditor for each
financial year of the company.

 (2) Notwithstanding subsection (1), the Registrar shall have
the power to exempt any private company from the requirement
stated in that subsection according to the conditions as determined
by the Registrar.

 (3) The Board shall appoint an auditor of the company—

 (a) in the case of newly incorporated companies, at least
thirty days before the end of the period for the submission
of the first financial statements to the Registrar; or

 (b) to fill a casual vacancy in the office of auditor.

 (4) The members shall appoint an auditor by ordinary
resolution—

 (a) in the case of subsequent years following the submission
of its first financial statements, during the period for
appointing auditors; or

 (b) if the Board fails to appoint an auditor under subsection (3).

 (5) An auditor of a private company shall only be appointed
in accordance with subsection (3) or (4).

 (6) For the purposes of subsection (4), the period for appointing
auditors means the period of thirty days—

 (a) before the end of the period allowed for the lodgement
of the previous year financial statements with the
Registrar under subsection 259(1); or

 (b) if the previous year financial statements were lodged
earlier, before the day on which financial statements
were lodged with the Registrar.

Laws of Malaysia276 Act 777

 (7) The company and every director of the company who
contravene this section commit an offence.

Power of Registrar to appoint auditors of private company

268. If a private company fails to appoint an auditor, the Registrar
may appoint one or more auditors upon application in writing
from any member of the company.

Term of office of auditors of private company

269. (1) An auditor of a private company shall hold office in
accordance with the terms of his appointment, provided that—

 (a) he does not take office until the previous auditor
cease to hold office, unless he is the first auditor of
the company; and

 (b) he ceases to hold office thirty days from the circulation
of the financial statements to the members unless he is
re-appointed.

 (2) Notwithstanding paragraph (1)(a), an auditor may take
office before the previous auditor ceases office in the following
circumstances:

 (a) where the previous auditor is not the sole auditor; or

 (b) where he is appointed as an additional auditor.

 (3) Where the office of an auditor becomes vacant under
paragraph (1)(b) and no auditor has been appointed by members
of the company, the auditor who holds office immediately before
the vacancy shall be deemed to be re-appointed, unless—

 (a) he was appointed by the Board;

 (b) the constitution require actual re-appointment;

 (c) the deemed re-appointment is prevented by the
members under section 270; or

Companies 277

 (d) the members have resolved that he should not be re-
appointed.

 (4) Subsection (3) is without prejudice to the provisions
of this Subdivision as to removal and resignation of auditors.

Prevention by members of deemed re-appointment of auditor

270. (1) An auditor of a private company shall not be deemed
to be re-appointed under subsection 269(3) if the company has
received notice under this section from members representing at
least five per centum of the total voting rights of all members
who would be entitled to vote on a resolution that the auditor
should not be re-appointed.

 (2) A notice under this section—

 (a) may be in hard copy or electronic form;

 (b) shall be authenticated by each member giving the
notice; and

 (c) shall be received by the company at least thirty days
before the circulation of the financial statements to the
members.

Chapter II

Provisions relating to Auditor of Public Company

Appointment of auditors of public company

271. (1) An auditor of a public company shall be appointed for
each financial year of the company.

 (2) Notwithstanding subsection (1), the Board shall appoint an
auditor—

 (a) at any time before the first annual general meeting of
the company; or

 (b) to fill casual vacancy in the office of the auditor.

Laws of Malaysia278 Act 777

 (3) Any auditor appointed under subsection (2) shall hold
office until the conclusion of—

 (a) the first annual general meeting for the appointment
under paragraph 2(a); or

 (b) the next annual general meeting for the appointment
under paragraph 2(b).

 (4) The members shall appoint an auditor by ordinary
resolution—

 (a) at the annual general meeting;

 (b) if the company should have appointed an auditor at
an annual general meeting but failed to do so; or

 (c) if  the Board fails to appoint an auditor under
subsection (2).

 (5) An auditor of a public company should only be appointed
in accordance with subsection (2) or (4).

 (6) The company and every officer who contravene this
section commit an offence.

Power of the Registrar to appoint auditors of public company

272. If a public company fails to appoint an auditor, the Registrar
may appoint one or more auditors upon application in writing
from any member of the company.

Term of office of auditors of public company

273. The auditor of a public company shall hold office in
accordance with the terms of his appointment, provided that—

 (a) he does not take office until the previous auditor has
ceased to hold office unless he is the first auditor of
the company, and

 (b) he ceased to hold office at the conclusion of the annual
general meeting next following his appointment, unless
he is re-appointed.

Companies 279

Chapter III

General Provisions relating to Auditors

Fixing of auditor’s remuneration

274. (1) The remuneration of an auditor appointed—

 (a) by the members of a company shall be fixed by the
members by ordinary resolution or in such manner as
the members may determine;

 (b) by the Board shall be fixed by the Board and if not so
fixed, by the company; or

 (c) by the Registrar shall be fixed either by the Registrar or
the Board and if not so fixed, by the company.

 (2) In this section, “remuneration” includes sums paid in respect
of expenses and payment otherwise than cash.

Obligation to furnish particulars of payment made to
auditors

275. (1) If a company is served with a notice sent by or on
behalf of at least five per centum of the total number of members
of the company or the holders in aggregate of not less than five
per centum of the company’s issued share capital, requiring
particulars of all remuneration paid to or receivable by the auditor
of the company, a partner, an employer or an employee of the
auditor, by or from the company or any subsidiary in respect of
services other than auditing services rendered to the company,
the company shall forthwith—

 (a) prepare or cause to be prepared a statement showing
particulars of all the remuneration paid to or receivable
by the auditor, partner, employer or employee of the
auditor and of the services in respect of which the payments
have been made for the financial year immediately
preceding the service of the notice;

 (b) forward a copy of the statement to all persons entitled
to receive notice of general meetings of the company;
and

Laws of Malaysia280 Act 777

 (c) in the case of a public company, lay the statement before
the company in general meeting.

 (2) The company and every officer who contravene this section
commit an offence.

Resolution to remove auditor from office

276. (1) The members of a company may remove an auditor
from office at any time—

 (a) by ordinary resolution at a general meeting; and

 (b) in accordance with section 277.

 (2) This section shall not be taken as depriving the person
removed of the compensation or damages payable to him in
respect of the termination of his appointment as an auditor.

 (3) An auditor may not be removed from office before the
expiration of his term of office except by resolution under this
section.

Special notice required for resolution to remove auditor from
office

277. (1) A special notice shall be required for a resolution to
remove an auditor from office at a general meeting of a company.

 (2) Upon receipt of the special notice of such an intended
resolution, the company shall immediately send a copy of the
notice to the auditor proposed to be removed and the Registrar.

 (3) The auditor may make a representation in writing not
exceeding a reasonable length to the company within seven days
from the receipt of the special notice and may request that prior
to the meeting at which the resolution is to be considered, a
copy of the representation be circulated by the company to every
member of the company to whom notice of the meeting is sent.

 (4) Upon request of the auditor referred to in subsection (3),
the company shall send a copy of the representation to every
member of the company to whom notice of the meeting is sent.

Companies 281

 (5) If a copy of the representation is not sent as required
under subsection (4), the auditor may, without prejudice to his
right to be heard orally, require that the representation be read
out at the meeting.

 (6) A copy of the representation need not be circulated and
the representation need not be read at the meeting if, on the
application either of the company or of any other person claiming
to be aggrieved, the Court is satisfied that the auditor is using this
section to secure needless publicity or the matter is defamatory
or some other grounds that the Court thinks reasonable.

Notice to Registrar of resolution to remove auditor from
office

278. (1) If a resolution is passed under section 276, the
company shall give a notice of that fact to the Registrar within
fourteen days.

 (2) The company and every officer who contravene this
section commit an offence.

Procedure to appoint auditor by written resolution

279. (1) This section applies where a resolution is proposed
as a written resolution of a private company the effect of which
would be to appoint a person as an auditor in place of an outgoing
auditor.

 (2) The company shall send a copy of the proposed resolution
to the person proposed to be appointed as an auditor and to the
outgoing auditor.

 (3) The outgoing auditor may make a statement in writing
explaining the circumstances connected with his resignation not
exceeding a reasonable length to the company within fourteen days
from receiving the proposed resolution referred to in subsection (1)
and may request a copy of the statement to be sent to every
member of the company.

Laws of Malaysia282 Act 777

 (4) The company shall send a copy of the statement to every
member of the company to whom resolution under this section
has been circulated prior to the period for agreeing to written
resolution.

 (5) The company shall circulate the resolution in accordance with
section 301 or 303 and where this subsection and subsection (4)
apply—

 (a) the period allowed under subsection 303(3) for service of
copies of the proposed resolution is twenty-eight days
instead of twenty-one days; and

 (b) subsections 303(5) and (6) shall apply in relation to a
failure to comply with that subsection.

 (6)  A copy of the statement need not be circulated if, on the
application either of the company or of any other person claiming
to be aggrieved, the Court is satisfied that the auditor is using this
section to secure needless publicity or the matter is defamatory
or other grounds that the Court thinks reasonable.

Procedure to appoint auditor at a meeting of members

280. (1) This section applies to a resolution at a general meeting
of a company the effect of which is to appoint a person as an
auditor in place of an outgoing auditor.

 (2) A special notice is required of such a resolution if—

 (a) in the case of a private company—

 (i) no period for appointing auditor has ended since
the outgoing auditor ceased to hold office due
to his resignation or removal; or

 (ii) such a period has ended and an auditor should
have been appointed but is not appointed; or

 (b) in the case of a public company—

 (i) no annual general meeting is held since the
outgoing auditor ceased to hold office due to
his resignation or removal; or

Companies 283

 (ii) an annual general meeting is held at which an
auditor should have been appointed but is not
appointed.

 (3) Upon receipt of notice of such a proposed resolution, the
company shall immediately send a copy of the notice to the
person proposed to be appointed as an auditor.

Resignation of auditor

281. (1) An auditor of a company may resign his office by
giving a notice in writing to that effect to the company at its
registered office.

 (2) A notice of resignation under subsection (1) shall bring
the auditor’s term of office to an end after twenty-one days from
which the notice is given or from the date as may be specified
in the notice.

Notice of resignation of auditor to Registrar

282. (1) Where an auditor resigns his office, the company shall
send a copy of the notice to the Registrar within seven days from
the receiving of a notice of resignation.

 (2) The company and every officer who contravene this
section commit an offence.

Rights of resigning auditor of a public company

283. (1) This section applies where the notice of resignation of
an auditor of a public company is accompanied with a statement
of the circumstances connected with his resignation.

 (2) The auditor may give the notice of resignation referred
to in section 281 together with a signed requisition calling on
the directors of the company to immediately convene a general
meeting of the company for the purposes of receiving and
considering the explanation of the circumstances connected with
his resignation as he may wish to place before the meeting.

Laws of Malaysia284 Act 777

 (3) The auditor may request the company to circulate a
statement in writing not exceeding a reasonable length of the
circumstances connected with the auditor’s resignation to its
members—

 (a) before the meeting convened on auditor’s requisition; or

 (b) before any general meeting at which the auditor’s term
of office would otherwise have expired or at which it is
proposed to fill the vacancy caused by his resignation.

 (4) The company shall—

 (a) state the fact that the statement referred to in subsection (3)
has been made in any notice of the meeting given to
members of the company; and

 (b) send a copy of the statement to every member of the
company to whom notice of the meeting is or has been
sent.

 (5) The directors shall hold the general meeting required under
this section within twenty-eight days from the date of the receipt
of the notice of a requisition made under subsection (2).

 (6) If a copy of the statement referred to in subsection (4)
is not sent as required due to the default of the company, the
auditor may, without prejudice to his right to be heard orally,
require that the statement be read out at the meeting.

 (7) A copy of a statement need not be sent and the statement
need not be read out at the meeting if, on the application either of
the company or of any other person who claims to be aggrieved,
the Court is satisfied that the auditor is using this section to
secure needless publicity or the matter is defamatory.

 (8) The Court may order the company’s costs on such an
application to be paid in whole or in part by the auditor,
notwithstanding that the auditor is not a party to the application.

 (9) An auditor who has resigned has, notwithstanding his resignation,
the rights conferred by section 285 in relation to any general
meeting of the company as mentioned in paragraph (3)(a) or (b).

Companies 285

 (10) In this section, any reference in section 285 to matters
concerning the auditor as an auditor shall be construed as
references to matters concerning the auditor as a former auditor.

 (11) Every director who fails to take all reasonable steps to
secure that a meeting is convened under subsection (5) commits
an offence.

Duty to inform upon cessation of office

284. If an auditor has made written representation to the company
under subsection 277(3) or if an auditor gives notice to the
directors of the company under subsection 281(1), the auditor
shall—

 (a) submit a copy of the written representation or his
statement of circumstances connected with his
resignation to the Registrar; and

 (b) in the case of a company whose shares or debentures
are quoted on a stock exchange, submit a copy of the
statement of the stock exchange,

within seven days from the submission of the written representation
or his notice of resignation.

Attendance of auditors at general meetings where financial
statements are laid

285. (1) An auditor of a public company shall attend every
annual general meeting where the financial statements of the
company for a financial year are to be laid, so as to respond
according to his knowledge and ability to any question relevant
to the audit of the financial statements.

 (2) In the case of a private company, if due notice is given
to an auditor of the intention to move a resolution requiring the
presence of the auditor at a general meeting of the company
where financial statements of the company for any financial
year are to laid, the auditor shall attend that meeting so as to
respond according to his knowledge and ability to any question
relevant to the audit of the financial statements.

Laws of Malaysia286 Act 777

 (3) An auditor who fails to attend a meeting as required under
subsection (1) or (2) commits an offence unless—

 (a) the auditor is prevented by circumstances beyond his
control from attending the meeting;

 (b) the auditor arranges for another auditor with knowledge
of the audit to attend and carry out the duties of the
auditor at the meeting;

 (c) if the auditor is a partner of a firm, the person attending
the meeting in place of the designated auditor is a partner
of that firm; or

 (d) the auditor arranges for an agent authorized by the
auditor in writing to attend and carry out the duties of
the auditor at the meeting.

Auditor and other person to enjoy qualified privilege in
certain circumstances

286. (1) An auditor shall not, in the absence of malice on his
part, be liable to any action for defamation at the suit of any
person in respect of any statement which he makes in the course
of his duties as an auditor, whether the statement is made orally
or in writing.

 (2) A person shall not, in the absence of malice on his part,
be liable to any action for defamation at the suit of any person
in respect of the publication of any document prepared by an
auditor in the course of his duties and required under this Act
to be lodged with the Registrar.

 (3) An auditor shall not be liable to be sued in any court or
be subject to any criminal or disciplinary proceedings for any
report under section 266 submitted by the auditor in good faith
and in the intended performance of any duty imposed on the
auditor under this Act.

 (4) This section does not limit or affect any other right,
privilege or immunity that an auditor or other person has as
defendant in an action for defamation.

Companies 287

Duties of auditors to trustee for debenture holders

287. (1) The auditor of a borrowing corporation shall send
a copy of the financial statements or any report, certificate or
other document which the auditor is required by this Act or by
the debentures or trust deed to give to the corporation to every
trustee for the debenture holders of the borrowing corporation by
post within seven days from furnishing the corporation with any
financial statements or any report, certificate or other document
which he is required by this Act or by the debentures or trust
deed to give to the corporation.

 (2) Where in the performance of his duties as an auditor
of a borrowing corporation, the auditor becomes aware of any
matter which is in his opinion relevant to the exercise and
performance of the powers and duties imposed by this Act or by
any trust deed upon any trustee for the debenture holders of the
corporation, the auditor shall send by post a report in writing on
the matter to the borrowing corporation and a copy of the report
to the trustee within seven days from the auditor becoming aware
of the matter.

 (3) An auditor shall not be liable to be sued in any court or
be subject to any criminal or disciplinary proceedings for any
report under section 266 submitted by the auditor in good faith
and in the intended performance of any duty imposed on the
auditor under this Act.

 (4) Any auditor who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine of five hundred ringgit for each day during which
the offence continues after conviction.

Division 4

Indemnity and Insurance for Officers and Auditors

Provisions indemnifying directors or officers

288. Any provision, whether contained in the constitution or in
any contract with a company or otherwise, for exempting any
officer or auditor of the company from, or indemnifying him

Laws of Malaysia288 Act 777

against, any liability which by law would otherwise attach to him
in respect of any negligence, default, breach of duty or breach
of trust, of which he may be guilty in relation to the company,
shall be void.

Indemnity and insurance for officers and auditors

289. (1) Unless provided otherwise in this section, a company
shall not indemnify or directly or indirectly effect insurance for
an officer or auditor of the company in respect of—

 (a) the liability for any act or omission in his capacity
as an officer or auditor; or

 (b) the costs incurred by that officer or auditor in defending
or settling any claim or proceedings relating to any such
liability.

 (2) An indemnity given in breach of this section shall
be void.

 (3) A company may indemnify an officer or auditor of the
company for any costs incurred by him or the company in respect
of any proceedings—

 (a) that relates to the liability for any act or omission
in his capacity as an officer or auditor; and

 (b) in which judgment is given in favour of the officer or
auditor or in which the officer or auditor is acquitted
or in which the officer or auditor is granted relief under
this Act, or where proceedings are discontinued or not
pursued.

 (4) A company may indemnify an officer or auditor of the
company in respect of—

 (a) any liability to any person, other than the company, for
any act or omission in his capacity as an officer or
auditor; and

Companies 289

 (b) costs incurred by that director or officer or auditor in
defending or settling any claim or proceedings relating
to any such liability except—

 (i) any liability of the director to pay—

 (A) a fine imposed in criminal proceedings; or

 (B) a sum payable to a regulatory authority
by way of a penalty in respect of non-
compliance with any requirement of a
regulatory nature, however arising; or

 (ii) any liability incurred by the director—

 (A) in defending criminal proceedings in
which he is convicted; or

 (B) in defending civil proceedings brought
by the company, or an associated
company, in which judgment is given
against him; or

 (c) in connection with an application for relief under
this Act.

 (5) A company may, with the prior approval of the Board,
effect insurance for an officer or auditor of the company in
respect of—

 (a) civil liability, for any act or omission in his capacity as
a director or officer or auditor; and

 (b) costs incurred by that officer or auditor in defending or
settling any claim or proceeding relating to any such
liability; or

 (c) costs incurred by that officer or auditor in defending any
proceedings that have been brought against that person in
relation to any act or omission in that person’s capacity
as an officer or auditor—

 (i) in which that person is acquitted;

Laws of Malaysia290 Act 777

 (ii) in which that person is granted relief under this
Act; or

 (iii) where proceedings are discontinued or not
pursued.

 (6) In  the  case  o f  a  d i rec to r ,  subsec t ion  (4 )  and
paragraphs (5)(a) and (b) shall not apply to any civil or criminal
liability in respect of a breach of the duty as specified in
section 213.

 (7) The directors shall—

 (a) record or cause to be recorded in the minutes of the
board of directors; and

 (b) disclose or cause to be disclosed in the directors’ report
referred to in section 253,

the particulars of any indemnity given to, or insurance effected
for, any officer or auditor of the company.

 (8) Where insurance is effected for an officer or auditor of a
company and subsection (6) or (7) has not been complied with,
the officer or auditor shall be personally liable to the company
for the cost of effecting the insurance unless the officer or auditor
satisfies the Court that he is not liable.

 (9) In this section—

 “officer”, in relation to a corporation, includes—

 (a) any director, manager, secretary or employee of
the corporation;

 (b) a former officer;

 (c) a receiver or receiver and manager of any part
of the undertaking of the corporation appointed
under a power contained in any instrument; and

Companies 291

 (d) any liquidator of a company appointed in a voluntary
winding up,

but does not include—

 (A) any receiver who is not also a manager;

 (B) any receiver and manager appointed by the Court;
or

 (C) any liquidator appointed by the Court or by the
creditors;

 “effect insurance” includes pay, whether directly or indirectly,
the costs of the insurance;

 “indemnify” includes relief or excuse from liability, whether before
or after the liability arises, and “indemnity” has a corresponding
meaning.

Division 5

Meetings

Subdivision 1

Meetings and Resolutions for Members

Passing a resolution

290. (1) A resolution of the members or of a class of members
of a private company shall be passed either—

 (a) by a written resolution; or

 (b) at a meeting of the members.

 (2) A resolution of the members or of a class of members of
a public company shall be passed at a meeting of the members.

 (3) Unless otherwise provided in the constitution, where this
Act does not specify the type of resolution required, the resolution
of a company shall be passed as an ordinary resolution.

Laws of Malaysia292 Act 777

Ordinary resolutions

291. (1) An ordinary resolution of the members or a class of
members of  a company means a resolution passed by a simple
majority of more than half of such members—

 (a) who are entitled to vote and do vote in person, or where
proxies are  allowed, by proxy at a meeting of members;
or

 (b)  who are entitled to vote on a written resolution.

 (2) Subject to paragraph (1)(a), an ordinary resolution passed
at a meeting on a show of hands is passed by a simple majority
if it is passed by members representing a simple majority of
members who are present at the meeting.

 (3) An ordinary resolution is passed on a poll taken at a
meeting if it is passed by members representing more than half
of the total voting rights of the members who are entitled to vote
and do vote in person or by proxy on the resolution.

 (4) Subject to the provision of the constitution, any matter
that may be passed by ordinary resolution may also be passed
by special resolution.

Special resolutions

292. (1) A special resolution of the members or class of members
of a company means a resolution of which a notice of not less
than twenty-one days has been given and passed by a majority
of not less than seventy-five per centum of such members—

 (a) who are entitled to vote and do vote in person, or where
proxies are allowed, by proxy at a meeting of members;
or

 (b) who are entitled to vote on a written resolution.

 (2) If a resolution of a private company is passed as a written
resolution, the resolution is not a special resolution unless it
is stated that it is a special resolution and passed as a special
resolution.

Companies 293

 (3)  Subject to paragraph (1)(a), a special resolution passed at
a meeting on a show of hands is passed as a special resolution
if it is passed by not less than seventy-five per centum of the
members who are present at the meeting.

 (4) A special resolution is passed on a poll taken at a meeting
if it is passed by members representing not less than seventy-
five per centum of the total voting rights of the members who
are entitled to vote and do vote in person or by proxy on the
resolution.

 (5) Where a resolution is passed at a meeting—

 (a) the resolution is not a special resolution unless the
notice of the meeting includes the text of the resolution
and states that the resolution is proposed as a special
resolution; and

 (b) if it is so stated in the notice of the meeting, the resolution
shall only be passed as a special resolution.

General rules on voting

293. (1) Unless otherwise provided in the constitution—

 (a) in the case of a company having a share capital—

 (i) on a vote on a written resolution, every member
shall have one vote in respect of each share or
stock held by him;

 (ii) on a vote on a resolution on a show of hands at
a meeting, every member shall have one vote;
or

 (iii) on a vote on a resolution on a poll taken at a
meeting, every member shall have one vote in
respect of each share or stock held by him; and

 (b) in the case of a company not having a share capital,
every member shall have one vote.

Laws of Malaysia294 Act 777

 (2) Notwithstanding paragraph (1)(a), no member shall be
entitled to vote at a meeting unless all calls or other sums presently
payable by the member in respect of shares in the company has
been paid.

Votes by proxy

294. (1) Notwithstanding anything in the constitution, where a
member entitled to vote on a resolution has appointed a proxy,
the proxy shall be entitled to vote on a show of hands, provided
that he is the only proxy appointed by the member.

 (2) Where a member entitled to vote on a resolution has
appointed more than one proxy—

 (a) the proxies shall only be entitled to vote on poll; and

 (b) the appointment shall not be valid unless he specifies the
proportions of his holdings to be represented by each
proxy.

 (3) Notwithstanding subsection (1), in the case of a company
whose shares are quoted on a stock exchange, if a member
entitled to vote on a resolution has appointed more than one
proxy, the entitlement of those proxies to vote on a show of
hands shall be in accordance with the listing requirements of
the stock exchange.

Votes of joint holders of shares

295. (1) In the case of joint holders of shares of a company,
the joint holders shall be considered as one shareholder.

 (2) For the purposes of subsection (1)—

 (a) if the joint holders purport to exercise the power in
the same way, the power is treated as exercised in that
way; or

 (b) if the joint holders do not purport to exercise the power
in the same way, the power is treated as not exercised.

Companies 295

Right to object to a person’s entitlement to vote

296. (1) Unless otherwise provided in the constitution, no
objection shall be raised to the qualification of any voter except
at the meeting or adjourned meeting at which the vote objected
to is given or tendered, and every vote not disallowed at the
meeting shall be valid for all purposes.

 (2) Any objection under subsection (1) made in due time
shall be referred to the chairman of the meeting, whose decision
shall be final and conclusive.

Subdivision 2

Written Resolutions of Private Companies

Written resolutions of private companies

297. (1) A resolution shall be proposed as a written resolution
by the Board or any member of a private company.

 (2) The following shall not be passed as a written resolution:

 (a) a resolution under section 206 to remove a director
before the expiration of his term of office; or

 (b) a resolution under section 276 to remove an auditor
before the expiration of his term of office.

Eligibility of members to receive written resolution

298. (1) In relation to a member’s eligibility to receive a
resolution proposed as a written resolution of a private company,
the eligible members shall be the members who would have been
entitled to vote on the resolution on the circulation date of the
resolution.

 (2) If a person who is entitled to vote on a written resolution
changes during the course of the day the written resolution is
circulated, the eligible members shall be the persons entitled
to vote on the resolution at the time that the first copy of the
resolution is circulated to a member for the member’s agreement.

Laws of Malaysia296 Act 777

Circulation date

299. The circulation date of a written resolution shall be the
date on which—

 (a) copies of the written resolution are circulated to
members; or

 (b) if copies are circulated to members on different days,
to the first of those days.

Manner in which a written resolution to be circulated

300. (1) A written resolution shall be circulated in hard copy
or electronic form.

 (2) Unless otherwise provided in the constitution, a written
resolution—

 (a) circulated in hard copy shall be sent to any member
either personally or by post to the address provided by
the member to the company for such purpose; or

 (b) circulated in electronic form shall be transmitted to
the electronic address provided by the member to the
company for such purpose.

Circulation of written resolutions proposed by directors

301. (1) Where the Board proposes a written resolution, the
company shall circulate copies of the written resolution to every
eligible member at the same time, so far as practicable in the
manner specified under section 300.

 (2) A copy of the written resolution shall be accompanied by
a statement informing a member as to—

 (a) the procedure for signifying agreement or otherwise
to the resolution; and

 (b) the date by which the resolution shall lapse if it is not
passed.

Companies 297

 (3) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit.

 (4) The validity of the resolution, if passed, is not affected
by a failure to comply with this section.

Members’ power to require circulation of written resolution

302. (1) Any member of a private company having a total of
five per centum, or such lower per centum as specified in the
constitution, of the total voting rights of all eligible members may
require the company to circulate a resolution that may properly
be moved as a written resolution.

 (2) Any resolution may properly be moved as a written
resolution unless the resolution—

 (a) if passed, would be ineffective whether by reason of
inconsistency with any written law or the constitution;

 (b) is defamatory of any person;

 (c) is frivolous or vexatious; or

 (d) if passed, would not be in the best interest of the
company.

 (3) Where a member requires a company to circulate a
written resolution, the member may require the company to
circulate with the written resolution a statement of not more than
one thousand words on the subject matter of the written resolution.

 (4) A company is required to circulate the written resolution
and any accompanying statement once the company has received
a request to do so from any member representing not less than
five per centum or such lower percentage as is specified in the
constitution of the total voting rights of all members entitled to
vote on the resolution.

 (5) A request under subsection (1) shall—

 (a) be in hard copy or electronic form;

 (b) state the resolution and provide any accompanying
statement; and

Laws of Malaysia298 Act 777

 (c) be signed or authenticated by the member making the
request.

Circulation of written resolution proposed by members

303. (1) If a company receives a request under subsection 302(1)
to circulate a written resolution, the directors shall circulate to
every eligible member in hard copy or electronic form—

 (a)  a copy of the resolution; and

 (b)  a copy of any accompanying statement.

 (2) The directors shall circulate copies of the written resolution
and any accompanying statement at the same time, so far as
reasonably practicable to all eligible members in hard copy or
in electronic form.

 (3) The directors shall send the copies, or if copies are sent
to members on different days, the first of those copies, not
more than twenty-one days from it becomes subject to the
requirement under section 302 to circulate the resolution.

 (4) The copy of the resolution shall be accompanied by a
statement as to—

 (a) the procedure for signifying agreement or otherwise
to the resolution; and

 (b) the date by which the resolution shall lapse if the
resolution is not passed.

 (5) The validity of the resolution, if passed, is not affected
by a failure to comply with this section.

 (6) If the director fails to circulate a written resolution,
any member who has requested the written resolution under
section 302 may circulate the resolution.

 (7) Any reasonable expenses incurred by the members
circulating the resolution by reason of the failure of the directors
to circulate a written resolution shall be reimbursed by the
company.

Companies 299

 (8) Any sum so reimbursed shall be retained by the company
out of any sums due or to become due from the directors by way
of fees or other remuneration in respect of the services of the
directors as who were in default.

Expenses of circulation

304. Unless the company resolves otherwise—

 (a) the expenses of the company in complying with
section 303 shall be paid by the members who requested
the circulation of the statement; and

 (b) the company shall not be bound to comply with
section 303 unless there is deposited with or tendered
to the company, not later than one week before the
meeting, a sum reasonably sufficient to meet the company
expenses in doing so.

Application not to circulate a member’s written resolution

305. (1) A company shall not be required to circulate a
member’s written resolution under subsection 303(1) if, on
an application by the company or a person who claims to be
aggrieved, the Court is satisfied that the rights conferred by
section 302 are being abused.

 (2) The Court may order any member who requested the
circulation of the written resolution to pay the whole or part of
the company’s costs on such an application, even if the member
is not a party to the application.

Procedure for signifying agreement to written resolution

306. (1) A member signifies his agreement to a proposed written
resolution when the company receives from him an authenticated
document—

 (a)  identifying the resolution to which it relates; and

 (b)  indicating his agreement to the resolution.

Laws of Malaysia300 Act 777

 (2) The document shall be sent to the company in hard copy
or electronic form.

 (3) A member’s agreement to a written resolution, once
signified, shall not be revoked.

 (4) A written resolution shall be passed when the required
majority of eligible members have signified their agreement to
the written resolution.

Period for agreeing to written resolution

307. (1) Unless otherwise provided in the constitution, a proposed
written resolution made under section 302 lapses if it is not passed
before the end of the period of twenty-eight days beginning with
the circulation date.

 (2) The agreement of a member to a written resolution shall
not be effective if it is signified after the expiry of that period.

Sending of documents relating to written resolutions by
electronic means

308. Where a company has given an electronic address in
any document containing or accompanying a proposed written
resolution, the company shall be deemed to have agreed that any
document or information relating to that resolution may be sent
by electronic means to that address, subject to any conditions or
limitations specified in the document.

Subdivision 3

Passing Resolutions at Meetings of Members

Resolutions at meetings of members

309. Unless otherwise provided in the constitution, a resolution
shall be validly passed at a meeting of members if—

 (a) notice of the meeting and of the resolution is given; and

 (b) the meeting is held and conducted,

in accordance with the provisions of this Subdivision.

Companies 301

Power to convene meetings of members

310. A meeting of members may be convened by—

 (a) the Board; or

 (b) any member holding at least ten per centum of the issued
share capital of a company or a lower percentage as
specified in the constitution or if the company has no
share capital, by at least five per centum in the number
of the members.

Power to require directors to convene meetings of members

311. (1) The members of a company may require the directors
to convene a meeting of members of the company.

 (2) A requisition under subsection (1)—

 (a) shall be in hard copy or electronic form;

 (b) shall state the general nature of the business to be dealt
with at the meeting;

 (c) may include the text of a resolution that may properly
be moved and is intended to be moved at the meeting;
and

 (d) shall be signed or authenticated by the person making
the requisition.

 (3) The directors shall call for a meeting of members once the
company has received requisition to do so from—

 (a) members representing at least ten per centum of the paid
up capital of the company carrying the right of voting
at meetings of members of the company, excluding any
paid up capital held as treasury shares; or

 (b) in the case of a company not having a share capital,
members who represent at least five per centum of the
total voting rights of all members having a right of
voting at meetings of members.

Laws of Malaysia302 Act 777

 (4) Notwithstanding subsection (3), in the case of a private
company, members representing at least five per centum of the
paid up capital of the company carrying the right of voting at
meeting of members of the company may require a meeting of
members to be convened if more than twelve months has elapsed
since the end of the last meeting of members convened pursuant
to a requisition under this section and the proposed resolution is
not defamatory, vexatious or frivolous.

 (5) A resolution may properly be moved at a meeting unless
the resolution—

 (a) if passed, would be ineffective whether by reason of
inconsistency with any written law or the constitution;

 (b) is defamatory of any person;

 (c) is frivolous or vexatious; or

 (d) if passed, would not be in the best interest of the
company.

 (6) For the purposes of subsections (3) and (4), the right of
voting shall be determined at the date the requisition is deposited
with the company.

Directors’ duty to call meetings required by members

312. (1) In relation to section 311, the directors shall—

 (a) call for the meeting within fourteen days from the date
of the requisition; and

 (b) hold the meeting on a date not more than twenty-eight
days after the date of the notice to convene the meeting.

 (2) If the requests received by the company identify a
resolution intended to be moved at the meeting, the notice of
the meeting shall include the text of the resolution.

 (3) The business that may be dealt with at the meeting
includes a resolution of which notice is given in accordance with
this section.

Companies 303

 (4) If the resolution is to be proposed as a special resolution,
the directors shall be considered as not having duly called for the
meeting if the notice of the resolution is not given in accordance
with section 292.

Power of members to convene meeting of members at company’s
expense

313. (1) If the directors—

 (a) are required under section 311 to call a meeting of
members; and

 (b) do not do so in accordance with section 312,

the members who requisitioned the meeting, or any of the members
representing more than one half of the total voting rights of all
of the members who requisitioned the meeting, may call for a
meeting of members.

 (2) Where the requisition received by the company included
the text of a resolution intended to be moved at the meeting, the
notice of the meeting shall include the text of the resolution.

 (3) The meeting shall be convened on a date not more than
three months after the date on which the directors received a
requisition under subsection 311(1) to call for a meeting of
members.

 (4) The meeting shall be convened in the same manner, as
nearly as possible, as that in which meetings are requisitioned
to be convened by directors of the company.

 (5) The business which may be dealt with at the meeting
includes a resolution of which notice is given in accordance with
this section.

 (6) Any reasonable expenses incurred by the members
requisitioning the meeting by reason of the failure of the directors
to call a meeting shall be reimbursed by the company.

Laws of Malaysia304 Act 777

 (7) Any sum so reimbursed shall be retained by the company
out of any sums due or to become due from the company by
way of fees or other remuneration in respect of the services of
the directors as who were in default.

Power of Court to order meeting

314. (1) This section applies if for any reason it is impracticable—

 (a) to call for a meeting of members of a company in any
manner in which meetings of that company may be
called; or

 (b) to conduct the meeting in the manner prescribed by the
constitution or this Act.

 (2) The Court may, either of its own motion or on the
application—

 (a) of a director of the company;

 (b) of a member of the company who would be entitled to
vote at the meeting; or

 (c) of the personal representative of any such member,

order a meeting to be called, held and conducted in any manner
the Court thinks fit.

 (3) Where such an order is made, the Court may give
such ancillary or consequential direction as the Court thinks
expedient.

 (4) Such directions may include a direction that one member
of the company present in person or by proxy at the meeting
be deemed to constitute a quorum.

 (5) A meeting called, held and conducted in accordance
with an order under this section shall be deemed for all
purposes to be a meeting of the company duly called, held and
conducted.

Companies 305

Resolution passed at adjourned meeting

315. Where a resolution is passed at an adjourned meeting of
a company or of holders of any class of shares, the resolution
shall, for all purposes, be treated as having been passed on the
date on which it was in fact passed.

Subdivision 4

Notice of Meetings

Notice required for meetings of members

316. (1) A meeting of members of a private company, other
than a meeting for the passing of a special resolution, shall be
called by notice of at least fourteen days or any longer period
specified in its constitution.

 (2) A meeting of members of a public company, other than a
meeting for the passing of a special resolution, shall be called
by notice—

 (a) in the case of an annual general meeting, at least
twenty-one days or any longer period specified in its
constitution; and

 (b) in any other case, at least fourteen days or any longer
period specified in its constitution.

 (3) An annual general meeting may be called by a notice
shorter than the period referred to in subsection (2) if agreed
by all the members entitled to attend and vote at the meeting.

 (4) A meeting of members other than an annual general
meeting may be called by a notice shorter than the period
referred to in subsection (1) or (2) if so agreed by the majority
in the number of members entitled to attend and vote at the
meeting, being a majority who—

 (a) together hold not less than the requisite percentage in the
number of the shares giving a right to attend and vote
at the meeting, excluding any shares in the company
held as treasury shares; or

Laws of Malaysia306 Act 777

 (b) in the case of a company not having a share capital,
together represent not less than the requisite percentage
of the total voting rights at that meeting of all the
members.

 (5) The requisite percentage shall be—

 (a) in the case of a private company, ninety per centum or
such higher percentage, not exceeding ninety five per
centum as may be specified in the constitution; or

 (b)  in the case of a public company, ninety five per centum.

 (6) Any accidental omission to give notice of a meeting to,
or the non-receipt of the notice of the meeting by, any member
shall not invalidate proceedings at a meeting.

Contents of notices of meetings of members

317. (1) Notice of a meeting of members of a company shall
state—

 (a) the place, date and time of the meeting; and

 (b) the general nature of the business of the meeting.

 (2) Notice of meeting of members may include text of any
proposed resolution and other information as the directors deem
fit.

Notice of adjourned meetings of members

318. When a meeting of members is adjourned for thirty days
or more, notice of the adjourned meeting shall be given in the
same manner as in the case of the original meeting.

Manner in which notice to be given

319. (1) Notice of a meeting of members shall be in writing
and shall be given to the members either—

 (a) in hard copy;

Companies 307

 (b) in electronic form; or

 (c) partly in hard copy and partly in electronic form.

 (2) Unless otherwise provided in the constitution, a notice—

 (a) given in hard copy shall be sent to any member either
personally or by post to the address supplied by the
member to the company for such purpose; or

 (b) given in electronic form shall be transmitted to the electronic
address provided by the member to the company for
such purpose or by publishing on a website.

Notification of publication of notice of meeting on website

320. (1) Notice of a meeting of members shall not be validly
given by a company by means of a website unless a notification
to that effect is given in accordance with this section.

 (2) The company shall notify a member of the publication of
the notice on the website and such notification shall be in writing
and shall be given in hard copy or electronic form stating—

 (a) that it concerns a meeting of members;

 (b) the place, date and time of the meeting; and

 (c) in the case of a public company, whether the meeting is
an annual general meeting.

 (3) The notice shall be made available on the website
throughout the period beginning from the date of the notification
referred to in subsection (2) until the conclusion of the meeting.

Persons entitled to receive notice of meetings of members

321. (1) Notice of a meeting of members shall be given to every
member, director and auditor of the company.

Laws of Malaysia308 Act 777

 (2) The reference to a member in subsection (1) includes any
person who is entitled to a share in consequence of the death or
bankruptcy of a member who, but for his death or bankruptcy,
would be entitled to receive notice of the meeting and the company
has been notified of the person’s entitlement in writing.

Resolution requiring special notice

322. (1) Where special notice is required of a resolution under
any provision of this Act, the resolution shall not be effective
unless notice of the intention to move it has been given to the
company at least twenty-eight days before the meeting at which
it is moved.

 (2) The company is not required to give notice of the proposed
resolution received under subsection (1) to the members unless
the resolution can be properly moved at a meeting of members
required under this Act.

 (3) The company shall, where practicable, give its members
notice of any such resolution in the same manner and at the same
time as it gives notice of the meeting.

 (4) Where it is not practicable to give its members notice
in accordance with subsection (3), the company shall give its
members notice of any such resolution at least fourteen days
before the meeting—

 (a) by advertising it in one widely circulated newspaper
in Malaysia in the national language and one widely
circulated newspaper in Malaysia in the English
language; or

 (b) in any other manner as specified in the constitution.

 (5) If, after notice of the intention to move such a resolution
has been given to the company, a meeting is called on a date
twenty-eight days or less after the notice has been given, the
notice although not given within the time required by this section
is deemed to have been properly given.

Companies 309

Power of members to require circulation of statements

323. (1) The members of a public company may require the
company to—

 (a) circulate a statement of not more than one thousand
words with respect to—

 (i) a matter referred to in a proposed resolution to
be dealt with at that meeting; or

 (ii) other business to be dealt with at that meeting;
or

 (b) give notice of a resolution which may be properly
moved and is intended to move at that meeting,

to members of the company entitled to receive notice of a meeting
of members.

 (2) The directors shall be required to circulate the statement
referred to in paragraph (1)(a) or give notice of a resolution
referred to in paragraph (1)(b), as the case may be, once the
company has received the requisition from—

 (a) members representing at least two and a half per
centum of the paid up capital of the company carrying
the right of voting excluding any paid up capital held
as treasury shares;

 (b) at least fifty members who have a relevant right to vote
and hold shares in the company on which there has
been paid up an average sum, per member, of at least
five hundred ringgit; or

 (c) in the case of a company not having a share capital,
members who represent at least two and a half per
centum of the total voting rights of all members having
a right of voting.

 (3) A request made under subsection (1) shall be—

 (a) in hard copy or electronic form;

 (b) accompanied with the statement to be circulated;

Laws of Malaysia310 Act 777

 (c) signed or authenticated by the person making it; and

 (d) received by the company—

 (i) in the case of requisition requiring notice of
resolution, at least twenty-eight days before the
meeting; or

 (ii) in the case of any other statement, at least seven
days before the meeting.

 (4) Unless the company resolves otherwise—

 (a) the expenses of the company in complying with
subsection (2) shall be paid by the members who requested
the circulation of the statement; and

 (b) it shall not be bound to comply with subsection (2)
unless there is deposited with or tendered to the company,
not later than one week before the meeting, a sum
reasonably sufficient to meet its expenses in doing so.

 (5)  For the purposes of subsection (2), the right of voting
shall be determined at the date the requisition is deposited with
the company.

 (6) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding twenty thousand ringgit.

Director’s duty to circulate members’ statement

324. (1) Subject to sections 308 and 326, the directors of a
public company that is required to circulate a statement under
section 323 shall send a copy of the statement to each member of
the company who is entitled to receive notice of the meeting—

 (a) in the same manner as the notice of the meeting; and

 (b) at the same time as, or as soon as reasonably practicable
after, it gives notice of the meeting.

Companies 311

 (2)  The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding twenty thousand ringgit.

Power of Court to order non-circulation of members’
statement

325. (1) A company shall not be required to circulate a
member’s statement under section 324 if, on an application by
the company or any person who claims to be aggrieved, the Court
is satisfied that the rights conferred by section 323 are being
abused to secure needless publicity or the matter is defamatory,
frivolous or vexatious or if the circulation would not be in the
best interest of the company.

 (2) The Court may order the company’s costs on an application
by the company to be paid in whole, or in part by the
requisitionists, notwithstanding that they are not parties to the
application.

Sending documents relating to a meeting by electronic means

326. Where a company has provided an electronic address in a
notice calling a meeting, it shall be deemed to have been agreed
that any document or information relating to proceedings at the
meeting including the appointment and termination of a proxy
may be sent by electronic means to that address, subject to any
conditions or limitations specified in the notice.

Subdivision 5

Procedure at Meetings

Meetings of members at two or more venues

327. (1) Subject to the constitution, a company may convene a
meeting of members at more than one venue using any technology
or method that enables the members of the company to participate
and to exercise the members’ rights to speak and vote at the
meeting.

Laws of Malaysia312 Act 777

 (2) The main venue of the meeting shall be in Malaysia and the
chairperson shall be present at that main venue of the meeting.

Quorum at meetings

328. (1) In the case of a company having only one member,
one member personally present at a meeting shall constitute a
quorum.

 (2) In any other case, two members personally present at a
meeting or by proxy shall be a quorum unless a higher number
is specified in the constitution.

 (3) For the purpose of constituting a quorum—

 (a) one or more representatives appointed by a corporation
shall be counted as one member; or

 (b) one or more proxies appointed by a person shall be
counted as one member.

 (4) No business shall be transacted at any meeting of
members unless a quorum is present at the time when the
meeting proceeds to business.

 (5) Unless otherwise provided in the constitution, if within
half an hour from the time appointed for the meeting, a quorum
is not present, the meeting—

 (a) if convened upon the requisition of members, shall be
dissolved; or

 (b) in any other case, shall stand adjourned to the same
day in the next week at the same time and place, or to
such other day and at such other time and place as the
directors may determine.

Chairperson of meetings of members

329. (1) Subject to any provision of the constitution that states
who shall be the chairperson, the chairman of the Board, if any,
shall preside as the chairperson at every general meeting of the
company.

Companies 313

 (2) If there is no such chairman, or if the chairman is not present
within fifteen minutes after the time appointed for the holding
of the meeting or is unwilling to act, the members present shall
elect one of their members to be chairperson of the meeting.

Declaration by chairperson on a show of hands

330. (1) At any meeting of members, a resolution put to the
vote of the meeting shall be decided on a show of hands unless
before or on the declaration of the result of the show of hands,
a poll is demanded—

 (a) by the chairman;

 (b) by at least three members present in person or by proxy;

 (c) by any member present in person or by proxy and
representing not less than ten per centum of the total
voting rights of all the members having the right to vote
at the meeting; or

 (d) by a member holding shares in the company conferring
a right to vote at the meeting being shares on which an
aggregate sum has been paid up equal to not less than
ten per centum of the total paid up shares conferring
that right.

 (2) On a vote on a resolution at a meeting on a show of
hands, a declaration by the chairperson that the resolution has
been passed unanimously or with a particular majority or is lost,
and an entry to that effect in the minutes of the proceeding shall
be conclusive evidence of that fact without proof of the number
or proportion of the votes recorded in favour of or against the
resolution.

 (3) An entry in respect of such a declaration in the minutes
of the meeting recorded in accordance with section 343 is
conclusive evidence of that fact.

 (4) This section does not have effect if a poll is demanded
in respect of the resolution, and the demand is not subsequently
withdrawn.

Laws of Malaysia314 Act 777

Right to demand a poll

331. A provision of the constitution shall be void in so far as
the provision would have the effect of—

 (a) excluding the right to demand a poll at a general
meeting on any question or matter other than the election
of the chairperson of the meeting or the adjournment
of the meeting;

 (b) making ineffective a demand for a poll on any such
question or matter other than the election of the
chairperson of the meeting or the adjournment of the
meeting that is made—

 (i) by not less than five members having the right
to vote on the resolution;

 (ii) by a member or members representing not less
than ten per centum of the total voting rights of
all the members having the right to vote on the
resolution, excluding any voting rights attached
to any shares in the company held as treasury
shares; or

 (iii) by a member or members holding shares in
the company conferring a right to vote on the
resolution, being shares on which an aggregate
sum has been paid up equal to not less than ten
per centum of the total sum paid up on all the
shares conferring that right, excluding shares in
the company conferring a right to vote on the
resolution which are held as treasury shares.

Voting on a poll

332. (1) On a poll taken at a meeting of members of a company,
a member entitled to more than one vote need not, if he votes,
use all his votes or cast all the votes he uses in the same way.

Companies 315

 (2) If a poll is duly demanded, it shall be taken either forthwith
or after an interval or adjournment or otherwise as the chairman
directs, and the result of the poll shall be the resolution of the
meeting at which the poll was demanded, but a poll demanded
on the election of a chairman or on a question of adjournment
shall be taken forthwith.

Representation of corporations at meetings of members

333. (1) If a corporation is a member of a company, the
corporation may by resolution of its Board or other governing
body authorize a person or persons to act as its representative
or representatives at any meeting of members of the company.

 (2) If the corporation authorizes only one person, the person
shall be entitled to exercise the same powers on behalf of the
corporation as the corporation could exercise if he was an individual
member of the company.

 (3) If the corporation authorizes more than one person as
its representative, every one of the representative is entitled to
exercise the same powers on behalf of the corporation as the
corporation could exercise if every one of the representative was
an individual member of the company.

 (4) If  the corporation authorizes more than one person and
more than one of the representatives purport to exercise the power
under subsection (3)—

 (a) if the representatives purport to exercise the power in
the same way, the power is treated as exercised in that
way; or

 (b) if the representatives do not purport to exercise the power
in the same way, the power is treated as not exercised.

 (5) A certificate of authorization by the corporation shall be
prima facie evidence of the appointment or the revocation of the
appointment, as the case may be, of a representative under this
section.

Laws of Malaysia316 Act 777

Subdivision 6

Proxies

Appointment of proxies

334. (1) A member of a company shall be entitled to appoint
another person as his proxy to exercise all or any of his rights
to attend, participate, speak and vote at a meeting of members
of the company.

 (2) In the case of a company having a share capital, a member
may appoint more than one proxy in relation to a meeting,
provided that the member specifies the proportion of the member’s
shareholdings to be represented by each proxy.

 (3) The instrument appointing a proxy and the power of
attorney or other authority, if any, under which it is signed or
a notarially certified copy of that power or authority shall be
deposited at the registered office of the company, or at such
other place within Malaysia as is specified for that purpose in
the notice convening the meeting, not less than forty-eight hours
before the time for holding the meeting or adjourned meeting
at which the person named in the instrument proposes to vote,
or, in the case of a poll, not less than twenty-four hours before
the time appointed for the taking of the poll, and in default the
instrument of proxy shall not be treated as valid.

Notice of meetings of members to contain statement of rights
to appoint proxies

335. (1) In every notice calling a meeting of members of a
company, there shall appear prominently, a statement informing
the member of his rights under section 334, failing which every
officer who contravenes this section commits an offence and shall,
on conviction, be liable to a fine not exceeding ten thousand
ringgit.

 (2) Any person who authorizes or permits an invitation to appoint
as proxy a person or one of a number of persons specified in the
invitation to be issued at the company’s expense to only some of
the members entitled to be sent a notice of the meeting and to
vote in the meeting by proxy, commits an offence and shall, on
conviction, be liable to a fine not exceeding ten thousand ringgit.

Companies 317

 (3) The proceedings of the meeting shall not be invalidated
notwithstanding the non-compliance with this section.

Proxy as a chairperson of a meeting of members

336. Unless expressly prohibited in the constitution, a proxy may
be elected to be the chairperson of a meeting of members by a
resolution of the company passed at the meeting.

Right of proxy to demand for a poll

337. (1) The appointment of a proxy to vote on a matter at a
meeting of a company, authorizes the proxy to demand, or join
in demanding, a poll on that matter.

 (2) In applying paragraph 331(b), a demand by a proxy counts—

 (a) for the purposes of subparagraph (b)(i), as a demand by
the member;

 (b) for the purposes of subparagraph (b)(ii), as a demand by
a member representing the voting rights that the proxy
is authorized to exercise; or

 (c) for the purposes of subparagraph (b)(iii), as a demand
by a member holding the shares to which those rights
are attached.

Termination of a person’s authority to act as a proxy

338. (1) Unless the company receives a notice of termination
before the commencement of a meeting of members or an
adjourned meeting of members, the termination of the authority
of the person to act as proxy does not affect—

 (a) the constitution of the quorum at the meeting;

 (b) the validity of anything he did as chairperson of a meeting;

Laws of Malaysia318 Act 777

 (c) the validity of a poll demanded by him at a meeting; or

 (d) the validity of the vote exercised by him at a meeting.

 (2) If the constitution require or permit members to give the
notice of termination in subsection (1) to a person other than the
company, the reference to the company receiving the notice shall
be taken as the person receiving the notice.

 (3) Notwithstanding subsection (1), the constitution may require
that the notice of termination of the authority of the proxy to be
received by the company at a time earlier than that specified in
subsection (1).

 (4) Any provision of the constitution is void in so far as
it would have the effect of requiring notice of termination to
be received by the company or another person earlier than
forty-eight hours before the time for holding the meeting or
adjourned meeting.

Subdivision 7

Class Meetings

Application to class meetings

339. (1) The provisions of Subdivision 5 of this Division in
relation to meetings shall apply to a meeting of holders of a
class of shares and class of members subject to the modifications
specified in this Subdivision.

 (2) Sections 328 and 330 shall not apply in relation to a
meeting of holders of a class of shares and class of members in
connection with a meeting in respect of the variations of rights
attached to the class of shares and class of members.

 (3) The quorum for a variation of class rights meeting in
respect of holders of a class of shares is—

 (a) for a meeting other than an adjourned meeting, two
persons present holding at least one-third of the number
of issued shares of such class, excluding any shares of
that class held as treasury shares; and

Companies 319

 (b) for an adjourned meeting, one person present holding
shares of such class,

unless otherwise provided in the constitution.

 (4) The quorum for a variation of class rights meeting in
respect of holders of a class of members is—

 (a) for a meeting other than an adjourned meeting, two
members of the class present, in person or by proxy,
who together represent at least one-third of the voting
rights of the class; and

 (b) for an adjourned meeting, one member of the class
present, in person or by proxy,

unless otherwise provided in the constitution.

 (5) For the purposes of subsection (3), where a person is
represented by a proxy or proxies, he is treated as holding only
the shares in respect of which the proxy or proxies are authorized
to exercise voting rights.

 (6) For the purposes of this section—

 (a) any amendment of a provision contained in the
constitution for the variation of the rights attached to a
class of shares or the rights of a class of members, or
the insertion of any such provision into the constitution,
is itself to be treated as a variation of those rights;
and

 (b) references to the variation of rights attached to a class
of shares or a class of members include references to
the abrogation.

 (7) At a variation of class rights meeting, any holder of shares
of such class or any member present, in person or by proxy, as
the case may be, may demand a poll.

Laws of Malaysia320 Act 777

Subdivision 8

Additional Requirements for Public Companies

Annual general meeting

340. (1) Every public company shall hold an annual general
meeting in every calendar year in addition to any other meetings
held during that period, to transact the following business:

 (a) the laying of audited financial statements and the
reports of the directors and auditors;

 (b) the election of directors in place of those retiring;

 (c) the appointment and the fixing of the fee of directors;
and

 (d) any resolution or other business of which notice is given
in accordance with this Act or the constitution.

 (2) For the purposes of subsection (1), the annual general
meeting shall be held—

 (a) within six months of the company’s financial year end;
and

 (b) not more than fifteen months after the last preceding
annual general meeting.

 (3) Notwithstanding subsection (1), a company shall not be
required to hold an annual general meeting in the year of its
incorporation or in the following year provided that the company
hold its first annual general meeting within eighteen months of
its incorporation.

 (4) The company may apply to the Registrar to extend the
periods referred to in this section, and the Registrar may extend
such periods as he considers appropriate, upon being satisfied
with the reasons provided.

 (5) If a company fails to convene an annual general meeting
under this section, the Court may, on the application of any
member, order a general meeting to be called.

Companies 321

 (6) The company and every off icer  who contravene
subsection (1), (2) or (3) commit an offence and shall, on
conviction, be liable to a fine not exceeding twenty thousand
ringgit.

Subdivision 9

Record of Resolutions and Meetings

Records of resolutions and meetings

341. (1) Every company shall keep records comprising—

 (a) all resolutions of members passed otherwise than at the
meeting of members;

 (b) minutes of all proceedings of meetings of members; and

 (c) details provided to the company in accordance with
section 344.

 (2) The records shall be kept for at least seven years from the
date of the resolution, meeting or decision, as the case may be.

 (3) Every officer who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Inspection of records of resolutions and meetings

342. (1) The records referred to in section 341 relating to the
previous seven years shall be kept available for inspection—

 (a) at the registered office of the company; or

 (b) at another place which a notice has been given under
subsection (2).

Laws of Malaysia322 Act 777

 (2) Unless the records have at all times been kept at the
registered office, the company shall give a notice to the Registrar
in respect to the place where the records are kept or the change
of the place within fourteen days from the date the records are
kept at such place or such change of place.

 (3) The records shall be made available for inspection by any
member of the company without charge.

 (4) Any member shall be entitled to be furnished with a copy
of any minutes specified under section 341 within fourteen days
after he has made a request in writing to the company at a charge
not exceeding two ringgit for every one hundred words.

 (5) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine of five hundred ringgit for each day
during which the offence continues after conviction.

Records as evidence of resolutions

343. (1) The record of a resolution passed otherwise than at a
meeting of members, if purporting to be signed by a director of
the company or by the secretary, is sufficient evidence of the
passing of the resolution.

 (2) If there is a record of a written resolution of a private
company, the requirements of this Act with respect to the passing
of the resolution are deemed to be complied with unless the
contrary is proved.

 (3) The record of proceedings of a meeting of members
purporting to be signed by the chairperson of that meeting or
by the chairperson of the next meeting of members is sufficient
evidence of the proceedings at the meeting.

 (4) If there is a record of proceedings of a  meeting of members
of a company, then, until the contrary is proved—

 (a) the meeting is deemed to be duly convened;

 (b) all proceedings at the meeting are deemed to have been
duly taken place; and

Companies 323

 (c) all appointments at the meeting are deemed to be valid.

Details of decisions provided by a sole member

344. (1) If a sole member of a company takes any decision
that—

 (a) may be taken by the company in  meeting of members;
and

 (b) has effect as if agreed by the company in meeting of
members,

he shall provide the company with details of that decision, unless
that decision is taken by way of a written resolution.

 (2) A person who contravenes this section commits an offence
and shall, on conviction, be liable to a fine not exceeding ten
thousand ringgit.

 (3) Failure to comply with this section does not affect the
validity of any decision referred to in subsection (1).

Division 6

Remedies

Interpretation

345. For the purposes of this Division, “complainant” means—

 (a) a member of a company, or a person who is entitled to
be registered as a member of a company;

 (b) a former member of a company if the application relates
to the circumstances in which the member ceased to be
a member;

 (c) any director of a company; or

 (d) the Registrar, in the case of a company declared under
section 590.

Laws of Malaysia324 Act 777

Remedy in cases of an oppression

346. (1) Any member or debenture holder of a company may
apply to the Court for an order under this section on the ground—

 (a) that the affairs of the company are being conducted or the
powers of the directors are being exercised in a manner
oppressive to one or more of the members or debenture
holders  including himself or in disregard of his or their
interests as members, shareholders or debenture holders
of the company; or

 (b) that some act of the company has been done or is
threatened or that some resolution of the members,
debenture holders or any class of them has been passed
or is proposed which unfairly discriminates against or
is otherwise prejudicial to one or more of the members
or debenture holders, including himself.

 (2) If on such application the Court is of the opinion that either
of those grounds is established, the Court may make such order
as the Court thinks fit with the view to bringing to an end or
remedying the matters complained of, and without prejudice to
the generality of subsection (1), the order may—

 (a) direct or prohibit any act or cancel or vary any
transaction or resolution;

 (b) regulate the conduct of the affairs of the company in the
future;

 (c) provide for the purchase of the shares or debentures of
the company by other members or debenture holders of
the company or by the company itself;

 (d) in the case of a purchase of shares by the company,
provide for a reduction accordingly of capital of the
company; or

 (e) provide that the company be wound up.

 (3) If an order that the company be wound up is made under
paragraph (2)(e), the provisions of this Act relating to winding
up of a company shall apply as if the order had been made upon
a petition duly presented to the Court by the company, with such
adaptations as are necessary.

Companies 325

 (4) If an order under this section makes any alteration in or
addition to any constitution, then, notwithstanding anything in any
other provision of this Act, but subject to the order, the company
concerned shall not have power without the leave of the Court
to make any further alteration in or addition to the constitution
inconsistent with the order, but subject to the foregoing provisions
of this subsection, the alterations or additions made by the order
shall be of the same effect as if duly made by resolution of the
company.

 (5) An office copy of any order made under this section shall
be lodged by the applicant with the Registrar within fourteen
days from the making of the order.

 (6) The applicant who contravenes subsection (5) commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine of five hundred ringgit for each day during which
the offence continues after conviction.

Derivative proceedings

347. (1) A complainant may, with the leave of the Court initiate,
intervene in or defend a proceeding on behalf of the company.

 (2) Proceedings brought under this section shall be brought in
the company’s name.

 (3) The right of any person to bring, intervene in, defend or
discontinue any proceedings on behalf of a company at common
law is abrogated.

Leave of Court

348. (1) An application for leave of the Court under section 347
shall be made to the Court without the need for an appearance
to be entered.

 (2) The complainant shall give thirty days’ notice in writing
to the directors of his intention to apply for the leave of Court
under section 347.

Laws of Malaysia326 Act 777

 (3) Where leave has been granted for an application under
section 347, the complainant shall initiate proceedings in Court
within thirty days from the grant of leave.

 (4) In deciding whether or not the leave shall be granted, the
Court shall take into account whether—

 (a) the complainant is acting in good faith; and

 (b) it appears prima facie to be in the best interest of the
company that the application for leave be granted.

 (5) Any proceedings brought, intervened in or defended under
this section shall not be discontinued, compromised or settled
except with the leave of the Court.

Effect of ratification

349. If members of a company, ratify or approve the conduct of
the subject matter of the action—

 (a) the ratification or approval does not prevent any person
from bringing, intervening in or defending proceedings
with the leave of the Court;

 (b) the application for leave or action brought or intervened
in shall not be stayed or dismissed by reason only of
the ratification or approval; and

 (c) the Court may take into account the ratification or approval
in determining what order to make.

Powers of the Court

350. In granting leave under this section and sections 347 and
348, the Court may make such other orders as the Court thinks
appropriate including an order—

 (a) authorizing the complainant or any other person to control
the conduct of the proceedings;

Companies 327

 (b) giving directions for the conduct of the proceedings;

 (c) for any person to provide assistance and information to
the complainant, including to allow inspection of the
company’s books;

 (d) requiring the company to pay reasonable legal fees and
disbursements incurred by the complainant in connection
with the application or action, or pending the grant of
the leave or pending the grant of any injunction by
the Court hearing the application for leave under this
section; or

 (e) the costs of the complainant, the company or any other
person for proceedings taken under this section, including
an order as to indemnity for costs.

Injunction

351. (1) Where a person has engaged, is engaging or intends
to engage in conduct that constituted, constitutes or would
constitute—

 (a) a contravention of this Act;

 (b) an attempt to contravene this Act;

 (c) an attempt that aids, abets, advises or procures a person
to contravene this Act;

 (d) an attempt to induce, whether by threats, promises or
otherwise, a person to contravene this Act;

 (e) an attempt by which any person would be in any way,
directly or indirectly, knowingly concerned in, or party
to, the contravention by a person of this Act; or

 (f) an attempt of conspiracy with others to contravene this
Act,

the Court may, on the application of the Registrar, or of a person
whose interests have been, are or would be affected by the
conduct, grant an injunction, on such terms as the Court thinks
appropriate, restraining the first-mentioned person from engaging
in the conduct and, if in the opinion of the Court it is desirable
to do so, requiring that person to do any act or thing.

Laws of Malaysia328 Act 777

 (2) If a person refused or failed, is refusing or failing, to do
an act or thing that the person is required by this Act to do, the
Court may, on the application of the Registrar or any person
whose interests have been, are or would be affected by the
refusal or failure to do that act or thing, grant an injunction, on
such terms as the Court thinks appropriate, requiring the person
who refused or failed, is refusing or failing, to do that act
or thing.

 (3) The power of the Court to grant an injunction to restrain
a person from engaging in conduct may be exercised whether or
not—

 (a) it appears to the Court that the person intends to engage
again or to continue to engage, in conduct of that kind;

 (b) the person has previously engaged in conduct of that
kind; or

 (c) there is an imminent danger of substantial damage to any
person if such person engages in a conduct of that kind.

 (4) The power of the Court to grant an injunction requiring a
person to do an act or thing may be exercised whether or not—

 (a) it appears to the Court that the person intends to refuse
or fail again, or to continue to refuse or fail, to do that
act or thing;

 (b) the person has previously refused or failed to do that
act or thing; or

 (c) there is an imminent danger of substantial damage to any
person if such person refuses or fails to do that act or
thing.

 (5) Where the Registrar applies to the Court for the grant
of an injunction under this section, the Court shall not require
the applicant or any other person to give an undertaking as to
damages as a condition for the granting of an interim injunction.

 (6) Where  an  app l i ca t ion  fo r  an  in junc t ion  under
subsection (1) or (2) has been made, the Court may grant an
injunction by consent of all parties to the proceedings, if the
Court determines it to be appropriate, whether or not the Court
is satisfied that that subsection applies.

Companies 329

 (7) The Court may grant an interim injunction pending
determination of an application under subsection (1) if in the
opinion of the Court it is desirable to do so.

 (8) The Court may revoke or vary an injunction granted under
subsection (1), (2) or (7).

 (9) In granting an injunction to restrain a person from engaging
in particular conduct, or to require a person to do a particular
act or thing, the Court may order that person to pay damages to
any other person, either in addition to or in substitution of the
grant of the injunction.

Division 7

Charges, Arrangements and Reconstructions
and Receivership

Subdivision 1

Charges

Registration of charges

352. (1) A company that creates a charge over its property or
any of its undertakings to which this section applies shall lodge
within thirty days from the creation of the charge, together with
the prescribed fee with the Registrar for registration, a statement
of particulars of the charge in the form and manner as may be
determined by the Registrar.

 (2) If a company contravenes with subsection (1), the charge
shall be void against the liquidator and any creditor of the
company, so far as any security on the company’s property or
undertaking is conferred.

 (3) Nothing in subsection (2) shall prejudice any contract or
obligation for the repayment of the money secured by a charge
and when a charge becomes void under this section, the money
secured shall immediately become payable.

 (4)  Any charge created, before the lapse of thirty days before
a prior charge is registered with respect of the same debts, or
a part of the debts, the charge shall not be valid or operative
unless the Court is satisfied that the charge was created for the

Laws of Malaysia330 Act 777

purpose of correcting some material error in the prior charge or
under other proper circumstances and not for the purposes of
avoiding or evading the provisions of this Subdivision.

 (5) Failure to register a charge created over a company’s
property or undertaking other than those relating to land, shall
not affect the validity or limit the effect of the charge created
under subsection (1).

 (6) Subsection (1) shall not apply—

 (a) to a charge created to secure payment or performance
of a financial obligation arising from any instruments
or transactions effected in the money market in such
manner and to such extent as may be specified by the
Central Bank of Malaysia under the Financial Services
Act 2013 or the Islamic Financial Services Act 2013;
or

 (b) if the person interested in the charge is the Central Bank
of Malaysia.

 (7) For the purposes of subsection (6), the charge shall be
treated as if it is a charge registered under subsection (1) and shall
be valid against the liquidator and any creditor of the company.

 (8) Notwithstanding subsection (1), any person interested in
the charge may lodge with the Registrar the particulars of the
charge before the end of the period allowed for registration.

 (9) If a registration is effected by any person interested in the
charge other than the company, that person shall be entitled to
recover from the company the amount of any fees properly paid
by that person on the registration.

 (10)  The company and every officer who contravene
subsection 352(1) and section 354 commit an offence and shall,
on conviction, be liable to a fine not exceeding fifty thousand
ringgit and in the case of a continuing offence, to a further fine
not exceeding five hundred ringgit for each day during which
the offence continues after conviction.

Companies 331

Types of charges require registration

353. The requirement for registration under section 352 shall
apply to the following charges:

 (a) a charge to secure any issue of debentures;

 (b) a charge on uncalled share capital of a company;

 (c) a charge on shares of a subsidiary of the company which
are owned by the company;

 (d) a charge or an assignment created or evidenced by an
instrument which if executed by an individual within
Peninsular Malaysia and affecting property within
Peninsular Malaysia, would be invalid or of limited
effect if not filed or registered under the Bills of Sale
Act 1950 [Act 268];

 (e) a charge on land wherever situate or any interest in the
land;

 (f) a charge on book debts of the company;

 (g) a floating charge on the undertaking or property of a
company;

 (h) a charge on calls made but not paid;

 (i) a charge on a ship or aircraft or any share in a ship or
aircraft;

 (j) a charge on goodwill, on a patent or licence under a
patent, on a trade mark, or on a copyright or a licence
under a copyright; and

 (k) a charge on the credit balance of the company in any
deposit account.

Registration of charges created over property outside
Malaysia

354. If a charge created in Malaysia affects property outside
Malaysia, the statement of the particulars as determined by the
Registrar may be lodged for registration in accordance with
section 352 even if further proceedings may be necessary to make
the charge valid or effectual according to the law of the country
in which the property is situated.

Laws of Malaysia332 Act 777

Registration of charges in series of debentures

355. (1) When a series of debentures containing or giving by
reference to any other instrument, any charge to the benefit of
which the debenture holders of that series are entitled equally is
created by a company, it shall be sufficient if there is lodged with
the Registrar for registration within thirty days from the date of
the execution of the instrument containing the charge, or if there
is no such instrument after the execution of the first debenture
of the series, a statement containing the following particulars:

 (a) the total amount secured by the whole series;

 (b) the dates of the resolutions authorizing the issue of the
series and the date of the covering instrument, if any,
by which the security is created or defined;

 (c) a general description of the property charged; and

 (d) the names of the trustee, if any, for the debenture holders.

 (2) For the purposes of subsection (1), if more than one issues
are made of debenture in the series, particulars of the date and
amount of each issue shall be lodged within thirty days from
each issue, but an omission to do so shall not affect the validity
of the debentures issued.

 (3) If any commission, allowance or discount has been paid
or made either directly or indirectly by a company to any person
in consideration of his—

 (a) subscribing or agreeing to subscribe; or

 (b) procuring or agreeing to procure subscriptions,

whether absolute or conditional for any debentures, the particulars
required to be lodged under this section shall include particulars
as to the amount or rate percentage of the commission, allowance
or discount paid or made, but omission to do so shall not affect
the validity of the debentures issued.

 (4) The deposit of any debentures as security for any debt of
the company shall not, for the purposes of subsection (3), be
treated as the issue of the debentures at a discount.

Companies 333

Duty of company to register charges existing on property
acquired

356. (1) If—

 (a) a company acquires property which is subject to a charge
and which would, if it had been created by the company
after the acquisition of the property, have been required
to be registered under this Subdivision;

 (b) a foreign company becomes registered in Malaysia and
has prior to such registration created a charge which
would, if it had been created by the company while it
was registered in Malaysia, have been required to be
registered under this Subdivision; or

 (c) a foreign company becomes registered in Malaysia and
has prior to such registration acquired property which is
subject to a charge of any such kind as would, if it had
been created by the company after the acquisition and
while it was registered in Malaysia, have been required
to be registered under this Subdivision,

the company or foreign company shall lodge a statement of the
particulars of the charge as determined by the Registrar within
thirty days from the date on which the acquisition is completed or
the date of the registration of the foreign company in Malaysia,
as the case may be, with the Registrar for registration.

 (2) The company or a foreign company and every officer of the
company or the foreign company who contravene subsection (1)
commit an offence, and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Register of charges to be kept by Registrar

357. (1) The Registrar shall keep and maintain a register of all
charges lodged for registration under this Subdivision.

Laws of Malaysia334 Act 777

 (2) The Registrar shall enter in the register with respect to
those charges the following particulars:

 (a) in the case of a charge to the benefit of which the holders
of a series of debentures are entitled, the particulars as
are required to be contained in a statement furnished
under subsection 355(1); and

 (b) in the case of any other charge—

 (i) the date of creation, if the charge is a charge
created by the company;

 (ii) the date of acquisition of the property, if the
charge is a charge existing on property acquired
by the company;

 (iii) the amount secured by the charge;

 (iv) a description sufficient to identify the property

charged; and

 (v) the name of the person entitled to the charge.

 (3) The Registrar shall issue a certificate of registration of
charge in the form as the Registrar may determine and the
certificate shall be conclusive evidence that the requirements as
to registration have been complied with.

Endorsement of certificate of registration on debentures

358. (1) A company shall cause to be endorsed on every debenture
forming one of a series of debentures or certificate of debenture
stock which is issued by the company and the payment of which
is secured by a charge registered—

 (a) a copy of the certificate of registration; or

 (b) a statement that the registration has been effected and
the date of registration.

Companies 335

 (2) Subsection (1) shall not apply to any debenture or certificate
of debenture stock which has been issued by the company before
the charge was registered.

 (3) If a company contravenes this section, every person who
knowingly and wilfully authorizes or permits the delivery of any
debenture or certificate of debenture stock which is not endorsed
as required by this section commits an offence.

Assignment and variation of charge

359. (1) If after a charge on property of a company has been
created and registered under this Subdivision, a person other than
the original charge holder becomes the new holder of the charge,
the new holder of the charge shall, within thirty days and upon
payment of a prescribed fee—

 (a) lodge with the Registrar a notice stating that he has
become the new holder of the charge and the notice
shall contain the information as may be determined by
the Registrar; and

 (b) give a copy of the notice to the company.

 (2) If after a charge on the property of a company has been
created and registered under this Subdivision there is a variation
in the terms of the charge having the effect of—

 (a) varying the amount of the debt or liabilities, whether
present or prospective, secured by the charge; or

 (b) prohibiting or restricting the creation of subsequent charges
on the property,

the company shall lodge with the Registrar a notice setting out
the particulars of the variation as may be determined by the
Registrar within thirty days from the variation occurs and upon
payment of a prescribed fee.

 (3) For the purposes of subsection (2), if the amount of debt or
liability secured by a registrable charge created by the company
is—

 (a) unspecified; or

Laws of Malaysia336 Act 777

 (b) specified with further advances,

any payment or advance made by the charge holder to the company
in accordance with the terms of the charge shall not be regarded
to be a variation in the terms of the charge.

 (4) A reference in this section to the charge holder in relation
to a charge shall be construed as a reference to the trustee for
debenture holders if the charge is constituted by a debenture or
debentures and there is a trustee for the debenture holders.

 (5) The new holder of the charge who contravenes this section
commits an offence and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Satisfaction and release of property from charge

360. (1) If, with respect to a registered charge—

 (a) the debt for which the charge was given has been paid
or satisfied in whole or in part; or

 (b) the property or undertaking charged or any part of the
property or undertaking has been released from the
charge or has been ceased to form part of the company’s
property or undertaking,

the company shall lodge with the Registrar the particulars as
may be determined by the Registrar of the fact within fourteen
days from the payment, satisfaction, release or cessation, and the
Registrar shall enter that particulars in the register.

 (2) The payment, satisfaction, release or cessation referred
to in subsection (1) shall be supported with sufficient evidence
which shall be lodged with the Registrar.

 (3) For the purposes of subsection (1), any other person entitled
to the charge may lodge the particulars of information referred
to in that subsection.

Companies 337

Extension of time and rectification of register of charges

361. The Court, on being satisfied that the omission to register
a charge, whether under this Act or any corresponding previous
written law, within the time required or that the omission or
misstatement of any particular with respect to any such charge
or in a memorandum of satisfaction was accidental or due to
inadvertence or to some other sufficient cause or is not of a nature
to prejudice the position of creditors or shareholders or that on
other grounds it is just and equitable to grant relief, may, on the
application of the company or any person interested and on such
terms and conditions as seem to the Court just and expedient,
including a term or condition that the extension or rectification
is to be without prejudice to any liability already incurred by the
company or any of its officers in respect of the default, order
that the time for registration be extended or that the omission or
misstatement be rectified.

Company to keep instruments of charges and register of charges

362. (1) Every company shall cause the instrument creating any
charge requiring registration under this Subdivision or a copy of
such instrument to be kept at the registered office of the company.

 (2) For the purposes of subsection (1), in the case of a series
of debentures, the keeping of a copy of one debenture of the
series shall be sufficient.

 (3) Every company shall keep at the registered office of the
company a register of charges and enter in the register all charges
specifically affecting property of the company and all floating
charges on the undertaking or any property of the company, giving
in each case—

 (a) a short description of the property charged;

 (b) the amount of the charge; and

 (c) the names of the persons entitled to the charge except in
the case of securities to the bearer.

Laws of Malaysia338 Act 777

 (4) The instruments or copies of such instruments and the
register of charges kept under this section shall be open for
inspection by —

 (a) any creditor or member of the company for a fee of five
ringgit; or

 (b) any other person on payment of such fee not exceeding ten
ringgit for each inspection as is fixed by the company.

 (5) Any person shall be, on an application to a company and
upon payment of a fee not exceeding ten ringgit as is fixed by
the company for every page, be furnished with a copy of any
instrument of charge or debenture kept by the company under
this section within three days of his making the application.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding fifty thousand ringgit, and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Documents made out of Malaysia

363. If under this Subdivision, an instrument, deed, statement
or other document is required to be lodged with the Registrar
within a specified time, the time so specified shall be extended
for a period of seven days or such further period as the Registrar
may allow in relation to an instrument, deed, statement or other
document executed or made in a place out of Malaysia.

Application of this Subdivision to foreign company

364. A reference in this Subdivision to a company shall be read
as including a reference to a foreign company to which Division 1
of Part V applies, but nothing in this Subdivision applies to a
charge on property outside Malaysia of a foreign company.

Companies 339

Subdivision 2

Arrangements and Reconstructions

Interpretation

365. In this Subdivision, unless the context otherwise requires—

 “arrangement” includes a reorganization of the share capital of
a company by the consolidation of shares of different classes or
by the division of shares into shares of different classes or by
both of these methods;

 “company” means any corporation or society liable to be wound
up under this Act with the exception of section 370;

 “transferee company” means—

 (a) in section 370, a company to which the whole or any
part of the undertaking or property of the transferor
company is transferred to; and

 (b) in section 371, a company to which all of the shares or
all of the shares in any particular class of the transferor
company is transferred to;

 “transferor company” means—

 (a) in section 370, a company which transfers the whole or
any part of the undertaking or property of the company;
and

 (b) in section 371, a company which transfers all of the
shares or all of the shares in any particular class of the
company.

Power of Court to order compromise or arrangement with
creditors and members

366. (1) The Court may, on an application under this Subdivision,
order a meeting in a summary way to be summoned in such
manner as the Court directs, by either—

 (a) the company;

Laws of Malaysia340 Act 777

 (b) any creditor or member of the company;

 (c) the liquidator, if the company is being wound up; or

 (d) the judicial manager, if the company is under judicial
management.

 (2) A meeting held pursuant to an order of the Court made
under subsection (1) may be adjourned if the resolution for
adjournment is approved by seventy-five per centum of the total
value of creditors or class of creditors or the members or class
of members present and voting either in person or by proxy at
the meeting.

 (3) The compromise or arrangement shall be binding on—

 (a) all the creditors or class of creditors;

 (b) the members or class of members;

 (c) the company; or

 (d) the liquidator and contributories, if the company is being
wound up,

if the compromise or arrangement is agreed by a majority of
seventy-five per centum of the total value of the creditors or class
of creditors or members or class of members present and voting
either in person or by proxy at the meeting or the adjourned
meeting and has been approved by order of the Court.

 (4) The Court may grant its approval to a compromise or
arrangement subject to such alterations or conditions as the Court
thinks just.

 (5) An order under subsection (3) shall have no effect until an
office copy of the order is lodged with the Registrar, and upon
being so lodged, the order shall take effect on and from the date
of lodgement or such earlier date as the Court may determine
and as may be specified in the order.

 (6) Subject to subsection (7), a copy of every order made under
subsection (3) shall be annexed to every copy of the constitution
of the company issued after the order has been made, or in the

Companies 341

case of a company not having a constitution, to every copy of
the instrument issued constituting or defining the constitution of
the company.

 (7) The Court may, by order, exempt a company from complying
with the requirements of subsection (6) or determine the period
during which the company shall comply with the requirements.

 (8) If any such compromise or arrangement, whether or not
for the purposes of or in connection with a scheme for the
reconstruction of any company or the amalgamation of any two or
more companies, has been proposed, the directors of the company
shall—

 (a) if a meeting of the members of the company by resolution
directs, instruct such accountants or advocates or both as
are named in the resolution to report on the proposals
and forward their report to the directors as soon as
practicable; and

 (b) make the report available at the registered office of the
company for inspection by the shareholders and creditors
of the company at least seven days before the date of
any meeting ordered by the Court to be summoned in
accordance with subsection (1).

 (9) The company and every officer who contravene subsection (6)
or (8) commit an offence.

Power of Court to appoint an approved liquidator

367. (1) The Court may, on an application under this Subdivision,
appoint an approved liquidator to assess the viability of the scheme
proposed for the compromise or arrangement and the approved
liquidator appointed shall prepare a report for submission to the
applicant.

 (2) The report prepared under this section shall be tabled at
the meeting of creditors or members held under section 366.

Laws of Malaysia342 Act 777

Power of Court to restrain proceedings

368. (1) If no order has been made or resolution passed for the
winding up of a company and a compromise or arrangement has
been proposed between the company and its creditors or any class
of those creditors, the Court may, in addition to any of its powers,
on the application in a summary way of the company or any
member or creditor of the company, restrain further proceedings
in any action or proceeding against the company except by leave
of the Court and subject to any terms as the Court may impose.

 (2) The Court may grant a restraining order under subsection (1)
to a company for a period of not more than three months and the
Court may on the application of the company, extend this period
for not more than nine months if—

 (a) the Court is satisfied that there is a proposal for a scheme
of compromise or arrangement between the company
and its creditors or any class of creditors representing
at least one-half in value of all the creditors;

 (b) the Court is satisfied that the restraining order is necessary
to enable the company and its creditors to formalise the
scheme of compromise or arrangement for the approval
of the creditors or members under section 366;

 (c) a statement of particulars as to the affairs of the company
made up to a date not more than three days before the
application is lodged together with the application; and

 (d) the Court approves the person nominated by a majority
of the creditors in the application by the company under
subsection (1) to act as a director or if that person is
not already a director, appoints that person to act as a
director notwithstanding the provisions of this Act or
the constitution of the company.

 (3) The person approved or appointed by the Court to act as
a director of the company under paragraph (2)(d) shall—

 (a) have the right of access to the accounting and other records
including registers of the company at all reasonable
times; and

Companies 343

 (b) be entitled to require from any officer of the company
any information and explanation as he may require for
the purposes of his duty.

 (4) Unless the Court otherwise orders, any disposition of the
property of the company including things in action and any
acquisition of property by the company, other than in the ordinary
course of business, made after the grant of the restraining order
by the Court shall be void.

 (5) Where an order is made under subsection (1), every company
in relation to which the order is made shall, within seven days—

 (a) lodge an office copy of the order with the Registrar; and

 (b) publish a notice of the order in one widely circulated
newspaper in Malaysia in the national language and one
widely circulated newspaper in Malaysia in the English
language,

and the company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding one hundred thousand ringgit and in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

 (6) An order made by the Court under subsection (1) shall not
have the effect of restraining—

 (a) further proceedings in any action or proceeding that
should be taken against the company by the Registrar
or the Securities Commission; or

 (b) further proceedings in any action or proceeding against
any person including the guarantor of the company but
does not include the company that had applied for the
restraining order.

 (7) If a company disposes or acquires any property other than
in the ordinary course of its business, without leave of the Court,
the company and every officer who contravene this section commit
an offence and shall, on conviction, be liable to imprisonment for
a term not less than five years or to a fine not exceeding three
million ringgit or to both.

Laws of Malaysia344 Act 777

Information as to compromise or arrangement with creditors
and members

369. (1) If a meeting is summoned under this Subdivision, every
notice summoning the meeting—

 (a) which is sent to a creditor or member shall be accompanied
with a statement explaining the effect of the compromise
or arrangement and in particular stating any material
interests of the directors, whether as directors or as
members or as creditors of the company or otherwise,
and the effect of the compromise or arrangement so far
as it is different from the effect on the similar interests
of other persons; and

 (b) which is given by advertisement shall either contain the
statement referred to in paragraph (a) or a notification of
the place at which and the manner in which the creditors
or members entitled to attend the meeting may obtain
copies of such a statement.

 (2) Where the compromise or arrangement affects the rights of
debenture holders, the statement shall give the like explanation
with respect to the trustee for the debenture holders as, under
subsection (1), a statement is required to give with respect to the
directors.

 (3) If a notice given by advertisement includes a notification that
copies of a statement can be obtained, every creditor or member
entitled to attend the meeting shall on making an application in
the manner indicated in the notice, be furnished with a copy of
the statement free of charge by the company.

 (4) Each director and each trustee for debenture holders shall
provide the necessary information on matters relating to each
director and each trustee for debenture holders for the purposes
of this section within seven days of the receipt of a request by
the company in writing.

 (5) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding five years or to a fine
not exceeding one million ringgit or to both.

Companies 345

 (6) For the purposes of subsection (5), the officer of the
company includes any liquidator of the company and any trustee
for debenture holders.

 (7) Notwithstanding subsection (5), a person shall not be liable
under that subsection if he shows that the default was due to
the refusal of any other person, being a director or trustee for
debenture holders, to supply the necessary particulars as to the
interests of the director or trustee for the debenture holders.

Reconstruction and amalgamation of companies

370. (1) This section applies where an application is made to the
Court under this Subdivision for the approval of a compromise
or arrangement and it is proved to the Court that—

 (a) the compromise or arrangement has been proposed for
the purposes of, or in connection with, a scheme for the
reconstruction of any company or the amalgamation of
any two or more companies; and

 (b) under the scheme the whole or any part of the undertaking
or the property of any company concerned in the scheme,
“transferor company”, is to be transferred to another
company, “transferee company”.

 (2) The Court may, either by the order approving the compromise
or arrangement or by any subsequent order, make provision for
all or any of the following matters:

 (a) the transfer to the transferee company of the whole or any
part of the undertaking and of the property or liabilities
of the transferor company;

 (b) the allotting or appropriation by the transferee company
of any shares, debentures, policies or other similar
interests in that company which under the compromise
or arrangement are to be allotted or appropriated by that
company to or for any person;

 (c) the continuation by or against the transferee company of
any legal proceedings pending by or against the transferor
company;

Laws of Malaysia346 Act 777

 (d) the dissolution without winding up of the transferor
company;

 (e) the provision to be made for any persons who, within such
time and in such manner as the Court directs, dissent
from the compromise or arrangement; and

 (f) such incidental, consequential and supplemental matters
as are necessary to secure that the reconstruction or
amalgamation shall be fully and effectively carried out.

 (3) If an order made under this section provides for the transfer
of property or liabilities—

 (a) the property shall, by virtue of the order, be transferred
to and vest in the transferee company; and

 (b) the liabilities shall, by virtue of the order, be transferred
to and become the liabilities of the transferee company,

and in the case of any particular property if the order directs
free from any charge which is by virtue of the compromise or
arrangement to cease to have effect.

 (4) Every company in relation to which an order is made under
this section shall lodge an office copy of the order—

 (a) with the Registrar within seven days of the making of
the order; and

 (b) if the order relates to land, with the appropriate authority
concerned with the registration or recording of dealings
in that land.

 (5) No vesting order referred to in this section shall have any
effect or operation in transferring or otherwise vesting land until
the appropriate entries are made with respect to the vesting of
that land by the appropriate authority.

 (6) The company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Companies 347

 (7) In this section—

 (a) “liabilities” includes duties;

 (b) “property” includes all rights and powers relating to the
property.

Right of offeror to buy out

371. (1) If a scheme or contract involving the transfer of all
the shares or all the shares in any particular class in a transferor
company, to a “transferee company”, whose transfer involve the
holders of not less than ninety per centum of the nominal value
shares or of the shares of that class, other than shares already held
at the date of the offer by, or by a nominee for, the transferee
company or its subsidiary, have been approved, the transferor
company on behalf of the transferee company has within four
months to make offer to buy out the share.

 (2) The transferee company may at any time within two months
after the offer has been approved under subsection (1) give notice
to any dissenting shareholder in the transferor company that the
transferee company desires to acquire the dissenting shareholder’s
shares in the form and manner as determined by the Registrar.

 (3) If a notice has been given by the transferee company,
the transferee company shall be entitled and bound to acquire
those shares on the terms which, under the scheme or contract,
the shares of the approving shareholders are to be transferred
to the transferee company or if the offer contained two or more
alternative sets of terms, upon the terms which were specified in
the offer as being applicable to dissenting shareholders, unless
on an application made by the dissenting shareholder within one
month from the date on which the notice was given or within seven
days of a statement being supplied to a dissenting shareholder
under subsection (4), whichever is the later, as the Court thinks
fit to order otherwise.

 (4)  If a transferee company has given notice to any dissenting
shareholder that the transferee company desires to acquire his
shares, the dissenting shareholder shall be entitled to require the
company to supply to him a statement in writing of the names
and addresses of all other dissenting shareholders as shown in

Laws of Malaysia348 Act 777

the register of members, by a demand in writing served on that
company within one month from the date on which the notice
was given to the dissenting shareholder.

 (5) Subject to subsection (4), the transferee company shall
not be entitled or bound to acquire the shares of the dissenting
shareholders until fourteen days after the posting of the statement
of the names and addresses to the dissenting shareholder.

 (6) If, under any such scheme or contract, shares in a company
are transferred to another company or its nominee and those shares
together with any other shares in the transferor company held by,
or by a nominee for, the transferee company or its subsidiary at
the date of the transfer, comprise or include ninety per centum
of the shares in the transferor company or any class of those
shares, then—

 (a) the transferee company shall give notice of that fact in
the form and manner as determined by the Registrar to
the remaining shareholder or the remaining shares of that
class who have not assented to the scheme or contract,
within one month from the date of the transfer unless
on a previous transfer under the scheme or contract, the
transferee company has complied with this requirement;
and

 (b) any shareholder may require the transferee company to
acquire the shares in question within three months from
the giving of the notice to him,

and if a shareholder gives notice under paragraph (b) with respect
to any shares, the transferee company shall be entitled and bound
to acquire those shares on the terms on which under the scheme or
contract the shares of the approving shareholders were transferred
to the transferee company, or on such other terms as are agreed
or as the Court thinks fit to order, on the application of either
the transferee company or the shareholder.

 (7) If a notice has been given by the transferee company under
subsection (1) and the Court has not, on an application made by
the dissenting shareholder, ordered to the contrary, the transferee
company shall, transmit a copy of the notice to the transferor

Companies 349

company together with an instrument of transfer executed, on
behalf of the shareholder by any person appointed by the transferee
company, and on its own behalf by the transferee company—

 (a) after the expiration of one month after the date on which
the notice has been given;

 (b) after fourteen days a statement has been supplied to a
dissenting shareholder under subsection (4); or

 (c) if an application to the Court by the dissenting shareholder
is then pending, after that application has been disposed
of.

 (8) In relation to subsection (7), the transferee company shall
pay, allot or transfer the amount or other consideration representing
the price payable by the transferee company for the shares which
by virtue of this section that company is entitled to acquire to
the transferor company, and the transferor company shall register
the transferee company as the shareholder.

 (9) Any sums received by the transferor company under this
section shall be paid into a separate bank account, and any
sums and any other consideration received shall be held by that
transferor company in trust for the several persons entitled to the
shares in respect of the sums received by the transferor company,
respectively.

 (10) If any consideration other than cash is held in trust
by a company for any person under this section or under any
corresponding previous written law, such consideration other than
cash may, after the expiration of two years and shall before the
expiration of ten years from the date on which the consideration
was allotted or transferred to the company, be transferred to the
Minister charged with the responsibility for finance.

 (11) The Minister charged with the responsibility for finance shall
sell or dispose of any consideration received under subsection (10)
as he thinks fit and shall deal with the proceeds of the sale or
disposal as if it were moneys paid to the Minister under the law
relating to unclaimed moneys.

Laws of Malaysia350 Act 777

 (12) In this section, “dissenting shareholder” includes a
shareholder who has not assented to the scheme or contract and
any shareholder who has failed or refused to transfer his shares
to the transferee company in accordance with the scheme or
contract.

Subdivision 3
Receivers and Receivers and Managers

Qualification for appointment of receiver or receiver and
manager

372. Any person who is an approved liquidator referred to in
section 433 shall be qualified to be appointed as receiver or
receiver and manager.

Disqualification for appointment as receiver or receiver and
manager

373. Subject to section 372, the following person shall not be
qualified to act as a receiver or receiver and manager of the
property of a company:

 (a) a corporation;

 (b) an undischarged bankrupt; and

 (c) a mortgagee of any property of the company, an auditor
of the company or an officer of the company or any
corporation which is a mortgagee of the property of the
company.

Appointment of receiver or receiver and manager

374. A receiver or receiver and manager may be appointed—

 (a) under any instrument that confers on a debenture holder
or charge holder the power to appoint a receiver or
receiver and manager;

Companies 351

 (b) under any instrument that creates a charge in respect of
property and undertaking of a company that confers on
the charge holder the power to appoint a receiver or a
receiver and manager; or

 (c) by the Court.

Appointment of receiver or receiver and manager under
instrument

375. (1) If an instrument confers on the debenture holder the
power to appoint a receiver or receiver and manager, the debenture
holder may appoint a receiver or receiver and manager by an
instrument in writing signed by him or on his behalf.

 (2) Unless the instrument expressly provides otherwise—

 (a) a receiver or receiver and manager is the agent of the
company;

 (b) a person appointed as a receiver may act as receiver and
manager; or

 (c) a power conferred to appoint a receiver or receiver and
manager includes the power to appoint—

 (i) two or more receivers or receiver and managers;

 (ii) a receiver or receiver and manager additional to
a receiver or receiver and manager in office;
and

 (iii) a receiver or receiver and manager to replace a
receiver or receiver and manager whose office
has become vacant.

 (3) If two or more receivers or receiver and managers are
appointed under one instrument, unless the instrument expressly
provides otherwise—

 (a) the functions or the powers of the receivers or receiver
and managers may be performed or exercised by any
one of them or by both or all of them jointly; and

Laws of Malaysia352 Act 777

 (b) a reference to the receiver or receiver and manager shall
be a reference to whichever one of the receivers or
receiver and managers.

Appointment of receiver or receiver and manager by Court

376. (1) The Court may, after giving notice to the company
appoint a receiver or receiver and manager on the application of
a debenture holder or any other interested person and give notice
to the company, where the Court is satisfied that—

 (a) the company has failed to pay a debt due to the debenture
holder or has otherwise failed to meet any obligation
to the debenture holder, or that any principal money
borrowed by the company or interest is in arrears;

 (b) the company proposes to sell or otherwise dispose of the
secured property in breach of the terms of any instrument
creating the security or charge; or

 (c) it is necessary to appoint a receiver or receiver and manager
to ensure the preservation of the secured property for
the benefit of the debenture holder.

 (2) A person appointed as a receiver by the Court may act
as a receiver and manager unless the Court order excludes the
appointment as receiver and manager.

 (3) If two or more receivers or receiver and managers are
appointed by the Court, unless the Court expressly provides
otherwise—

 (a) the functions or the powers of the receivers or receiver
and managers may be performed or exercised by any
one of them or by both or all of them jointly; and

 (b) a reference to the receiver or receiver and manager shall
be a reference to whichever one of the receivers or
receiver and managers.

 (4) The right of any person to apply to the Court for the
appointment of a receiver or receiver and manager under common
law is not abrogated by the operation of this section or Subdivision.

Companies 353

Notice of appointment of receiver or receiver and manager

377. (1) If any person—

 (a) obtains an order for the appointment of a receiver or
receiver and manager of the property of a company or
of the property within Malaysia of any other corporation;
or

 (b) appoints a receiver or receiver and manager under any
powers contained in any instrument,

he shall lodge with the Registrar in a notice of appointment of
that fact, within seven days from the date he obtained the order
or made the appointment.

 (2) Any person who contravenes this section commits an
offence and, shall, on conviction, be liable to a fine not exceeding
fifty thousand ringgit, and in the case of a continuing offence,
to a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Vacancy in office of receiver or receiver and manager

378. (1) The office of a receiver or receiver and manager shall
become vacant if the person holding the office—

 (a) resigns;

 (b) dies;

 (c) becomes disqualified by any of the reasons under
paragraph 373(b) or (c);

 (d) is terminated or removed under the instrument appointing
a receiver or receiver and manager or where there is no
instrument appointing a receiver or receiver and manager,
by the Court;

 (e) assigns his estate for the benefit of his creditors or makes
an arrangement with his creditors under any laws relating
to bankruptcy; or

Laws of Malaysia354 Act 777

 (f) is convicted of an offence involving fraud or dishonesty
punishable on conviction by imprisonment for three
months or more.

 (2) A receiver or receiver and manager appointed under a
power conferred by an instrument may resign from office by
giving written notice not less than fourteen days of his intention
to resign to the person by whom he was appointed.

 (3) A receiver or receiver and manager appointed by the Court
shall not resign without first obtaining the leave of the Court to
do so.

 (4) A person vacating the office of receiver or receiver and
manager shall, where practicable, provide such information and
give such assistance in the conduct of the receivership to his
successor as that person reasonably requires.

 (5) On the application of a person appointed to fill a vacancy
in the office of receiver or receiver and manager, the Court may
make any order that the Court considers necessary or desirable
to facilitate the performance of his duties.

Notice of cessation of office

379. (1) A person who ceases to act as receiver or receiver and
manager by—

 (a) reason stated under paragraph 378(1)(a), (c), (d) or (e);
or

 (b) having obtained leave to resign from the Court,

shall lodge with the Registrar a notice of cessation of that fact,
in such manner as the Registrar may determine, within fourteen
days after the occurrence of such vacancy.

 (2) I f  a  vacancy is  caused by reason s ta ted  under
paragraph 378(1)(b), the notice under subsection (1) shall be
lodged to the Registrar by the personal representative or debenture
holder of a receiver or receiver and manager.

Companies 355

 (3) I f  a  vacancy is  caused by reason s ta ted  under
paragraph 378(1)(f), the notice under subsection (1) shall be
lodged with the Registrar by the debenture holder within fourteen
days from the relevant facts have come to the knowledge of the
debenture holder.

 (4) Any person who contravenes this section commits an offence
and, in the case of a continuing offence, to a further fine not
exceeding five hundred ringgit for each day during which the
offence continues after conviction.

Statement relating to appointment of receiver or receiver and
manager

380. (1) If a receiver or a receiver and manager of the property
has been appointed, every invoice, order for goods or services,
business letter or order form whether in hard copy or electronic
form issued by or on behalf of the corporation or the receiver
or receiver and manager or the liquidator of the corporation and
on which the name of the corporation appears, and every official
website of the corporation where the name of the corporation
appears shall contain a statement that a receiver or receiver and
manager has been appointed.

 (2) A failure to comply with subsection (1) shall not affect the
validity of such document.

 (3) The company and every officer who contravene this section
commit an offence.

Liability of receiver or receiver and manager

381. (1) Any receiver or receiver and manager or other authorized
person entering into possession of any assets of a company for
the purpose of enforcing any charge shall, without prejudice to
his rights against the company or any other person, be liable for
debts incurred by him or other authorized person in the course
of the receivership or possession, for services rendered, goods
purchased or property hired, leased, used or occupied unless
otherwise provided in the instrument appointing the receiver or
receiver and manager or other authorized person.

Laws of Malaysia356 Act 777

 (2) Subsection (1) shall not be construed as to constitute the
charge holder, as to be a mortgagee in possession.

 (3) For the purposes of this section, “a mortgagee in possession”
means a charge holder who personally or as through an agent
exercises a power to—

 (a) receive income from a charged property;

 (b) enter into possession or assume control of a charged
property; or

 (c) sell or otherwise alienate a charged property.

Liability for contract

382. (1) A receiver or receiver and manager is personally liable
for a contract entered into by him in the exercise of any of his
powers unless specifically provided otherwise in the instrument
appointing the receiver or receiver and manager.

 (2) The terms of a contract referred to in subsection (1) may
exclude or limit the personal liability of the receiver or receiver
and manager other than a receiver or receiver and manager
appointed by the Court.

Power of receiver or receiver and manager

383. (1) A receiver or receiver and manager shall have the
powers and authorities expressly or impliedly conferred by the
instrument or by the order of the Court, by or under which the
appointment was made.

 (2) Subject to the instrument or order of the Court by or under
which the appointment is made, a receiver or receiver and manager
shall have the powers set out in the Sixth Schedule.

Application to Court for directions

384. (1) A receiver or receiver and manager of the property
of a company may apply to the Court for directions in relation
to any matter arising in connection with the performance of the
functions of the receiver or receiver and manager.

Companies 357

 (2) If a receiver or receiver and manager has been appointed
to enforce any charge for the benefit of debenture holders of the
company, any such debenture holder may apply to the Court for
directions in relation to any matter arising in connection with
the performance of the functions of the receiver or receiver and
manager.

Appointment of liquidator as receiver or receiver and manager
in cases of winding up

385.  An approved liquidator may be appointed as the receiver
or receiver and manager, if an application is made to the Court
to appoint a receiver or receiver and manager on behalf of the
debenture holders or other creditors of the company which is
being wound up by the Court.

Powers of receiver or receiver and manager on liquidation

386. (1) After the commencement of winding up of a company—

 (a) a receiver may continue to act as a receiver and exercise
all the powers of a receiver in respect of property or
assets secured under the debenture appointing the receiver;
and

 (b) a receiver and manager may continue to act as a receiver
as referred to in paragraph (a) and a receiver and
manager may exercise all the powers of a receiver and
manager for the purpose of carrying on the business of
the company provided that the receiver and manager
obtains consent from the liquidator or if the liquidator
withholds his consent, the consent of the Court.

 (2) A receiver or receiver and manager holding office referred
to in subsection (1) shall continue to act as the agent of the
company.

 (3) A debt or liability incurred by a company through the acts
of a receiver or receiver and manager who is acting as the agent
of the company in accordance with subsection (2) is not a cost,
charge or expense of liquidation.

Laws of Malaysia358 Act 777

Power of Court to fix remuneration of receiver or receiver
and manager

387. (1) The Court may, on an application by the liquidator
of a company, by order fix the amount to be paid by way of
remuneration to any person who, under the powers contained in
any instrument, has been appointed as receiver or receiver and
manager of the property of the company.

 (2) The power of the Court shall—

 (a) extend to fixing the remuneration for any period before
the making of the order or the application;

 (b) be exercisable notwithstanding that the receiver or receiver
and manager has died or ceased to act before the making
of the order or the application; and

 (c) if the receiver or receiver and manager has been paid
or has retained for his remuneration for any period
before the making of the order any amount in excess
of that fixed for that period, extend to require him or
his personal representatives to account for the excess
or such part of it as may be specified in the order,

if no previous order has been made with respect to it.

 (3) The power conferred by paragraph (2)(c) shall not be exercised
as respects any period before the making of the application for
the order unless in the opinion of the Court there are special
circumstances making it proper for the power to be so exercised.

 (4) The Court may from time to time vary or amend an order
made under this section on an application made either by the
liquidator or by the receiver or receiver and manager.

Provisions as to information if receiver or receiver and manager
appointed

388. (1) If a receiver or receiver and manager of the property
of a company is appointed, the receiver or receiver and manager
shall send a notice on his appointment to the company and the
company shall, submit to the receiver or receiver and manager

Companies 359

a statement as to the affairs of the company in accordance with
this section within fourteen days from receipt of the notice or
such longer period as may be allowed by the Court.

 (2) The receiver or receiver and manager shall within thirty
days from the receipt of the statement under subsection (1) or
such longer period as the Court may allow—

 (a) lodge with the Registrar a copy of the statement and any
comments the receiver or receiver and manager thinks
fit to make on the statement;

 (b) send to the company a copy any such comments or, if
the receiver or receiver and manager does not think fit
to make any comment, a notice to that effect; and

 (c) if the receiver or receiver and manager is appointed by
or on behalf of debenture holders, send to the debenture
holders’ representative a copy of the statement and his
comments in the statement or, if the receiver or receiver
and manager does not think fit to make any comment,
a notice to that effect.

 (3) Subsections (1) and (2) shall not apply in relation to the
appointment of a receiver or receiver and manager to act—

 (a) with an existing receiver or receiver and manager; or

 (b) in place of a receiver or receiver and manager ceasing
to act,

except that, where subsections (1) and (2) apply to a receiver or
receiver and manager who dies or ceases to act before the subsections
have been fully complied with, the references in subsections (1)
and (2) to the receiver or receiver and manager shall be, subject
to subsection (4) include references to his successor and to any
continuing receiver or receiver and manager.

 (4) If the company is being wound up, this section and
sections 389, 390, 391 and 392 shall apply notwithstanding that
the receiver or receiver and manager and the liquidator are the
same person, but with any necessary modifications arising from
that fact.

Laws of Malaysia360 Act 777

 (5) The receiver or receiver and manager who contravene
this section commits an offence, and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Obligations of company and directors to provide information
to receiver or receiver and manager

389. (1) If a receiver or receiver and manager is appointed in
respect of the property or undertaking of a company, the company
and every director of the company shall—

 (a) make available to the receiver or receiver and manager
all books, documents and information relating to the
property or undertaking in receivership in the company’s
possession or under the company’s control within seven
days after the receipt of notice under subsection 388(1);

 (b) if required to do so by the receiver or receiver and
manager, verify by way of an affidavit that the books,
documents and information are complete and correct;

 (c) give the receiver or receiver and manager such assistance
as he may reasonably require; and

 (d) if the company has a seal, make the seal available for
use by the receiver or receiver and manager.

 (2) Any person who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
fifty thousand ringgit, and in the case of a continuing offence,
to a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Submission of statement of affairs

390. (1) Statement as to the affairs of a company required by
subsection 388(1) shall state as at the date of the appointment
of a receiver or receiver and manager—

 (a) the particulars of the company’s assets, debts and liabilities;

Companies 361

 (b) the names and addresses of its creditors;

 (c) securities held by creditors respectively;

 (d)  the dates when the securities were respectively created;
and

 (e) such other information as may be required by the Registrar.

 (2) The statement shall be submitted by, and be verified by
affidavit of, one or more of the persons who were at the date of
the appointment of a receiver or receiver and manager, the directors
of the company or by such of the persons in this subsection
mentioned as the receiver or receiver and manager may require
to submit and verify the statement, stating—

 (a) persons who are or have been officers;

 (b) persons who have taken part in the formation of the
company at any time within one year before the date of
the appointment of a receiver or receiver and manager;

 (c) persons who are in the employment of the company, or
have been in the employment of the company within that
year, and are in the opinion of the receiver or receiver
and manager capable of giving the information required;
or

 (d) persons who are or have been within that year officers
of or in the employment of a corporation which is, or
within that year was, an officer of the company to which
the statement relates.

 (3) Any person making the statement and affidavit shall be
allowed and shall be paid by the receiver or receiver and manager
out of his receipts such costs and expenses incurred in and about
the preparation and making of the statement and affidavit as the
receiver or receiver and manager may consider reasonable, subject
to an appeal to the Court.

 (4) Any person who contravenes subsections (1) and (2)
commits an offence and in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Laws of Malaysia362 Act 777

Lodging of accounts of receiver or receiver and manager

391. (1) Every receiver or receiver and manager of the property
of a company or of the property within Malaysia of any other
corporation shall—

 (a) within thirty days from the expiration of the period of
six months from the date of his appointment and of
every subsequent period of six months and within thirty
days from his ceasing to act as receiver or receiver and
manager, lodge with the Registrar a detailed account
showing—

 (i) his receipts and his payments during each period
of six months, or, where he ceases to act as
receiver or receiver and manager, during the
period from the end of the period to which the
last preceding account related or from the date
of his appointment, as the case may be, up to
the date he ceased to act as receiver or receiver
and manager;

 (ii) the aggregate amount of those receipts and
payments during all preceding periods since his
appointment; and

 (iii) where he has been appointed under the powers
contained in any instrument, the amount owing
under that instrument at the time of his appointment,
in the case of the first account, and at the
expiration of every six months after his appointment
and, where he has ceased to act as receiver or
receiver and manager at the date he ceased to
act as receiver or receiver and manager, and his
estimate of the total value of all assets of the
company or other corporation which are subject
to that instrument; and

 (b) before lodging the account, verify by affidavit all accounts
and statements referred to in the account.

 (2) The Registrar may cause the accounts to be audited by an
approved company auditor appointed by the Registrar at his own
motion or on the application of the company or other corporation
or a creditor.

Companies 363

 (3) For the purpose of audit under subsection (2), the receiver or
receiver and manager shall furnish the auditor with such vouchers
and information as the receiver or receiver and manager requires
and the auditor may at any time require the production of and
inspect any books of account kept by the receiver or receiver and
manager or any document or other records relating to the audit.

 (4) The Registrar may require the applicant under subsection (2)
to give security for the payment of the cost of the audit.

 (5) The costs of an audit under subsection (2) shall be fixed
by the Registrar and be paid by the receiver or receiver and
manager unless the Registrar otherwise determines.

 (6) Every receiver or receiver and manager who contravenes
this section commits an offence and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Payments of certain debts subject to floating charge in priority
to claims under charge

392. (1) If a receiver or receiver and manager is appointed on
behalf of the holders of any debentures of a company secured
by a floating charge or possession is taken by or on behalf of
debenture holders of any property comprised in or subject to
floating charge, then if the company is not wound up at the time,
there shall be paid out of the assets coming into the hands of
receiver or receiver and manager or other person taking possession
in priority to the debenture holders the following:

 (a) firstly, the costs, expenses and remuneration of the receiver
or receiver and manager and any indemnity to which
the receiver or receiver and manager is entitled to from
or out of the property of the company;

 (b) secondly, all wages or salaries, including any amount
payable by way of allowance or reimbursement under
any contract of employment or award or agreement
regulating conditions of employment, whether or not
earned wholly or in part by way of commission, of any

Laws of Malaysia364 Act 777

employee in respect of services rendered by him to the
company for a period of four months before the date of
the appointment of the receiver or receiver and manager
up to an amount not exceeding fifteen thousand ringgit;

 (c) thirdly, all remuneration payable to any employee in
respect of vacation leave, or in the case of the employee’s
death to any other person in his right, accrued in respect
of any period before the date of the appointment of the
receiver or receiver and manager; and

 (d) fourthly, all amounts due in respect of contributions
payable, including employee’s portion which has been
deducted but not paid, during the next twelve months
before the date of the appointment of the receiver or
receiver and manager, by the company as the employer of
any person under any written law relating to employees
social security contribution and superannuation or
provident funds or under any scheme of superannuation
or retirement benefit which is an approved scheme under
the federal law relating to income tax.

 (2) The debts in each class specified in subsection (1) shall
rank in the order but as between debts of the same class shall rank
pari passu between the debts, and shall be paid in full, unless
the property of the company is insufficient to meet the debts, in
which case the debts shall diminish in equal proportions.

 (3) If any payment has been made to any employee of the
company on account of wages, salary or vacation leave out of
money advanced by a person for that purpose, the person by
whom the money was advanced shall, in a receivership, have a
right of priority in respect of the money advanced and paid, up to
the amount by which the sum in respect of which the employee
would have been entitled to priority in the receivership has been
diminished by reason of the payment, and shall have the same
right of priority in respect of that amount as the employee would
have had if the payment had not been made.

 (4) If the company is under a contract of insurance, entered
into before the date of appointment of the receiver or receiver
and manager, insured against liability to third parties, then if any

Companies 365

such liability is incurred by the company, either before or after
the date of appointment of the receiver or receiver and manager,
and an amount in respect of that liability is or has been received
by the company or the receiver or receiver and manager from
the insurer, the amount shall, after deducting any expenses of
or incidental to getting in the amount, be paid by the receiver
or receiver and manager to the third party in respect of whom
the liability was incurred to the extent necessary to discharge
that liability or any part of that liability remaining undischarged
in priority to all payments in respect of the debts referred to in
subsection (1).

 (5) Any payment made under this section shall be recovered
as far as may be out of the assets of the company available for
payment of general creditors.

 (6) If a request is made by or with the concurrence of the
receiver or receiver and manager for the giving of any of the
supplies including water, electricity, gas and telecommunications,
after the appointment of the receiver or receiver and manager,
the supplier may make it a condition of the giving of the supply
that the receiver or receiver and manager personally guarantees
the payment of any charges in respect of the supply given after
his appointment.

 (7) Notwithstanding subsection (6), the supplier shall not
make it a condition of the giving of the supply, or do anything
which has the effect of making it a condition of the giving of the
supply, that any outstanding charges in respect of a supply given
to the company before the appointment of receiver or receiver
and manager are paid.

Enforcement of duty of receiver or receiver and manager,
etc., to make returns

393. (1) Any receiver or receiver and manager of the property
of a company who has defaulted in lodging any return, account
or other document or in giving any notice required by law shall
make good the default within fourteen days from the service of
a notice requiring him to do so by any member or creditor of
the company or trustee for the debenture holders.

Laws of Malaysia366 Act 777

 (2) The Court may, on an application made by the person who
has given the notice under subsection (1), make an order directing
the receiver or receiver and manager to make good the default
within such time as is specified in the order.

 (3)  If it appears that any receiver or receiver and manager of
the property of a company has misapplied or retained or become
liable or accountable for any money or property of the company
or being guilty of any misfeasance or breach of trust or breach of
duty in relation to the company, the Court may, on the application
of any creditor or contributory or the liquidator, examine into the
conduct of the receiver or receiver and manager and compel the
receiver or receiver and manager—

 (a) to repay or restore the money or property or any part of
the money or property with interest at such rate as the
Court thinks just; or

 (b) to contribute such sum to the assets of the company by
way of compensation in respect of the misapplication,
retainer, misfeasance or breach of trust or breach of
duty as the Court thinks just.

 (4) This section shall have effect notwithstanding that the
offence is one for which the offender is criminally liable.

Division 8

Corporate Rescue Mechanism

Interpretation

394. For the purposes of this Division—

 “nominee” means any person who is qualified to be appointed as
an insolvency practitioner whose powers and duties shall include
the powers and duties specified in the Seventh Schedule;

 “voluntary arrangement” means a composition in satisfaction of
a company’s debts or a scheme of arrangement of a company’s
affairs under Subdivision 1.

Companies 367

Subdivision 1

Corporate Voluntary Arrangement

Non-application of this Subdivision

395. This Subdivision shall not apply to—

 (a) a public company;

 (b) a company which is a licensed institution or an operator
of a designated payment system regulated under the
laws enforced by the Central Bank of Malaysia;

 (c) a company which is subject to the Capital Markets and
Services Act 2007; and

 (d) a company which creates a charge over its property or
any of its undertaking.

Persons who may propose voluntary arrangement

396. (1) The directors of a company other than a company
which is under a judicial management order or is being wound
up may make a proposal to the company and to its creditors for
a voluntary arrangement under this Subdivision.

 (2) The proposal for a voluntary arrangement under this
Subdivision shall include the appointment of a nominee either
as a trustee or supervisor for the purpose of supervising the
implementation of the voluntary arrangement.

 (3) A proposal for a voluntary arrangement may also be made—

 (a) by a judicial manager if a company is under a judicial
management order; or

 (b) by a liquidator if a company is being wound up,

who may also be the nominee for the voluntary arrangement.

Laws of Malaysia368 Act 777

 (4) In the case where the liquidator is the Official Receiver,
the nominee shall be an insolvency practitioner.

Proposal for voluntary arrangement

397. (1) Where the directors of a company or Official Receiver
intend to make a proposal for a voluntary arrangement, the
directors or Official Receiver shall appoint a nominee and shall
submit the following documents to the nominee:

 (a) a document setting out the terms of the proposed voluntary
arrangement; and

 (b) a statement of the company’s affairs containing—

 (i) the particulars of the company’s creditors and of
its debts and other liabilities and of its assets;
and

 (ii) other information as may be required by the
nominee to comply with subsection (2).

 (2) For the purposes of subsection (1), the nominee shall
submit to the directors, a statement indicating whether or not, in
his opinion—

 (a) the proposed voluntary arrangement has a reasonable
prospect of being approved and implemented;

 (b) the company is likely to have sufficient funds available
for the company during the proposed moratorium to
enable the company to carry on its business; and

 (c) that the meetings of the company and its creditors
should be summoned to consider the proposed voluntary
arrangement.

 (3) The nominee is entitled to rely on information submitted
to him under subsection (1) in forming his opinion on matters
required under subsection (2) unless he has reason to doubt of
its accuracy.

Companies 369

Moratorium

398. (1) A moratorium in a voluntary arrangement commences
automatically from the time of filing of the following documents
by the company to the Court:

 (a) a document setting out the terms of the proposed voluntary
arrangement;

 (b) a statement of the company’s affairs containing—

 (i) the particulars of the company’s creditors and of
its debts and other liabilities and of its assets;
and

 (ii) other information;

 (c) a statement that the company is eligible for a moratorium;

 (d) a statement from the nominee that he has given his consent
to act;

 (e) a statement from the nominee; and

 (f) a statement disclosing the full particulars of previous
proposed voluntary arrangements or an application for
moratorium and the results of the application, if any.

 (2) The Eighth Schedule shall have effect with respect to—

 (a) companies eligible for a moratorium;

 (b) the duration and extension of the moratorium;

 (c) the effects of the moratorium; and

 (d) the procedures applicable in relation to the approval and
implementation of a voluntary arrangement where such
a moratorium is or has been in force.

Laws of Malaysia370 Act 777

Summoning of meetings

399. (1) Where a moratorium is in force, the nominee shall
summon a meeting of the company and a meeting of its creditors
at the time, date and place as the nominee thinks fit within the
period specified in the Eighth Schedule.

 (2) Every creditor of the company of whose claim and address
the nominee is aware shall be summoned to the creditors’ meeting
under this section.

 (3) A meeting summoned under this section shall be conducted
in accordance with the rules of meeting under Division 5 of
Part III.

Decisions of meetings

400. (1) A meeting summoned under section 399 shall decide
whether to approve the proposed voluntary arrangement or
otherwise.

 (2) The required majority to approve a proposal for voluntary
arrangement in the creditors’ meeting shall be seventy-five per
centum of the total value of creditors present and voting at the
meeting either in person or by proxy.

 (3) A simple majority is required to pass a resolution to approve
the proposal for voluntary arrangement in a meeting of members.

 (4) A meeting summoned under section 399 shall not approve
any proposal which affects the right of a secured creditor of the
company to enforce his security, except with the concurrence of
the secured creditor concerned.

 (5) Once  approved by  the  requi red  major i ty  under
subsections (2) and (3), the proposed voluntary arrangement
shall take effect and be binding on all creditors of the company
whether or not the creditors have voted in favour of the proposal.

 (6) A modification in respect of the proposal shall not be
allowed to be made in any of the meeting under section 399.

Companies 371

 (7) After the conclusion of each meeting held under subsection (2)
and (3), the nominee shall report the result of the meeting to the
Court and shall give notice of that result to the Registrar and to
such other persons or bodies as the Court may approve.

Implementation of proposal

401. (1) The person who is for the time being carrying out, in
relation to the voluntary arrangement, the functions conferred—

 (a) on the nominee by virtue of the approval given at one
or both of the meetings summoned under section 399;
or

 (b) on any other person other than the nominee who is an
insolvency practitioner,

shall be known as the supervisor of the voluntary arrangement.

 (2) The Court may direct that the nominee be replaced by
another person qualified to act as a nominee in relation to the
voluntary arrangement on an application—

 (a) by the directors or Official Receiver in a case where the
nominee fails to comply with any duty imposed on the
nominee under the Seventh Schedule or the nominee
has died; or

 (b) by the directors or Official Receiver or the nominee
in a case where it is inappropriate for the nominee to
continue to act.

 (3) A person may only be appointed as a replacement nominee
under the Seventh Schedule if the person submits a statement
indicating his consent to act as nominee to the Court.

 (4) If any of the company’s creditors or any other person is
dissatisfied by any act, omission or decision of the supervisor,
the company’s creditor may appeal to the Court and on receipt
of the application of appeal, the Court may—

 (a) confirm, reverse or modify any act or decision of the
supervisor;

Laws of Malaysia372 Act 777

 (b) give directions to the supervisor; or

 (c) make such other order as the Court thinks fit.

 (5) The supervisor may apply to the Court for directions in
relation to any particular matter arising under the voluntary
arrangement and is included among the persons who may apply
to the Court for the winding up of the company or for a judicial
management order to be made in relation to the winding up of
the company.

 (6) The Court may make an order appointing a person who is
qualified to act as an insolvency practitioner or authorized to act
as supervisor, in relation to the voluntary arrangement, either in
substitution for the existing supervisor or to fill a vacancy if—

 (a) it is expedient to appoint a person to carry out the
functions of the supervisor; and

 (b) it is inexpedient, difficult or impracticable for an appointment
to be made without the assistance of the Court.

 (7) The power conferred by subsection (6) is exercisable—

 (a) to increase the number of persons exercising the functions
of a supervisor; or

 (b) to replace one or more of the persons if there is more
than one person exercising the functions.

Arrangements coming to an end prematurely

402. For the purposes of this Subdivision, a voluntary arrangement
in which the approval of which has taken effect under section 401
comes to an end prematurely if the voluntary arrangement has not
been fully implemented in respect of all persons bound by the
arrangement by virtue of subsection 400(5) when the voluntary
arrangement ceases to have effect.

Companies 373

Subdivision 2
Judicial Management

Non-application of this Subdivision

403. This Subdivision shall not apply to—

 (a) a company which is a licensed institution or an operator
of a designated payment system regulated under the
laws enforced by the Central Bank of Malaysia; and

 (b) a company which is subject to the Capital Markets and
Services Act 2007.

Application to Court for a company to be placed under judicial
management and for appointment of a judicial manager

404. An application for an order that a company should be
placed under a judicial management and for an appointment of
a judicial manager may be made to the Court by the company
or its creditor if the company or its creditor considers that—

 (a) the company is or will be unable to pay its debts; and

 (b) there is a reasonable probability of rehabilitating the

company or of preserving all or part of its business as a
going concern or that otherwise the interests of creditors
would be better served than by resorting to a winding
up.

Power of Court to make a judicial management order and
appoint a judicial manager

405. (1) Where a company or its directors, under a resolution of
its members or the board of directors, or a creditor, including any
contingent or prospective creditor or all or any of those parties,
together or separately, makes an application under section 404,
the Court may make a judicial management order in relation to
the company if—

 (a) the Court is satisfied that the company is or will be
unable to pay its debts; and

Laws of Malaysia374 Act 777

 (b) the Court considers that the making of the order would be
likely to achieve one or more of the following purposes:

 (i) the survival of the company, or the whole or part
of its undertaking as a going concern;

 (ii) the approval under section 366 of a compromise
or arrangement between the company and any
such persons as are mentioned in that section;

 (iii) a more advantageous realisation of the company’s
assets would be effected than on a winding up.

 (2) Upon hearing the application for a judicial management
order, the Court may dismiss the application or adjourn the hearing
conditionally or unconditionally or make an interim order or any
other order that the Court thinks fit.

 (3) Any judicial management order made under subsection (1)
shall direct that during the period in which the order is in force,
the affairs, business and property of the company shall be managed
by a judicial manager appointed by the Court.

 (4) The costs and expenses of any unsuccessful application for
a judicial management order made under this section shall, unless
the Court otherwise orders, be borne by the applicant and, if the
Court considers that the application is frivolous or vexatious, the
Court may make such orders to redress any injustice that may
have resulted as the Court thinks just and equitable.

 (5) Nothing in this section shall preclude a Court—

 (a) from making a judicial management order and appointing
a judicial manager if the Court considers the public
interest so requires; or

 (b) from appointing, after the making of an application for
a judicial management order and on the application of
the person applying for the judicial management order,
an interim judicial manager, pending the making of a
judicial management order, and such interim judicial
manager may be the person nominated in the application
and may exercise such functions, powers and duties as
the Court may specify in the interim order.

Companies 375

 (6) A judicial management order shall not be made in relation
to a company after the company has gone into liquidation.

 (7) For the purposes of this Subdivision, “property” in relation
to a company includes money, goods, things in action and every
description of property, whether real property or personal property,
and whether in Malaysia or elsewhere, and also obligations and
every description of interest whether present or future or vested
or contingent arising out of or incidental to property.

 (8) The definition in section 466 of “inability to pay debts”
shall apply for the purposes of this section as it applies for the
purposes of Subdivision 7 of Division 1 of Part IV.

Duration of judicial management order and its extension

406. (1) A judicial management order shall remain in force for
a period of six months from the date of the making of the order,
unless the judicial management is otherwise discharged, but the
Court may, on the application of a judicial manager, extend this
period for another six months subject to such terms as the Court
may impose.

 (2) If an application to extend the period of another six months
as referred to in subsection (1) is made, the judicial manager
shall give notice of the application to—

 (a) all directors;

 (b) all members;

 (c) all creditors; and

 (d) any person who is entitled to appoint a receiver or receiver
and manager,

of the company, and such period shall not be taken as part of
any limitation period as specified under any written law.

 (3) The applicant shall notify the Registrar of any application
made under subsection (1) in the form and manner as determined
by the Registrar.

Laws of Malaysia376 Act 777

Nomination of judicial manager

407. (1) In any application for a judicial management order
under section 404, the applicant shall nominate a person who is
an insolvency practitioner, who is not the auditor of the company,
to act as a judicial manager.

 (2) The Court may refuse the nomination of the applicant
under subsection (1) and may appoint another person who is an
insolvency practitioner as the judicial manager.

 (3) Where a nomination is made by the company under
subsection (1), a majority in value of the creditors, including
contingent or prospective creditors may be heard in opposition
to the nomination and the Court may, if satisfied as to the value
of the creditors’ claims and as to the grounds of opposition—

 (a) invite the creditors to nominate a person who is an
insolvency practitioner to act as the judicial manager;
and

 (b) adopt the nomination if the Court thinks fit.

 (4) A judicial manager shall be entitled to receive such salary or
remuneration by way of percentage or otherwise as is determined—

 (a) by agreement between the judicial manager and the
company or creditors, as the case may be;

 (b) failing such agreement, by a resolution passed at a meeting
of creditors by a majority of not less than seventy-five
per centum in value and of the creditors present in person
or by proxy and voting at the meeting and whose debts
have been admitted to vote, which meeting shall be
convened by the judicial manager by a notice to each
creditor to which notice shall be attached a statement
of all receipts and expenditure by the judicial manager
and the amount of remuneration sought by him; or

 (c) failing a determination in a manner referred to in
paragraph (a) or (b), by the Court.

Companies 377

Notice of application for judicial management order

408. (1) When an application for a judicial management order
is made to the Court, the applicant shall cause the notice of the
application—

 (a) to be advertised in one widely circulated newspaper in
Malaysia in the national language and one widely circulated
newspaper in Malaysia in the English language; and

 (b) to be given—

 (i) to the company, in a case where a creditor is the
applicant; and

 (ii) to any person who has appointed or is or may
be entitled to appoint a receiver or receiver and
manager of the whole, or substantially the whole
of a company’s property under the terms of any
debentures of a company.

 (2)  The applicant shall notify the Registrar of any application
made under subsection (1) in the form and manner as determined
by the Registrar.

Dismissal of application for judicial management order

409. Subject to subsection 405(5), the Court shall dismiss an
application for a judicial management order if it is satisfied that—

 (a) a receiver or receiver and manager referred to in
subparagraph 408(1)(b)(ii) has been or will be appointed;
and

 (b) the making of the order is opposed by a secured creditor.

Effect of application for a judicial management order

410. During the period beginning with the making of an application
for a judicial management order and ending with the making of
such an order or the dismissal of the application—

 (a) no resolution shall be passed or order made for the
winding up of the company;

Laws of Malaysia378 Act 777

 (b) no steps shall be taken to enforce any charge on or security
over the company’s property or to repossess any goods
in the company’s possession under any hire purchase
agreement, chattels leasing agreement or retention of title
agreement, except with leave of the Court and subject
to such terms as the Court may impose; and

 (c) no other proceedings and no execution or other legal
process shall be commenced or continued and no distress
may be levied against the company or its property except
with leave of the Court and subject to such terms as the
Court may impose.

Effect of judicial management order

411. (1) Upon the making of a judicial management order—

 (a) any receiver or receiver and manager shall vacate office;
and

 (b) any application for the winding up of the company shall
be dismissed.

 (2) Where any receiver or receiver and manager has vacated
office under paragraph (1)(a)—

 (a) the remuneration and expenses properly incurred by the
receiver or receiver and manager; and

 (b) any indemnity to which the receiver or receiver and
manager is entitled out of the assets of the company,

shall be charged on and, subject to subsection (4), paid out of
any property which was in his custody or under his control at
the time in priority to any security held by the person by or on
whose behalf he was appointed.

 (3) Neither a receiver nor a receiver and manager of a company
who vacates office under paragraph (1)(a) shall be required to take
steps to comply with any duty imposed on him by section 391
on or after so vacating office.

Companies 379

 (4) During the period for which a judicial management order
is in force—

 (a) no resolution shall be passed or order made for the

winding up of the company;

 (b) no receiver or receiver and manager of the kind referred
to in section 374 shall be appointed;

 (c) no other proceedings and no execution or other legal process
shall be commenced or continued and no distress may be
levied against the company or its property except with
the consent of the judicial manager or with the leave
of the Court and, if the Court grants leave, subject to
such terms as the Court may impose;

 (d) no steps shall be taken to enforce security over the
company’s property or to repossess any goods in the
company’s possession under any hire purchase agreement,
chattels leasing agreement or retention of title agreement,
except with consent of the judicial manager or leave of
the Court and subject to such terms as the Court may
impose; and

 (e) no steps shall be taken to transfer any share of the
company or to alter the status of any member of the
company except with the leave of the Court and, if the
Court grants leave, subject to such terms as the Court
may impose.

Notification that a company is under judicial management order

412. (1) Where a judicial manager has been appointed, every
invoice, order for goods or services, business letter or order form
whether in hard copy or electronic form issued by or on behalf of
the company or the judicial manager and on which the name of
the company appears, and every official website of the company
where the name of the company appears shall contain a statement
that the affairs, business and property of the company are being
managed by the judicial manager.

Laws of Malaysia380 Act 777

 (2) The company, the judicial manager and every officer who
contravene this section commit an offence and, in the case of a
continuing offence, to a further fine not exceeding one thousand
ringgit for each day during which the offence continues after
conviction.

Vacancy in appointment of judicial manager

413. If a vacancy occurs by death, resignation or otherwise in
the office of a judicial manager of a company, the Court may, on
the application of the company or any creditor of the company,
by order, fill the vacancy.

General powers and duties of judicial manager

414. (1) On the making of a judicial management order, the
judicial manager shall take into his custody or under his control
all the property to which the company is or appears to be entitled.

 (2) During the period for which a judicial management order
is in force, all powers conferred and duties imposed on the
directors by this Act or by the constitution of the company shall
be exercised and performed by the judicial manager and not by
the directors, but nothing in this subsection shall require the
judicial manager to call any meetings of the company.

 (3) The judicial manager of a company shall—

 (a) do all such things as may be necessary for the management
of the affairs, business and property of the company;
and

 (b) do all such other things as the Court may order.

 (4) Without prejudice to the generality of paragraph (3)(a),
the powers conferred by that subsection shall include the powers
specified in the Ninth Schedule.

 (5) The judicial manager may apply to the Court for directions
in relation to any particular matter arising in connection with the
carrying out of his functions.

Companies 381

 (6) Nothing in this section shall be taken as authorizing the
judicial manager of a company to make any payment towards
discharging any debt to which the company was subject on the
making of the judicial management order unless—

 (a) the making of the payment is sanctioned by the Court or
the payment is made under a compromise or arrangement
so sanctioned; or

 (b) the payment is made towards discharging sums secured by
a security or payable under a hire purchase agreement,
chattels leasing agreement or retention of title agreement
to which section 415 applies.

 (7) If a request is made by or with the concurrence of the
judicial manager for the giving of any of the supplies including
water, electricity, gas and telecommunications, after the making
of the judicial management order—

 (a) the supplier may make it a condition of the giving of the
supply that the judicial manager personally guarantees
the payment of any charges in respect of the supply
given after the judicial manager’s appointment; or

 (b) the supplier shall not make it a condition of the giving
of the supply, or do anything which has the effect of
making it a condition of the giving of the supply, that any
outstanding charges in respect of a supply given to the
company before the making of the judicial management
order are paid.

 (8) The judicial manager of a company may summon a meeting
of the company’s creditors, if he thinks fit, and shall summon
such a meeting if he is directed to do so by the Court.

 (9) Any alteration in the constitution made by virtue of an order
under paragraph (3)(b) is of the same effect as if duly made by
resolution of the company, and the provisions of this Act apply
to the constitution as so altered accordingly.

 (10) The judicial manager shall deliver an office copy of an order
sanctioning the alteration of the constitution under paragraph (3)(b)
to the Registrar within fourteen days from the making of the order.

Laws of Malaysia382 Act 777

 (11) A person dealing with the judicial manager of a company
in good faith and for value shall not be concerned to inquire
whether the judicial manager is acting within his powers.

Power to deal with charged property, etc.

415. (1) The judicial manager of a company may dispose of or
otherwise exercise his powers in relation to any property of the
company which is subject to a security to which, as created, was
a floating charge.

 (2) Where, on application by the judicial manager of a company,
the Court is satisfied that the disposal, with or without other
assets—

 (a) of any property of the company which is subject to a
security other than a floating charge; or

 (b) of any goods under a hire purchase agreement, chattels
leasing agreement or retention of title agreement,

would be likely to promote one or more of the purposes specified
in the judicial management order, the Court may, by order,
authorize the judicial manager to dispose of the property as if it
were not subject to the security or to dispose of the goods as if
all rights of the owner under the hire purchase agreement were
vested in the company.

 (3) The judicial manager shall send a copy of an order made
under subsection (2) to the Registrar within fourteen days from
the making of the order.

 (4) The judicial manager making an application to the Court
to dispose of property subject to a security under subsection (2)
shall give notice of not less than seven days before the making
of the application, to the security holder or to the owner of the
goods which are subject to any of the agreements mentioned in
that subsection and the security holder or the owner, as the case
may be, may oppose the disposal of the property.

 (5) Where any property is disposed of under subsection (1),
the security holder shall have the same priority in respect of any
property of the company disposed of as he would have had in
respect of the property that is subject to the security.

Companies 383

 (6) It shall be a condition of an order made under subsection (2)
that the net proceeds of the disposal shall be applied towards
discharging the sums secured by the security or payable under the
hire purchase agreement, chattels leasing agreements or retention
of title agreement and where the net proceeds of the disposal
are less than the sums secured by the security or payable under
any of those agreements, the security holder or the owner of the
goods, as the case may be, may prove on a winding up for any
balance due to him.

 (7) Where a condition imposed under subsection (6) relates
to two or more securities, that condition shall require the net
proceeds of the disposal to be applied towards discharging the
sums secured by those securities in the order of priorities of such
securities.

 (8) A judicial manager who, without reasonable excuse,
contravenes subsection (6) or (7) commits an offence and in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day the offence continues after conviction.

 (9) Nothing in this section shall be regarded as prejudicing an
application to the Court under section 425.

Agency and liability for contracts

416. (1) The judicial manager or interim judicial manager of a
company—

 (a) shall be deemed to be the agent of the company;

 (b) shall be personally liable on any contract, including any
contract of employment, entered into or adopted by him
in the carrying out of his functions, except in so far as
the contract or a notice under subsection (2) otherwise
provides; and

 (c) shall be entitled to be indemnified in respect of that
liability, and to have his remuneration and expenses
defrayed, out of the property of the company which
is in his custody or under his control in priority to all
other debts except those subject to a security to which
subsection 415(2) applies.

Laws of Malaysia384 Act 777

 (2) Where a contract entered into by the company is adopted
by the judicial manager or interim judicial manager, he may, by
notice given to the other party, disclaim any personal liability
under the contract.

 (3) For the purposes of this section, the judicial manager or
interim judicial manager is not to be taken to have adopted a
contract entered into by the company by reason of anything done
or omitted to be done within thirty days from the making of the
judicial management order.

 (4) Nothing in this section shall—

 (a) limit the right of a judicial manager or interim judicial
manager to seek an indemnity from any other person in
respect of contracts entered into by him that are approved
by the Court; or

 (b) make the judicial manager or interim judicial manager
personally liable for payment of rent under leases held
by the company at the time of the appointment.

Vacation of office and release

417. (1) The judicial manager of a company may—

 (a) at any time be removed from office by order of the Court;
or

 (b) resign his office by giving notice of his resignation to
the Court with leave of the Court and subject to such
conditions as the Court may impose.

 (2) The judicial manager of a company shall vacate office if—

 (a) being an insolvency practitioner at the time of his
appointment, he ceases to be an insolvency practitioner;
or

 (b) the judicial management order is discharged.

Companies 385

 (3) Where at any time a person ceases to be a judicial manager
of a company whether by virtue of this section or by reason of
his death—

 (a) any sums payable in respect of any debts or liabilities
incurred while the person was a judicial manager under
contracts entered into by him in the carrying out of his
functions; and

 (b) any remuneration and expenses properly incurred by him,

shall be charged on and paid out of the property of the company
in his custody or under his control in priority to all other debts,
except those subject to a security to which subsection 415(2)
applies.

 (4) Where a person ceases to be a judicial manager of a
company, he shall, from such time as the Court may determine,
be released from any liability in respect of any act or omission
done by him in the management of the company or otherwise in
relation to his conduct as a judicial manager.

 (5) Nothing in this section shall relieve the person who ceases
to be a judicial manager of a company from any liability referred
to in subsection 424(5).

Information to be given by and to judicial manager

418. (1) Where a judicial management order has been made,
the judicial manager shall—

 (a) send a copy of the order to the Registrar and the company
within seven days of the making of the order;

 (b) publish a notice of the order in one widely circulated
newspaper in Malaysia in the national language and one
widely circulated newspaper in Malaysia in the English
language; and

 (c) send such a notice to all creditors of the company, so
far as the judicial manager is aware of the addresses
within thirty days from the making of the order, unless
the Court otherwise directs.

Laws of Malaysia386 Act 777

 (2) The company shall submit a statement as to the affairs of
the company in accordance with section 419 within fourteen days
from the receipt of the order referred to in paragraph (1)(a) or
such longer period as may be allowed by the judicial manager
which should not exceed sixty days.

 (3) Any person who, without reasonable excuse, contravenes
this section commits an offence and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Company’s statement of affairs

419. (1) The company’s statement of affairs required to be
submitted to the judicial manager under subsection 418(2) shall
show as at the date of the judicial management order—

 (a) the particulars of the company’s assets, debts and liabilities;

 (b) the names and addresses of its creditors;

 (c) the securities held by the creditors respectively;

 (d) the dates when the securities were respectively created;
and

 (e)  such other information as may be determined by the
Registrar.

 (2) The statement shall be submitted by, and be verified by
affidavit of, at least one of the directors who was, at the date of
the judicial management order, the director of the company and
at least one other person approved by the judicial manager from
the following categories:

 (a) person who is or has been an officer of the company;

 (b) person who has taken part in the formation of the company
at any time within one year before the date of the judicial
management order; or

Companies 387

 (c) person who is in the employment of the company including
a person who is employed under a contract for services,
or has been in the employment of the company within
that year, and is in the opinion of the judicial manager
capable of giving the information required.

 (3) Any person making the statement and affidavit shall be
allowed and shall be paid by the judicial manager, out of his
receipts, such costs and expenses incurred in and about the
preparation and making of the statement and affidavit as the
judicial manager may consider reasonable, subject to an appeal
to the Court by the person making the statement.

 (4) Any statement of affairs prepared under this section may
be used in evidence against any person making or concurring in
making the statement of affairs.

 (5) The judicial manager shall lodge a copy of the statement
of affairs with the Registrar within seven days from the receipt
of such statement from the company.

 (6) Any person who, without reasonable excuse, contravenes
this section commits an offence and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Statement of proposals

420. (1) Where a judicial management order has been made, the
judicial manager shall, within sixty days or such longer period
as the Court may allow, after the making of the order—

 (a) send a statement of his proposal for achieving one or
more of the purposes mentioned in paragraph 405(1)(b)
to the Registrar and to all creditors to their last known
address; and

 (b) lay a copy of the statement before a meeting of the
company’s creditors summoned for the period of not
less than fourteen days’ notice.

Laws of Malaysia388 Act 777

 (2) The judicial manager shall also, within sixty days or such
longer period as the Court may allow after the making of the
order either—

 (a) send a copy of the statement to all members of the
company to the last known address of all the members;
or

 (b) publish a notice in one widely circulated newspaper
in Malaysia in the national language and one widely
circulated newspaper in Malaysia in the English language
stating an address to which members of the company
should write for copies of the statement to be sent to
the members free of charge.

Consideration of proposals by creditors’ meeting

421. (1) A meeting of creditors, summoned under paragraph
420(1)(b), shall decide whether to approve the judicial manager’s
proposal.

 (2) The proposal shall be approved by seventy-five per centum
of the total value of creditors whose claims have been accepted
by the judicial manager, present and voting at the meeting either
in person or by proxy and the proposal may be approved with
modifications subject to the consent of the judicial manager to
each modification.

 (3) Once approved by the required majority under subsection (2),
the proposal, with or without modifications, shall be binding on
all creditors of the company whether or not the creditors have
voted in favour of the proposal.

 (4) The judicial manager shall report the result of the meeting
to the Court and shall give notice of that result to the Registrar
and to such other persons or bodies as the Court may approve.

 (5) If a report is given to the Court under subsection (4)
that the meeting has declined to approve the judicial manager’s
proposal with or without modification, the Court may—

 (a) by order discharge the judicial management order;

Companies 389

 (b) make any consequential provision in the judicial management
order as the Court thinks fit;

 (c) adjourn the hearing conditionally or unconditionally; or

 (d) make an interim order or any other order that the Court
thinks fit.

 (6) A copy of any order of the Court made under subsection (5)
shall be published in one widely circulated newspaper in Malaysia
in the national language and one widely circulated newspaper in
Malaysia in the English language.

 (7) Where the judicial management order is discharged, the
judicial manager shall send an office copy of the order to the
Registrar within seven days from the order.

 (8) A judicial manager who, without reasonable excuse,
contravenes subsection (7) commits an offence and, in the case
of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Committee of creditors

422. Where a creditors’ meeting held under section 421 has approved
the judicial manager’s proposals with or without modifications
the meeting may, establish a committee of creditors, which if it
thinks fit may require the judicial manager to attend before the
meeting and furnish the meeting with such information relating
to the carrying out by the judicial manager of his functions as
the meeting may reasonably require.

Duty to manage company’s affairs, etc., in accordance with
approved proposals

423. (1) Where the judicial manager’s proposal have been
approved by a meeting of creditors held under section 421, and
subject to any order under section 425, the judicial manager shall

Laws of Malaysia390 Act 777

have a duty to manage the affairs, business and property of the
company in accordance with the proposal.

 (2) Where the judicial manager proposes to make substantial
revisions of an approved proposal, the judicial manager shall—

 (a) send a statement of the proposed revisions to all creditors
of the company to the last known address of all the
creditors; and

 (b) lay a copy of the statement before the creditor’s meeting
summoned of not less than fourteen days’ notice.

 (3) The judicial manager shall also either—

 (a) send a copy of the statement to all members of the
company to the last known address of all the members;
or

 (b) publish a notice stating an address to which the members
of the company should write for copies of the statement
to be sent to them free of charge in one widely circulated
newspaper in Malaysia in the national language and one
widely circulated newspaper in Malaysia in the English
language.

 (4) The majority of seventy-five per centum in value of
creditors, present and voting at the creditor’s meeting summoned
under subsection (2) either in person or by proxy whose claims
have been accepted by the judicial manager, may approve the
proposed revisions with modifications but shall not do so unless
the judicial manager consents each modification.

 (5) After the conclusion of a meeting summoned under
subsection (2), the judicial manager shall give notice of the result
of the meeting to the Registrar or to such other persons or bodies
as the Court may approve.

Duty to apply for discharge of judicial management order

424. (1) The judicial manager of a company shall apply to the
Court for the judicial management order to be discharged if it

Companies 391

appears to the judicial manager that the purpose specified in the
order either has been achieved or is incapable of achievement.

 (2) On the hearing of an application under this section, the
Court may, by order—

 (a) discharge the judicial management order;

 (b) make any consequential provision as it thinks fit;

 (c) adjourn the hearing conditionally or unconditionally; or

 (d) make an interim order or any other order that the Court
thinks fit.

 (3) Where the judicial management order is discharged, the
judicial manager shall lodge a copy of the order affecting the
discharge with the Registrar within seven days of the making of
the order of discharge.

 (4) Where a judicial management order has been discharged
under this Subdivision or where a person ceases to be a judicial
manager under section 417, the judicial manager may apply to
the Court for his discharge.

 (5) Upon receipt of an application under subsection (4), the
Court may, if it thinks fit—

 (a) make an order discharging him from liability in respect

of any act or omission by him in the management of
the company; or

 (b) make an order discharging him in relation to his conduct
as judicial manager,

but any such discharge shall not relieve him from liability for any
misapplication or retention of money or property of the company
or for which the judicial manager has become accountable or from
any law to which he would be subject in respect of negligence,
default, misfeasance, breach of trust or breach of duty in relation
to the company.

Laws of Malaysia392 Act 777

Protection of interests of creditors and members

425. (1) At any time when a judicial management order is in
force, a creditor or member of the company may apply to the
Court for an order under this section on the ground that—

 (a) the company’s affairs, business and property are being or
have been managed by the judicial manager in a manner
which is or was unfairly prejudicial to the interests of
its creditors or members generally or of some part of its
creditors or members, including at least the creditor or
member himself, or of a single creditor that represents
twenty-five per centum in value of the claims against
the company; or

 (b) any actual or proposed act or omission of the judicial
manager is or would be so prejudicial.

 (2) On an application under this section, the Court may, by
order—

 (a) give relief in respect of the matters complained of;

 (b)  adjourn the hearing conditionally or unconditionally; or

 (c) make an interim order or any other order that the Court
thinks fit.

 (3) Subject to subsection (4), an order made by the Court under
this section may—

 (a) regulate the future management of the company’s affairs,
business and property by the judicial manager;

 (b) require the judicial manager to refrain from doing or
continuing an act complained of by the applicant or to
do an act which the applicant had complained that the
judicial manager has omitted to do;

 (c) require the summoning of a meeting of creditors or
members for the purpose of considering such matters
as the Court may direct; or

 (d) discharge the judicial management order and make such
consequential provision as the Court thinks fit.

Companies 393

 (4) An order made under this section shall not prejudice or
prevent the implementation of any composition or scheme approved
under section 366.

 (5) Where the judicial management order is discharged, the
judicial manager shall lodge with the Registrar an office copy
of the order within seven days from the date of the discharged
order.

 (6) A judicial manager who, without reasonable excuse,
contravenes subsection (5) commits an offence and in the case of
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Undue preference in judicial management

426. (1) Any transfer, mortgage, delivery of goods, payment,
execution or other act relating to property made or done by or
against a company which is unable to pay its debts as the debts
become due, from the company’s own money in favour of any
creditor or any person in trust of any creditor with the intention
to give such creditor a preference over other creditors shall be
void in the event of the company being placed under judicial
management on an application for a judicial management order
presented within six months from the date of making, taking,
paying or suffering the transfer, mortgage, delivery of goods,
payment, execution and every such act.

 (2) Any transfer or assignment by a company of all its property
to trustees for the benefit of all its creditors shall be void.

 (3) This section shall not affect the rights of any person making
title in good faith and for valuable consideration through or under
a creditor of the company placed under the judicial management.

Delivery and seizure of property

427. (1) Where any of the persons mentioned in subsection (2)
has in his possession or control any property, books, papers or
records to which the company appears to be entitled, the Court

Laws of Malaysia394 Act 777

may require that person immediately, or within such period as
the Court may direct to pay, deliver, convey, surrender or transfer
the property, books, papers or records to the judicial manager.

 (2) The persons referred to in subsection (1) are as follows:

 (a) a contributory or member of the company;

 (b) any person who has previously held office as receiver or
receiver and manager of the company’s property;

 (c) any trustee for, or any banker, agent or officer of, the
company; and

 (d) any other person who has in his possession or control
any property, books, papers or records to which the
company appears to be entitled.

 (3) Where—

 (a) the judicial manager seizes or disposes of any property
which is not the property of the company; and

 (b) at the time of seizure or disposal the judicial manager
believes, and has reasonable grounds for believing, that
the judicial manager is entitled, whether under an order
of the Court or otherwise, to seize or dispose of that
property,

the judicial manager shall not be liable to any person in respect of
any loss or damage resulting from the seizure or disposal except
in so far as that loss or damage is caused by the negligence of
the judicial manager and the judicial manager shall have a lien
on the property, or the proceeds of its sale, for such expenses as
were incurred in connection with the seizure or disposal.

 (4) Any person who, without reasonable excuse, contravenes any
obligation imposed by this section commits an offence and, in the
case of a continuing offence, to a further fine not exceeding one
thousand ringgit for each day during which the offence continues
after conviction.

Companies 395

Duty to co-operate with judicial manager

428. (1) The person who—

 (a) is or has at any time been an officer of the company;

 (b) has taken part in the formation of the company at any
time within one year before the date of the judicial
management order;

 (c) is in the employment of the company including a person
who is employed under a contract for services, or has
been in the employment of the company within that
year; and

 (d) is in the opinion of the judicial manager capable of giving
the information required shall—

 (i) give to the judicial manager such information
concerning the company and its promotion,
formation, business, dealings, affairs or property
as the judicial manager may at any time after the
date of the judicial management order reasonably
require; and

 (ii) attend on the judicial manager at such times as
the judicial manager may reasonably require.

 (2) Any person who, without reasonable excuse, contravenes any
obligation imposed by this section commits an offence and, in the
case of a continuing offence, to a further fine not exceeding one
thousand ringgit for each day during which the offence continues
after conviction.

Inquiry into company’s dealings, etc.

429. (1) The Court may, on the application of the judicial
manager, summon to appear before it—

 (a) any officer of the company;

Laws of Malaysia396 Act 777

 (b) any person known or suspected to have in his possession
any property of the company;

 (c) any person who is supposed to be indebted to the company;
or

 (d) any person whom the Court thinks capable of giving
information concerning the promotion, formation, business,
dealings, affairs or property of the company,

and the Court may require any such person referred to in
paragraphs (a) to (d) to submit an affidavit to the Court containing
an account of his dealings with the company or to produce any
books, papers or other records in his possession or under his
control relating to the company or the matters mentioned in
paragraph (d).

 (2) In a case where a person, without reasonable excuse, fails
to appear before the Court when he is summoned to do so under
this section or there are reasonable grounds for believing that a
person has absconded, or is about to abscond, with a view to
avoiding his appearance before the Court under this section, the
Court may, for the purpose of bringing that person and anything
in his possession before the Court, cause a warrant to be issued—

 (a) for the arrest of that person; and

 (b) for the seizure of any books, papers, records, money or
goods in that person’s possession,

and may authorize a person arrested under such a warrant to be
kept in custody, and anything seized under such a warrant to
be held until that person is brought before the Court under the
warrant or until such other time as the Court may order.

 (3) Any person who appears or is brought before the Court
under this section may be examined on oath, either orally or by
interrogatories, concerning the company or the matters mentioned
in paragraph (1)(d).

 (4) If it appears to the Court, after considering any evidence
obtained under this section that any person has in his possession
any property of the company, the Court may, on the application of

Companies 397

the judicial manager, order that person to surrender the property
to the judicial manager at such time, in such manner and on such
terms as the Court thinks fit.

 (5) If it appears to the Court, on consideration of any evidence
obtained under this section, that any person is indebted to the
company, the Court may, on the application of the judicial manager,
after examining that person on the matter, order that person to
pay to the judicial manager, at such time and in such manner as
the Court may direct, the whole or any part of the amount due,
whether in full discharge of the debt or otherwise, as the Court
thinks fit.

Application of provisions of winding up of a company under
judicial management

430. (1) At any time when a judicial management order is
in force in relation to a company under judicial management,
sections 536, 537, 538 and 539 shall apply as if the company
under the judicial management was a company being wound up
and the judicial manager was the liquidator.

 (2) Notwithstanding subsection (1), the Court shall have the
power—

 (a) to order that any other sections in Subdivision 4 of
Division 2 of Part IV shall apply to a company under
judicial management as if the sections in Subdivision 4
of Division 2 of Part IV apply in a winding up by the
Court; and

 (b) any reference to the liquidator shall be taken as a
reference to the judicial manager and any reference to a
contributory shall be taken as a reference to a member
of the company.

Laws of Malaysia398 Act 777

Part IV
CESSATION OF COMPANIES

Division 1
Voluntary and Compulsory Winding Up

Subdivision 1
Preliminary

Application of winding up provisions

431. The provisions of winding up in this Act shall apply
to the winding up of a company for either mode specified in
subsection 432(1), unless the context otherwise requires.

Modes of winding up

432. (1) The winding up of a company may be effected either—

 (a) by way of a winding up order made by the Court; or

 (b) by way of a voluntary winding up.

 (2) A voluntary winding up may be effected by a resolution
either—

 (a) by a members’ voluntary winding up where the company
is solvent and the liquidator is appointed by the members
at the members’ meeting; or

 (b) by a creditors’ voluntary winding up where the company is
insolvent and the liquidator is appointed by the creditors
at the creditors’ meeting.

Qualification of liquidator

433. (1) Subject to this section, a person other than the Official
Receiver who is appointed interim liquidator or liquidator in a
winding up by the Court shall not, except with the leave of the

Companies 399

Court, be qualified for an appointment as an interim liquidator
or liquidator of a company if—

 (a) he is not an approved liquidator;

 (b) he is indebted to the company or to a corporation that
is deemed to be related to the company by virtue of
section 7 in an amount exceeding twenty-five thousand
ringgit;

 (c) he is an officer of the company;

 (d) he is a partner, employer or employee of an officer of
the company;

 (e) he is a partner or employee of an employee of an officer
of the company;

 (f) he assigns his estate for the benefit of his creditors or
has made an arrangement with his creditors under any
law relating to bankruptcy;

 (g) if he becomes bankrupt; or

 (h) if he is convicted of an offence involving fraud or
dishonesty punishable on conviction by imprisonment
for three months or more.

 (2) Paragraphs (1)(a) and (c) shall not apply to—

 (a) a members’ voluntary winding up; or

 (b) a creditors’ voluntary winding up if, by a resolution
carried by a majority of the creditors in number and
value present in person or by proxy and voting at a
meeting of which seven days’ notice has been given to
every creditor stating the object of the meeting, it is
determined that paragraphs (1)(a) and (c) or either of
that paragraph shall not apply.

 (3) For the purposes of paragraph (1)(a), any person who is
a member of a recognized professional body may apply to the
Minister charged with the responsibility for finance to be approved
as a liquidator for the purposes of this Act.

Laws of Malaysia400 Act 777

 (4) The Minister charged with the responsibility for finance
may approve such person as a liquidator if he is satisfied with
experience and capacity of the person and upon payment of the
prescribed fee by such person.

 (5) For the purposes of subsection (3), the Minister may, in
consultation with the Minister charged with the responsibility for
finance, prescribe a body to be a recognized professional body.

 (6) For the purposes of subsection (1), a person shall be deemed
to be an officer of a company if—

 (a) the person is an officer of a corporation that is deemed
to be related to the company by virtue of section 7; or

 (b) the person has been an officer or promoter of the company
or of such a corporation at any time within the preceding
period of twenty-four months.

 (7) A person shall not be appointed as liquidator of a company
unless he has consented in writing prior to the appointment to
act as such liquidator.

 (8) Nothing in this section shall affect any appointment of a
liquidator made before the commencement of this Act.

Government bound by certain provisions

434. The provisions of this Part relating to the remedies against
the property of a company, the priorities of debts and effect of
an arrangement with creditors shall bind the Government.

Subdivision 2
Contributories

Liability as contributories of present and past members

435. (1) When a company is wound up, every present and past
member shall be liable to contribute to the assets of the company
to an amount sufficient for payment of its debts and liabilities
and the costs, charges and expenses of the winding up and for the
adjustment of the rights of the contributories among the present
and past members.

Companies 401

 (2) Subject to subsection (3)—

 (a) a past member shall not be liable to contribute under
subsection (1)—

 (i) if he has ceased to be a member for one year or
more before the commencement of the winding
up;

 (ii) in respect of any debt or liability of the company
contracted after he ceased to be a member; or

 (iii) if it appears to the Court that the existing members
are unable to satisfy the contributions required
to be made by the existing members under this
Act;

 (b) in the case of a company limited by shares, no contribution
shall be required from any member exceeding the amount,
if any, unpaid on the shares in respect of which the
member is liable as a present or past member;

 (c) in the case of a company limited by guarantee, no
contribution shall, subject to subsection (5), be required
from any member exceeding the amount undertaken to
be contributed by him to the assets of the company in
the event of its being wound up;

 (d) nothing in this Act shall invalidate any provision contained
in any policy of insurance or other contract where—

 (i) the liability of the individual members on the
policy or contract is restricted; or

 (ii) the funds of the company are alone made liable
in respect of the policy or contract; or

 (e) a sum due to any member in his capacity as a member
by way of dividends, profits or otherwise shall not be a
debt of the company payable to that member in a case
of competition between himself and any other creditor
not a member, but any such sum may be taken into
account for the purpose of the final adjustment of the
rights of the contributories among the members.

Laws of Malaysia402 Act 777

 (3) In the winding up of a limited company, any director,
whether past or present, whose liability is unlimited shall be
liable to make a further contribution as if he were a member
of an unlimited company in addition to his liability, if any, to
contribute as an ordinary member.

 (4) Notwithstanding anything in subsection (3)—

 (a) a past director shall not be liable to make a further
contribution if he has ceased to hold office for a year
or more before the commencement of the winding up;

 (b) a past director shall not be liable to make a further
contribution in respect of any debt or liability of the
company contracted after he ceased to hold office; and

 (c) subject to the constitution, a director shall not be liable
to make a further contribution, unless the Court deems it
necessary to require that contribution in order to satisfy
the debts and liabilities of the company and the costs,
charges and expenses of the winding up.

 (5) On the winding up of a company limited both by shares
and guarantee, every member shall be liable to contribute to the
extent of any sums unpaid on any shares held by the member,
in addition to the amount undertaken to be contributed by him
to the assets of the company in the event of it being wound up.

Nature of liability of contributory

436. The liability of a contributory shall create a debt accruing due
from him at the time when his liability commenced but payable
at the times when calls are made for enforcing the liability.

Contributories in the case of death of member

437. (1) If a contributory dies, either before or after he has been
placed on the list of contributories, his personal representatives
shall be liable in due course of administration to contribute
to the assets of the company in discharge of the liability of
the contributory and the personal representatives shall be the
contributories accordingly.

Companies 403

 (2) If the personal representatives make default in paying
any money ordered to be paid by the personal representatives,
proceedings may be taken for administering the estate of the
deceased contributory and for compelling payment of the money
due.

Contributories in case of bankruptcy of member

438. If a contributory becomes bankrupt or assigns his estate for
the benefit of his creditors, either before or after the contributory
has been placed on the list of contributories—

 (a) his trustee shall represent him for all the purposes of the
winding up and shall be a contributory accordingly; and

 (b) there may be proved against his estate the estimated value
of his liability to future calls as well as calls already
made.

Subdivision 3
Voluntary Winding Up

Circumstances in which company may be wound up voluntarily

439. (1) A company may be wound up voluntarily—

 (a) when the period, if any, fixed for the duration of the
company by the constitution expires, or the event, if
any, occurs, on the occurrence of which the constitution
provide that the company is to be dissolved and the
company in general meeting has passed a resolution
requiring the company to be wound up voluntarily; or

 (b) if the company so resolve by special resolution.

 (2) A company shall—

 (a) lodge a printed copy of the resolution with the Registrar
within seven days from the passing of a resolution for
voluntary winding up; and

Laws of Malaysia404 Act 777

 (b) give notice of the resolution in one widely circulated
newspaper in Malaysia in the national language and
one widely circulated newspaper in Malaysia in the
English language within ten days after the passing of
the resolution.

 (3) The company and every officer who contravene subsection (2)
commit an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and, in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Interim liquidators

440. (1) Where the directors of a company have made a statutory
declaration that—

 (a) the company cannot by reason of its liabilities continue
its business; and

 (b) the meetings of the company and of its creditors have
been summoned for a date within thirty days of the date
of the declaration,

the directors shall forthwith appoint an approved liquidator to
be the interim liquidator after the statutory declaration has been
lodged with the Registrar and with the Official Receiver.

 (2) An interim liquidator shall have all the functions and
powers of a liquidator in a creditors’ winding up subject to such
limitations and restrictions as may be prescribed by the rules
relating to winding up.

 (3) The appointment of an interim liquidator under this section
shall continue for thirty days from the date of his appointment
or for such further period as the Official Receiver may allow
in any particular case or until the appointment of a liquidator,
whichever occurs first.

 (4) Notice of the appointment of an interim liquidator under
this section together with a copy of the declaration lodged with
the Registrar shall be advertised within fourteen days of the
appointment of the interim liquidator in one widely circulated
newspaper in Malaysia in the national language and one widely
circulated newspaper in Malaysia in the English language.

Companies 405

 (5) An interim liquidator shall be entitled to receive such
salary or remuneration by way of percentage or otherwise as is
prescribed under the winding up rules.

Date of commencement of winding up

441. (1) A voluntary winding up shall commence—

 (a) where an interim liquidator has been appointed before
the resolution for voluntary winding up is passed, at the
time when the declaration referred to in section 440 is
lodged with the Registrar; and

 (b) in any other case, at the time of the passing of the
resolution for voluntary winding up.

 (2) A copy of the declaration referred to in paragraph (1)(a)
shall be lodged with the Official Receiver.

Effect of voluntary winding up

442. (1) The company shall cease to carry on its business from
the commencement of the winding up except so far as is required
in the opinion of the liquidator for the beneficial winding up.

 (2) Notwithstanding anything to the contrary in the constitution,
the corporate state and corporate powers of the company shall
continue until it is dissolved.

 (3) Any transfer of shares, not being a transfer made to or with
the sanction of the liquidator, and any alteration in the status of
the members made after the commencement of the winding up,
shall be void.

Declaration of solvency

443. (1) Where it is proposed to wind up a company voluntarily,
the director or in the case of a company having more than one
director, the majority of the directors may—

 (a) make a written declaration to the effect that the directors
have made an inquiry into the affairs of the company;
and

Laws of Malaysia406 Act 777

 (b) at a meeting of directors, have formed the opinion
that the company will be able to pay its debts in full
within a period not exceeding twelve months after the
commencement of the winding up.

 (2) The declaration in subsection (1) shall be made by the
directors before the date on which the notices of the meeting at
which the resolution for the winding up of the company is to be
proposed are sent out to the members of a company.

 (3) A statement of affairs of the company shall be attached to
the declaration containing the particulars made up to the latest
practicable date before the making of the declaration as follows:

 (a) the assets of the company, and the total amount expected
to be realized;

 (b) the liabilities of the company; and

 (c) the estimated expenses of winding up.

 (4) The declaration made by the directors shall have no effect
for the purposes of this Act unless it is—

 (a) made at the meeting of directors referred to in
subsection (1);

 (b) made within five weeks immediately preceding the passing
of the resolution for voluntary winding up; and

 (c) lodged with the Registrar before the date on which the
notices of the meeting at which the resolution for the
winding up of the company is to be proposed are sent
out to members of the company.

 (5) A director who makes a declaration under this section
without having reasonable grounds for the opinion that the company
will be able to pay its debts in full within the period stated in
the declaration commits an offence and shall, on conviction, be
liable to imprisonment for a term not exceeding five years or
a fine not exceeding three million ringgit or to both and in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Companies 407

 (6) If the company is wound up under a resolution for voluntary
winding up passed within a period of five weeks after the making
of the declaration, but its debts are not paid or provided for
in full within the period stated in the declaration, it shall be
presumed until the contrary is shown that the director did not
have reasonable grounds for his opinion.

 (7) The company and every off icer  who contravene
paragraph (4)(c) commit an offence and shall, on conviction, be
liable to a fine not exceeding two hundred fifty thousand ringgit
and in the case of a continuing offence, to a further fine not
exceeding one thousand ringgit for each day during which the
offence continues after conviction.

Distinction between “members” and “creditors” voluntary
winding up

444. A winding up in the case of which a directors’ declaration
under section 443 has been made, is a “members’ voluntary winding
up” and a winding up in the case of which such a declaration
has not been made is a “creditors’ voluntary winding up”.

Subdivision 4
Members’ Voluntary Winding Up

Appointment and removal of liquidator

445. (1) In a members’ voluntary winding up, the company shall
appoint one or more liquidators for the purpose of winding up the
company’s affairs and distributing its assets in general meeting.

 (2) On the appointment of a liquidator, all the powers of the
directors cease, except so far as the company in general meeting
with consent of the liquidator, or the liquidator sanctions the
continuance of all the powers of the directors.

 (3) The company may, in general meeting convened by any
contributory by special resolution of which special notice has been
given to the creditors and the liquidators, remove any liquidator
but no such resolution shall be effective to remove a liquidator
if the Court on the application of the liquidator or a creditor has
ordered that the liquidator may not be removed.

Laws of Malaysia408 Act 777

Power to fill vacancy in office of liquidator

446. (1) If a vacancy occurs by death, resignation, removal or
otherwise in the office of a liquidator appointed by the company,
the company in a meeting of members may fill the vacancy,
subject to any arrangement with its creditors.

 (2) For the purposes of subsection (1), a meeting may be
convened by any contributory or, if there is more than one
liquidator, by the continuing liquidators.

 (3) The meeting shall be held in a manner provided by this Act
or by the constitution, or in such manner as may be determined by
the Court, on application by any contributory or by the continuing
liquidators.

Duty of liquidator to call for creditors’ meeting in case of
insolvency

447. (1) If the liquidator is of the opinion that the company
will not be able to pay or provide for the payment of its debts
in full within the period stated in the declaration made under
section 443, the liquidator shall forthwith summon a meeting
of the creditors and lay before the meeting a statement of the
assets and liabilities of the company and the notice summoning
the meeting shall draw the attention of the creditors to the right
conferred upon the creditors by subsection (2).

 (2) The creditors may, at the meeting summoned under
subsection (1), appoint—

 (a) the liquidator appointed by the company; or

 (b) any other person to be the liquidator,

for the purpose of winding up the affairs and distributing the
assets of the company.

 (3) Once a meeting of creditors is held under subsection (1),
the winding up shall thereafter proceed as if the winding up were
a creditors’ voluntary winding up.

Companies 409

 (4) The liquidator or if some other person has been appointed by
the creditors to be the liquidator, the person so appointed shall lodge
with the Registrar and with the Official Receiver a notice containing
information as may be determined by the Registrar within seven
days from a meeting which has been held under subsection (1).

 (5) Where a members’ voluntary winding up has become a
creditors’ voluntary winding up, and the creditors’ meeting under
subsection (3) is held three months or less before the end of
the first year from the commencement of the winding up, the
liquidator is not required by this section to summon a meeting of
creditors at the end of that year if the liquidator is the liquidator
appointed by the company.

 (6) The liquidator or the person appointed as a liquidator by
the creditors who contravenes subsection (4) commits an offence
and shall, on conviction, be liable to a fine not exceeding ten
thousand ringgit and, in the case of a continuing offence, to a
further fine not exceeding five hundred ringgit for each day during
which the offence continues after conviction.

Conversion to creditors’ voluntary winding up

448. As from the day on which the creditors’ meeting is held
under section 449, this Act has effect as if—

 (a) the directors’ declaration under section 443 had not been
made; and

 (b) the creditors’ meeting and the company meeting at which it
was resolved that the company be wound up voluntarily,

and accordingly the winding up becomes a creditors’ voluntary
winding up.

Subdivision 5
Creditors’ Voluntary Winding Up

Meeting of creditors

449. (1) The company shall cause a meeting of the creditors
of the company to be summoned for the day, or the next day on

Laws of Malaysia410 Act 777

which there is to be held the meeting at which the resolution for
voluntary winding up is to be proposed.

 (2) Where a meeting of the creditors is summoned under
subsection (1), the company shall cause the notice of the meeting
of creditors to be sent by post to the creditors simultaneously
with the sending of the notices of the meeting of the company.

 (3) The company shall convene the meeting at a time and place
convenient to the majority in value of the creditors and shall—

 (a) give notice by post of the meeting to the creditors at
least seven clear days; and

 (b) send to each creditor together with the notice of meeting,
a statement showing the names of all creditors and the
amounts of their claims.

 (4) The company shall cause notice of the meeting of the
creditors to be advertised at least seven days before the date of
the meeting in one widely circulated newspaper in Malaysia in
the national language and one widely circulated newspaper in
Malaysia in the English language.

 (5) The directors of the company shall—

 (a) cause a full statement of the company’s affairs showing
in respect of assets, the method and manner in which
the valuation of the assets was arrived at, together with
a list of the creditors and the estimated amount of their
claims to be laid before the meeting of creditors; and

 (b) appoint one of the directors to attend the meeting.

 (6) The director so appointed under paragraph (5)(b) and the
secretary shall attend the meeting and disclose to the meeting
the company’s affairs and the circumstances leading up to the
proposed winding up.

 (7) The creditors may appoint one of the creditors or the
director appointed under paragraph (5)(b) to preside the meeting.

Companies 411

 (8) The chairperson shall, at the meeting, determine whether
the meeting has been held at a time and place convenient to the
majority in value of the creditors and his decision shall be final.

 (9) If the chairperson decides that the meeting has not been held
at a time and place convenient to that majority, the meeting shall
lapse and a further meeting shall be summoned by the company
as soon as is practicable.

 (10) If the meeting of the company is adjourned and the
resolution for winding up is passed at an adjourned meeting,
any resolution passed at the meeting of the creditors shall have
effect as if it had been passed immediately after the passing of
the resolution for winding up.

 (11) The company and every officer who contravene this
section commit an offence and shall, on conviction, be liable to
a fine not exceeding ten thousand ringgit.

Liquidators in creditors’ voluntary winding up

450. (1) The company shall and the creditors may at their
respective meetings nominate a person to be a liquidator for the
purpose of winding up the affairs and distributing the assets of
the company.

 (2) If the creditors and the company nominate different persons,
the person nominated by the creditors shall be liquidator and if
no person is nominated by the creditors, the person nominated
by the company shall be liquidator.

 (3) Notwithstanding subsections (1) and (2), where different
persons are nominated, any director, member or creditor may apply
to the Court for an order directing that the person nominated as
liquidator by the company shall be the liquidator or jointly with
the person nominated by the creditors within seven days from
the date on which the nomination was made by the creditors.

 (4) The liquidator may, or if requested by any creditor or
contributory shall, summon separate meetings of the creditors and
contributors for the purpose of determining whether or not the

Laws of Malaysia412 Act 777

creditors or contributories require the appointment of a committee
of inspection as provided in Tenth Schedule, to act with the
liquidator, and if so who are to be members of the committee.

 (5) The committee of inspection, or if there is no such
committee, the creditors may fix the remuneration to be paid to
the liquidator.

 (6) On the appointment of a liquidator, all the powers of the
directors shall cease, except if the continuance of the powers is
approved by—

 (a) the committee of inspection; or

 (b) if there is no such committee, the creditors.

 (7) If a liquidator, other than a liquidator appointed by or by
the direction of the Court dies, resigns or otherwise vacates the
office, the creditors may fill the vacancy and for such purpose
a meeting of the creditors may be summoned by any two of the
creditors.

Property and proceedings

451. (1) Any attachment, sequestration, distress or execution
put in force against the estate or effects of the company after
the commencement of a creditors’ voluntary winding up shall be
void.

 (2) After the commencement of the winding up, no action or
proceeding shall be proceeded with or commenced against the
company except by leave of the Court and subject to such terms
as the Court may impose.

Subdivision 6
Provisions Applicable to Every Voluntary Winding Up

Distribution of property of company

452. Subject to the provisions relating to the preferential payments
under this Act, the property of a company shall, on its winding
up be applied equally in satisfaction of its liabilities, and shall

Companies 413

subject to that application, be distributed among the members
according to their rights and interests in the company, unless the
constitution otherwise provides.

Appointment or removal of liquidator by Court

453. (1) Where there is no liquidator acting in a voluntary
winding up, the Court may on application, appoint a liquidator.

 (2) The Court may, on cause shown, remove a liquidator and
appoint another liquidator.

Remuneration of liquidators in voluntary winding up

454. (1) A liquidator shall be entitled to receive salary or
remuneration as prescribed in the rules.

 (2) Any member, creditor or the liquidator may, at any time
before the dissolution of the company, apply to the Court to
review the amount of the remuneration of the liquidator and the
decision of the Court on the matter shall be final and conclusive.

 (3) Notwithstanding subsection 479(2), in the case of a company
which is an insurer, no person, other than the Central Bank of
Malaysia, may apply to the Court to review the remuneration of
the liquidator and the Court shall determine the remuneration
of the liquidator on the recommendation of the Central Bank of
Malaysia.

Act of liquidator valid, etc.

455. (1) The acts of a liquidator shall be valid notwithstanding
any defects that may afterwards be discovered in his appointment
or qualification.

 (2) Any conveyance, assignment, transfer, mortgage, charge or
other disposition of a company’s property made by a liquidator
shall be valid in favour of any person taking such property in
good faith and for value and without notice of such defect or
irregularity, notwithstanding any defect or irregularity affecting the
validity of the winding up or the appointment of the liquidator.

Laws of Malaysia414 Act 777

 (3) Every person making or permitting any disposition of
property to any liquidator shall be protected and indemnified
notwithstanding any defect or irregularity affecting the validity
of the winding up or the appointment of the liquidator not then
known to such person.

 (4) For the purposes of this section, a disposition of property
shall be taken as including a payment of money.

Powers of liquidator in a voluntary winding up

456. The liquidator may exercise any power and duty specified
under the Eleventh Schedule in a voluntary winding up.

Power of liquidator to accept shares, etc., as consideration for
sale of property of company

457. (1) Where it is proposed that the whole or part of the
business or property of a company is to be transferred or sold
to another corporation, with the sanction of a special resolution
of the company conferring either a general authority on the
liquidator or an authority in respect of any particular arrangement,
the liquidator of the company may—

 (a) receive in compensation or part compensation for the
transfer or sale of the shares, debentures, policies or
other like interests in the corporation for distribution
among the members of the company; or

 (b) enter into any other arrangement whereby the members
of the company may, in lieu of receiving cash, shares,
debentures, policies or other like interests or in addition
to the arrangement, participate in the profits of or receive
any other benefit from the corporation,

and any such transfer, sale or arrangement shall be binding on
the members of the company.

 (2) If any member of the company expresses his dissent on
matters referred to in subsection (1) in writing addressed to the
liquidator and delivered to the registered office of the liquidator
within seven days from the passing of the resolution, the member

Companies 415

may require the liquidator to either to abstain from carrying the
resolution into effect or to purchase his interest at a price to
be determined by an agreement or by arbitration in the manner
provided under this section.

 (3) If the liquidator elects to purchase the member’s interest,
the purchase money shall be paid before the company is dissolved
and be raised by the liquidator in such manner as is determined
by special resolution.

 (4) A special resolution shall not be invalid for the purposes
of this section by reason that it is passed before or concurrently
with a resolution for voluntary winding up or for appointing
liquidators, but if an order for winding up the company by the
Court is made within a year after the passing of the resolution,
the resolution shall not be valid unless sanctioned by the Court.

 (5) For the purposes of an arbitration under this section, the
Arbitration Act 2005 [Act 646] shall apply as if there were a
submission for reference to two arbitrators, one to be appointed
by each party and the appointment of an arbitrator may be made
by the liquidator, or if there is more than one liquidator then by
any two or more of the liquidators.

 (6) For the purpose of subsection (5), the Court may give any
directions necessary for the initiation and conduct of the arbitration
and any such directions shall be binding on the parties.

 (7) In the case of a creditors’ voluntary winding up, the powers
of the liquidator under this section shall not be exercised except
with the approval of the Court or the committee of inspection.

Annual meeting of members and creditors

458. (1) If the winding up continues for more than one year,
the liquidator shall summon—

 (a) in the case of a members’ voluntary winding up, a meeting
of members of the company; and

 (b) in the case of a creditors’ voluntary winding up, a meeting
of members of the company and the meeting of creditors,

Laws of Malaysia416 Act 777

at the end of the first year from the commencement of the winding
up and of each succeeding year or not more than three months
after the succeeding year, and shall lay before the meeting an
account of the acts of the liquidator and dealings and of the
conduct of the winding up during the preceding year.

 (2) The liquidator shall cause the notices of the meeting of
creditors to be delivered by post to the creditors simultaneously
with the delivery of the notices of the meeting of the company.

 (3) Every liquidator who contravenes this section commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and, in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Final meeting and dissolution

459. (1) As soon as the affairs of the company are fully wound
up, the liquidator shall—

 (a) prepare an account showing how the winding up has been
conducted and the property of the company has been
disposed of; and

 (b) call for a meeting of members of the company, or in the
case of a creditor’s voluntary winding up, a meeting of
members of the company and the creditors,

for the purpose of laying before the meeting the account and for
giving any explanation.

 (2) The meeting shall be called by an advertisement published
in one widely circulated newspaper in Malaysia in the national
language and one widely circulated newspaper in Malaysia in
the English language, which the advertisement shall specify the
time, place and object of the meeting and shall be published at
least thirty days before the meeting.

 (3) The liquidator shall lodge with the Registrar and with the
Official Receiver a return of the holding of the meeting and of
its date with a copy of the account attached to such return, within
seven days from the meeting.

Companies 417

 (4) The quorum at a meeting of the company shall be two
members and at a meeting of the company and the creditors shall
be two members and two creditors and if a quorum is not present
at the meeting, the liquidator shall in lieu of the return mentioned
in subsection (3), lodge a return with the account attached, that the
meeting was duly summoned and that no quorum was present, and
upon such a return being lodged, the provisions of subsection (3)
as to the lodging of the return shall be deemed to have been
complied with.

 (5) On the expiration of three months after the lodging of
the return with the Registrar and with the Official Receiver, the
company shall be dissolved.

 (6) Notwithstanding subsection (5), the Court may, on the
application of the liquidator or of any other person who appears
to the Court to be interested, make an order deferring the date at
which the dissolution of the company is to take effect for such
time as the Court thinks fit.

 (7) The person on whose application an order of the Court
under this section is made shall lodge with the Registrar and with
the Official Receiver an office copy of the order within fourteen
days from the making of the order and the person who fails so
to do commits an offence and shall, on conviction, be liable to
a fine not exceeding ten thousand ringgit and, in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

 (8) If the return or copy of the account is not so lodged in
accordance with subsection (3), the liquidator commits an offence
and shall, on conviction, be liable to a fine not exceeding ten
thousand ringgit and, in the case of a continuing offence, to a
further fine not exceeding five hundred ringgit for each day during
which the offence continues after conviction.

 (9) The liquidator who fails to call a meeting as required by
this section commits an offence and shall, on conviction, be liable
to a fine not exceeding two hundred and fifty thousand ringgit
and, in the case of a continuing offence, to a further fine not
exceeding one thousand ringgit for each day during which the
offence continues after conviction.

Laws of Malaysia418 Act 777

Arrangement binding on creditors

460. (1) Any arrangement entered into between a company about
to be or in the course of being wound up and its creditors shall,
subject to the right of appeal under this section, be binding on—

 (a) the company if sanctioned by a special resolution; and

 (b) the creditors if acceded to by three-fourth in value and
one-half in number of the creditors, every creditor for
under five hundred ringgit being reckoned in value only.

 (2) A creditor shall be accounted a creditor for value for such
sum as upon an account fairly stated, after allowing the value of
security or liens held by the creditor and the amount of any debt
or set off owing by the creditor to the debtor, appears to be the
balance due to the creditor.

 (3) Any dispute with regards to the value of any such security
or lien or the amount of such debt or set off may be settled by
the Court on the application of the company, liquidator or creditor.

 (4) Any creditor or contributory may appeal to the Court
against the arrangement, within three weeks from the completion
of the arrangement, and the Court may amend, vary or confirm
the arrangement as the Court thinks just.

Application to Court to have questions determined or powers
exercised

461. (1) The liquidator or any contributory or creditor may
apply to the Court—

 (a) to determine any question arising in the winding up of
a company; or

 (b) to exercise all or any of the powers which the Court may
exercise if the company is wound up by the Court.

 (2) The Court, if satisfied that the determination of the question
or the exercise of power will be just and beneficial, may accede
wholly or partially to any such application on such terms and
conditions as the Court thinks fit or may make any other order
on the application as the Court thinks just.

Companies 419

Costs

462. All costs, charges and expenses properly incurred in the
winding up, including the remuneration of the liquidator shall be
payable out of the assets of the company in priority to all other
claims.

Limitation on right to wind up voluntarily

463. Where a petition has been presented to the Court to wind
up a company on the ground that it is unable to pay its debts,
the company shall not resolve that it be wound up voluntarily
without the leave of the Court.

Subdivision 7
Winding Up by Court

Petition of winding up

464. (1) A company, whether or not it is being wound up
voluntarily, may be wound up under an order of the Court on
the petition of any one or more of the following:

 (a) the company;

 (b) any creditor, including a contingent or prospective creditor,
of the company;

 (c) a contributory or any person who is the personal
representative of a deceased contributory or the trustee
in bankruptcy or the Director General of Insolvency of
the estate of a bankrupt contributory;

 (d) the liquidator;

 (e) t h e  M i n i s t e r  o n  t h e  g r o u n d  s p e c i f i e d  i n
paragraph 465(1)(d) or (l);

 (f) in the case of a company which is a licensed institution
under the Financial Services Act 2013 or the Islamic
Financial Services Act 2013 and which is not a member
institution under the Malaysia Deposit Insurance
Corporation Act 2011 [Act 720], the Central Bank of
Malaysia;

Laws of Malaysia420 Act 777

 (g) in the case of a company which is an operator of a
designated payment system under the Financial Services
Act 2013 or the Islamic Financial Services Act 2013,
the Central Bank of Malaysia;

 (h) t h e  R e g i s t r a r  o n  t h e  g r o u n d  s p e c i f i e d  i n
paragraph 465(1)(k); or

 (i) in the case of a member institution under the Malaysia
Deposit Insurance Corporation Act 2011, the Malaysia
Deposit Insurance Corporation mentioned in section 99
of that Act.

 (2) Notwithstanding anything in subsection (1)—

 (a) a person referred to in paragraph (1)(c) may not present
a petition on any of the grounds specified in paragraph
465(1)(a), (b), (d) or (g) unless the share in respect of
which the contributor was a contributory or some of
the shares were originally allotted to the contributor, or
have been held by him and registered in his name for
at least six months during the eighteen months before
the presentation of the petition or have devolved on him
through the death or bankruptcy of a former holder;

 (b) a petition shall not be presented by any person except a
contributory or the Minister if the ground of the petition
is default in lodging the statutory declaration under
subsection 190(3);

 (c) the Court shall not hear the petition if presented by a
contingent or prospective creditor until such security for
costs has been given as the Court thinks reasonable and
a prima facie case for winding up has been established
to the satisfaction of the Court; and

 (d) the Court shall not, where a company is being wound up
voluntarily, make a winding up order unless the Court
is satisfied that the voluntary winding up cannot be
continued with due regard to the interests of the creditors
or contributories.

Companies 421

Circumstances in which company may be wound up by Court

465. (1) The Court may order the winding up if—

 (a) the company has by special resolution resolved that the
company is to be wound up by the Court;

 (b) the company defaults in lodging the statutory declaration
under subsection 190(3);

 (c) the company does not commence business within a year
from its incorporation or suspends its business for a
whole year;

 (d) the company has no member;

 (e) the company is unable to pay its debts;

 (f) the directors have acted in the affairs of the company in
the directors’ own interests rather than in the interests
of the members as a whole or acted in any other manner
which appears to be unfair or unjust to members;

 (g) when the period, if any, fixed for the duration of the
company by the constitution expires or the event, if
any, occurs on the occurrence of which the constitution
provide that the company is to be dissolved;

 (h) the Court is of the opinion that it is just and equitable
that the company be wound up;

 (i) the company has held a licence under the Financial Services
Act 2013 or the Islamic Financial Services Act 2013,
and that the licence has been revoked or surrendered;

 (j) the company has carried on a licensed business without
being duly licensed or the company has accepted, received
or taken deposits in Malaysia, in contravention of the
Financial Services Act 2013 or the Islamic Financial
Services Act 2013, as the case may be;

 (k) the company is being used for unlawful purposes or
any purpose prejudicial to or incompatible with peace,
welfare, security, public interest, public order, good
order or morality in Malaysia; or

Laws of Malaysia422 Act 777

 (l) the Minister has made a declaration under section 590.

 (2) For the purpose of winding up actions commenced by the
Registrar under paragraph (1)(k), the finding of the Registrar that
a company is being used for unlawful purposes or any purpose
prejudicial to national security or public interest or incompatible
with peace, welfare, public order, security, good order or morality
in Malaysia shall in all Courts and by all persons having power
to take evidence for the purposes of this Act, be received as
prima facie evidence until proven otherwise.

Definition of “inability to pay debts”

466. (1) A company shall be deemed to be unable to pay its
debts if—

 (a) the company is indebted in a sum exceeding the amount
as may be prescribed by the Minister and a creditor by
assignment or otherwise has served a notice of demand,
by himself or his agent, requiring the company to pay
the sum due by leaving the notice at the registered office
of the company, and the company has for twenty-one
days after the service of the demand neglected to pay the
sum or to secure or compound for it to the satisfaction
of the creditor;

 (b) execution or other process issued on a judgment, decree
or order of any court in favour of a creditor of the
company is returned unsatisfied in whole or in part; or

 (c) it is proved to the satisfaction of the Court that the
company is unable to pay its debts and in determining
whether a company is unable to pay its debts the Court
shall take into account the contingent and prospective
liabilities of the company.

 (2) A petition to wind up a company shall be filed in the Court
within six months from the expiry date of the notice of demand
issued under paragraph (1)(a).

Companies 423

Commencement of winding up by the Court

467. (1) Where before the presentation of the winding up petition
a resolution has been passed by the company for voluntary
winding up, the winding up of the company shall be deemed to
have commenced at the time of the passing of the resolution,
and, unless the Court on proof of fraud or mistake thinks fit to
direct otherwise, all proceedings taken in the voluntary winding
up shall be deemed to have been validly taken.

 (2) In any other case, the commencement of winding up shall
be at the date of the winding up order.

Payment of preliminary costs by petitioner

468. (1) Where a person, other than a company itself or a
liquidator, presents a petition under section 464 and a winding
up order is made, that person shall at his own cost, conduct all
the proceedings in the winding up until a liquidator has been
appointed under this Division.

 (2) The liquidator shall reimburse the petitioner out of the
assets of the company the taxed costs incurred by the petitioner
in any such proceedings unless the Court orders otherwise.

 (3) Where the company has no assets or insufficient assets,
and in the opinion of the Minister any fraud has been committed
by any person in the promotion or formation of the company or
by any officer of the company in relation to the company since
the formation, the taxed costs or so much of the taxed costs as
is not so reimbursed may be reimbursed to the petitioner out of
moneys provided by the Parliament for the purpose, with the
approval specified by the Minister in writing to an amount not
exceeding three thousand ringgit.

 (4) Where any winding up order is made upon the petition of
the company or the liquidator the costs incurred shall, subject to
any order of the Court, be paid out of the assets of the company
in like manner as if they were the costs of any other petitioner.

Laws of Malaysia424 Act 777

Powers of Court on hearing petition for winding up

469. (1) On hearing the petition for winding up, the Court may,
by order—

 (a) dismiss the petition with or without costs;

 (b) adjourn the hearing conditionally or unconditionally; or

 (c) make any interim or any other order that the Court thinks
fit.

 (2) The Court shall not refuse to make a winding up order
solely on the ground only—

 (a) that the assets of the company have been mortgaged to
an amount equal to or in excess of those assets;

 (b) that the company has no assets; or

 (c) in the case of a petition by a contributory, that there
will be no assets available for distribution amongst the
contributories.

 (3) The Court may, at the hearing of the petition or at any time
on the application of the petitioner, the company, or any person
who has given notice that he intends to appear on the hearing
of the petition—

 (a) direct that any notice be given or any steps is taken
before or after the hearing of the petition;

 (b) dispense with any notices being given or steps being
taken which are required by this Act, or by the rules,
or by any prior order of the Court;

 (c) direct that oral evidence be taken on the petition or any
matter relating to the petition;

 (d) direct a speedy hearing or trial of the petition or any
issue or matter;

 (e) allow the petition to be amended or withdrawn; and

Companies 425

 (f) give such directions as to the proceedings as the Court
thinks fit.

 (4) Where the petition is presented on the ground of default in
lodging the statutory report, the Court may instead of making a
winding up order, direct that the statutory report shall be lodged
and may order the costs to be paid by any persons who, in the
opinion of the Court, are responsible for the default.

Power of Court to stay or restrain proceedings against company
prior to order of winding up

470. (1) At any time after the presentation of a winding up
petition and before a winding up order has been made, the
company or any creditor or contributory may, where any action
or proceeding against the company is pending, apply to the Court
for an order to stay or restrain further proceedings in the action
or proceeding, and the Court may stay or restrain the action or
proceeding accordingly on such terms as it thinks fit.

 (2) The applicant shall lodge with the Registrar the office copy
of the order within fourteen days from the making of such order
under subsection (1).

Action or proceeding stayed after winding up order

471. (1) When a winding up order has been made or an interim
liquidator has been appointed, no action or proceeding shall be
proceeded with or commenced against the company except by
leave of the Court and in accordance with such terms as the
Court imposes.

 (2) The application for leave under subsection (1) shall be
made in the Court granting the winding up order and shall be
served on the liquidator.

 (3) The office copy of the order for leave under subsection (1)
shall be lodged by the applicant referred to in subsection 470(1)
with the Registrar and with the Official Receiver within fourteen
days from the making of the order.

Laws of Malaysia426 Act 777

Avoidance of dispositions of property or certain attachment, etc.

472. (1) Any disposition of the property of the company, other
than an exempt disposition, including any transfer of shares or
alteration in the status of the members of the company made
after the presentation of the winding up petition shall, unless the
Court otherwise orders, be void.

 (2) In subsection (1), “exempt disposition” means a disposition
made by a liquidator, or by an interim liquidator of the company
in exercise of the power conferred on him under Part I of Twelfth
Schedule or the rules that appointed him or an order of the Court.

 (3) Any attachment, sequestration, distress or execution put
in force against the estate or effects of the company after the
presentation of the winding up petition shall be void.

Petition to be lis pendens

473. Any petition for winding up a company shall constitute a
lis pendens within the meaning of any law relating to the effect
of a lis pendens upon purchasers or mortgagees.

Lodgement of winding up order

474. (1) The petitioner shall, within seven days from the making
of a winding up order, notify the Registrar, Official Receiver and
liquidator—

 (a) the order and its date; and

 (b) the name and address of the liquidator.

 (2) The petitioner shall within seven days from receiving the
copy of the winding up order—

 (a) lodge an office copy of the order with the Registrar and
with the Official Receiver;

 (b) cause a copy to be served upon the secretary of the
company or upon such other person or in such manner
as the Court directs; and

Companies 427

 (c) deliver a copy to the liquidator with a statement that the
requirements of this subsection have been complied with.

 (3) A petitioner who contravenes subsection (1) or (2) commits
an offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Effect of winding up order

475. An order for winding up a company shall operate in favour
of all the creditors and contributories of the company as if made
on the joint petition of a creditor and of a contributory.

Subdivision 8
Provisions relating to Liquidators in Winding Up by Court

Interim liquidator

476. (1) The Court may appoint the Official Receiver or an
approved liquidator as an interim liquidator at any time after the
presentation of a winding up petition and before the making of
a winding up order.

 (2) The interim liquidator shall have and may exercise all the
functions and powers of a liquidator subject to such limitations
and restrictions as may be prescribed in the rules or as the Court
may specify in the order appointing him.

Appointment, style, etc., of liquidators

477. (1) The following provisions with respect to liquidators
shall have effect on a winding up order being made:

 (a) if an approved liquidator other than the Official Receiver
is not appointed to be the liquidator of the company, the
Official Receiver shall by virtue of his office become
the interim liquidator and shall continue to act as such
until he or another person becomes liquidator and is
capable of acting as such;

Laws of Malaysia428 Act 777

 (b) if there is no liquidator appointed, the Official Receiver
shall summon separate meetings of the creditors and
contributories of the company for the purpose of
determining whether or not an application is to be made
to the Court for appointing a liquidator in the place of
the Official Receiver;

 (c) the Court may make any appointment and order required
to give effect to any such determination, and, if there is
a difference between the determinations of the meetings
of the creditors and contributories in respect of the
matter aforesaid, the Court shall decide the difference
and make such order as the Court may think fit;

 (d) in a case where a liquidator is not appointed by the
Court, the Official Receiver shall be the liquidator of
the company;

 (e) the Official Receiver shall by virtue of his office be the
liquidator during any vacancy;

 (f) any vacancy in the office of a liquidator appointed by
the Court may be filled by the Court;

 (g) a liquidator shall be described, where a person other than
the Official Receiver is the liquidator, by the style of
“the liquidator”, and, where the Official Receiver is
the liquidator, by the style of “the Official Receiver
and liquidator”, of the particular company in respect of
which he is appointed, and not by his individual name.

Appointment of other person as liquidator other than Official
Receiver

478. (1) Where a person other than the Official Receiver is an
appointed interim liquidator or liquidator in a winding up of a
company by the Court, that person—

 (a) shall not act as such until he has given—

 (i) written notice of his appointment to the Registrar
and the Official Receiver; and

Companies 429

 (ii) security in the prescribed manner to the satisfaction
of the Official Receiver; and

 (b) shall give the Official Receiver such information and
such access to and facilities for inspecting the books
of the company, and any assistance as may be required
for enabling that officer to perform his duties under this
Act.

 (2) If two or more liquidators are appointed by the Court,
unless the Court expressly provides otherwise—

 (a) the functions or the powers of the liquidators may be
performed or exercised by any one of them or by both
or all of them jointly; and

 (b) a reference to the liquidator shall be a reference to any
one of the liquidators.

 (3) Subject to this Act, the act of a liquidator shall be valid
notwithstanding any defects that may afterwards be discovered
in his appointment or qualification.

Remuneration of liquidators in winding up by Court

479. (1) An interim liquidator other than the Official Receiver
shall be entitled to receive the salary or remuneration by way of
percentage or otherwise as is determined by the Court.

 (2) A liquidator other than the Official Receiver shall be entitled
to receive such salary or remuneration by way of percentage or
otherwise as is determined by—

 (a) an agreement between the liquidator and the committee
of inspection, if any;

 (b) where there is no agreement or where there is no
committee of inspection, a resolution passed at a meeting
of creditors by a majority of not less than three-fourths
in value and one-half in number of the creditors present
in person or by proxy and voting at the meeting and
whose debts have been admitted to vote, which meeting
shall be convened by the liquidator by a notice to each

Laws of Malaysia430 Act 777

creditor to which notice shall be attached a statement
of all receipts and expenditure by the liquidator and the
amount of remuneration sought by him; or

 (c) if the agreement or determination under paragraph (a) or (b)
fails, the Court.

 (3) Where the salary or remuneration of a liquidator other than
the Official Receiver is determined in the manner specified in
paragraph (2)(a), the Court may, on the application of a member
whose shareholding represent in the aggregate not less than ten
per centum of the issued capital of the company, confirm or vary
the determination.

 (4) Where the salary or remuneration of a liquidator other
than the Official Receiver is determined in the manner specified
in paragraph (2)(b), the Court may, on the application of the
liquidator or a member referred to in subsection (3), confirm or
vary the determination.

 (5) Subject to any order of the Court, the Official Receiver
when acting as a liquidator or interim liquidator of a company
shall be entitled to receive such salary or remuneration by way
of percentage or otherwise as is prescribed.

Control of approved liquidator by Official Receiver

480. (1) Where a person other than the Official Receiver is the
liquidator in a winding up of a company by Court, the Official
Receiver shall take cognizance of his conduct and—

 (a) if the liquidator does not faithfully perform his duties
and duly observe all the requirements imposed on him
by any written law or otherwise with respect to the
performance of his duties; or

 (b) if any complaint is made to the Official Receiver by any
creditor or contributory in regard to performance of his
duties,

the Official Receiver shall inquire into the matter, and take such
action thereon as he may think expedient.

Companies 431

 (2) In addition to subsection (1) the Official Receiver may, at
any time—

 (a) require the liquidator to answer any inquiry and provide
any information or documents in relation to any winding
up in which he is engaged and may apply to the Court
to examine him or any other person on oath concerning
the winding up of the company; or

 (b) direct a local investigation to be made of the books and
vouchers of the liquidator.

Control of Official Receiver by Minister

481. The Minister shall take cognizance of the conduct of the
Official Receiver and of all Assistant Official Receivers who are
concerned in the liquidation of companies, and if any such person
does not faithfully perform his duties and duly observe all the
requirements imposed on him by any written law or otherwise with
respect to the performance of his duties, or if any complaint is
made to the Minister by any creditor or contributory in regard to
the performance of his duties, the Minister shall inquire into the
matter, and take such action thereon as he may think expedient,
and may direct a investigation to be made of the books and
vouchers of that person.

Resignation or removal of liquidator in winding up by Court

482. A liquidator or interim liquidator appointed by the Court
may—

 (a) resign from office in accordance with the rules; or

 (b) on cause shown, be removed from office by the Court.

Custody and vesting of company’s property

483. (1) Where an interim liquidator has been appointed or a
winding up order has been made, the interim liquidator or liquidator
shall forthwith take into his custody or under his control all the
property to which the company is or appears to be entitled.

Laws of Malaysia432 Act 777

 (2) On the application of the liquidator, the Court may order
that all or any part of the property belonging to the company
or held by trustees on behalf of the company shall vest in the
liquidator and the property shall, subject to subsection (3), vest
accordingly and the liquidator may, after giving such indemnity,
if any, as the Court directs, bring or defend any action which
relates to that property or of which is necessary to bring or
defend for the purpose of effectually winding up the company
and recovering its property.

 (3) Where an order is made under subsection (2), every liquidator
in relation to whom the order is made shall within seven days
of the making of the order—

 (a) lodge an office copy of the order with the Registrar; and

 (b) where the order relates to land, lodge an office copy of
the order with the appropriate authority concerned with
the registration or recording of dealings in that land.

 (4) No vesting order referred to in this section shall have any
effect to transfer or otherwise vest any land until the appropriate
entries are made with respect to the transferring or vesting by
the appropriate authority.

 (5) A liquidator who contravenes the requirement of
subsection (3) commits an offence and shall, on conviction, be
liable to a fine not exceeding ten thousand ringgit and in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Submission of statement of affairs of company

484. (1) A statement as to the affairs of the company as at the
date of the winding up order showing—

 (a) the particulars of its assets, debts and liabilities;

 (b) the names and addresses of its creditors;

 (c) the securities held by the creditors respectively;

Companies 433

 (d) the dates when the securities were respectively given;
and

 (e) such further information as is prescribed or as the liquidator
requires,

shall be made by one or more persons in subsection (2) and
verified in the manner as may be determined by the Registrar
and submitted to the liquidator.

 (2) The statement in subsection (1) shall be made and submitted
by one or more of the persons who are at the date of the winding
up order, the directors and by the secretary of the company, or
by any of the following persons as the liquidator may require,
subject to the direction of the Court:

 (a) a person who is or has been an officer of the company;

 (b) a person who has taken part in the formation of the
company, at any time within one year before the date
of the winding up order; or

 (c) a person who is or has been within that period, officers
of or in the employment of a corporation which is, or
within that period was, an officer of the company to
which the statement relates.

 (3) The statement in subsection (1) shall be submitted within
fourteen days from the date of the winding up order or within
such extended time as the liquidator or the Court for special
reasons specified.

 (4) Within seven days from the receipt of the statement in
subsection (2)—

 (a) the liquidator including the Official Receiver shall cause
a copy of the statement to be filed with the Court and
lodged with the Registrar; and

 (b) where the Official Receiver is not the liquidator, the
liquidator shall cause a copy of the statement to be
lodged with the Official Receiver.

Laws of Malaysia434 Act 777

 (5) Any person making or concurring in making the statement
required by this section may, subject to the rules, be allowed and
be paid out of the assets of the company such costs and expenses
incurred in the preparation and the making of the statement as
the liquidator considers reasonable subject to an appeal to the
Court.

 (6) Any person who contravenes the requirements of this
section commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding three years or to a fine
not exceeding one hundred thousand ringgit or to both and in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Report by liquidator

485. (1) The liquidator shall, as soon as practicable from the
receipt of the statement of affairs, submit a preliminary report
to the Court—

 (a) as to the amount of capital issued, subscribed and paid
up and the estimated amount of assets and liabilities;

 (b) if the company has failed, as to the causes of the failure;
and

 (c) whether in his opinion further inquiry is desirable as to
any matter relating to the promotion, formation or failure
of the company or the conduct of the business thereof.

 (2) In addition to subsection (1), the liquidator may, as he
thinks fit, make further reports stating—

 (a) the manner in which the company was formed and whether
in his opinion any fraud has been committed or any
material fact has been concealed by any person in its
promotion or formation or by any officer in relation to
the company since its formation;

 (b) whether any officer of the company has contravened or
failed to comply with this Act; and

Companies 435

 (c) specifying any other matter which in his opinion is
desirable to be brought to the notice of the Court.

Powers of liquidator in winding up by Court

486. (1) Where a company is being wound up by the Court,
the liquidator may—

 (a) without the authority under paragraph (b), exercise any
of the general powers specified in Part I of the Twelfth
Schedule; and

 (b) with the authority of the Court or the committee of
inspection, exercise any of the powers specified in
Part II of the Twelfth Schedule.

 (2) The exercise by the liquidator in a winding up by the Court
of the powers conferred by this section is subject to the control
of the Court and any creditor or contributory may apply to the
Court with respect to any exercise or proposed exercise of any
of those powers.

Exercise and control of liquidator’s powers

487. (1) Subject to this Division, the liquidator shall, in the
administration of the assets of the company and in the distribution
among its creditors, have regard to any directions given by
resolution of the creditors or contributories at any general meeting
or by the committee of inspection, and any directions so given
by the creditors or contributories shall override any directions
given by the committee of inspection in case of conflict.

 (2) The liquidator may summon general meetings of the creditors
or contributories for the purpose of ascertaining their wishes
and he shall summon meetings at such times as the creditors
or contributories by resolution direct or whenever requested in
writing to do so by not less than ten per centum in value of the
creditors or contributories.

 (3) The liquidator may apply to the Court for directions in
relation to any particular matter arising under the winding up.

Laws of Malaysia436 Act 777

 (4) Subject to this Division, the liquidator shall use his own
discretion in the management of the affairs and property of the
company and the distribution of its assets.

Liquidator to pay moneys received into bank account

488. (1) Every liquidator shall, in the manner and at the time
prescribed by the rules, pay the money received by him into such
bank account as is prescribed by the rules or as is specified by
the Court.

 (2) If any liquidator retains for more than ten days a sum
exceeding ten thousand ringgit, or such other amount as the Court
in any particular case authorizes him to retain, then unless he
explains the retention to the satisfaction of the Court he shall pay
interest on the amount so retained in excess computed from the
expiration of the ten days until he has complied with subsection (1)
at the rate of twenty per centum per annum, and shall be liable—

 (a) to disallowance of all or such part of his remuneration
as the Court thinks just;

 (b) to be removed from his office by the Court; and

 (c) to pay any expenses occasioned by reason of his default.

 (3) Any liquidator who pays any sums received by him as
liquidator into any bank or account other than the bank or account
prescribed or specified under subsection (1) commits an offence.

Settlement of list of contributories and application of assets

489. (1) As soon as practicable after the making of a winding
up order by the Court, the liquidator shall—

 (a) cause the company’s property to be collected and applied
to discharging the company’s liabilities; and

 (b) consider whether subsection (2) requires the settlement
of a list of contributories.

Companies 437

 (2) A liquidator of a company that is being wound up by the
Court shall, settle a list of contributories if it appears to the
liquidator it is likely that—

 (a) either—

 (i) there are persons liable as members or past members
to contribute to the company’s property on the
winding up; or

 (ii) there will be a surplus available for distribution;
and

 (b) it will be necessary—

 (i) to make calls on contributories; or

 (ii) to adjust the right of the contributories among
themselves.

 (3) A liquidator may rectify the register of members in all
cases where rectification is required under this Division.

 (4) In settling the list of contributories, the liquidator shall
distinguish between persons who are contributories in their own
right and persons who are contributories as being representatives
of or liable for the debts of others.

 (5) The list of contributories when settled shall be prima facie
evidence of the liabilities of the persons named in the list as
contributories.

Release of liquidators and dissolution of company

490. A liquidator may apply to the Court—

 (a) for an order that he be released and that the company be
dissolved, if he has—

 (i) realised all the property of the company or so
much as in his  opinion can be realised without
needlessly protracting the liquidation;

Laws of Malaysia438 Act 777

 (ii) distributed a final dividend, if any, to the creditors;

 (iii) adjusted the rights of the contributories among
themselves; and

 (iv) made a final return, if any, to the contributories,
or

 (b) for an order that he be released, if he has resigned or
been removed from his office.

Orders of release or dissolution

491. (1) Where an order is made that the company be dissolved,
the company shall from the date of the order, be dissolved
accordingly.

 (2) The Court—

 (a) may cause a report on the accounts of a liquidator, other
than the Official Receiver, to be prepared by the Official
Receiver or by a qualified auditor appointed by the
Court;

 (b) after the liquidator has complied with all the requirements
of the Court, shall take into consideration the report and
any objection which is urged by the Official Receiver,
auditor or any creditor or contributory or other person
interested against the release of the liquidator; and

 (c) shall either grant or withhold the release accordingly.

 (3) Where the release of a liquidator is withheld, the Court
may, on the application of any creditor or contributory or person
interested, make such order as it thinks appropriate charging the
liquidator for any act or default done or made contrary to his
duties.

 (4) An order of the Court releasing the liquidator shall discharge
him from all liability in respect of any act done or default made
by him in the administration of the affairs of the company or
otherwise in relation to his conduct as liquidator, but any such
order may be revoked on proof that it was obtained by fraud or
by suppression or concealment of any material fact.

Companies 439

 (5) Where the liquidator has not previously resigned or been
removed, the liquidator’s release shall operate as a removal from
office.

 (6) Where the Court has made—

 (a) an order that the liquidator be discharged; or

 (b) an order that the liquidator be discharged and the company
be dissolved,

an office copy of the order shall, within fourteen days from the
making of the order, be lodged by the liquidator with the Registrar
and the Official Receiver.

 (7) Any liquidator who contravenes the requirements of
subsection (6) commits an offence and shall, on conviction, be
liable to a fine not exceeding ten thousand ringgit and in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Subdivision 9
General Powers of Court in Winding Up by Court

Power of Court to stay winding up

492. (1) At any time after an order for winding up has been
made, the Court may, on the application of the liquidator or
of any creditor or contributory and on proof to the satisfaction
of the Court that all proceedings in relation to the winding up
of the company ought to be stayed, make an order staying the
winding up of the company for a specified time on such terms
and conditions as the Court thinks fit.

 (2) Where the Court makes an order under subsection (1), the
liquidator shall cease to conduct any further action on behalf of
the company from the date of such order.

Laws of Malaysia440 Act 777

Power of Court to terminate winding up

493. (1) At any time after an order for winding up has been
made, the Court may, on the application of the liquidator or of
any creditor or contributory and on proof to the satisfaction of
the Court that all proceedings in relation to the winding up of
the company ought to be terminated, make an order terminating
the winding up of the company as the Court thinks fit.

 (2) In making an order under subsection (1), the Court may
take into consideration, but not limited to, the following facts:

 (a) the satisfaction of the debts;

 (b) any agreement by the liquidators, creditors, contributories
and other interested parties; or

 (c) other facts that the Court considers appropriate.

 (3) Where the Court makes an order under subsection (1), the
company ceases to be in liquidation and the liquidator ceases to
hold office and be released from all liability in respect of any act
done or default made by the liquidator in the administration of
the affairs of the company or otherwise in relation to his conduct
as liquidator, with effect from the making of the order or such
other date as may be specified in the order.

Matters relating to stay and termination of winding up

494. (1) On any application under sections 492 and 493, the
Court may, before making an order, require the liquidator to
furnish a report with respect to any facts or matters which are
in his opinion relevant.

 (2) The Court may, on making an order under sections 492 and 493
or at any time after making the order, make such other order as
it thinks fit in connection with the staying or termination of the
winding up.

 (3) Where the Court has made an order terminating the winding
up under section 493, the Court may give such directions as it
thinks fit for the resumption of the management and control of
the company to elect directors of the company to take office
upon the termination of the winding up.

Companies 441

 (4) The costs of proceedings before the Court under sections
492 and 493 and the costs incurred in convening a meeting of
members of the company in accordance with an order of the
Court under section 493, if the Court so directs, forms part of
the costs, charges and expenses of the winding up.

 (5) An office copy of every order made under sections 492 and 493
shall be lodged by the company with the Registrar and the
Official Receiver and if the application is made by a creditor or
contributory, served to the liquidator within fourteen days from
the making of the order.

 (6) The company and every officer who contravenes this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding ten thousand ringgit and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Debts due by contributory to company and extent of set off

495. On an application by the liquidator, the Court may make
an order directing any contributory for the time being on the list
of contributories to pay to the company in the manner directed
by the order any money due from him or from the estate of the
person whom he represents exclusive of any money payable by
him or the estate by virtue of any call under this Act, and may—

 (a) in the case of an unlimited company, allow the contributory
by way of set off any money due to him or to the
estate which he represents from the company on any
independent dealing or contract but not any money due
to him as a member of the company in respect of any
dividend or profit;

 (b) in the case of a limited company, make to any director
whose liability is unlimited or to his estate similar
allowance as referred to in paragraph (a); and

 (c) in the case of any company whether limited or unlimited,
when all the creditors are paid in full, allow any money
due on any account whatever to a contributory from
the company may be by way of set off against any
subsequent call.

Laws of Malaysia442 Act 777

Power of Court to make calls

496. (1) The Court may either before or after it has ascertained
the sufficiency of the assets of the company—

 (a) make calls on all or any of the contributories for the time
being on the list of contributories, to the extent of their
liability, for payment of any money which the Court
considers necessary to satisfy the debts and liabilities
of the company and the costs, charges and expenses of
winding up and for the adjustment of the rights of the
contributories among themselves; and

 (b) make an order for payment of any calls so made.

 (2) In making the call under subsection (1), the Court may take
into consideration the probability that some of the contributories
may partly or wholly fail to pay the call.

Payment of moneys due to company into named bank

497. (1) The Court may order any contributory, purchaser or
other person from whom money is due to the company to pay
the amount due into the bank named in the order to the account
of the liquidator instead of to the liquidator, and any such order
may be enforced in the same manner as if it had directed payment
to the liquidator.

 (2) All moneys and securities paid or delivered into any bank
under this Division shall be subject to the order of the Court.

Order on contributory conclusive evidence

498. An order made by the Court under sections 495, 496 and 497
shall, subject to any right of appeal, be conclusive evidence that
the money, if any, appearing to be due or ordered to be paid is due,
and all other pertinent matters stated in the order shall be taken
to be truly stated as against all persons and in all proceedings.

Companies 443

Appointment of special manager

499. (1) The liquidator may, if satisfied that the nature of
the estate or business of the company, or the interests of the
creditors or contributories generally, require the appointment of
a special manager of the estate or business of the company other
than himself, apply to the Court for an appointment of a special
manager of the estate or business to act during such time as the
Court directs with such powers including any of the powers of a
receiver or receiver and manager as are entrusted to the liquidator
by the Court.

 (2) The special manager—

 (a) shall give such security and account in such manner as
the Court directs;

 (b) shall receive such remuneration as is fixed by the Court;
and

 (c) may at any time resign after giving not less than thirty
days’ notice in writing to the liquidator of his intention
to resign, or on cause shown, be removed by the Court.

Claims of creditors and distribution of assets

500. (1) The Court may fix a date on or before which creditors
are to prove their debts or claims or after which the creditors
will be excluded from the benefit of any distribution made before
those debts are proved.

 (2) The Court shall adjust the rights of the contributories among
themselves and distribute any surplus among the persons entitled
to the surplus.

 (3) The Court may, in the event of the assets being insufficient
to satisfy the liabilities, make an order as to the payment out
of the assets of the costs, charges and expenses incurred in the
winding up in such order of priority as the Court thinks fit.

Laws of Malaysia444 Act 777

Inspection of books and papers by creditors and contributories

501. The Court may make such order for inspection of the books
and papers of the company by creditors and contributories as the
Court thinks just, and any books and papers in the possession
of the company may be inspected by creditors or contributories
accordingly.

Power to summon persons connected with company

502. (1) The Court may summon before it any officer of the
company or person known or suspected to have in his possession
any property of the company or supposed to be indebted to the
company, or any person whom the Court deems capable of giving
information concerning the promotion, formation, trade dealings,
affairs or property of the company.

 (2) The Court may examine the officer or person on oath
concerning the matters mentioned in subsection (1) either orally
or by way of written interrogatories and may reduce his oral
statement into writing and require him to sign the written statement
which may be used in evidence in any legal proceedings against
the officer or person.

 (3) The Court may require the officer or person to produce
any books and papers in his custody or power relating to the
company, but if the officer or person claims any lien on books
or papers, the production shall be without prejudice to that lien,
and the Court shall have jurisdiction to determine all questions
relating to that lien.

 (4) An examination under this section or section 503 may, if
the Court so directs and subject to the rules referred to in section
616, be held before any Sessions Court Judge named for the
purpose by the Court, and the powers of the Court under this
section and section 503 may be exercised by such Sessions Court
Judge.

 (5) If any person so summoned after being tendered a reasonable
sum for his expenses refuses to come before the Court at the
time appointed without having a lawful excuse, made known to
the Court at the time of its sitting and allowed by it, the Court
may cause him to be apprehended and brought before the Court
for examination.

Companies 445

Power to order public examination of promoters, directors, etc.

503. (1) A liquidator appointed in a winding up of a company
may make a report to the Court stating that, in his opinion—

 (a) a fraud has been committed;

 (b) any material fact has been concealed by any person in
the promotion or formation of the company or by any
officer in relation to the company since its formation;
or

 (c) any officer of the company has failed to act honestly
or diligently or has been guilty of any impropriety or
recklessness in relation to the affairs of the company.

 (2) After considering the report under subsection (1), the Court
may direct—

 (a) the person or officer, or any other person who was
previously an officer of the company, including any
banker, advocate or auditor, or who is known or suspected
to have in his possession any property of the company
or is supposed to be indebted to the company; or

 (b) any person whom the Court deems capable of giving
information concerning the promotion, formation, trade
dealings, affairs or property of the company,

to appear before the Court on a date appointed and be publicly
examined as to the promotion or formation or the conduct of the
business of the company, or in the case of an officer or former
officer, as to his conduct and dealings as an officer of the company.

 (3) The liquidator and any creditor or contributory may take
part in the examination either personally or by an advocate.

 (4) The Court may put or allow to be put such questions to
the person examined as the Court thinks fit.

 (5) The person examined shall be examined on oath and shall
answer all such questions as the Court puts or allows to be put
to him.

Laws of Malaysia446 Act 777

 (6) A person ordered to be examined under this section shall,
before his examination, be furnished with a copy of the liquidator’s
report.

 (7) Where a person who is directed to attend before the Court
under subsection (2) applies to the Court to be exculpated from
any charges made or suggested against him, the liquidator shall
appear on the hearing of the application and call the attention
of the Court to any matters which appear to the liquidator to
be relevant and if the Court, after hearing any evidence given
or witnesses called by the liquidator, grants the application, the
Court may allow the applicant such costs as it thinks fit.

 (8) Notes of the public examination—

 (a) shall be reduced to writing;

 (b) shall be read over to or by and signed by the person
examined;

 (c) may thereafter be used in evidence in any legal proceedings
against the person; and

 (d) shall be open to the inspection of any creditor or
contributory at all reasonable times.

 (9) The Court may, if it thinks fit, adjourn the public examination
from time to time.

Power to arrest absconding contributory

504. The Court at any time before or after making a winding up
order, on proof of probable cause for believing that a contributory,
director or former director of the company—

 (a) is in hiding;

 (b) has absconded;

 (c) is about to leave Malaysia or otherwise to abscond;

 (d) is about to remove any of his property; or

Companies 447

 (e) is about to conceal any of his property,

for the purpose of—

 (A) evading payment of calls;

 (B) avoiding examination respecting the affairs of the company;
or

 (C) avoiding, delaying or embarrassing proceedings in the
winding up,

may cause the contributory, director or former director to be
arrested and his books and papers and movable personal property
to be seized and safely kept until such time as the Court orders.

Delegation of powers of Court to liquidator

505. Provision may be made by rules enabling or requiring all
or any of the powers and duties conferred and imposed on the
Court by this Division in respect of—

 (a) the holding and conduct of meetings to ascertain the
wishes of creditors and contributories;

 (b) the paying, delivery, conveyance, surrender or transfer
of money, property, books or papers to the liquidator;

 (c) the making of calls and the adjusting of the rights of
contributories; and

 (d) the fixing of a time within which debts and claims shall
be proved,

to be exercised or performed by the liquidator as an officer of the
Court and subject to the control of the Court, but the liquidator
shall not, without the special leave of the Court, rectify the
register of members and shall not make any call without either
the special leave of the Court or the sanction of the committee
of inspection.

Laws of Malaysia448 Act 777

Powers of Court cumulative

506. (1) Any powers by this Act conferred on the Court shall
be in addition to and not in derogation of any existing powers
of instituting proceedings against any contributory or debtor of
the company or the estate of any contributory or debtor for the
recovery of any call or other sums.

 (2) Subject to the rules referred to in section 616, an appeal
from any order or decision made or given in the winding up of
a company shall lie in the same manner and subject to the same
conditions as an appeal from any order or decision of the Court
in cases within its ordinary jurisdiction.

Division 2
Provisions Applicable to Every Winding Up

Subdivision 1
General

Investment of surplus funds on general account

507. (1) Subject to the direction in writing of the committee
of inspection, or if there is no committee of inspection, by the
liquidator himself, whenever the cash balance standing to the
credit of any company in liquidation is in excess of the amount
which is required for the time being to answer demands in respect
of the estate of the company, the excess sum may—

 (a) be invested in securities issued by the Government of
Malaysia; or

 (b) be placed on deposit at interest or with return with any
bank.

 (2) On the application by any creditor who is not satisfied with
the direction or decision relating to the investment made under
subsection (1), the Court may direct otherwise if it thinks fit.

 (3) Any interest received in respect of the investment shall
form part of the assets of the company.

Companies 449

 (4) Whenever any part of the money so invested is, in the opinion
of the committee of inspection, or, if there is no committee of
inspection, of the liquidator, required to answer any demands in
respect of the company’s estate, the committee of inspection may
direct, or, if there is no committee of inspection, the liquidator may
arrange for the sale or realization of such part of the securities
referred to in paragraph (1)(a) as is necessary.

Unclaimed assets to be paid to receiver of revenue

508. (1) Where a liquidator has in his hands or under his
control—

 (a) any unclaimed dividend or other moneys which have
remained unclaimed for more than six months from the
date when the dividend or other moneys became payable;
or

 (b) after making final distribution, any unclaimed or undistributed
moneys arising from the estate of the company,

the liquidator shall forthwith pay those moneys to the Official
Receiver to be placed to the credit of the Companies Liquidation
Account and whose receipt shall be an effectual discharge in
respect of the unclaimed moneys.

 (2) The Court may on application of the Official Receiver—

 (a) order any liquidator to submit to it an account of any
unclaimed or undistributed funds, dividends or other
moneys in his hands or under his control verified by
affidavit and may direct an audit of the account; and

 (b) direct the liquidator to pay those moneys to the Official
Receiver to be placed to the credit of the Companies
Liquidation Account.

 (3) The interest or return arising from the investment of the
moneys standing to the credit of the Companies Liquidation
Account shall be paid into the Consolidated Fund.

 (4) For the purposes of this section, the Court may exercise all
the powers conferred by this Act with respect to the discovery

Laws of Malaysia450 Act 777

and realization of the property of the company and the provisions
of this Act with respect to the discovery and realization shall,
with such adaptations as are prescribed, apply to the proceedings
under this section.

 (5) Unless expressly provided for in this Act, this section shall
not deprive any person of any other right or remedy to which he
is entitled against the liquidator or any other person.

 (6) If any claimant makes any demand for any money placed
to the credit of the Companies Liquidation Account, the Official
Receiver upon being satisfied that the claimant is the owner of
the money—

 (a) shall authorize payment to be made to him out of the
Account; or

 (b) if it has been paid into the Consolidated Fund, may
authorize payment of the same amount to be made to
him out of moneys made available by Parliament for
the purpose.

 (7) Any person dissatisfied with the decision of the Official
Receiver in respect of a claim made under subsection (6) may
appeal to the Court which may confirm, disallow or vary the
decision.

 (8) Where any unclaimed moneys paid to any claimant are
afterwards claimed by any other person, that other person shall
not be entitled to any payment out of the Consolidated Fund
under subsection (6), but may have recourse against the claimant
to whom the unclaimed moneys have been paid.

 (9) Any unclaimed moneys paid to the credit of the Companies
Liquidation Account to the extent to which the said moneys have
not been paid out of the Account under this section shall, on the
lapse of six years from the date of the payment of the moneys
to the credit of the Account, be paid into the Consolidated Fund.

Books and papers to be kept by liquidator

509. Every liquidator shall keep proper books and papers in which
he shall cause to be made entries or minutes of proceedings at

Companies 451

meetings and of such other matters as are prescribed, and any
creditor or contributory may, subject to the control of the Court,
personally or by his agent inspect the proper books and papers.

Control of Court over liquidators

510. (1) The Court shall take cognizance of the conduct of
liquidators, and if a liquidator does not faithfully perform his
duties and observe the prescribed requirements or the requirements
of the Court or if any complaint is made to the Court by any
creditor or contributory or by the Official Receiver in regard to
the conduct, the Court shall inquire into the matter and take such
action as the Court thinks fit.

 (2) The Registrar or the Official Receiver may report to the
Court any matter which in the opinion of the Registrar or the
Official Receiver is a misfeasance, neglect or omission on the part
of the liquidator and the Court may order the liquidator to make
good any loss which the property of the company has sustained
and make such other order as the Court thinks fit.

 (3) The Court may at any time require any liquidator to answer
any inquiry in relation to the winding up and may examine the
liquidator or any other person on oath concerning the winding
up and may direct an investigation to be made of the books and
vouchers of the liquidator.

Delivery of property to liquidator

511. The Court may require any contributory, trustee, receiver,
banker, agent or officer of the company to pay, deliver, convey,
surrender or transfer to the liquidator or interim liquidator forthwith
or within such time as the Court directs any money, property,
books and papers in his hands to which the company is prima
facie entitled.

Powers of Official Receiver where no committee of inspection

512. (1) Where a person other than the Official Receiver is the
liquidator and there is no committee of inspection, the Official
Receiver may, on the application of the liquidator, do any act

Laws of Malaysia452 Act 777

or thing or give any direction or permission which is authorized
or required by this Act to be done or given by the committee of
inspection.

 (2) Where the Official Receiver is the liquidator and there
is no committee of inspection, the Official Receiver may in his
discretion do any act or thing which is required to be done by
this Act, or subject to any direction or permission given by the
committee of inspection.

Notice of appointment and address of liquidator

513. (1) A liquidator or an interim liquidator shall lodge a notice
of his appointment, the address of his office and any change of
the address with the Registrar and the Official Receiver in the
form and manner determined by the Registrar within fourteen
days from the appointment or the change of address.

 (2) Service made by leaving any document at or sending it
by post addressed to the address of the office of the liquidator
or interim liquidator given in any such notice lodged with the
Registrar shall be deemed to be good service upon the liquidator
and upon the company.

 (3) A liquidator or an interim liquidator shall, within fourteen
days from his resignation or removal from office, lodge with the
Registrar and with the Official Receiver a notice of that fact in
the form and manner as may be determined by the Registrar.

 (4) A liquidator or an interim liquidator who contravenes this
section commits an offence and shall, on conviction, be liable
to a fine not exceeding ten thousand ringgit and in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Liquidator’s accounts

514. (1) Every liquidator shall, within thirty days from the
expiration of the period of six months from the date of the
liquidator’s appointment and of every subsequent period of six

Companies 453

months and in any case within thirty days after the liquidator
ceases to act as a liquidator shall immediately after obtaining an
order of release, lodge with the Registrar and with the Official
Receiver, an account of the liquidator’s receipts and payments
and a statement of the position in the winding up and verified
by statutory declaration in a manner as may be determined by
the Registrar.

 (2) The Official Receiver may cause the account of any
liquidation to be audited by an approved company auditor.

 (3) For the purpose of audit referred to in subsection (2),
the liquidator shall furnish the auditor with such vouchers and
information as the auditor requires, and the auditor may at any
time require the production of and inspect any books or accounts
kept by the liquidator.

 (4) A copy of the account or, if audited, a copy of the audited
account shall be kept by the liquidator and the copy shall be open
to the inspection of any creditor or of any person interested at
the office of the liquidator.

 (5) The liquidator shall—

 (a) give notice that the account has been made up to every
creditor and contributory when forwarding any report,
notice of meeting, notice of call or dividend; and

 (b) in the notice, notify creditors and contributories at what
address and between what hours the account may be
inspected.

 (6) The costs of an audit under this section shall be fixed by
the Official Receiver and shall be part of the expenses of winding
up.

 (7) A liquidator who contravenes subsection (1) commits an
offence and shall, on conviction, be liable to a fine not exceeding
ten thousand ringgit and in the case of a continuing offence, to
a further fine not exceeding five hundred ringgit for each day
during which the offence continues after conviction.

Laws of Malaysia454 Act 777

Liquidator to make good defaults

515. (1) If any liquidator who has made any default in lodging
or making any application, return, account or other document,
or in giving any notice which the liquidator is by law required
to lodge, make or give, fails to make good the default within
fourteen days from the service of notice requiring the liquidator
to do so, the Court may, on the application of any contributory
or creditor of the company or the Official Receiver, make an
order directing the liquidator to make good the default within
such time as is specified in the order.

 (2) Any order made under subsection (1) may provide that all
costs of and incidental to the application shall be borne by the
liquidator.

 (3) Nothing in subsection (1) shall prejudice the operation of
any written law imposing penalties on a liquidator in respect of
any such default.

Notification that a company is in liquidation

516. (1) Where a company is being wound up, the words “in
liquidation” shall be added after the name of the company in
every invoice, order for goods or business letter issued by or on
behalf of the company, a liquidator of the company, a receiver
or manager of the property of the company.

 (2) The company and every officer of the company or liquidator
and every receiver or manager who contravene this section and
who knowingly and wilfully authorize or permit the contravention
commit an offence and shall, on conviction, be liable to a fine
not exceeding ten thousand ringgit.

Appeal against decision of liquidator

517. Any person aggrieved by any act or decision of the liquidator
may apply to the Court which may confirm, reverse or modify the
act or decision complained of and make such order as it thinks
just.

Companies 455

Books and papers of company

518. (1) Where a company is being wound up, all books and
papers of the company and of the liquidator that are relevant to
the affairs of the company at or subsequent to the commencement
of the winding up of the company shall be prima facie evidence
of the truth of all matters recorded in the books or papers in
respect of the contributories and the company.

 (2) When a company has been wound up, the liquidator shall
retain the books and papers referred to in subsection (1) for
a period of five years from the date of the dissolution of the
company and at the expiration of that period, may destroy the
books and papers.

 (3) Notwithstanding subsection (2), when a company has been
wound up, the books and papers referred to in subsection (1) may
be destroyed within a period of five years after the dissolution
of the company—

 (a) in the case of a winding up by the Court, in accordance
with the directions of the Court;

 (b) in the case of a members’ voluntary winding up, as the
company by resolution directs; and

 (c) in the case of a creditors’ voluntary winding up, as the
committee of inspection, or, if there is no such committee,
as the creditors of the company direct.

 (4) The company or the liquidator shall not be responsible
to any person claiming to have interest in any book or paper
destroyed in accordance with this section.

 (5) Any person who contravenes this section commits an offence
and shall, on conviction, be liable to a fine not exceeding ten
thousand ringgit.

Expenses of winding up where assets insufficient

519. (1) Unless expressly directed to do so by the Court, a
liquidator shall not be liable to incur any expense in relation to
the winding up of a company unless there are sufficient available
assets.

Laws of Malaysia456 Act 777

 (2) On the application of a creditor or a contributory, the
Court may direct a liquidator to incur a particular expense on
the condition that the creditor or contributory indemnifies the
liquidator in respect of the recovery of the amount expended and
if the Court so directs, gives such security to secure the amount
of the indemnity as the Court thinks reasonable.

Resolutions passed at adjourned meetings of creditors and
contributories

520. Subject to subsection 449(10), where a resolution is passed
at an adjourned meeting of any creditors or contributories of a
company, the resolution shall for all purposes be treated as having
been passed on the date on which it was in fact passed and not
on any earlier date.

Meetings to ascertain wishes of creditors or contributories

521. (1) The Court may, as to all matters relating to the winding
up of a company, have regard to the wishes of the creditors or
contributories as proved to the Court by any sufficient evidence,
and may if the Court thinks fit for the purpose of ascertaining
those wishes direct meetings of the creditors or contributories
to be called, held and conducted in such manner as the Court
directs, and may appoint a person to act as chairperson of any
such meeting and to report the result of the meeting to the Court.

 (2) In the case of creditors, regard shall be had to the value
of each creditor’s debt.

 (3) In the case of contributories, regard shall be had to the
number of votes conferred on each contributory by this Act or
the constitution.

Special commission for receiving evidence

522. (1) The Sessions Court Judges shall be the commissioners for
the purpose of taking evidence under this Part, and the Court may
refer the whole or any part of the examination of any witnesses
under this Part to any person appointed as commissioner.

Companies 457

 (2) Every commissioner shall, in addition to any powers which
he might lawfully exercise as a Sessions Court Judge, have in
the matter so referred to him the same powers as the Court to—

 (a) summon and examine witnesses;

 (b) require the production or delivery of documents;

 (c) punish defaults by witnesses; and

 (d) allow costs and expenses to witnesses.

 (3) Unless otherwise ordered by the Court, the taking of
evidence by the commissioners shall be in open court and shall
be open to the public.

 (4) The examination so taken shall be returned or reported to
the Court in such manner as the Court directs.

Subdivision 2
Proof and Ranking of Claims

Description of debts provable in winding up

523. (1) Demands in the nature of unliquidated damages arising
otherwise than by reason of a contract, promise or breach of trust
shall not be provable in winding up.

 (2) A person having notice of any winding up order in a winding
up by the Court or a resolution has been passed in a voluntary
winding up shall not prove under the winding up for any debt
or liability contracted by the company subsequent to the date of
his so having notice.

 (3) Save as provided in subsections (1) and (2), all debts and
liabilities present or future, certain or contingent, to which the
company is subject at the date of the winding up order or the
resolution, or to which the company may become subject before
dissolution by reason of any obligation incurred before the date
of the winding up order shall be deemed to be debts provable in
winding up.

Laws of Malaysia458 Act 777

 (4) An estimation shall be made by the liquidator of the value
of any debt or liability provable under subsection (3) which, by
reason of its being subject to any contingency or for any other
reason, does not bear a certain value.

 (5) Any person aggrieved by the estimate made under subsection (4)
may appeal to the Court.

 (6) If in the opinion of the Court, the value of the debt or the
liability is incapable of being fairly estimated, the Court may
make an order to that effect, and the debt or liability shall for
the purposes of this Act be deemed to be a debt not provable in
winding up.

 (7) If in the opinion of the Court the value of the debt or
liability is capable of being fairly estimated, the Court may assess
the same and may give all necessary directions for this purpose,
and the amount of the value when assessed shall be deemed to
be a debt provable in winding up.

Rights and duties of secured creditors

524. (1) A secured creditor may—

 (a) realise a property subject to a charge, if entitled to do
so;

 (b) value the property subject to the charge and claim in the
winding up as an unsecured creditor for the balance due,
if any; or

 (c) surrender the charge to the liquidator for the general
benefit of creditors and claim in the winding up as an
unsecured creditor for the whole debt.

 (2) A secured creditor may exercise the power referred to in
paragraph (1)(a) whether or not the secured creditor has exercised
the power referred to in paragraph (1)(b).

 (3) A secured creditor who realises a property subject to a
charge under paragraph (1)(a)—

 (a) may, unless the liquidator has accepted a valuation and
claim by the secured creditor under subsection (7),

Companies 459

claim as an unsecured creditor for any balance due after
deducting the net amount realised;

 (b) shall account to the liquidator for any surplus remaining
from the net amount realised after the satisfaction of
the debt, including interest payable but which shall not
exceed six months, in respect of that debt up to the
time of its satisfaction, and after making any proper
payments to the holder of any other charge over the
property subject to the charge.

 (4) If a secured creditor values the security and claims as an
unsecured creditor for the balance due under paragraphs (1)(a)
and (b), if any, the valuation and any claim shall be made in the
manner to be determined by the Registrar and—

 (a) contain full particulars of the valuation and any claim;

 (b) contain full particulars of the charge including the date
on which it was given; and

 (c) identify any documents that substantiate the claim and
the charge.

 (5) The liquidator may require the production of any document
referred to in paragraph (4)(c).

 (6) Where a claim is made by a secured creditor under subsection (4),
the liquidator shall—

 (a) accept the valuation and claim; or

 (b) reject the valuation and claim in whole or in part, but—

 (i) where a valuation and claim is rejected in whole or
in part, the creditor may make a revised valuation
and claim within fourteen days of receiving notice
of the rejection; and

 (ii) the liquidator may, if he subsequently considers
that a valuation and claim was wrongly rejected in
whole or in part, revoke or amend that decision.

Laws of Malaysia460 Act 777

 (7) Where the liquidator—

 (a) accepts a valuation and claim under paragraph (6)(a);

 (b) accepts a revised valuation and claim under subparagraph
(6)(b)(i); or

 (c) accepts a valuation and claim on revoking or amending a
decision to reject a claim under subparagraph (6)(b)(ii),

the liquidator may, unless the secured creditor has realised the
property, at any time, redeem the security on payment of the
assessed value.

 (8) The liquidator may at any time, by notice in writing, require
a secured creditor, within twenty-one days from the receipt of
the notice, to—

 (a) elect which of the powers referred to in subsection (1)
the creditor wishes to exercise; and

 (b) if the creditor elects to exercise the power referred to in
paragraph (1)(b) or (c), exercise the power within that
period.

 (9) A secured creditor on whom notice has been served
under subsection (8) who fails to comply with the notice is to
be taken as having surrendered the charge to the liquidator under
paragraph (1)(c) for the general benefit of creditors, and may claim
in the liquidation as an unsecured creditor for the whole debt.

 (10) A secured creditor who has surrendered a charge under
paragraph (1)(c) or who is taken as having surrendered a charge
under subsection (9) may, with the leave of the Court or the
liquidator and subject to such terms and conditions as the Court
or the liquidator thinks fit, at any time before the liquidator has
realised the property charged—

 (a) withdraw the surrender and rely on the charge; or

 (b) submit a new claim under this section.

Companies 461

 (11) Every person who—

 (a) makes, or authorize the making of, a claim under
subsection (4) that is false or misleading in a material
particular knowing it to be false or misleading; or

 (b) omits, or authorize the omission, from a claim under that
subsection of any matter knowing that the omission makes
the claim false or misleading in a material particular,

commits an offence and shall, on conviction, be liable to a fine
not exceeding one million ringgit or to imprisonment for a term
not exceeding five years or to both.

Rights and duties of unsecured creditors

525. (1) Every creditor shall prove his debt immediately after
the making of a winding up order.

 (2) A debt may be proved by delivering or sending an affidavit
through the post in a prepaid letter to the liquidator.

 (3) The affidavit shall—

 (a) verify the debt;

 (b) be made by the creditor himself or by any person authorized
by or on behalf of the creditor or his estate and if made
by a person so authorized, it shall state his authority
and means of knowledge;

 (c) contain or refer to a statement of account showing the
particulars of the debt and shall specify the vouchers,
if any, by which the statement of account can be
substantiated; and

 (d) state whether the creditor is or is not a secured creditor.

 (4) The liquidator may at any time call for the production of
the vouchers or books of account.

 (5) A creditor shall bear the cost of proving the creditor’s debt
unless the Court otherwise specially orders.

Laws of Malaysia462 Act 777

 (6) Every creditor who has lodged a proof shall be entitled to
see and examine the proofs of other creditors at all reasonable
times.

 (7) A creditor proving his debt shall deduct from his debt all
trade discounts, but he shall not be compelled to deduct any
discount not exceeding five per centum on the net amount of his
claim, which he has agreed to allow for payment in cash.

Mutual credit and set-off

526. (1) This section applies where before the commencement
of the winding up there have been mutual credits, mutual debts
or other mutual dealings between the company and any of the
company’s creditor proving or claiming to prove for a winding
up of debts.

 (2) An account shall be taken of what is due from each party
to the other in respect of the mutual dealings and the sums due
from one party shall be set off against the sums due from the
other.

 (3) Sums due from the company to another party shall not be
included in the account taken under subsection (2) if that other
party had notice at the time the sums owed became due that a
meeting of creditors has been summoned or a petition for the
winding up of the company was pending.

Priorities

527. (1) Subject to this Act, in a winding up there shall be paid
in priority to all other unsecured debts—

 (a) firstly, the costs and expenses of the winding up including
the taxed costs of a petitioner payable under section 468,
the remuneration of the liquidator and the costs of any
audit carried out under section 514;

 (b) secondly, all wages or salary, whether or not earned wholly
or in part by way of commission, including any amount
payable by way of allowance or reimbursement under any
contract of employment or award or agreement regulating

Companies 463

conditions of employment, of any employee not exceeding
fifteen thousand ringgit or such other amount as may
be prescribed whether for time or piecework in respect
of services rendered by him to the company within a
period of four months before the commencement of the
winding up;

 (c) thirdly, all amounts due in respect of worker’s compensation
under any written law relating to worker’s compensation
accrued before the commencement of the winding up;

 (d) fourthly, all remuneration payable to any employee in
respect of vacation leave, or in the case of his death to
any other person in his right, accrued in respect of any
period before the commencement of the winding up;

 (e) fifthly, all amounts due in respect of contributions payable
during the twelve months next before the commencement
of the winding up by the company as the employer of
any person under any written law relating to employees
social security contribution and superannuation or
provident funds or under any scheme of superannuation
or retirement benefit which is an approved scheme under
the federal law relating to income tax; and

 (f) sixthly, the amount of all federal tax assessed under any
written law before the date of the commencement of
the winding up or assessed at any time before the time
fixed for the proving of debts has expired.

 (2) The debts in each class specified in subsection (1) shall
rank in the order specified but debts of the same class shall
rank pari passu and shall be paid in full, unless the property of
the company is insufficient to meet the debts, in which case the
payment shall be reduced and the rate of reduction shall be in
equal proportion.

 (3) Where any payment has been made to any employee of
the company on account of wages, salary or vacation leave out
of money advanced by a person for that purpose, the person by
whom the money was advanced shall, in a winding up, have a
right of priority in respect of the money so advanced and paid, up
to the amount by which the sum in respect of which the employee
would have been entitled to priority in the winding up has been

Laws of Malaysia464 Act 777

diminished by reason of the payment, and shall have the same
right of priority in respect of that amount as the employee would
have had if the payment had not been made.

 (4) So far as the assets of the company available for payment
of general creditors are insufficient to meet any preferential debts
specified in subparagraphs (1)(b), (d) and (e) and any amount
payable in priority by virtue of subsection (3), those debts shall
have priority over the claims of the holders of debentures under
any floating charge created by the company, and shall be paid
accordingly out of any property comprised in or subject to that
charge.

 (5) Where the company is under a contract of insurance, entered
into before the commencement of the winding up, insured against
liability to third parties, then if any such liability is incurred by
the company, either before or after the commencement of the
winding up, and an amount in respect of that liability is or has
been received by the company or the liquidator from the insurer,
the amount shall, after deducting any expenses of or incidental
to getting in the amount, be paid by the liquidator to the third
party in respect of whom the liability was incurred to the extent
necessary to discharge that liability or any part of that liability
remaining undischarged in priority to all payments in respect of
the debts referred to in subsection (1).

 (6) If the liability of the insurer to the company is less
than the liability of the company to the third party, nothing in
subsection (5) shall limit the rights of the third party in respect
of the balance.

 (7) Subsections (5) and (6) shall have effect notwithstanding any
agreement to the contrary entered into after the commencement
of this Act.

 (8) Notwithstanding subsection (1)—

 (a) paragraph (c) of that subsection shall not apply in relation
to the winding up of a company in any case where
the company is being wound up voluntarily merely for
the purpose of reconstruction or of amalgamation with
another company and the right to the compensation has

Companies 465

on the reconstruction or amalgamation been preserved to
the person entitled thereto, or where the company has
entered into a contract with an insurer in respect of any
liability under any law relating to workers compensation;
and

 (b) where a company has given security for the payment or
repayment of any amount to which paragraph(1)(f) relates,
that paragraph shall apply only in relation to the balance
of any such amount remaining due after deducting from
the balance the net amount realized from such security.

 (9) Where in any winding up assets have been recovered under
an indemnity for costs of litigation given by certain creditors,
or have been protected or preserved by the payment of moneys
or the giving of indemnity by creditors, or where expenses in
relation to which a creditor has indemnified a liquidator, have
been recovered, the Court may make such order as it deems just
with respect to the distribution of those assets and the amount of
those expenses so recovered with a view to giving those creditors
an advantage over others in consideration of the risk run by the
creditors in so doing.

 (10) Subject to this Act, all debts proved in a winding up shall
be paid pari passu.

Subdivision 3

Effect on Other Transactions

Undue preference

528.  (1) Any transfer, mortgage, delivery of goods, payment,
execution or other act relating to property made or done by or
against a company which is unable to pay its debts, as the debts
become due, from its own money in favour of any creditor or any
person in trust for any creditor shall be deemed to have given
such creditor a preference over other creditors in the event of
the company being wound up on a winding up petition presented
within six months from the date of making or doing the same
and every such act shall be deemed fraudulent and void.

Laws of Malaysia466 Act 777

 (2) The date of presentation of the winding up petition shall
be—

 (a) in the case of winding up by Court—

 (i) the date of the presentation of petition; or

 (ii) where prior to the presentation of the petition a
resolution has been passed by the company for
voluntary winding up, the date upon which the
resolution to wind up the company voluntarily is
passed; and

 (b) in the case of voluntary winding up, the date upon which
the winding up is deemed by this Act to have commenced.

 (3) Any transfer or assignment by a company of all its property
to the trustees for the benefit of all its creditors shall be void.

 (4) Any transfer, mortgage, delivery of goods, payment,
execution or other act relating to property made or done by or
against a company in contravention of this section shall be void
except if it is in favour of any person dealing with the company
for valuable consideration and without any actual notice of the
contravention.

 (5) For the purposes of this section, “valuable consideration”
means a consideration fair and reasonable money value in relation
to—

 (a) the value of the property conveyed, assigned or transferred;
or

 (b) the known or reasonably anticipated benefits of the
contract, dealing or transaction.

 (6) For the purposes of this section, “notice” includes knowledge
of inability to pay a debt by the company or any winding up
proceedings against the company or of the facts sufficient to
indicate to the person dealing with the wound up company.

Companies 467

Effect of floating charge

529. A floating charge on the undertaking or property of the
company created within six months of—

 (a) the presentation of the winding up petition in the case
of winding up by Court; or

 (b) the passing of the resolution in the case of voluntary
winding up,

shall be invalid except to the amount of any cash paid to the
company at the time of or subsequently to the creation of and
in consideration for the charge together with interest or return
on that amount at the rate of five per centum per annum unless
it is proved that the company is solvent immediately after the
creation of the charge.

Liquidator’s right to recover in respect of certain sales to or
by company

530. (1) Where any property, business or undertaking has been
acquired by a company for a cash consideration, the liquidator
may recover any amount by which the cash consideration for
the acquisition exceeded the value of the property, business or
undertaking at the time of its acquisition from—

 (a) a person who was at the time of the sale, a director of
the company or a person connected with a director; or

 (b) a company of which, at the time of the sale, a person was
a director who was also a director of the first-mentioned
company or a person connected with a director.

 (2) Where any property, business or undertaking has been
sold by a company for a cash consideration, the liquidator may
recover any amount by which the value of the property, business
or undertaking exceeded the cash consideration at the time of its
sale from—

 (a) a person who was at the time of the sale a director of
the company or a person connected with a director; or

Laws of Malaysia468 Act 777

 (b) a company of which, at the time of the sale, a person was
a director who was also a director of the first-mentioned
company or a person connected with a director.

 (3) The amount to be recovered in subsection (1) or (2) shall
refer to the acquisition or sale, as the case may be, made within
a period of two years before—

 (a) in the case of a winding up by Court, the presentation
of the winding up petition against the company; or

 (b) in the case of a voluntary winding up, the passing of the
resolution to wind up the company.

 (4) For the purposes of this section, the value of the property,
business or undertaking includes the value of any goodwill
or profits which might have been made from the business or
undertaking or similar considerations.

 (5) In this section, “cash consideration”, in relation to an
acquisition or sale by a company, means consideration for the
acquisition or sale payable otherwise than by the issue of shares
in the company.

Disclaimer of onerous property

531. (1) Where any part of the property of a company consists
of—

 (a) any estate or interest in land which is burdened with
onerous covenants;

 (b) shares in corporations;

 (c) unprofitable contracts; or

 (d) any other property that is unsaleable, or not readily
saleable, by reason of its binding the possessor of the
property to the performance of any onerous act, or to
the payment of any sum of money,

the liquidator of the company, notwithstanding that he has
endeavoured to sell or has taken possession of the property or

Companies 469

exercised any act of ownership in relation to the property, may,
with the leave of the Court or committee of inspection and
subject to this section, in writing signed by him, at any time
within twelve months after the commencement of the winding
up or such extended period as is allowed by the Court, disclaim
the property.

 (2) Where any such property under subsection (1) has not
come to the knowledge of the liquidator within thirty days from
the commencement of the winding up, the power of disclaiming
may be exercised at any time within twelve months after he
has become aware of the property or such extended period as is
allowed by the Court.

 (3) The disclaimer shall operate to determine, as from the date
of disclaimer, the rights, interest and liabilities of the company
and the property of the company in or in respect of the property
disclaimed, but shall not, except so far as is necessary for the
purpose of releasing the company and the property of the company
from liability, affect the rights or liabilities of any other person.

 (4) The Court or committee of inspection before or on granting
leave to disclaim may require such notices to be given to persons
interested, and impose such terms as a condition of granting
leave, and make such other order on the matter as the Court or
committee of inspection thinks just.

 (5) The liquidator shall not be entitled to disclaim if an
application in writing has been made to the liquidator by any
person interested in the property requiring him to decide whether
he will or will not disclaim, and the liquidator has not, within a
period of twenty-eight days from the receipt of the application or
such further period as is allowed by the Court or committee of
inspection, given notice to the applicant that he intends to apply
to the Court or committee of inspection for leave to disclaim, and,
in the case of a contract, if the liquidator after such an application
in writing does not within that period or further period disclaim
the contract, the liquidator shall be deemed to have adopted it.

 (6) The Court may, on the application of a person who is, as
against the liquidator, entitled to the benefit or subject to the
burden of a contract made with the company, make an order
rescinding the contract on such terms as to the payment by or to
either party of damages for the non-performance of the contract,

Laws of Malaysia470 Act 777

or otherwise as the Court thinks just, and any damages payable
under the order to that person may be proved by him as a debt
in the winding up.

 (7) The Court may, on the application of a person who either—

 (a) claims any interest in any disclaimed property; or

 (b) is under any liability not discharged by this Act in respect
of any disclaimed property,

and on hearing such persons as it thinks fit, make an order for
the vesting of the property in or the delivery of the property to
any person entitled to the property, or to whom it seems just
that the property should be delivered by way of compensation
for such liability, or a trustee for him, and on such terms as the
Court thinks just.

 (8) On the lodgement of an office copy of the vesting order
with the Registrar and with the Official Receiver and if the order
relates to land, with the appropriate authority concerned with
the recording or registration of dealings in that land, as the case
requires, the property comprised in the order shall vest accordingly
in the person named in the order in that behalf without any further
conveyance, transfer or assignment.

 (9) Notwithstanding anything in subsections (7) and (8), where
the property disclaimed is of a leasehold nature, the Court shall
not make a vesting order in favour of any person claiming under
the company, whether as under-lessee or as mortgagee, except
upon the terms of making that person—

 (a) subject to the same liabilities and obligations as those
to which the company was subject under the lease in
respect of the property at the commencement of the
winding up; or

 (b) if the Court thinks fit, subject only to the same liabilities
and obligations as if the lease had been assigned to that
person at that date,

and in either event, if the case so requires, as if the lease had
comprised only the property comprised in the vesting order,
and any mortgagee or under-lessee declining to accept a vesting

Companies 471

order upon those terms shall be excluded from all the interest
in and the security upon the property, and, if there is no person
claiming under the company who is willing to accept an order
upon those terms, the Court may vest the estate and interest of
the company in the property in any person liable personally or
in a representative character and either alone or jointly with the
company to perform the lessee’s covenants in the lease, freed
and discharged from all the estates, encumbrances and interest
created in the vesting order by the company.

 (10) Any person aggrieved by the operation of a disclaimer
under this section shall be deemed to be a creditor of the company
to the amount of the grievances, and may accordingly prove the
amount as a debt in the winding up.

Interpretation

532.  For the purposes of sections 533 and 534—

 “bailiff” includes any officer charged with the execution of a
writ or other process;

 “goods” includes all movable property.

Restriction of rights of creditor as to execution or attachment

533. (1) Where a creditor has issued execution against the
goods or land of a company or has attached any debt due to the
company and the company is subsequently wound up, he shall
not be entitled to retain the benefit of the execution or attachment
against the liquidator unless he has completed the execution or
attachment before the date of the commencement of the winding
up, but—

 (a) where any creditor has had notice of a meeting having
been called at which a resolution for voluntary winding
up is to be proposed, the date on which the creditor had
notice shall for the purposes of this section be substituted
for the date of the commencement of the winding up;

 (b) a person who purchases in good faith under a sale by the
bailiff any goods of a company on which an execution

Laws of Malaysia472 Act 777

has been levied shall in all cases acquire a good title
to the goods against the liquidator; and

 (c) the rights conferred by this subsection on the liquidator
may be set aside by the Court in favour of the creditor
to such extent and subject to such terms as the Court
thinks fit.

 (2) For the purposes of this section—

 (a) an execution against goods is completed by seizure and
sale;

 (b) an attachment of a debt is completed by receipt of the
debt; and

 (c) an execution against land is completed by sale or, in the
case of an equitable interest, by the appointment of a
receiver.

Duties of bailiff as to goods taken in execution

534. (1) Subject to subsection (3), where any goods of a company
are taken in execution and, before the sale of the goods or the
completion of the execution by the receipt or recovery of the full
amount of the levy, notice is served on the bailiff that a liquidator
has been appointed or that a winding up order has been made
or that a resolution for voluntary winding up has been passed,
the bailiff shall, on being so required, deliver the goods and any
money seized or received in part satisfaction of the execution
to the liquidator, but the costs of the execution shall be a first
charge on the goods or moneys so delivered, and the liquidator
may sell the goods, or a sufficient part of the goods, for the
purpose of satisfying that charge.

 (2) Subject to subsection (4), where under an execution in
respect of a judgment for a sum exceeding one hundred ringgit,
the goods of a company are sold or money is paid in order to
avoid sale, the bailiff shall deduct the costs of the execution
from the proceeds of the sale or the money paid and retain the
balance for fourteen days.

Companies 473

 (3) If within the period of execution notice is served on the
bailiff of a petition for the winding up of the company having
been presented or of a meeting having been called at which there
is to be proposed a resolution for the voluntary winding up and
an order is made or a resolution is passed for the winding up,
the bailiff shall pay the balance to the liquidator who shall be
entitled to retain it as against the execution creditor.

 (4) The rights conferred by this section on the liquidator may
be set aside by the Court in favour of the creditor to such extent
and subject to such terms as the Court thinks fit.

Power of Court to declare dissolution of company void

535. (1) Where a company has been dissolved, the Court may,
at any time within two years after the date of dissolution, on
an application of the liquidator of the company or of any other
person who appears to the Court to be interested, make an order
upon such terms as the Court thinks fit declaring the dissolution
to have been void, and such proceedings may be taken as might
have been taken if the company had not been dissolved.

 (2) The person on whose application the order was made, shall,
within seven days from the making of the order or such further
time as the Court allows, lodge with the Registrar and with the
Official Receiver an office copy of the order and the person who
fails so to do commits an offence and shall, on conviction, be
liable to a fine not exceeding ten thousand ringgit.

Subdivision 4
Offences

Offences by officers of companies in liquidation

536. (1) Every person who, is or was an officer or a contributory
of a company which is being wound up, commits an offence if
he—

 (a) does not disclose to the liquidator all the property of
the company, and how and to whom and for what
consideration and when the company disposed of any
part of the property of the company, except such part as

Laws of Malaysia474 Act 777

has been disposed of in the ordinary way of the business
of the company;

 (b) does not deliver up to the liquidator, whether or not being
directed to do so by the liquidator—

 (i) all the movable and immovable property of the
company in his custody or under his control and
which he is required by law to deliver up; or

 (ii) all books and papers in his custody or under his
control belonging to the company and which he
is required by law to deliver up;

 (c) within twelve months before the commencement of the
winding up or at any time after the commencement—

 (i) has concealed any part of the property of the
company to the value of fifty ringgit or upwards,
or has concealed any debt due to or from the
company;

 (ii) has fraudulently removed any part of the property
of the company to the value of fifty ringgit or
upwards;

 (iii) has concealed, destroyed, mutilated or falsified, or
has been privy to the concealment, destruction,
mutilation or falsification of, any book or paper
affecting or relating to the property or affairs of
the company;

 (iv) has made or has been privy to the making of any
false entry in any book or paper affecting or
relating to the property or affairs of the company;

 (v) has fraudulently parted with, altered or made any
omission in, or has been privy to fraudulent
parting with, altering or making any omission in,
any document affecting or relating to the property
or affairs of the company;

 (vi) by any false representation or other fraud, has
obtained any property for or on behalf of the
company on credit which the company has not
subsequently paid for;

Companies 475

 (vii) has obtained on credit, for or on behalf of the
company, under the false pretence that the company
is carrying on its business, any property which
the company has not subsequently paid for; or

 (viii) has pawned, pledged or disposed of any property
of the company which has been obtained on credit
and has not been paid for, unless the pawning,
pledging or disposing was in the ordinary way
of the business of the company;

 (d) makes any material omission in any statement relating
to the affairs of the company;

 (e) fails to inform the liquidator of a false debt within thirty
days from the date he knows or believes that the false
debt has been proved by any person;

 (f) prevents the production of any book or paper affecting
or relating to the property or affairs of the company;

 (g) within twelve months before the commencement of the
winding up or at any time after the commencement, has
attempted to account for any part of the property of the
company by fictitious losses or expenses; or

 (h) within twelve months before the commencement of the
winding up or at any time after the commencement, has
been convicted of false representation or other fraud for
the purpose of obtaining the consent of the creditors
of the company or any of them to an agreement with
reference to the affairs of the company or to the winding
up.

 (2)  For the purposes of this section, the date of the commencement
of winding up shall be—

 (a) in the case of a winding up by Court, the presentation
of the winding up petition against the company; or

 (b) in the case of a voluntary winding up, the passing of the
resolution to wind up the company.

Laws of Malaysia476 Act 777

 (3) A person who commits an offence under this section shall,
on conviction, be liable to imprisonment for a term not exceeding
five years or to a fine not exceeding three million ringgit or to
both.

 (4) It shall be a defence to a charge under paragraph (1)(a),
(b) or subparagraph (c)(i), (vii) or (viii) or paragraph (1)(d) if
the person proves that he had no intent to defraud, and to a
charge under subparagraph (1)(c)(iii) or (iv) or paragraph (1)(f)
if he proves that he had no intent to conceal the state of affairs
of the company or to defeat the law.

 (5) Where any person pawns, pledges or disposes of any
property in circumstances which amount to an offence under
subparagraph (1)(c)(viii), every person who takes in pawns
or pledge or otherwise receives the property knowing it to be
pawned, pledged or disposed of in those circumstances commits
an offence and shall, on conviction, be liable to imprisonment
for a term not exceeding five years or to a fine not exceeding
three million ringgit or to both.

Inducement to be appointed as liquidator, etc.

537. Any person who gives or agrees or offers to give to any
member or creditor of a company any valuable consideration
with a view of securing his own appointment or nomination, or
to securing or preventing the appointment or nomination of some
person other than himself, as the company’s liquidator, commits
an offence and shall, on conviction, be liable to imprisonment
for a term not exceeding three years or to a fine not exceeding
one hundred thousand ringgit or to both.

Falsification of books, etc.

538. Every officer or contributory of any company being wound
up who destroys, mutilates, alters or falsifies any books, papers
or securities, or makes or is privy to the making of any false or
fraudulent entry in any register or book of account or document
belonging to the company with intent to defraud or deceive any
person, commits an offence and shall, on conviction, be liable
to imprisonment for a term not exceeding ten years or to a fine
not exceeding three million ringgit or to both.

Companies 477

Liability where proper accounts not kept

539. (1) If, on an investigation under any other Part or where a
company is wound up, it is shown that proper books of account
were not kept by the company throughout the period of two years
immediately preceding the commencement of the investigation or
the winding up or the period between the incorporation of the
company and the commencement of the investigation or winding
up, whichever is the lesser, every officer, commits an offence
and shall, on conviction, be liable to imprisonment for a term
not exceeding three years or to a fine not exceeding five hundred
thousand ringgit or to both.

 (2) For the purposes of this section, proper books or accounts
shall be deemed not to have been kept in the case of any company
if—

 (a) the books or accounts have not been kept as are necessary
to exhibit and explain the transactions and financial
position of the trade or business of the company, including
books containing entries from day to day in sufficient
detail of all cash received and cash paid, and, where
the trade or business has involved dealings in goods,
statements of the annual stock takings and, except in
the case of goods sold by way of ordinary retail trade,
of all goods sold and purchased, showing the goods and
the buyers and sellers of the goods in sufficient detail
to enable those goods and those buyers and sellers to
be identified; or

 (b) the books or accounts have not been kept in such manner
as to enable the books or accounts to be conveniently
and properly audited, whether or not the company has
appointed an auditor.

 (3) If in the course of winding up of a company or in any
proceedings against a company, an officer of the company who
knowingly was a party to the contracting of a debt had, at the
time the debt was contracted, no reasonable or probable ground
of expectation, after taking into consideration the other liabilities,
if any, of the company at the time, of the company being able
to pay the debt, commits an offence and shall, on conviction, be
liable to imprisonment for a term not exceeding five years or to
a fine not exceeding five hundred thousand ringgit or to both.

Laws of Malaysia478 Act 777

Responsibility for fraudulent trading

540. (1) If in the course of the winding up of a company or in
any proceedings against a company it appears that any business
of the company has been carried on with intent to defraud the
creditors of the company or creditors of any other person or
for any fraudulent purpose, the Court on the application of the
liquidator or any creditor or contributory of the company, may,
if the Court thinks proper so to do, declare that any person who
was knowingly a party to the carrying on of the business in that
manner shall be personally responsible, without any limitation
of liability, for all or any of the debts or other liabilities of the
company as the Court directs.

 (2) Where a person has been convicted of an offence under
subsection 539(3) in relation to the contracting of such a debt as
is referred to in that section, the Court on the application of the
liquidator or any creditor or contributory of the company may,
if the Court thinks proper so to do, declare that the person shall
be personally responsible without any limitation of liability for
the payment of the whole or any part of that debt.

 (3) W h e n  t h e  C o u r t  m a k e s  a n y  d e c l a r a t i o n  u n d e r
subsection (1) or (2), the Court may give such further directions
as it thinks proper for the purpose of giving effect to that
declaration, and in particular may make provision for making
the liability of any person under the declaration a charge on any
debt or obligation due from the company to the person, or on
any charge or any interest in any charge on any assets of the
company held by or vested in the person or any corporation or
person on his behalf, or any person claiming as assignee from or
through the person liable or any corporation or person acting on
his behalf, and may from time to time make such further order
as is necessary for the purpose of enforcing any charge imposed
under this subsection.

 (4) For the purposes of subsection (3), “assignee” includes
any person to whom or in whose favour by the directions of the
person liable the debt, obligation or charge was created, issued
or transferred or the interest created, but does not include an
assignee for valuable consideration and consideration by way of
marriage, given in good faith and without notice of any of the
matters on the ground of which the declaration is made.

Companies 479

 (5) Where any business of a company is carried on with the
intent or for the purpose mentioned in subsection (1), every person
who was knowingly a party to the carrying on of the business
with that intent or purpose, commits an offence and shall, on
conviction, be liable to imprisonment for a term not exceeding
ten years or to a fine not exceeding one million ringgit or to
both.

 (6) This section shall have effect notwithstanding that the
person concerned is criminally liable under this Act in respect
of the matters on the ground of which the declaration is made.

 (7) On the hearing of an application under subsection (1) or (2),
the liquidator may give evidence or call witnesses himself.

Power of Court to assess damages against delinquent officers, etc.

541. (1) If in the course of winding up it appears that—

 (a) any person who has taken part in the formation or
promotion of the company; or

 (b) any past or present liquidator or officer,

has misapplied or retained or become liable or accountable
for any money or property of the company or been guilty of
any misfeasance or breach of trust or duty in relation to the
company, the Court may, on the application of the liquidator or
of any creditor or contributory examine into the conduct of that
person, liquidator or officer and compel him to repay or restore
the money or property or any part of the money with interest at
such rate as the Court thinks just, or to contribute such sum to
the assets of the company by way of compensation in respect
of the misapplication, retainer, misfeasance or breach of trust or
duty as the Court thinks just.

 (2) This section shall extend and apply to and in respect of the
receipt of any money or property by any officer of the company
during the two years preceding the commencement of the winding
up whether by way of salary or otherwise which appears to the
Court to be unfair or unjust to other members of the company.

Laws of Malaysia480 Act 777

 (3) This section shall have effect notwithstanding that the
offence is one for which the offender is criminally liable.

Prosecution of delinquent officers and members of company

542. (1) If it appears to the Court in the course of a winding
up by the Court that any past or present officer or any member
of the company has been guilty of an offence in relation to the
company for which he is criminally liable, the Court may, either
on the application of any person interested in the winding up or
of its own motion, direct the liquidator either to prosecute the
offender himself or to refer the matter to the Minister.

 (2) If it appears to the liquidator in the course of a voluntary
winding up that any past or present officer or any member of
the company has been guilty of any offence in relation to the
company for which he is criminally liable, he shall forthwith report
the matter to the Minister and shall, in respect of information or
documents in his possession or under his control which relate to
the matter in question, furnish the Minister with such information
and give to him such access to and facilities for inspecting and
taking copies of any documents as he may require.

 (3) If it appears to the liquidator in the course of any winding
up that the company which is being wound up will be unable to
pay its unsecured creditors more than fifty cents in the ringgit,
the liquidator shall forthwith report the matter in writing to the
Official Receiver and shall furnish the Official Receiver with
such information and give to him such access to and facilities
for inspecting and taking copies of any documents as the Official
Receiver may require.

 (4) Where any report is made under subsection (2) or (3), the
Minister may, if he thinks fit, investigate the matter and may
apply to the Court for an order conferring on him or any person
designated by him for the purpose with respect to the company
concerned all such powers of investigating the affairs of the
company as are provided by this Act in the case of a winding
up by the Court, but if it appears to him that the case is not one
in which proceedings ought to be taken by him, he shall inform
the liquidator accordingly, and subject to the previous approval
of the Court, the liquidator may himself take proceedings against
the offender.

Companies 481

 (5) If it appears to the Court in the course of a voluntary
winding up that any past or present officer or any member of
the company has been guilty as mentioned in subsection (2) and
that no report with respect to the matter has been made by the
liquidator to the Minister, the Court may, on the application of
any person interested in the winding up or of its own motion,
direct the liquidator to make such a report, and on a report being
made accordingly, this section shall have effect as though the
report has been made under subsection (2).

 (6) Where any matter is reported or referred to the Minister or
Official Receiver under this section, he considers that the case
is one in which a prosecution ought to be instituted, he may
institute proceedings accordingly, and the liquidator and every
officer and agent of the company past and present, other than the
defendant in the proceedings, shall give the Minister or Official
Receiver all assistance in connection with the prosecution which
he is reasonably able to give.

 (7) For the purposes of subsection (6), “agent”, in relation to
a company, includes any banker or advocate of the company and
any person employed by the company as auditor, whether or not
an officer of the company.

 (8) If any person fails or neglects to give assistance in the manner
required by subsection (6), the Court may, on the application of
the Minister or Official Receiver, direct that person to comply with
the requirements of that subsection, and where any application is
made under this subsection with respect to a liquidator, the Court
may, unless it appears that the failure or neglect to comply was
due to the liquidator not having in his hands sufficient assets of
the company to enable him so to do, direct that the costs of the
application shall be borne by the liquidator personally.

 (9) The Minister may direct that the whole or any part of
any costs and expenses properly incurred by the liquidator in
proceedings brought under this section shall be defrayed out of
the moneys provided by Parliament.

 (10) Subject to any direction given under subsection (9) and to
any charges on the assets of the company and any debts to which
priority is given by this Act, all such costs and expenses shall be
payable out of those assets as part of the costs of winding up.

Laws of Malaysia482 Act 777

Division 3
Winding Up of Unregistered Companies

Provisions of Division cumulative

543. The provisions of this Division shall be in addition to and
not in derogation of any provisions contained in this or any other
Act with respect to winding up companies by the Court and the
Court or liquidator may exercise any powers or do any act in
the case of unregistered companies which might be exercised or
done by the Court or liquidator in winding up companies.

Unregistered company

544. For the purposes of this Division, “unregistered company”
includes a foreign company and any partnership, association or
company consisting of more than five members but does not
include a company incorporated under this Act or under any
corresponding previous written law.

Winding up of unregistered companies

545. (1) In respect of any unregistered company, the provisions
of this Part shall apply with the following modifications:

 (a) the principal place of business of the company in Malaysia
shall for all the purposes of the winding up be the
registered office of the company;

 (b) no such company shall be wound up voluntarily; and

 (c) the circumstances in which the company may be wound
up are—

 (i) if the company is dissolved or has ceased to have
a place of business in Malaysia or has a place
of business in Malaysia only for the purpose of
winding up its affairs or has ceased to carry on
business in Malaysia;

 (ii) if the company is unable to pay its debts;

Companies 483

 (iii) if the Court is of the opinion that it is just and
equitable that the company should be wound up;
and

 (iv) the company is being used for unlawful purposes
or any purpose prejudicial to or incompatible with
peace, welfare, security, public interest, public
order, good order or morality in Malaysia.

 (2) An unregistered company shall be deemed to be unable to
pay its debts if—

 (a) the company is indebted to a creditor, in a sum exceeding
the amount as may be prescribed by the Minister, by
an assignment or otherwise, and the creditor has served
a notice of demand requiring the company to pay the
sum due—

 (i) by leaving it at its principal place of business in
Malaysia;

 (ii) by delivering it to the secretary, director, manager
or principal officer of the company; or

 (iii)  by serving in any manner as the Court approves
or directs,

  and the company has failed to pay, secure or compound
for the sum to the satisfaction of the creditor within
three weeks after the service of the notice;

 (b) any action or other proceeding has been instituted against
any member for any debt, demand due or claimed to be
due from the company or the member in his capacity as
a member, and, notice in writing of the institution of the
action or proceeding has been served on the company—

 (i) by leaving it at its principal place of business in
Malaysia;

 (ii) by delivering it to the secretary, director, manager
or principal officer of the company; or

 (iii) by serving in any manner as the Court approves
or directs,

Laws of Malaysia484 Act 777

  and the company has failed to pay, secure or compound
for the debt or demand or to procure the action or
proceeding to be stayed or to indemnify the defendant
to his satisfaction against the action or proceeding and
against all costs, damages and expenses to be incurred
by him within ten days after the service of the notice;

 (c) the execution or other process issued on a judgment,
decree or order obtained in any court in favour of a
creditor against the company, any member or any person
authorized to be sued as nominal defendant on behalf
of the company is returned unsatisfied; or

 (d) it is otherwise proved to the satisfaction of the Court that
the company is unable to pay its debts.

 (3) A company incorporated outside Malaysia may be wound up
as an unregistered company under this Division notwithstanding
that it is being wound up, has been dissolved or has otherwise
ceased to exist as a company under or by virtue of the laws of
the place under which it was incorporated.

 (4) In this section, “to carry on business” has the meaning
assigned to it in section 561.

Contributories in winding up of unregistered company

546. (1) Where an unregistered company is being wound up, a
contributory shall be—

 (a) a person who is liable to pay or contribute to the payment
of—

 (i) any debt or liability of the company;

 (ii) any sum for the adjustment of the rights of the
members among themselves; or

 (iii) the costs and expenses of winding up; or

 (b) where the company has been dissolved in the place
in which it is formed or incorporated, a person who
immediately before the dissolution was a contributory,

Companies 485

and shall be liable to contribute to the assets of the company all
sums due from him in respect of any such liability.

 (2) On the death or bankruptcy of any contributory, the
provisions of this Act with respect to the personal representatives
of deceased contributories and the assignees and trustees of
bankrupt contributories shall apply.

Power of Court to stay or restrain proceedings

547. (1) The provisions of this Act with respect to staying
and restraining actions and proceedings against a company at
any time after the presentation of a petition for winding up and
before the making of a winding up order shall, in the case of an
unregistered company where the application to stay or restrain
is by a creditor, extend to actions and proceedings against any
contributory of the company.

 (2) Where an order has been made for the winding up of an
unregistered company, no action or proceeding shall be proceeded
with or commenced against any contributory of the company in
respect of any debt of the company except by leave of the Court
and subject to such terms as the Court imposes.

Outstanding assets of a dissolved unregistered company

548. (1) Where an unregistered company, of which the place of
incorporation or origin of which is in a designated country, has
been dissolved and there remains in Malaysia any outstanding
property, movable or immovable, including things in action which
at the time it was dissolved—

 (a) was vested in the company;

 (b) the company was entitled to it; or

 (c) the company had a disposing power,

but which was not acquired, realized upon or otherwise disposed
of or dealt with by the company or its liquidator before the
dissolution, the property, except called and uncalled capital, shall
be and become vested in such person as is entitled according to

Laws of Malaysia486 Act 777

the law of the place of incorporation or origin of the company, in
respect of the estate and interest, legal or equitable, of the company
or its liquidator at the date the company was dissolved.

 (2) Where the place of origin of an unregistered company is
Malaysia, sections 556 to 560 shall, with such adaptations as
may be necessary, apply in respect of that company.

 (3) Where it appears to the Minister that any law in force in
any other country contains provisions similar to the provisions of
this section, he may, by notice published in the Gazette, declare
that other country to be a designated country for the purposes
of this section.

Division 4
Striking Off and Management of Assets of Dissolved

Companies

Subdivision 1
Striking Off

Power of Registrar to strike off company

549. Notwithstanding any provision in this Act, the Registrar
may strike a company off the register, if—

 (a) the company is not carrying on business or is not in
operation;

 (b) the company has contravened this Act;

 (c) the company is being used for unlawful purposes or
any purpose prejudicial to or incompatible with peace,
welfare, security, public interest, public order, good
order or morality in Malaysia;

 (d) in any case where the company is being wound up and
the Registrar has reasonable cause to believe that—

 (i) no liquidator is acting;

Companies 487

 (ii) the affairs of the company are fully wound up and
for a period of six months the liquidator has been
in default in lodging any return required to be
made by him; or

 (iii) the affairs of the company has been fully wound up
under a winding up by the Court and there are no
assets or the assets available are not sufficient to
pay the costs of obtaining an order of the Court
dissolving the company.

Application to strike off company

550. Subject to section 549, the Registrar may strike a company
off the register either on his own motion or upon an application
by a director, member or liquidator of the company.

Notice of intention to strike off company

551. (1) Before the name of a company can be struck off from
the register under section 549, the Registrar may serve on the
company or the liquidator, a notice, stating that if an answer
showing cause to the contrary is not received within thirty days
from the date of the notice, a notification to the public will be
published in the manner determined by the Registrar, with a view
to striking the name of the company off the register.

 (2) The Registrar may strike the name of the company off the
register after the expiration of thirty days of the publication of
the notification in subsection (1) if he—

 (a) receives a confirmation that the company is no longer
carrying on business or is not in operation;

 (b) receives no reply from the company to the notice referred
to in subsection (1);

 (c) receives no objection to the notice and public notification
referred to in subsection (1); or

 (d) is not satisfied with the reasons as to why the company
should not be struck off.

Laws of Malaysia488 Act 777

 (3) The Registrar shall publish the name of the company which
has been struck off in the Gazette and upon publication in the
Gazette, the company shall be dissolved.

 (4) A notice to be sent under this section to a liquidator may
be addressed to the liquidator at his last known place of business,
and a letter or notice to be sent under this section to a company
may be addressed to the company at its registered office or, if
no office has been registered, to an officer of the company, or
if there is no officer of the company whose name and address
are known to the Registrar, may be sent to each of the persons
who formed the company, addressed to him at the last known
address.

Objection to striking off

552. (1) Where a notice of intention to strike off a company
from the register is given under subsection 551(1), any person
may, together with the payment of a prescribed fee, lodge with
the Registrar, within thirty days from the date specified in the
notice, an objection to the striking off of the company on any
of the following grounds:

 (a) that the company is still carrying on business or there is
other reason for it to continue in existence;

 (b) that the company is a party to legal proceedings;

 (c) that the company is in receivership or liquidation, or
both;

 (d) that the person is a creditor or a member or a person
who has an undischarged claim against the company;

 (e) that the person believes that there exists, and intends to
pursue, a right of action on behalf of the company under
Division 6 of Part III; or

 (f) that, for any other reason, it would not be just and
equitable to remove the company from the register.

Companies 489

 (2) For the purposes of paragraph (1)(d)—

 (a) a claim by a creditor against a company is not an
undischarged claim if—

 (i) the claim has been paid in full; or

 (ii) the claim has been paid in full or in part by a
receiver or a liquidator in the course of a completed
receivership or liquidation; or

 (iii) a receiver or a liquidator has notified the creditor
that the assets of the company are not sufficient
to enable any payment to be made to the creditor;
and

 (b) a claim by a member or any other person against a
company is not an undischarged claim if—

 (i) payment has been made to the shareholder or
that person in accordance with a right under the
constitution or this Act to receive or share in the
company’s surplus assets; or

 (ii) a receiver or liquidator has notified the member
or that person that the company has no surplus
assets.

 (3) The Registrar shall not proceed with the striking off unless
the Registrar is satisfied that—

 (a) the objection has been withdrawn;

 (b) any facts on which the objection is based are not, or are
no longer correct; or

 (c) the objection is frivolous and vexatious.

 (4) The Registrar shall send a notification to the objector and
the company if he decides to suspend or to continue with the
process of striking off the company.

Laws of Malaysia490 Act 777

Withdrawal of striking off application

553. Subject to a payment of a prescribed fee, an applicant
referred to in section 550 may withdraw the application by lodging
a notice of withdrawal to the Registrar.

Effect of striking off

554. (1) Where a company is struck off from the register under
section 549, the company shall be dissolved, but—

 (a) the liability, if any, of every director or officer and member
of the company continues and may be enforced as if the
company had not been dissolved; and

 (b) nothing in section 550 shall affect the power of the Court
to wind up a company, the name of which has been
struck off from the register provided that there is proof
that the company has a property which can be realised.

 (2) Where the Court issued a winding up order under
paragraph (1)(b), the liquidator shall only be required to discover
and realise any assets of the company.

Power of Court to reinstate struck off company into register

555. (1) Any person who is aggrieved by the decision of the
Registrar to strike off the company may, within seven years after
the name of the company has been struck off, apply to the Court
to reinstate the name of the company into the register.

 (2) If the Court is satisfied that the company was at the time of
the striking off, carrying on business or in operation or otherwise
that it is just that the name of the company be reinstated in the
register, the Court may order that—

 (a) the name of the company be reinstated; and

 (b) give such directions and make such provisions as seem
just for placing the company and all other persons in
the same position as nearly as may be as if the name
of the company had not been struck off.

Companies 491

 (3) Upon an office copy of the order is lodged with the Registrar,
the company shall be deemed to have continued in existence as
if its name had not been struck off.

Subdivision 2
Management of Assets of Dissolved Companies

Power of Registrar to represent dissolved company in certain
circumstances

556. (1) Where after a company has been dissolved, it is proved
to the satisfaction of the Registrar—

 (a) that the company if still existing would be legally or
equitably bound to carry out, complete or give effect
to some dealing, transaction or matter; and

 (b) that in order to carry out, complete or give effect to the
dealing, transaction or matter some purely administrative
act should have been done by or on behalf of the company
if still existing,

the Registrar may in representing the company or its liquidator
under this section do or cause to be done any such act.

 (2) The Registrar may execute or sign any relevant instrument
or document stating that he has done so under this section, and
the execution or signature shall have the same force, validity
and effect as if the company, if existing, had duly executed such
instrument or document.

Outstanding assets of dissolved or struck off company to vest
in Registrar

557. (1) Where, after a company has been dissolved, there remains
any outstanding property, movable or immovable, including things
in action and whether within or outside Malaysia which at the
time it was dissolved —

 (a) was vested in the company;

 (b) the company was entitled to it; or

Laws of Malaysia492 Act 777

 (c) the company had a disposing power,

but which was not got in, realized upon or otherwise disposed
of or dealt with by the company or its liquidator before the
dissolution, the property, except called and uncalled capital, shall,
for the purposes of the following sections of this Subdivision and
notwithstanding any other written law to the contrary, be vested
in the Registrar for all the estate and interest, legal or equitable,
of the company or its liquidator at the date the company was
dissolved, together with all claims, rights and remedies which
the company or its liquidator had at that time.

 (2) For the purposes of subsection (1), where any claim, right or
remedy of the liquidator may, under this Act, be made, exercised
or availed of only with the approval or concurrence of the Court
or some other person, the Registrar may make, exercise or avail
himself of that claim, right or remedy without that approval or
concurrence.

Disposal of outstanding interests in property

558. (1) Upon proof to the satisfaction of the Registrar that
there is vested in him by operation of section 557 or of any
corresponding previous written law or of a law of a designated
country corresponding with section 548, any estate or interest in
property, whether solely or together with any other person, of a
beneficial nature and not merely held in trust, the Registrar may
sell or otherwise dispose of or deal with such estate or interest
in property or any part of the estate or interest in property as he
deems fit.

 (2) The Registrar may sell or otherwise dispose of or deal
with the property either solely or in concurrence with any other
person in such manner for such consideration by public auction,
public tender or private contract upon such terms and conditions
as he thinks fit, with power to rescind any contract and resell
or otherwise dispose of or deal with such property as he thinks
expedient and may make, execute, sign and give such contracts,
instruments and documents as he thinks necessary.

 (3) The Registrar shall be remunerated by the commission,
whether by way of percentage or otherwise, as prescribed in
respect of the exercise of the powers conferred upon him by
subsection (1).

Companies 493

 (4) The moneys received by the Registrar in the exercise of
any of the powers conferred on him by this Subdivision shall
be applied in defraying all costs, expenses, commission and
fees incidental to the disposal and subsequently to any payment
authorized by this Subdivision and the surplus, if any, shall be
dealt with as if they were unclaimed moneys under the laws
relating to unclaimed moneys.

Liability of Registrar and Government as to property vested
in Registrar

559. (1) Property vested in the Registrar by operation of this
Subdivision or by operation of any corresponding previous
written law shall be liable and subject to all charges, claims and
liabilities imposed thereon or affecting the property by reason of
any statutory provision as to rates, taxes, charges or any other
matter or thing to which the property would have been liable or
subject had the property continued in the possession, ownership
or occupation of the company.

 (2) Notwithstanding subsection (1), there shall not be imposed
on the Registrar or the Government any duty, obligation or
liability whatsoever to do or suffer any act or thing required by
any such statutory provision to be done or suffered by the owner
or occupier other than the satisfaction or payment of any such
charges, claims or liabilities out of the assets of the company so
far as the charges, claims or liabilities are in the opinion of the
Registrar properly available for and applicable to the payment.

Accounts and audit

560. (1) The Registrar shall—

 (a) record in the register a statement of any property coming
to his hand or under his control or to his knowledge
vested in him by operation of this Subdivision and of
his dealings;

 (b) keep accounts of all moneys arising and of how the
moneys have been disposed of; and

 (c) keep all accounts, vouchers, receipts and papers relating
to the property and moneys.

Laws of Malaysia494 Act 777

 (2) The Auditor General shall have all the powers in respect
of those accounts as are conferred upon him by any Act relating
to audit of public accounts.

Part V
MISCELLANEOUS

Division 1
Foreign Companies

Prohibition on carrying on business in Malaysia

561. (1) A foreign company shall not carry on a business in
Malaysia unless the foreign company is registered as a foreign
company under this Act.

 (2) A foreign company shall not be regarded as carrying on
business in Malaysia for the reasons only that it carries on activities
as specified in the Thirteenth Schedule within Malaysia.

 (3) For the purposes of this section, “carrying on business”
includes establishing or using a share transfer or share registration
office or administering, managing or otherwise dealing with property
situated in Malaysia as an agent, legal personal representative,
or trustee, whether by servants or agents or otherwise.

 (4) The foreign company and every officer who contravene
this section commit an offence.

Registration of foreign companies

562. (1) For the purpose of registration under this Act, a foreign
company shall provide to the Registrar the following information:

 (a) the name, identification, nationality and the ordinary place
of residence of every shareholder in Malaysia and, if any
of these persons is a body corporate, the corporate name,
place of incorporation or place of origin, registration
number and the registered office of the body corporate;

Companies 495

 (b) the name, identification, nationality and the ordinary
place of residence of every person who is appointed as
a director of the foreign company in Malaysia;

 (c) the list of its shareholders or members at its place of
origin;

 (d) in the case of a foreign company with share capital, the
details of class and number of shares at its place of
origin;

 (e) in the case of a foreign company limited without share
capital, the amount up to which the member undertakes
to contribute to the assets of the foreign company at its
place of origin in the event of its being wound up;

 (f) the name and address of a person who is a resident in
Malaysia, who is appointed by the foreign company as
its agent under a memorandum of appointment or power
of attorney; and

 (g) such other information that the Registrar may require.

 (2) The application made under subsection (1) shall be
accompanied with a statement by the agent of the foreign company
confirming his consent for the appointment.

 (3) Upon being satisfied that the requirements of this Act have
been complied with and on payment of the prescribed fee, the
Registrar shall—

 (a) register the foreign company and allocate a registration
number for the foreign company; and

 (b) issue a notification of registration in the form and manner
as the Registrar may determine and the notification
shall be conclusive evidence that the requirements as
to registration have been complied with.

 (4) For the purposes of paragraph (1)(c), “list of shareholders
or members” means a list of all of the shareholders or members
of the foreign company, provided that if the number of its
shareholders or members exceeds five hundred —

 (a) a list of its twenty largest shareholders or members; and

Laws of Malaysia496 Act 777

 (b) a certificate by the agent stating that the foreign company
has more than five hundred shareholders or members
and the full list of shareholders or members is kept at
the registered office of the foreign company and also
kept at the registered office of the foreign company in
Malaysia.

Requirement for foreign companies to have agent

563. (1) A foreign company shall at all times appoint an agent
in Malaysia who, until he ceases to be an agent in accordance
with subsection (5), shall—

 (a) continue to be the agent of the foreign company;

 (b) be answerable for all such acts, matters and things that
are required to be done by the foreign company under
this Act; and

 (c) be personally liable to all penalties imposed on the foreign
company for any contravention of this Act unless the
agent satisfies the court hearing the matter that the agent
should not be liable.

 (2) For the purposes of subsection (1), the foreign company
shall notify the Registrar of any changes relating to the registered
particulars of the agent within fourteen days from the change.

 (3) A foreign company or its agent shall lodge with the Registrar
a notice in writing stating that the agent has ceased or will cease
to be the agent on a date specified in the notice.

 (4) The agent in respect of whom the notice has been lodged
shall cease to be an agent—

 (a) on the expiry of twenty-one days from the date of
lodgement of the notice with the Registrar or on the
date of lodgement of the memorandum of appointment
of another agent in accordance with subsection (5),
whichever is the earlier; or

Companies 497

 (b) if the notice states a date on which the agent is to cease
and the date is later than the expiration of that period,
on that later date.

 (5) If an agent ceases to be an agent and the foreign company
continues to carry on business or has a place of business in
Malaysia, the foreign company shall appoint another agent within
twenty-one days from the date the previous agent ceases to be
an agent.

Name of foreign company and its publication

564. (1) A foreign company shall be registered under the name
as registered in its place of origin subject to the name being
available under section 26.

 (2) Any change in the name of a foreign company shall not
be registered if the name is not available under section 26.

 (3) No foreign company to which this Part applies shall use in
Malaysia any name other than that under which it is registered
under this Division.

 (4) The foreign company and every officer or agent who
contravene this section commit an offence and shall, on conviction,
be liable to a fine not exceeding ten thousand ringgit and in the
case of a continuing offence, to a further fine not exceeding five
hundred ringgit for each day during which the offence continues
after conviction.

Obligation to state name of foreign company, whether limited,
and place where incorporated

565. (1) A foreign company shall—

 (a) conspicuously exhibit its name and the place where the
foreign company is formed or incorporated in romanised
letters outside its registered office and every place of
business established by it in Malaysia;

Laws of Malaysia498 Act 777

 (b) cause its name, company number and the place where the
foreign company is formed or incorporated to be stated
in legible romanised letters on the following:

 (i) its business letters, notices and other official
publications, including in electronic medium;

 (ii) its websites;

 (iii) its bills of exchange, promissory notes, endorsements
and order forms;

 (iv) cheques purporting to be signed by or on behalf
of the company;

 (v) orders, invoices and other demands for payment,
receipts and letters of credit purporting to be
issued or signed by or on behalf of the company;
and

 (vi) all other forms of its business correspondence and
documentation;

 (c) if the liability of its members is limited, unless the last
word of its name is the word “Berhad” or “Limited”
or the abbreviation “Bhd.” or “Ltd.”, cause notice of
that fact—

 (i) to be stated in legible characters in every prospectus
issued by the foreign company and all circumstances
referred to in paragraph (b); and

 (ii) except in the case of a banking corporation, to be
exhibited outside its registered office and every
place of business established by the foreign
company in Malaysia.

 (2) The requirement under subsection (1) relating to the
exhibition or statement of its name shall be deemed not to have
been complied with if the name of a foreign company is indicated
in characters or in any other way than by the use of romanised
letters—

 (a) on the outside of its registered office;

Companies 499

 (b) on the outside of any place of business established by it
in Malaysia; or

 (c) on any of the documents referred to in subsection (1),

unless the name of the foreign company is exhibited outside its
registered office or place of business or stated on the document in
romanised letters, at least of equal size with all of the characters
exhibited or stated on the relevant office, place of business or
document.

 (3) In this section, “company number” means the number
allocated by the Registrar to a foreign company on its registration.

Requirement to have a registered office

566. (1) A foreign company shall, at all times, have a registered
office within Malaysia—

 (a) to which all communications and notices may be addressed;
and

 (b) which shall be open and accessible to the public during
ordinary business hours.

 (2) Every foreign company shall, within thirty days from it
establishes a place of business or commences to carry on business
within Malaysia, lodge with the Registrar of the situation of its
registered office in Malaysia and, unless the office is open and
accessible to the public during ordinary business hours, the days
and hours during which it is open and accessible to the public.

Return to be filed where documents, etc., altered

567. (1) If any change or alteration is made in—

 (a) the charter, statutes, constitution, memorandum or articles
of the foreign company or other instrument lodged with
the Registrar;

Laws of Malaysia500 Act 777

 (b) the directors of the foreign company or in the name or
address of any director;

 (c) the agent of the foreign company or the name or address
of any agent;

 (d) the situation of the registered office of the foreign
company in Malaysia or the days or hours during which
the registered office of the foreign company is open and
accessible to the public;

 (e) the address of the registered office of the foreign company
in its place of incorporation or origin;

 (f) the name of the foreign company; or

 (g) the powers of any directors resident in Malaysia who are
members of the local board of directors of the foreign
company,

the foreign company shall, within fourteen days or within such
further period as the Registrar in special circumstances allows after
the change or alteration, lodge with the Registrar particulars of the
change or alteration and such documents as may be determined
by the Registrar.

 (2) Subject to this Act, the Registrar shall register the change
or alteration as provided for under subsection (1) upon receipt
of the particulars of the change or alteration.

 (3) If a foreign company increases its share capital or authorized
share capital, the foreign company shall lodge with the Registrar
notice of the amount from which and the amount to which the
share capital has been increased within thirty days or within such
further period as the Registrar in special circumstances allows
after the increase.

 (4) If a foreign company not having a share capital increases
the number of its members beyond the registered number, the
foreign company shall lodge with the Registrar notice of the
increase within thirty days or within such further period as the
Registrar in special circumstances allows after the increase was
resolved on or took place.

Companies 501

 (5) If any order is made by a Court under any law which
corresponds to section 366 in force in the country in which
a foreign company is incorporated, the foreign company shall
lodge with the Registrar an office copy of that order within thirty
days or within such further period as the Registrar in special
circumstances allows after the order was made.

The branch register

568. (1) Subject to this section, a foreign company which has
a share capital and has any member who is resident in Malaysia
shall keep a branch register for the purpose of registering shares
of the members resident in Malaysia who apply to have the shares
registered at its registered office in Malaysia or at some other
place in Malaysia.

 (2) The company shall not be obliged to keep a branch register
under subsection (1) until after the expiration of sixty days from
the receipt by the company of an application in writing by a
member resident in Malaysia for registration in its branch register
in Malaysia of the shares held by the member.

 (3) This section shall not apply to any foreign company which
by its constitution prohibits any invitation to the public to subscribe
for shares in the foreign company.

 (4) Every such register as aforesaid shall be kept in the manner
provided by Division 8 of Part II as though the register were
the register of a company and transfers shall be effected on
the register in the same manner and at the same charges as on
the principal register of the company and transfer lodged at its
registered office in Malaysia shall be binding on the company and
the Court shall have the same powers in relation to rectification
of the register as it has in respect of the register of a company
incorporated in Malaysia.

 (5) If a foreign company opens a branch register in Malaysia,
the foreign company shall lodge with the Registrar a notice of
that fact specifying the address where the register is kept within
fourteen days from the opening of the branch.

Laws of Malaysia502 Act 777

 (6) If any change is made in the place where the register is kept
or where the register is discontinued, the foreign company shall
lodge notice of the change or discontinuance with the Registrar
within fourteen days of the change or discontinuance.

 (7) If a foreign company or corporation is entitled under a law
of the place of incorporation corresponding with section 371 to
give notice to a dissenting shareholder in that foreign company,
that the foreign company desires to acquire any of his shares
registered on a branch register kept in Malaysia, this section
shall cease to apply to that foreign company until—

 (a) the shares have been acquired; or

 (b) that company or corporation has ceased to be entitled to
acquire the shares.

 (8) The foreign company, every officer and agent who contravene
this section commit an offence and shall, on conviction, be liable
to a fine not exceeding ten thousand ringgit and in the case of a
continuing offence, to a further fine not exceeding five hundred
ringgit for each day during which the offence continues after
conviction.

Registration of shares in branch register

569. Subject to this Act, on an application in that behalf by a
member resident in Malaysia, the foreign company shall register
in a branch register of the foreign company, the shares held by
a member which are registered in any other register kept by the
company.

Removal of shares from branch register

570. Subject to this Act, on application in that behalf by a
member holding shares registered in a branch register, the foreign
company shall remove the particulars relating to the shares from
the branch register and register the shares in such other register
within Malaysia as is specified in the application.

Companies 503

Index of members, inspection and closing of branch registers

571. Sections 50, 51, 52, 53, 54, 55 and 56 shall, with such
adaptations as are necessary, apply respectively to the index of
persons holding shares in a branch register and to the inspection
and the closing of the register.

Transfer of shares and rectification

572. Sections 103, 105, 106 and 107 shall apply with necessary
adaptations with respect to the transfer of shares and the rectification
of the branch register of a foreign company.

Branch register to be prima facie evidence

573. A branch register shall be prima facie evidence of—

 (a) any matters directed or authorized by this Subdivision to
be inserted in the branch register; and

 (b) the title of the member to the shares and the registration
of the shares in the branch register.

Accounts to be kept by foreign companies

574. (1) Every foreign company, the directors and managers
shall cause—

 (a) to be kept accounting and other records in Malaysia as
will sufficiently explain the transactions and financial
position of the foreign company, arising out of its
operations in Malaysia; and

 (b) the records under paragraph (a) to be kept in such a
manner as to enable the records to be conveniently and
properly audited.

 (2) The records referred to in subsection (1) shall be audited
by a person approved under section 263.

Laws of Malaysia504 Act 777

 (3) Every foreign company, the directors and managers of the
foreign company shall cause appropriate entries to be made in the
accounting and other records within sixty days of the completion
of the transactions to which the entries relate.

 (4) Subsections 245(3), (4), (7) and (8) shall apply to foreign
companies as if for references to a “company” there were substituted
references to a “foreign company”.

Financial statements

575. (1) Subject to this section, a foreign company shall, within
two months of its annual general meeting, lodge with the Registrar
a copy of its financial statements made up to the end of its last
financial year in such form and containing such particulars and
accompanied by copies of such documents as the company is
required to annex, attach or send with its financial statements
by the law for the time being applicable to that company in the
place of its incorporation or origin, together with a statutory
declaration in the prescribed form verifying that the copies are
true copies of the documents so required.

 (2) The Registrar may, if he is of the opinion that the financial
statements and other documents referred to in subsection (1) do not
sufficiently disclose the company’s financial position, require the
company to lodge financial statements within such period, in such
form and containing such particulars and to annex thereto such
documents as the Registrar by notice in writing to the company
requires, but this subsection does not authorize the Registrar
to require financial statements to contain any particulars or the
company to annex, attach or to send any documents that would
not be required to be furnished if the company were a public
company incorporated under this Act.

 (3) The foreign company shall comply with the requirements
set out in the notice.

 (4) Where a foreign company is not required by the law of
the place of its incorporation or origin to hold an annual general
meeting and prepare financial statements, the foreign company
shall prepare and lodge with the Registrar financial statements
within such period, in such form and containing such particulars
and to annex such documents as the directors of the foreign

Companies 505

company would have been required to prepare or obtain if the
foreign company were a public company incorporated under this
Act.

 (5) In addition to the financial statements and other documents
required to be lodged with the Registrar by subsections (1)
to (4), a foreign company shall lodge with the Registrar—

 (a) a duly audited financial statements and other documents
required to be attached with the financial statements;
and

 (b) a duly audited statement showing the foreign company
assets used in and liabilities arising out of its operations
in Malaysia as at the date to which its financial statements
was made up,

which so far as is practicable, complies with the applicable
approved accounting standards and which gives a true and fair
view of the foreign company’s operations in Malaysia for the
last preceding financial year of the company.

 (6) Subject to subsection (5), the foreign company shall be
entitled to make such allotment of expenses incurred in connection
with the operations or administration affecting both Malaysia
and elsewhere and to add such notes and explanations as in its
opinion are necessary or desirable in order to give a true and
fair view of the profit or loss of its operations in Malaysia.

 (7) The Registrar may waive compliance with subsection (5)
in relation to any foreign company if the Registrar is satisfied
that—

 (a) it is impractical to comply with this subsection having
regard to the nature of the company’s operations in
Malaysia;

 (b) it would be of no real value having regard to the amount
involved;

 (c) it would involve expense unduly out of proportion to its
value; or

Laws of Malaysia506 Act 777

 (d) it would be misleading or harmful to the business of the
company or to any company which is deemed by virtue
of section 7 to be related to the company.

 (8) Financial statements shall be deemed to have been duly
audited for the purposes of subsection (5) if the financial statements
is—

 (a) accompanied by a report by an approved company auditor
in accordance with section 266; and

 (b) accompanied with a statutory declaration by the agent
or, where the agent is not primarily responsible for the
financial management of the company, by the person so
responsible setting forth his opinion as to the correctness
or otherwise of the statement and profit and loss account.

Annual return

576. (1) A foreign company shall lodge with the Registrar, once
in every calendar year, an annual return in the form and manner
as the Registrar may determine.

 (2) The annual return shall contain the following particulars:

 (a) the address of its registered office;

 (b) the address of its business place including branch, if any;

 (c) the address at which its register of members is kept, if
not kept at the registered office;

 (d) the address at which its financial records are kept, if not
kept at the registered office;

 (e) in the case of a company with a share capital, the summary
of its shareholding structure, including debentures;

 (f) the total amount of its indebtedness in Malaysia;

 (g) the particulars of directors, officers, auditors and agents
in Malaysia;

 (h) the list of its shareholders or members; and

Companies 507

 (i) such other information as the Registrar may require from
time to time.

 (3) The return shall be lodged not later than thirty days from
the anniversary of its registration date or within such further
period as the Registrar in special circumstances allows.

Service of notice

577. Any document required to be served on a foreign company
shall be sufficiently served—

 (a) if the document is addressed to the foreign company and
left at or sent by post to its registered office in Malaysia;

 (b) if the document is addressed to an agent of the company
and left at or sent by post to his registered address; or

 (c) in the case of a foreign company which has ceased to
maintain a place of business in Malaysia, if the document
is addressed to the foreign company and is left at or
sent by post to its registered office in the place of its
incorporation or origin.

Cessation of business in Malaysia

578. (1) If a foreign company ceases to have a place of business
or to carry on business in Malaysia, the foreign company shall,
within seven days from ceasing, lodge with the Registrar a notice
to that fact, and as from the day on which the notice is lodged,
its obligation to lodge any document, other than a document that
ought to have been lodged before that day, shall cease.

 (2) The Registrar shall remove the name of that foreign company
from the register upon the expiration of twelve months after the
lodging of the notice.

 (3) If a foreign company goes into liquidation or is dissolved
in its place of incorporation or origin—

 (a) any person who, immediately prior to the commencement
of the liquidation proceedings, was an agent shall, within
thirty days from the commencement of the liquidation

Laws of Malaysia508 Act 777

or the dissolution or within such further time as the
Registrar in special circumstances allows, lodge or cause
to be lodged with the Registrar notice of that fact and,
when a liquidator is appointed, notice of his appointment;
and

 (b) the liquidator shall have the powers and functions of a
liquidator until a liquidator for Malaysia is duly appointed
by the Court.

 (4) A liquidator of a foreign company appointed for Malaysia
by the Court or a person exercising the powers and functions of
a liquidator—

 (a) shall, before any distribution of the assets of the foreign
company is made, by advertisement in a newspaper
widely circulated in each country where the foreign
company had been carrying on business prior to the
liquidation if no liquidator has been appointed for that
place, invite all creditors to make their claims against
the foreign company within a reasonable time before
the distribution;

 (b) shall not pay out any creditor to the exclusion of any
other creditor of the foreign company without obtaining
an order of the Court except as otherwise provided in
subsection (8); and

 (c) shall, unless otherwise ordered by the Court—

 (i) only recover and realize the assets of the foreign
company in Malaysia; and

 (ii) subject to subsection (8), pay the net amount so
recovered and realized to the liquidator of that
foreign company for the place where it was
formed or incorporated after paying any debts
and satisfying any liabilities incurred in Malaysia
by the foreign company.

 (5) Where a foreign company has been wound up, so far as its
assets in Malaysia are concerned and there is no liquidator for
the place of its incorporation or origin, the liquidator may apply
to the Court for directions as to the disposal of the net amount
recovered under subsection (3).

Companies 509

 (6) Upon receipt of a notice from an agent that the foreign
company has been dissolved, the Registrar shall remove the name
of the company from the register.

 (7) Where the Registrar has reasonable cause to believe that
a foreign company has ceased to carry on business or to have a
place of business in Malaysia, the provisions of this Act relating
to the striking off the register of the names of defunct companies
shall, with such modifications as are necessary, extend and apply
accordingly.

 (8) Section 527 shall apply to a foreign company wound up or
dissolved under this section as if for references to a “company”
were substituted references to a “foreign company”.

Power of foreign companies to hold immovable property

579. Subject to and in accordance with any written law, a foreign
company registered under this Subdivision shall have the power
to hold any immovable property in Malaysia.

Division 2
Enforcement and Sanctions

Subdivision 1
Enforcement of the Act

As to rights of witnesses to legal representation

580. Any person summoned for examination under section 502
or 503 may at his own cost appoint an advocate and solicitor
who shall be at liberty to put to him such questions as the Court,
Sessions Court Judge or Magistrate deems just, for the purpose
of enabling him to provide explanation or qualify any answers
given by him.

Power to grant relief

581. (1) In any proceeding for negligence, default, breach of
duty or breach of trust against any person to whom this section
applies, if it appears to the Court before which the proceedings

Laws of Malaysia510 Act 777

are taken that a person is or may be liable, but that he has
acted honestly and reasonably and that, having regard to all the
circumstances of the case, he ought fairly to be excused for the
negligence, default or breach, the Court may relieve him either
wholly or partly from his liability on such terms as the Court
thinks fit.

 (2) If any person to whom this section applies has reason to
apprehend that any claim will or might be made against him in
respect of any negligence, default, breach of duty or breach of
trust, he may apply to the Court for relief, and the Court shall
have the same power to relieve him as under this section it would
have had if it had been a Court before which proceedings against
him for negligence, default, breach of duty or breach of trust had
been brought.

 (3) This section applies to—

 (a) an officer of a corporation;

 (b) a person employed by a corporation as an auditor, whether
he is or is not an officer of the corporation;

 (c) an expert within the meaning of this Act;

 (d) a liquidator or person who is appointed by the Court,
receiver, receiver and manager or judicial manager
that carries out any duty under this Act in relation to a
corporation; and

 (e) a nominee appointed under a voluntary arrangement
to carry out any duty under this Act in relation to a
corporation.

Irregularities in proceedings

582. (1) No proceeding under this Act shall be invalidated by
any defect, irregularity or deficiency of notice or time unless the
Court is of the opinion that substantial injustice has been or may
be caused which cannot be remedied by any order of the Court.

 (2) The Court may, if it thinks fit, make an order declaring
that the proceeding is valid notwithstanding any such defect,
irregularity or deficiency.

Companies 511

 (3) Without affecting the generality of subsections (1) and (2)
or any other provision of this Act, where any omission, defect,
error or irregularity, including the absence of a quorum at any
meeting of the company or of the directors has occurred in the
management or administration of a company whereby—

 (a) any breach of this Act has occurred;

 (b) there has been default in the observance of the constitution
of the company; or

 (c) any proceedings at or in connection with any meeting
of the company or of the directors or any assembly
purporting to be such a meeting have been rendered
ineffective including the failure to make or lodge any
declaration of solvency under section 443,

the Court—

 (A) may, either of its own motion or on the application of
any interested person, make such order as the Court
thinks fit to—

 (i) rectify or cause to be rectified or to negate or
modify or cause to be modified the consequences
in law of any such omission, defect, error or
irregularity; or

 (ii) validate any act, matter or thing rendered or alleged
to have been rendered invalid by or as a result of
any such omission, defect, error or irregularity;

 (B) shall, before making any such order, satisfy itself that
such an order would not do injustice to the company
or to any member or creditor;

 (C) where any such order is made, may give such ancillary
or consequential directions as the Court thinks fit; and

 (D) may determine notice or summons to be given to other
persons of the intention to make any such application
or of the intention to make such an order, and whether

Laws of Malaysia512 Act 777

and how the notice or summons should be given or
served and whether the notice or summons should be
advertised in any newspaper.

 (4) The Court, whether the company is in process of being
wound up or not, may extend or abridge any time for doing any
act or taking any proceeding allowed or limited by this Act upon
such terms, if any, as the justice of the case may require and
any such extension may be ordered although the application for
the same is not made until after the time originally allowed or
limited.

Disposal of shares of shareholder whose whereabouts unknown

583. (1) If by the exercise of reasonable diligence a company
is unable to discover the whereabouts of a shareholder for a
period of not less than ten years, the company may cause an
advertisement to be published in a newspaper circulating in the
place shown in the register of members as the address of the
shareholder stating that the company after the expiration of thirty
days from the date of the advertisement intends to transfer the
shares to the Minister charged with responsibility for finance.

 (2) The company may transfer the shares held by the shareholder
in the company to the Minister charged with responsibility for
finance and for that purpose may execute for and on behalf of
the owner a transfer of those shares to the Minister charged with
the responsibility for finance if after the expiration of thirty
days from the date of the advertisement the whereabouts of the
shareholder remain unknown.

 (3) The Minister charged with the responsibility for finance
shall sell or dispose of any shares received in such manner and
at such time as the Minister thinks fit and shall deal with the
proceeds of the sale or disposal as if the shares were moneys
paid to him under the law relating to unclaimed moneys.

 (4) The Minister charged with the responsibility for finance
may transfer any shares received to the owner of the shares if
there are claims to the shares held by the Minister, which has
yet to be sold or disposed of.

Companies 513

Furnishing of information and particulars of shareholding

584. (1) The Registrar may at any time by notice in writing
require any company, person or individual to furnish all the
necessary information and particulars of any share acquired or
held directly or indirectly either for his own benefit or for any
other company, person or individual and have the information
and particulars verified by statutory declaration.

 (2) Any company, person or individual served with the notice
under subsection (1) shall furnish the Registrar all the necessary
information and particulars of any share acquired or held and
duly verified by statutory declaration within seven days of the
receipt of such notice.

 (3) A company and every officer who contravene this section
commit an offence and shall, on conviction, be liable to a fine
not exceeding one million ringgit and in the case of a continuing
offence, to a further fine of ten thousand ringgit for each day
during which the offence continues after conviction.

 (4) Any person or individual who contravenes this section commits
an offence and shall, on conviction, be liable to imprisonment
for a term not exceeding ten years or to a fine not exceeding
three million ringgit or to both and in the case of a continuing
offence, to a further fine of ten thousand ringgit for each day
during which the offence continues after conviction.

Court may compel compliance

585. If an officer or former officer of a company or any other
person failed or omitted to do any act, matter or thing which
by or under this Act he is or was required or directed to do,
including to permit the inspection of any register, minute book
or document or to supply a copy of any register, minute book or
document, the Court on the application of the Registrar or any
member of the company or the Official Receiver or liquidator
may by order require that officer or former officer or person to
do the act, matter or thing immediately or within such time as is
allowed by the order, and for the purpose of complying with any
such order, the former officer shall be deemed to have the same
status, powers and duties as he had at the time the act, matter
or thing should have been done.

Laws of Malaysia514 Act 777

Translations of instruments

586. (1) If under this Act a corporation is required to lodge with
the Registrar any instrument, certificate, contract or document or a
certified copy of the instrument, certificate, contract or document
that is not written in the national language or in the English
language, the corporation shall lodge at the same time with the
Registrar a certified translation of the instrument, certificate,
contract or document either in the national language or in the
English language.

 (2) Where under this Act a corporation is required to make
available for public inspection any instrument, certificate, contract
or document that is not written in the national language or in
the English language, the corporation shall keep at its registered
office in Malaysia a certified translation of instrument, certificate,
contract or document either in the national language or in the
English language.

 (3) If any financial statements, minute books or other records
of a corporation required by this Act to be kept, are not kept in
the national language or in the English language, the directors
of the corporation shall cause a true translation of such financial
statements, minute books and other records to be made from
time to time at intervals of not more than seven days and shall
cause such translations to be kept with the original financial
statements, minute books and other records for so long as the
original financial statements, minute books and other records are
required to be kept by this Act.

 (4) Notwithstanding subsections (1), (2) and (3), the Registrar
may require any company to file any instrument, certificate,
contract or document including any financial statements, minute
books or other records of a corporation or a certified copy in the
national language.

Protection to certain officers who make disclosures

587. (1) Where an officer of a company in the course of
performance of his duties has reasonable belief of any matter
which may or will constitute a breach or non-observance of
any requirement or provision of this Act or its regulations, or
has reason to believe that a serious offence involving fraud
or dishonesty, as defined in paragraph 266(11)(b) has been, is
being or is likely to be committed against the company or this

Companies 515

Act by other officers of the company, he may report the matter
in writing to the Registrar.

 (2) The company shall not remove, demote, discriminate against,
or interfere with the lawful employment or livelihood of such
officer of the company by reason of the report submitted under
subsection (1).

 (3) No officer of a company shall be liable to be sued in
any court or be subject to any tribunal process, including
disciplinary action for any report submitted by the officer under
subsection (1) in good faith and in the intended performance of
his duties as an officer of the company.

General penalty

588. (1) A person commits an offence under this Act if he—

 (a) does that which by or under this Act he is prohibited to
do;

 (b) does not do that which by or under this Act he is required
or directed to do; or

 (c) otherwise contravenes or fails to comply with any provision
of this Act.

 (2) A person who is guilty of an offence under this Act shall,
on conviction, be liable to a penalty or punishment not exceeding
the penalty or punishment expressly mentioned as the penalty or
punishment for the offence, or if a penalty or punishment is not
mentioned—

 (a) in the case of a person who is an individual, to a fine
not exceeding fifty thousand ringgit or to imprisonment
for a term not exceeding three years or to both;

 (b) in the case of a person other than an individual, to a fine
not exceeding fifty thousand ringgit.

 (3) For the purposes of this section, “individual” means a
natural person.

Laws of Malaysia516 Act 777

Proceedings how and when taken

589. (1) The Registrar or any person shall not institute any
proceeding for any offence under this Act except with the written
consent of the Public Prosecutor.

 (2) The Registrar or any officer authorized by the Public
Prosecutor in writing shall have the right to appear and be heard
before a Magistrate’s Court or a Sessions Court in any proceedings
for an offence under this Act.

 (3) Proceedings for any offence under this Act other than an
offence punishable with imprisonment for a term exceeding five
years may be prosecuted in a Magistrate’s Court and in the case
of an offence punishable with imprisonment for a term of five
years or more shall be prosecuted in the Sessions Court.

Investigation of affairs of company at direction of Minister

590. (1) The Minister may, either of his own motion or on the
application of—

 (a) in the case of a company having a share capital—

 (i) not less than two hundred members or members
holding at least ten per centum of the issued
shares; or

 (ii) debenture holders holding not less than twenty per
centum of the value of the issued debentures; or

 (b) in the case of a company not having a share capital, not
less than twenty per centum of the total members,

declare the affairs of the company or foreign company to be
investigated under this section.

 (2) The Minister may make the declaration on his own motion
under subsection (1) if he is satisfied that—

 (a) a prima facie evidence has been established that for the
protection of the public, the interest holders of a scheme
under the Interest Schemes Act 2016, the members

Companies 517

or creditors of a company or a foreign company, an
investigation to be carried out under this section;

 (b) it is in the public interest that allegations of fraud,
misfeasance or other misconduct by persons who are or
have been concerned with the formation or management
of a company or a foreign company be investigated
under this section;

 (c) for any other reason it is in the public interest that the
affairs of the company or foreign company be investigated
under this section; or

 (d) in the case of a foreign company, the appropriate authority
of another country has requested that a declaration be
made under this section.

 (3) An application under this section shall be supported by
evidence as the Minister requires and the reasons of the applicants
in requiring the investigation.

 (4) Before declaring that an investigation to be carried out
under this section, the Minister may require the applicants to
give security to such amount as he thinks fit for the costs of the
investigation.

 (5) On or after the commencement of an investigation under this
section until the expiration of three months after a final report is
presented to the Minister as to the findings of the investigation,
no proceedings or actions shall be commenced or proceeded in
any Court without the consent of the Minister—

 (a) by the company in respect to or in respect of any contract,
bill of exchange or promissory note; or

 (b) by the holder or any other person in respect of any bill
of exchange or promissory note made, drawn or accepted
by or issued, transferred, negotiated or endorsed by or
to the company unless at the time of the negotiation,
transfer, issue, endorsement or delivery, the holder or
other person—

 (i) has given adequate pecuniary consideration; and

Laws of Malaysia518 Act 777

 (ii) at any time within three years before, was not
a member, officer, agent or employee of the
company or the wife or husband of a member,
officer, agent or employee of the company.

 (6) For the purposes of this section—

 “affairs of the company” includes—

 (a) the promotion, formation, membership, control,
trading, dealings, business and property of the
company;

 (b) the ownership of shares in, debentures of or
participatory interests issued by the company;

 (c) the ascertainment of the persons who are or have
been financially interested in the success or failure
or apparent success or failure of the company or
are or have been able to control or materially to
influence the policy of the company; and

 (d) the circumstances under which a person acquired
or disposed of or becomes entitled to acquire or
dispose of shares in, debentures of or participatory
interests issued by the company;

 “officer or agent”, in relation to a corporation, includes—

 (a) a director, banker, advocate or auditor of the
corporation;

 (b) a person who at any time—

 (i) has been a person referred to in paragraph (a);
or

 (ii) has been otherwise employed or appointed by
the corporation;

Companies 519

 (c) a person who—

 (i) has in his possession any property of the corporation;

 (ii) is indebted to the corporation; or

 (iii) is capable of giving information concerning the
promotion, formation, trading, dealings, affairs
or property of the corporation; and

 (d) where there are reasonable grounds for suspecting or believing
that a person is a person referred to in paragraph (c),
that person.

 (7) Any person who with intent to defeat the purposes of this
section, or to delay or obstruct the carrying out of an investigation
under this section—

 (a) destroys or alters any book, document or record of or
relating to a company or foreign company declared
under this section; or

 (b) sends or attempts to send or conspires with any other
person to send out of Malaysia any such book, document
or record or any property of any description belonging to
or in the disposition or under the control of the company
or foreign company,

commits an offence and shall, on conviction, be liable to a term of
imprisonment not exceeding five years or to a fine not exceeding
one million ringgit or to both.

Subdivision 2
General Offences

False and misleading statements

591. (1) Every corporation which advertises, circulates or
publishes any return, report, certificate, financial statements or
other document required by or for the purposes of this Act makes
or authorizes the making of a statement false or misleading in
any material particular knowing it to be false or misleading or
intentionally omits or authorizes the omission or accession of

Laws of Malaysia520 Act 777

any matter or thing which makes the document misleading in a
material respect and every officer of the corporation who knowingly
authorizes, directs or consents to the advertising, circulation or
publication commits an offence, and shall, on conviction—

 (a) in the case of a corporation, be liable to a fine not
exceeding three million ringgit; and

 (b) in the case of officer of the corporation, be liable to
imprisonment for a term not exceeding ten years or a
fine not exceeding three million ringgit or to both.

 (2) Every person who in any return, report, certificate, financial
statement or other document required by or for the purposes of
this Act—

 (a) makes or authorizes the making of a statement false or
misleading in any material particular knowing it to be
false; or

 (b) misleads or intentionally omits or authorizes the omission
or accession of any matter or thing making the document
misleading in a material respect,

commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding ten years or to a fine not
exceeding three million ringgit or to both.

 (3) If a person at a meeting votes in favour of the making of
a statement referred to in this section knowing it to be false, he
shall be deemed to have authorized the making of that statement.

False reports

592. (1) An officer of a corporation who, with intent to deceive,
makes or furnishes or knowingly and wilfully authorizes or permits
the making or furnishing of, any false or misleading statement
or report to—

 (a) a director, auditor, member, debenture holder or trustee
for debenture holders of the corporation;

Companies 521

 (b) in the case of a corporation that is a subsidiary, an auditor
of the holding company;

 (c) a stock exchange whether in or outside Malaysia or an
officer of the stock exchange; or

 (d) the Securities Commission,

relating to the affairs of the corporation commits an offence and
shall, on conviction, be liable to imprisonment for a term not
exceeding ten years or a fine not exceeding three million ringgit
or to both.

 (2) In subsection (1), “officer”, in addition to the definition
under section 2, includes a person who at the time the offence
was committed is an officer of the corporation.

False report or statement to the Registrar

593. A person who makes or furnishes, or knowingly authorizes
or permits the making or furnishing of, any false or misleading
statement, information or report to the Registrar relating to—

 (a) the affairs of a corporation;

 (b) any matter or thing required by the Registrar for the
implementation of this Act; or

 (c) the enforcement of this Act,

commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding ten years or to a fine not
exceeding three million ringgit or to both.

Fraudulently inducing persons to invest money

594. (1) Any person who, by any statement, promise or forecast
which he knows to be misleading, false or deceptive or by any
dishonest concealment of material facts or by the reckless making

Laws of Malaysia522 Act 777

of any statement, promise or forecast which is misleading, false
or deceptive, induces or attempts to induce another person to
enter into or offer to enter into—

 (a) any agreement for or with a view of acquiring, disposing
of, subscribing in or underwriting marketable securities or
lending or depositing money to or with any corporation;
or

 (b) any agreement the purpose or pretended purpose of which
is to secure a profit to any of the parties from the yield
of marketable securities or by reference to fluctuations
in the value of marketable securities,

commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding ten years or to a fine not
exceeding three million ringgit or to both.

 (2) Every officer or agent of any corporation by any deceitful
means or false promise and with intent to defraud, causes or procures
any money to be paid or any chattel or marketable security to be
delivered to that corporation or to himself or any other person for
the use of benefit or on account of that corporation commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding ten years or to a fine not exceeding three
million ringgit or to both.

 (3) The opinion of any properly qualified auditor or accountant
as to the financial position of any company at any time or during
any period in respect of which auditor or accountant has made
an audit or examination of the affairs of the company according
to recognized audit practice shall be admissible during the
proceedings as evidence, either for the prosecution or for the
defence of the financial position of the company at that time or
during that period notwithstanding that the opinion is based in
whole or in part on book-entries, documents or vouchers or on
written or verbal statements by other persons.

Fraud by officer

595. (1) Every officer of a company who—

 (a) by deceitful or fraudulent or dishonest means or by means
of any other fraud induced any person to give credit to
the company;

Companies 523

 (b) with intent to defraud creditors of the company, has made
or caused to be made any gift or transfer of or charge
on, or has caused or connived at the levying of any
execution against, the property of the company; or

 (c) with intent to defraud creditors of the company, has
concealed or removed any part of the property of the
company since or within two months before the date of
any unsatisfied judgment or order for payment of money
obtained against the company,

commits an offence and shall, on conviction, be liable to
imprisonment for a term not exceeding ten years or to a fine not
exceeding three million ringgit or to both.

 (2) In subsection (1), “officer”, in addition to the definition
under section 2, includes a person who at the time the offence
was committed is an officer of the corporation.

Restriction on offering shares, debentures, etc., for subscription
or purchase

596. (1) A person shall not, whether by appointment or otherwise,
go from place to place—

 (a) offering shares for subscription or purchase to the public
or any member of the public; or

 (b) seeking or receiving offers to subscribe for or to purchase
shares from the public or from any member of the public.

 (2) Subsection (1) shall not apply—

 (a) to an offer for subscription or purchase or invitation to
subscribe for or purchase or recommendation to which
the Capital Markets and Services Act 2007 applies; and

 (b) in the case of shares of any corporation—

 (i) notice of intention to apply for exemption from
subsection (1) in the form and manner as determined
by the Registrar has been advertised in one widely

Laws of Malaysia524 Act 777

circulated newspaper in Malaysia in the national
language and one widely circulated newspaper in
Malaysia in the English language; and

 (ii) the exemption from the application of subsection (1)
has been obtained from the Minister upon the
recommendation of the Registrar.

 (3) For the purposes of subsection (1), a person shall not in
relation to a corporation be regarded as not being a member of the
public by reasons only that he is a shareholder in the corporation
or a purchaser of goods from the corporation.

 (4) A person shall not make any oral invitation or offer to
the public or to any member of the public to subscribe for or to
purchase shares.

 (5) A person shall not make an offer to purchase any shares to
the public or to any member of the public who is not a person
whose ordinary business is to buy or sell shares, whether as
principal or agent.

 (6) Subsection (5) shall not apply—

 (a) where the shares to which the offer relates are shares
of a class which are quoted on, or in respect of which
permission to deal has been granted by a stock exchange
and the offer states and specifies the stock exchange;

 (b) where the shares to which the offer relates are shares
which a corporation has allotted or agreed to allot with
a view to shares being offered for sale to the public and
the offer is accompanied with a document that complies
with this Act and any other written law relating to
prospectus;

 (c) to any application for shares in or debentures of a
corporation or to any invitation to deposit money with or
lend money to a corporation which is issued, circulated,
distributed or made subject to and in accordance with
Subdivision 9 of Division 1 of Part III or in accordance
with the provisions of Division 3 of Part VI of the
Capital Market and Services Act 2007;

Companies 525

 (d) where the offer relates to an interest to which the Interest
Schemes Act 2016 applies and is accompanied with a
statement in writing as required by that Act;

 (e) to deposits or loans to a corporation referred to in
section 158; or

 (f) to any advice as to the price at which a management
company is prepared to buy or sell any interest to which
the Interest Schemes Act 2016 applies, given or sent by
the management company to any person to whom the
management company has given or sent a statement in
writing relating to that interest which complies with
the Interest Schemes Act 2016 within the period of six
months immediately preceding the giving or sending of
the advice.

 (7) Every person who acts, or incites, causes or procures any
person to act, in contravention of this section commits an offence
and shall, on conviction, be liable to imprisonment for a term
not exceeding five years or to a fine not exceeding three million
ringgit or to both.

 (8) Where a person convicted of an offence under this section
is a corporation, every officer concerned in the management of
the corporation shall be guilty of a similar offence unless he
proves that the act constituting the offence took place without
his knowledge or consent.

 (9) Where any person is convicted of having made an offer
in contravention of this section, the Court before which he is
convicted may order that any contract made as a result of the
offer shall be void and may give such consequential directions
as the Court thinks proper for the repayment of any money or
the retransfer of any shares.

 (10) In this section, “shares” means shares of a corporation
whether a corporation in existence or to be formed and includes
debentures and units and without affecting the generality of the
expression “debentures”, all such documents, including those
referred to as “bonds”, as confer or purport to confer on the holder
any claim against a corporation, whether the claim is present or

Laws of Malaysia526 Act 777

future or certain or contingent or ascertained or sounding only
in damages and also includes any interest as referred to in the
Interest Schemes Act 2016.

 (11) In this section, a reference to an offer or offering of shares
for subscription or purchase or for purchase shall be construed as
including an offer of shares by way of barter or exchange and a
reference to an offer of shares shall subject to subsection (12),
be construed as including an offer by means of broadcasting,
television or cinematograph.

 (12) If an offer is made by means of broadcasting, television
or cinematograph, the prospectus by which the offer is required to
be accompanied under this section shall be deemed to accompany
the offer if—

 (a) the prospectus is prepared by the person on whose behalf
the offer is made;

 (b) the public are informed at the same time and by the same
means as that by which the offer is made that a copy of
the prospectus will be supplied on request being made
at a specified address;

 (c) if request for a copy of a prospectus is made at that
address within thirty days from the offer was made,
the person making the request is supplied with a copy
within seven days from the request was made; and

 (d) the offer contains no more information or matter than the
information or matter referred to in paragraph 163(1)(a).

Restriction on the use of words “Limited”, “Berhad” and
“Sendirian”

597. (1) Any person carrying on business under any name or
title of which “Berhad” or “Bhd.” or “Limited” or “Ltd.” is the
final word or abbreviation, the person, unless duly incorporated
with limited liability, commits an offence and shall, on conviction,
be liable to imprisonment for a term not exceeding ten years or
to a fine not exceeding three million ringgit or to both.

Companies 527

 (2) A company shall not use the word “Sendirian” or “Sdn.” as
part of its name if the company does not fulfil the requirements
required by this Act to be fulfilled by private companies.

 (3) A company and every officer of a company who contravene
this section commit an offence and shall, on conviction, be liable
to imprisonment for a term not exceeding ten years or to a fine
not exceeding three million ringgit or to both.

  (4) Subject to Division 9 of Part II and for the purpose of this
section, “carrying on business” includes the use of any name or
title of which “Berhad” or ““Bhd.” or “Limited” or “Ltd.” or
the word “Sendirian” or “Sdn.” is part of the name or title in
any documents, books or publication.

Prosecution of delinquent officers of company

598. (1) This section applies where a moratorium has been
obtained for a company or the approval of a voluntary arrangement
in relation to a company has taken effect.

 (2) If it appears to the nominee or supervisor that any past or
present officer of the company has been guilty of any offence
in connection with the moratorium or voluntary arrangement, as
the case may be, for which he is criminally liable, the nominee
or supervisor shall within fourteen days—

 (a) report the matter to the Registrar; and

 (b) provide the Registrar with such information and give the
Registrar such access to and facilities for inspecting
and taking copies of documents, being information or
documents in the possession or under the control of
the nominee or supervisor and relating to the matter in
question, as the Registrar requires.

 (3) If a report is made to the Registrar under subsection (2),
the Registrar may require an investigation to be carried out for
the purpose of investigating the matter reported to the Registrar
and such other matters relating to the affairs of the company.

 (4) If the Registrar or any person institutes criminal proceedings
following any report under subsection (2), the nominee or supervisor,

Laws of Malaysia528 Act 777

and every past and present officer and agent of the company shall
give the Registrar all assistance in connection with the criminal
proceedings which the past and present officer and agent of the
company is reasonably able to give.

 (5) Any person who contravenes subsection (2) commits an
offence and shall, on conviction, be liable to imprisonment for
a term not exceeding one year or to a fine not exceeding five
hundred thousand ringgit or to both.

 (6) For the purposes of this section, “agent” includes any
banker or solicitor of the company and any person employed
by the company as auditor, whether that person is or is not an
officer of the company.

Division 3
General Provisions

Evidentiary value of copies certified by Registrar

599. (1) A copy or extract from any document filed or lodged
at the office of the Registrar certified to be a true copy or extract
signed and sealed by the Registrar shall be admissible in evidence
in any proceedings as of equal validity with the original document.

 (2) The reference in subsection (1) to a document includes,
if a reproduction or transparency of that document has been
incorporated with a register kept by the Registrar, a reference to
that reproduction or transparency.

Evidence of statutory requirements

600. In any legal proceedings—

 (a) a certificate signed and sealed by the Registrar that at a
date or during a period specified in the certificate, no
company was registered under this Act or corresponding
previous written law by a name specified in the certificate
shall be admissible as prima facie evidence that at
the date or during that period, as the case may be, no
company was registered by that name under this Act or
corresponding previous written law; and

Companies 529

 (b) a certificate signed and sealed by the Registrar that a
requirement of this Act specified in the certificate—

 (i) had or had not been complied with at a date or
within a period specified in the certificate; or

 (ii) had been complied with at a date specified in the
certificate but not before that date,

shall be admissible as prima facie evidence of matters specified
in the certificate.

Registers and inspection of register

601. (1) Subject to this Act, the Registrar shall keep registers as
the Registrar considers necessary in such forms as the Registrar
thinks fit.

 (2) Any person may, on payment of the prescribed fee—

 (a) inspect any document filed or lodged with the Registrar not
being a document that has been destroyed or otherwise
disposed of under section 603;

 (b) require a notification of the incorporation of any company
or any other certificate issued under this Act; or

 (c) require a copy or extract from any document that he is
entitled to inspect under paragraph (a) or any notification
or certificate referred to in paragraph (b) to be given
and certified by the Registrar.

 (3) If a reproduction or transparency of a document, notification
or certificate is produced for inspection, a person is not entitled
to require the reproduction of the original of that document or
certificate under paragraph (2)(a).

 (4) The reference in paragraph (2)(c) to a document or certificate
includes, if a reproduction or transparency of that document
or certificate has been incorporated with a register kept by the
Registrar, a reference to that reproduction or transparency and
if such a reproduction or transparency has been incorporated, a
person is not entitled under that paragraph to a copy or extract
from the original of that document or certificate.

Laws of Malaysia530 Act 777

Rectification of registers

602. (1) A person may apply to the Registrar for the rectification
of a register if an entry in the register—

 (a) contains any matter contrary to law;

 (b) contains any matter that, in a material particular, is false
or misleading in the form or context in which the matter
is included;

 (c) by reason of an omission or misdescription has not been
duly completed; or

 (d) is incorrect or erroneous.

 (2) Upon receipt of the application under subsection (1), in
order for the Registrar to decide whether to approve or refuse
the application, the Registrar may—

 (a) require the applicant to produce any document or to
furnish any information as the Registrar thinks necessary
in order for the Registrar to rectify the entry; or

 (b) require the applicant to give notice of that application to
such other person as the Registrar may specify, being
a person who appears to the Registrar to be concerned
or to have an interest in the business.

 (3) Notwithstanding subsection (1), the Registrar may refuse
any application if the error, mistake or omission does not arise in
the ordinary course of the discharge of the duties of the Registrar.

 (4) Any person aggrieved with the decision of the Registrar
under this section may appeal to the Court.

 (5) Any order made by the Court shall be lodged with the
Registrar and where the Court makes an order of rectification,
the Registrar shall rectify the register accordingly on receipt of
the order.

Companies 531

 (6) The Registrar may, without an application being made under
subsection (1), rectify the register if, in his view, an entry—

 (a) contains any matter contrary to law;

 (b) contains any matter that, in a material particular, is false
or misleading in the form or context in which the matter
is included;

 (c) by reason of an omission or misdescription has not been
duly completed; or

 (d) is incorrect or erroneous.

Disposal of old records

603. The Registrar may, if in his opinion it is no longer necessary
or desirable to retain the old records, destroy or give to the
National Archives—

 (a) in the case of a corporation—

 (i) any return of allotment of shares for cash which
has been lodged or filed for not less than seven
years;

 (ii) any annual return or financial statement that has
been lodged or filed for not less than seven years
or any document creating or evidencing a charge
or the complete or partial satisfaction of a charge
where a memorandum of satisfaction of a charge
has been registered for not less than seven years;
or

 (iii) any other document, other than the constitution
or any other document affecting the corporation,
which has been lodged, filed or registered for not
less than seven years;

 (b) in the case of a corporation that has been dissolved or
has ceased to be registered for not less than seven years,
any document lodged, filed or registered; or

Laws of Malaysia532 Act 777

 (c) any document which has been incorporated in a register
kept by the Registrar in whatever form.

Electronic lodgement of documents

604. (1) The Registrar may provide a service for the electronic
lodgement of documents required by this Act to be lodged with
the Registrar.

 (2) A document electronically lodged under this section shall
be deemed to have satisfied the requirement for lodgement if the
document is communicated or transmitted to the Registrar in such
manner as may be determined by the Registrar.

 (3) A document that is required to be stamped, signed or
sealed shall, if the document is to be electronically lodged, be
certified to be true copy or authenticated in such manner as may
be determined by the Registrar.

 (4) Where a document that is required to be signed and attested
under this Act is to be filed electronically, the requirement for
attestation of the signature does not apply.

 (5) If a document is electronically lodged with the Registrar,
the Registrar shall not be liable for any loss or damage suffered
by any person by reason of any error or omission of whatever
nature or however arising appearing in any document obtained
by any person under the service referred to in subsection (1),
if such error or omission occurred or arose as a result of any
defect or breakdown in the service or in the equipment used for
the provision of the service or without the knowledge of the
Registrar.

Issuing document electronically

605. The Registrar may, by electronic means, issue a document
which is to be issued by the Registrar under this Act.

Companies 533

Electronic information, etc., certified by Registrar admissible
in evidence

606. Any information, document, a copy or extract from any
document electronically lodged with the Registrar or issued by
the Registrar shall be a true extract from any documents lodged
with or submitted to the Registrar under section 604 or issued
by the Registrar under section 605 shall be admissible as prima
facie evidence of matters specified in that information, document,
copy or extract.

Enforcement of duty to make returns

607. (1) If a corporation or person, having made default in
complying with—

 (a) any provision of this Act or any other law which requires
the lodging or filing in any manner with the Registrar
or Official Receiver of any return, account or other
document or the giving of notice to the Registrar or
Official Receiver of any matter; or

 (b) any request of the Registrar or the Official Receiver to
amend or complete and re-submit any document or to
submit a fresh document,

fails to make good the default within fourteen days from the
service on the corporation or person of a notice requiring it to
make good the default to be done, the Court or any Sessions
Court may, on an application by any member or creditor of the
corporation or by the Registrar or Official Receiver, make an
order directing the corporation and any officer of the corporation
or that person to make good the default within such time as is
specified in the order.

 (2) The order may provide that all costs incidental to the
application shall be borne by the corporation or by any officers
of the corporation or the person responsible for the default.

 (3) Nothing in this section shall limit the operation of any
written law imposing penalties on a corporation or its officers
or that person in respect of any such default.

Laws of Malaysia534 Act 777

Relodging of lost or destroyed documents

608. (1) If the Registrar has reasonable cause to believe that a
document in relation to a corporation which originally is lodged
under this Act has been lost or destroyed, the Registrar may by
notice in writing direct the corporation to relodge a copy of the
document in the manner and form as may be determined by the
Registrar.

 (2) The corporation or any officer of the corporation shall
comply with the direction of the Registrar within fourteen days
from the service of the notice under subsection (1) or such longer
period as the Registrar may allow.

 (3) Upon the relodgement under subsection (1), the copy of
the document shall, for all purposes, have the same force and
effect as the originally lodged document.

 (4) No fee shall be payable upon the relodging of a document
under this section.

 (5) The corporation and any officer of the corporation who fails
to comply with the direction of the Registrar under subsection (1)
commit an offence and shall, on conviction, be liable to a fine
not exceeding ten thousand ringgit and in the case of a continuing
offence, to a further fine not exceeding five hundred ringgit for
each day during which the offence continues after conviction.

Time for lodging documents and extension of time

609. (1) If a document is required to be lodged under this Act
and the period of time for the document to be lodged is not
prescribed, the document shall be lodged within thirty days or,
in the case of a document required to be lodged by a foreign
company, within such further period as the Registrar in special
circumstances allows, after the happening of the event to which
the document relates.

 (2) The Registrar shall have the power and upon payment of
the prescribed fee, to extend any period of time relating to the
lodgement of any document required to be lodged under this Act
to such further period as the Registrar deems just and expedient,
and the Registrar may require additional information and impose
any terms and conditions as the Registrar deems fit.

Companies 535

Particulars and manner of information required to be lodged
under this Act

610. (1) In addition to the requirements under this Act, if a
document is required to be lodged under this Act, the Registrar
shall have the power to determine the particulars, form and manner
of information contained in such document.

 (2) In determining whether a document is to be accepted for
lodgement under this Act, the Registrar may require a person
who submits the document to—

 (a) comply with the particulars, form or manner of lodgement;
or

 (b) produce other document or information as the Registrar
thinks necessary.

Time for compliance with the requirements under this Act

611. If any action or document is required to be in compliance
with this Act and the period for compliance is not prescribed,
the time to comply shall be within thirty days from the action
or document is required to be complied with.

Methods of communication between company and members

612. (1) The communication between a company and its
members on matters relating to meetings and resolutions, supply
of information or documents or otherwise for the purpose of
complying with this Act, may be—

 (a) in hard copy;

 (b) in electronic form; or

 (c) by other methods agreed between the company and the
members.

 (2) A communication in hard copy for matters specified in
subsection (1) shall be valid if—

 (a) addressed to the company at the registered office; or

Laws of Malaysia536 Act 777

 (b) addressed to the members at the last known address.

 (3) A communication in electronic form for matters specified
in subsection (1) shall be valid if—

 (a) addressed to the company at an address provided for that
purpose; or

 (b) addressed to the members at the last known address
provided for that purpose.

 (4) Notwithstanding subsections (2) and (3) and subject to the
constitution, the company may use any method of communication
specified in subsection (1) and determine the manner and procedures
to be adopted.

Power to make regulations

613. (1) The Minister may make regulations for or with respect
to—

 (a) the fees and charges under this Act, which include exempt
payment of any fees and charges on such terms and
conditions as the Minister thinks fit;

 (b) any matters relating to any practicing certificate issued
under section 241 including but not limited to renewal,
revocation and suspension;

 (c) the manner in which the Registrar may deal with the
property vested in him under section 557; and

 (d) all matters and things required or authorized by this Act
to be prescribed or provided, for the carrying out of, or
giving full effect to, the provisions of this Act.

 (2) Any subsidiary legislation made under this Act may
provide for any act or omission in contravention of the subsidiary
legislation and may provide for penalties of a fine not exceeding
five hundred thousand ringgit or imprisonment for a term not
exceeding three years or to both.

Companies 537

Power to impose terms and conditions

614. In exercising his powers to approve any application or any
issuance of licence under this Act, the Minister may impose any
terms and conditions as he thinks fit.

Exemption

615. (1) The Minister may, upon the recommendation of the
Commission, by order exempt any person, corporation or class
of corporations from all or any of the provisions of this Act.

 (2) In exercising his power under this section, the Minister
may—

 (a) form a committee to assist him in reaching the decision;

 (b) request information or documentation or personal
representation from any person, the corporation or class
of corporations in order for him to be satisfied with the
recommendation; and

 (c) impose any terms and conditions as he thinks fit.

Rules

616. The Rules Committee constituted under the Courts of
Judicature Act 1964 [Act 91] may, subject to and in accordance
with the provisions of that Act relating to the making of rules,
make rules—

 (a) with respect to the proceedings and the practice and
procedure of the Court under this Act;

 (b) with respect to any matter or thing which is by this Act
required or permitted to be prescribed by rules;

 (c) without limiting the generality of the provisions of this
section, with respect to Court fees and costs and with
respect to rules as to meetings ordered by the Court;
and

 (d) generally with respect to the winding up of companies.

Laws of Malaysia538 Act 777

Power to amend Schedules

617. The Minister may, by order published in the Gazette, vary,
delete, add to, substitute or otherwise amend the Schedules to
this Act.

Division 4
Saving and Transitional

Transitional provisions relating to abolition of nominal value

618. (1) Where a share is issued before the commencement of
section 74—

 (a) the amount paid on the share shall be the sum of all
amounts paid to the company at any time for the share,
but not including any premium; and

 (b) the amount unpaid on the share shall be the difference
between the price of issue of the share, but not including
any premium, and the amount paid on the share.

 (2) Upon the commencement of section 74, any amount standing
to the credit of a company’s share premium account and capital
redemption reserve shall become part of the company’s share
capital.

 (3) Notwithstanding subsection (2), a company may, within
twenty-four months upon the commencement of section 74, use
the amount standing to the credit of its share premium account
to—

 (a) provide for the premium payable on redemption of
debentures or redeemable preference shares issued before
the commencement of section 74;

 (b) write off—

 (i) the preliminary expenses of the company incurred
before the commencement of section 74; or

Companies 539

 (ii) expenses incurred, or commissions or brokerages
paid or discounts allowed, before or upon the
commencement of section 74, for any duty, fee
or tax payable on or in connection with any issue
of shares of the company;

 (c) pay up, under an agreement made before the commencement
of section 74, shares which were unissued before that date
and which are to be issued upon that date to members
of the company as fully paid bonus shares;

 (d) pay up in whole or in part the balance unpaid on shares
issued before the commencement of section 74 to members
of the company; or

 (e) pay dividends declared before the commencement of
section 74, if such dividends are satisfied by the issue
of shares to members of the company.

 (4) Notwithstanding subsection (2), a company may, within
twenty-four months upon the commencement of section 74, use
the amount standing to the credit of its capital redemption reserve
account to pay up shares which were unissued before that date
and which are to be issued to members of the company as fully
paid bonus shares.

 (5)  Notwithstanding subsection (2), any company carrying out
the business of insurance or takaful in Malaysia immediately before
the commencement of section 74, may apply the amount standing
to the credit of its share premium account immediately before
such date by appropriation or transfer to any fund established
and maintained under the Financial Services Act 2013 or Islamic
Financial Services Act 2013.

 (6)  Notwithstanding subsection (1), the liability of a shareholder
for calls in respect of money unpaid on shares issued before the
commencement of section 74, whether on account of the par
value of the shares or by way of premium, shall not be affected
by the shares ceasing to have a par value.

 (7) For the purpose of interpreting and applying, upon the
commencement of section 74, a contract, including the constitution

Laws of Malaysia540 Act 777

of the company, entered into before such date or a trust deed or
other document executed before such date—

 (a) a reference to the par or nominal value of a share shall
be a reference to—

 (i) if the share is issued before such date, the par or
nominal value of the share immediately before
such date;

 (ii) if the share is issued upon such date but shares of
the same class were on issue immediately before
such date, the par or nominal value that the share
would have had if it had been issued then; or

 (iii) if the share is issued upon such date and shares of
the same class were not on issue immediately before
such date, the par or nominal value determined
by the directors,

  and a reference to share premium shall be construed as
a reference to any residual share capital in relation to
the share;

 (b) a reference to a right to a return of capital on a share
shall be construed as a reference to a right to a return
of capital of a value equal to the amount paid in respect
of the share’s par or nominal value; and

 (c) a reference to the aggregate par or nominal value of the
company’s issued share capital shall be construed as a
reference to that aggregate as it existed immediately
before that date as—

 (i) increased to take account of the par or nominal
value as defined in paragraph (a) of any shares
issued upon that date; and

 (ii) reduced to take account of the par or nominal
value as defined in paragraph (a) of any shares
cancelled upon that date.

Companies 541

 (8) A company may file with the Registrar a notice of its share
capital—

 (a) at any time before—

 (i) the date it is required to lodge its annual return
after the end of the period referred to under
subsection (3); or

 (ii) the expiry of 180 days after the end of the period
referred to under subsection (3),

  whichever is the earlier; or

 (b) within such longer period as the Registrar may, if he
thinks fit in the circumstances of the case, allow.

 (9) Notwithstanding subsection (8), a company may file with
the Registrar a notice of its share capital earlier than the periods
referred to in paragraph (8)(a) if the company—

 (a) has no amount standing to the credit of its share premium
account; or

 (b) has utilised the amount standing to the credit of its share
premium accounts under subsection (3).

 (10) Unless a company has filed a notice of its share capital
under subsection (8) or (9), the Registrar may for the purposes
of the records maintained by the Registrar adopt, as the share
capital of the company, the aggregate value of the shares
issued by the company as that value appears in the Registrar’s
records immediately after the end of the period referred to in
paragraph (8)(a).

General transitional provisions

619. (1) Any person appointed under the corresponding previous
written law and holding office at the commencement of this Act,
shall remain in office as if he had been appointed under this Act.

Laws of Malaysia542 Act 777

 (2) Any act made, executed, issued or passed under the
corresponding previous written law and in force and operative at
the commencement of this Act, shall so far as it could have been
made, executed, issued or passed, under this Act have effect as
if made, executed, issued or passed under this Act.

 (3) The memorandum of association and articles of association of
an existing company in force and operative at the commencement
of this Act, and the provisions of Table A under the Fourth
Schedule of the Companies Act 1965 if adopted as all or part of
the articles of association of a company at the commencement of
this Act, shall have effect as if made or adopted under this Act,
unless otherwise resolved by the company.

 (4) All proceedings, judicial or otherwise commenced before and
pending immediately before the commencement of this Act under
the Companies Act 1965 shall be deemed to have commenced
and may be continued under that Act.

 (5) A company or foreign company registered under any
corresponding previous written law shall be deemed to have been
registered under this Act and this Act shall extend and apply to
the company accordingly and any reference to this Act, express
or implied, to the date of registration of the company shall be
construed as a reference to the date upon which the company
was registered under the corresponding previous written law.

 (6) A company which is in the course of winding up immediately
before the commencement of this Act shall continue to be wound
up under the relevant provisions in the Companies Act 1965.

 (7) Section 308 of the Companies Act 1965 shall continue to
apply to a company which is in the course of being struck off the
register by the Registrar immediately before the commencement
of this Act.

 (8) The Minister may direct the Commission to issue guidelines,
circulars or practice notes to provide for any matters in force
before the commencement of this Act to be dealt with in such
manner to bring them in conformity with this Act.

Companies 543

Repeal and savings

620. (1) The Companies Act 1965 is repealed.

 (2) Notwithstanding subsection (1)—

 (a) any fee, charge or any sum paid or unpaid under the
repealed Companies Act 1965 on the date immediately
before the coming into operation of the relevant provision
of this Act shall, in respect of the corresponding period,
be deemed to have been paid or unpaid under the
provisions of this Act;

 (b) any pending application to the Minister or the Registrar
under the Companies Act 1965 immediately before the
commencement of this Act shall be treated as though
this Act has not been enacted; and

 (c) any approval, direction, decision, notification, exemption
and other executive acts, howsoever called, made, given
or done under or in accordance with, or by virtue of the
corresponding provisions of this Act by the Minister, the
Commission or the Registrar, and shall continue to remain
in full force and effect in relation to the persons to whom
the approval, direction, decision, notification, exemption
and other executive acts applied until amended, repealed,
rescinded, revoked or replaced under, in accordance with
or by virtue of, the corresponding provisions of this Act.

 (3) Nothing in the Companies Act 1965 or this Act shall affect
any person’s liability to be prosecuted or punished for offences
or breaches committed before the commencement of this Act or
any proceeding brought, sentence imposed or action taken before
that day in respect of such offence or breach.

 (4) Any right, privilege, obligation or liability acquired, accrued
or incurred before the effective date or any legal proceedings,
remedy or investigation in respect of such right, privilege,
obligation or liability shall not be affected by this Act and shall
continue to remain in force as if this Act has not been enacted.

Laws of Malaysia544 Act 777

First schedule

[Section 159]

FORM AND CONTENT OF PROSPECTUS

Part I

General

1. A prospectus shall be printed in a size not smaller than the type known
as eight point Times unless the Registrar, before the issuing, advertising,
circulating or distributing of the prospectus in Malaysia, certifies in writing
that the type and size of letters are legible and satisfactory.

2. A prospectus shall be dated and that date shall, unless the contrary is
proved, be taken as the date of issue of the prospectus.

3. To state that a copy of the prospectus has been lodged with and registered
by the Registrar.

4. Immediately after the statement under paragraph 3 is made, the prospectus
shall state that the Registrar takes no responsibility as to the contents of the
prospectus.

5. To state that no shares or debentures or that no shares and debentures, as
the case may be, shall be allotted on the basis of the prospectus later than six
months after the date of the issue of the prospectus, unless otherwise specified
by the Registrar.

6. If a prospectus contains any statement made by an expert whose consent
is required under section 160, the prospectus shall state the date on which the
statement, report, memorandum or valuation was made and whether or not it
was prepared by the expert for incorporation in the prospectus.

7. A prospectus shall not contain the name of any person as a trustee for
debenture holders or as an auditor or a banker or an advocate of the corporation
or proposed corporation or for or in relation to the issue or proposed issue of
shares or debentures unless that person has consented in writing before the
issue of the prospectus to act in that capacity in relation to the prospectus
and, in the case of a company or proposed company, a copy verified in a
manner determined by the Registrar has been lodged with the Registrar.

8. In addition to paragraph 7, where the prospectus offers shares in or
debentures of a foreign company incorporated or to be incorporated, the
prospectus shall state the particulars in relation to—

 (a) the instrument constituting or defining the constitution of the company;

 (b) the enactments or provisions having the force of an enactment by or
under which the incorporation of the company was effected or is to
be effected;

Companies 545

 (c) an address in Malaysia where the instrument, enactments or provisions
or certified copies may be inspected;

 (d) the date on which and the place where the company was or is to be
incorporated; and

 (e) whether the company has established a place of business in Malaysia
and, if so, the address of its principal office in Malaysia.

9. The matters stated in a prospectus must be within the knowledge of the
directors, promoters, principal advisers, auditors, advocates, valuers and other
professional advisers or experts or any other persons named in the prospectus,
and the following should be considered by the company:

 (a) the nature of the business of the company;

 (b) the persons likely to consider acquiring shares or debentures;

 (c) the fact that certain matters may reasonably be expected to be within
the knowledge of professional advisers whom potential investors may
reasonably expect to consult; and

 (d) whether the persons to whom an issue of, offer for subscription or
purchase of, or invitation to subscribe for or purchase, securities is
to be made are the holders of securities in the issuer and, if they
are, to what extent relevant information has previously been given
to them by the issuer under any law, if applicable.

10. Full accountability for the accuracy of all information in the prospectus
and the responsibility to ensure that there is no omission of facts which
would make any of the statements misleading, remains with the promoters or
directors of the issuer or any other person who is a party to the preparation
of the prospectus or any of its relevant portions.

11. For the purposes as to form and content of a prospectus, the company
and every person named in the prospectus shall comply with any guidelines
or furnish any information or documents as specified by the Registrar.

Part II

Matters to be stated

12. The number of founder or management or deferred shares, if any, and
the nature and extent of the interest of the holders of those shares in the
property and profits of the company.

13. The number of shares, if any, fixed by the constitution as the qualification
of a director, and any provision in the constitution as to the payment to the
directors.

14. The names, descriptions and addresses of all the directors or proposed
directors.

Laws of Malaysia546 Act 777

15. Where the prospectus relates to shares, particulars as to—

 (a) the minimum amount which, in the opinion of the directors, must be
raised by the issue of those shares in order to provide the sums, or,
if any part of the sum is to be defrayed in any other manner, the
balance of the sums, required to be provided in respect of each of—

 (i) the purchase price of any property purchased or to be
purchased which is to be defrayed in whole or in part
out of the proceeds of the issue;

 (ii) any preliminary expenses payable by the company, and any
commission so payable to any person in consideration
of his agreeing to subscribe for, or of his procuring or
agreeing to procure subscriptions for, any shares in the
company;

 (iii) the repayment of any money borrowed by the company in
respect of any of the foregoing matters; and

 (b) the amounts to be provided in respect of the matters aforesaid otherwise
than out of the proceeds of the issue and the sources out of which
those amounts are to be provided.

16. The nature of the company’s business and the names of all corporations
which are by virtue of section 7 deemed to be related to the company.

17. The time of the opening of the subscription lists.

18. The amount payable on application and allotment on each share or where
that amount may vary during the currency of the offer, the basis of calculation
of the amount so payable and, in the case of a second or subsequent offer of
shares, the number, description and amount offered for subscription on each
previous allotment made within the two preceding years, the number actually
allotted, and the amount, if any, paid on the shares so allotted.

19. The number, description and amount of any shares in or debentures of
the company which any person has, or is entitled to be given, an option to
subscribe for, together with the following particulars of the option:

 (a) the period during which the option is exercisable;

 (b) the price to be paid for shares or debentures subscribed for under the
option;

 (c) the consideration, if any, given or to be given for the option or for
the right to the option; and

 (d) the names and addresses of the persons to whom the option or the
right to the option was given or, if given to existing shareholders
or debenture holders as such, the relevant shares or debentures.

Companies 547

20. The number and amount of shares and debentures which within the two
preceding years have been issued, or agreed to be issued, as fully or partly
paid up otherwise than in cash, and in the latter case the extent to which they
are so paid up, and in either case the consideration for which those shares or
debentures have been issued or are proposed or intended to be issued.

21. (a) With respect to any property to which this paragraph applies—

 (i) the names and addresses of the vendors;

 (ii) the amount payable in cash, shares, or debentures to the vendor
and, where there is more than one separate vendor, or the
corporation is a sub-purchaser, the amount so payable to each
vendor; and

 (iii) short particulars of any transaction relating to the property
completed within the two preceding years in which any vendor
of the property to the corporation or any person who is, or
was at the time of the transaction, a promoter or a director or
proposed director of the corporation had any interest, direct
or indirect.

 (b) The property to which this paragraph applies is property purchased or
acquired by the corporation or by any subsidiary of the corporation
or proposed so to be purchased or acquired, which is to be paid for
wholly or partly out of the proceeds of the issue offered for subscription
by the prospectus or the purchase or acquisition of which has not
been completed at the date of the issue of the prospectus, other
than property the contract for the purchase or acquisition whereof
was entered into in the ordinary course of the corporation’s or the
subsidiary’s business, the contract not being made in contemplation
of the issue nor the issue in consequence of the contract.

22. The amount, if any, paid or payable as purchase money in cash, shares
or debentures for any property to which the last preceding paragraph applies,
specifying the amount, if any, payable for goodwill.

23. The amount, if any, paid within the two preceding years, or payable, as
commission, but not including commission to sub-underwriters, for subscribing
or agreeing to subscribe, or procuring or agreeing to procure subscriptions,
for any shares in or debentures of the corporation, or the rate of any such
commission, and the names of any directors or promoters or experts or proposed
directors who are entitled to receive any such commission and the amount or
rate of the commission.

24. The amount or estimated amount of preliminary expenses and the persons
by whom any of these expenses have been paid or are payable, and the amount
or estimated amount of the expenses of the issue and the persons by whom
any of those expenses have been paid or are payable.

25. Any amount or benefit paid or given within the two preceding years or
intended to be paid or given to any promoter, and the consideration for the
payment or the giving of the benefit.

Laws of Malaysia548 Act 777

26. The dates of, parties to, and general nature of every material contract,
not being a contract entered into in the ordinary course of the business carried
on or intended to be carried on by the corporation or a contract entered into
more than two years before the date of issue of the prospectus.

27. The names and addresses of the auditors of the corporation.

28. Full particulars of the nature and extent of the interest, direct or indirect,
if any, of every director and of every expert in the promotion of, or in the
property proposed to be acquired by, the corporation including other information
on any beneficial interest in shares or debentures of a corporation which is by
virtue of section 7 deemed to be related to that first mentioned corporation.

29. Where the prospectus relates to shares, if the share capital of the
corporation is divided into different classes of shares, the right of voting at
meetings of the corporation conferred by, and the rights in respect of capital
and dividends attached to, the several classes of shares respectively.

30. In the case of a corporation which has been carrying on business, or of
a business which has been carried on, for less than three years, the length
of time during which the business of the corporation or the business to be
acquired, as the case may be, has been carried on.

31. Where the prospectus relates to invitation to the public to deposit money
or lend money to a corporation, the prospectus shall include—

 (a) for the purposes of subsection 158(5), a copy of a written valuation
of the corporation’s interest in the land so mortgaged showing the
nature and extent of the corporation’s interest made not more than
six months before the date of the prospectus by a person competent
and qualified to make the valuation in the place where the land is
situated who is not an officer or employee of the corporation or of
any of its guarantor corporations or of any corporation that by virtue
of section 7 is deemed to be related to either the first-mentioned
corporation or any of its guarantor corporations;

 (b) for the purposes of subsection 158(6), a summary made by the auditor
who has made for inclusion in the prospectus the report required by
Part III of this Schedule; and

 (c) any other additional information as specified by the Registrar.

Part III

Reports to be set out

32. The prospectus shall set out the reports of the approved company auditor
named in the prospectus, the directors or proposed directors of the corporation
and if necessary, any expert named in the prospectus, containing the information
and details as specified by the Registrar.

Companies 549

second schedule

 [Section 189]

STATEMENT IN LIEU OF PROSPECTUS

Part I

Statement in lieu of prospectus lodged for registration
by [insert name of company]

The share capital of the company RM

Divided into Shares of RM
Shares of RM
Shares of RM

each: RM
each: RM
each: RM

Amount, if any, of the above capital which
consists of redeemable preference shares

The date  on or  before  which these
shares are, or are liable, to be redeemed

Names, descriptions and addresses of directors
or proposed directors

If the share capital of the company is divided
into different classes of shares, the right of
voting at meetings of the company conferred
by, and the rights in respect of capital and
dividends attached to, the several classes of
shares respectively

Shares of RM each: RM

Number and amount of shares and debentures
issued within the two years preceding the date
of this statement or proposed or agreed to be
issued as fully or partly paid up otherwise
than in cash

The consideration for the issue or intended
issue of those shares and debentures

1. Shares of RM
paid

fully

2. S h a r e s  u p o n
 RM          per
 credited as paid

which
share

3. Debentures RM
4. Consideration:

Number, description and amount of any
shares or debentures which any person
has or is entitled to be given an option to
subscribe for, or to acquire from a person
to whom they have been allotted or agreed
to be allotted with a view to his offering
them for sale

1. Shares of RM
 debentures

and

Laws of Malaysia550 Act 777

Period during which option is exercisable 2. Until

Price to be paid for shares or debentures
subscribed for or acquired under option

3. RM

Consideration for option or right to option 4. Consideration:

Persons to whom option or right to option
was given or, if given to existing shareholders
or debenture holders as such, the relevant
shares or debentures

5. Names and
addresses

Names and addresses of vendors of property
purchased or acquired, or proposed to be
purchased or acquired by the company
except where the contract for its purchase
or acquisition was entered into in the
ordinary course of the business intended
to be carried on by the company or the
amount of the purchase money is not material

Amount in cash, shares, or debentures payable
to each separate vendor

Amount, if any, paid or payable in cash,
shares or debentures, for any such property,
specifying amount, if any, paid or payable
for goodwill

Total purchase price

Cash

Shares

Debentures

Goodwill

RM

RM

RM

RM

RM

Short particulars of any transaction relating
to any such property which was completed
within the two preceding years and in which
any vendor to the company or any person who
is, or was at the time thereof, a promoter,
director, or proposed director of the company
had any interest direct or indirect

Amount, if any, paid or payable as commission
for subscribing or agreeing to subscribe or
procuring or agreeing to procure subscriptions
for any shares or debentures in the company; or

Amount paid: RM
Amount payable: RM

Companies 551

Rate of the commission per cent

Amount or rate of brokerage

The number of shares, if any, which persons
have agreed for a commission to subscribe
absolutely

Amount or estimated amount of preliminary
expenses

RM

By whom those expenses have been paid
or are payable

Amount paid or intended to be paid to any
promoter

Name of promoter:
Amount: RM

Consideration for the payment Consideration:

Any other value of benefit given or intended
to be given to any promoter

Name of promoter:
Nature and value of
benefit:

Consideration for giving of benefit Consideration:

Dates of, parties to, and general nature of
every material contract, other than contracts
entered into in the ordinary course of the
business intended to be carried on by the
company or entered into more than two
years before the delivery of this statement

Time and place at which the contracts or
copies of the contract or–

 (1) in the case of a contract not reduced
into writing, a memorandum giving
full particulars of the contract; and

 (2) in the case of a contract wholly or
partly in a language other than the
national language or English, a
copy of a certified translation of the
contract in the national language or
English or embodying a translation
in the national language or English
of the parts in a language other than
the national language or English, as
the case may be, may be inspected

Laws of Malaysia552 Act 777

Names and addresses of the auditors of the
company

Full particulars of the nature and extent of the
interest, direct or indirect, of every director
and of every expert, in the promotion of or
in the property proposed to be acquired by
the company, or, where the interest of such a
director or expert consists in being a partner
in a firm or a holder of shares or debentures
in a corporation, the nature and extent of
the interest of the firm or corporation and
where the interest of such a director or such
an expert consists in a holding of shares or
debentures in a corporation, a statement of
the nature and extent of the interest of the
director or expert in the corporation, with a
statement of all sums paid or agreed to be
paid to him or to the firm or corporation in
cash or shares, or otherwise, by any person,
in the case of a director, either to induce
him to become, or to qualify him as, a
director, or otherwise for service rendered
by him or by the firm or corporation in
connection with the promotion or formation
of the company, in the case of an expert,
for services rendered by him or the firm or
corporation in connection with the promotion
or formation of the company. For the purposes
of this paragraph, a director or expert shall
be deemed to have an indirect interest in a
corporation if he has any beneficial interest
in shares or debentures in a corporation
which is by virtue of section 7 deemed to
be related to that first mentioned corporation

And also, in the case of a statement to be
lodged by a private company on becoming
a public company, the following items:

Rates of the dividends, if any, paid by the
company in respect of each class of shares
in the company in each of the five financial
years immediately preceding the date of this
statement or since the incorporation of the
company, whichever period is the shorter

Companies 553

Particulars of the cases in which no dividends
have been paid in respect of any class of
shares in any of these years

Part II

Reports to be set out

1. Where it is proposed to acquire a business, a report by an approved company
auditor, who shall be named in the statement, with respect to—

 (a) the profits or losses of the business in respect of each of the five
financial years immediately preceding the lodging of the statement
with the Registrar; and

 (b) the assets and liabilities of the business at the last date to which the
accounts of the business were made.

2. (1) Where it is proposed to acquire shares in a corporation which by reason
of the acquisition or anything to be done in consequence of the acquisition or in
connection with it will become a subsidiary of the company, a report by an approved
company auditor, who shall be named in the statement, with respect to the profits
and losses and assets and liabilities of the other corporation in accordance with
subparagraph (2) or (3), as the case may be, indicating how the profits or losses of
the other corporation dealt with by the report would, in respect of the shares to be
acquired, have concerned members of the company, and what allowance would have
fallen to be made, in relation to the assets and liabilities so dealt with, for holders of
other shares, if the company had at all material times held the shares to be acquired.

 (2) If the other corporation has no subsidiaries, the report referred to in
subparagraph (1) shall—

 (a) so far as regards profits and losses, deal with the profits or losses of
the other corporation in respect of each of the five financial years
immediately preceding the delivery of the statement to the Registrar;
and

 (b) so far as regards assets and liabilities, deal with the assets and liabilities
of the other corporation at the last date to which the accounts of
the corporation were made.

 (3) If the other corporation has subsidiaries, the report referred to in
subparagraph (1) shall—

 (a) so far as regards profits and losses, deal separately with the other
corporation’s profits or losses as provided by subparagraph (2), and
in addition deal as mentioned earlier either—

 (i) as a whole with the combined profits or losses of its subsidiaries;
or

Laws of Malaysia554 Act 777

 (ii) individually with the profits or losses of each subsidiary, or,
instead of dealing separately with the other corporation’s profits
or losses, deal as aforesaid as a whole with the profits or losses of
the other corporation and with the combined profits or losses of its
subsidiaries; and

 (b) with regards to assets and liabilities, deal separately with the other
corporation’s assets and liabilities as provided by subparagraph (2),
and, in addition, deal as mentioned earlier either—

 (i) as a whole with the combined assets and liabilities of its subsidiaries,
with or without the other corporation’s assets and liabilities; or

 (ii) individually with the assets and liabilities of each subsidiary,

and shall indicate, in respect of the profits or losses and the assets and liabilities of
the subsidiaries, the allowance to be made for persons other than members of the
company.

NOTE—Where a company is not required to furnish any of the reports referred to
in this Part, a statement to that effect giving the reasons of the non-requirement shall
be furnished.

(Signatures of the persons above-named as directors or proposed directors or of their
agents authorized in writing)

Date:

Part III

Provisions applying to Parts I and II of this Schedule

1. In this Schedule, the expression “vendor” includes any person who is a vendor
for the purposes of the First Schedule.

2. If in the case of a business which has been carried on, or of a corporation, which
has been carrying on business, for less than five years, the accounts of the business
or corporation have only been made up in respect of four years, three years, two
years, or one year, Part II of this Schedule shall have effect as if references to four
years, three years, two years, or one year, as the case may be, were substituted for
references to five years.

3. Any report required by Part II of this Schedule shall either indicate by way of
note any adjustments as respects the figures of any profits or losses or assets and
liabilities dealt with by the report which appear to the persons making the report
necessary or shall make those adjustments and indicate that adjustments have been
made.

Companies 555

third schedule

[Section 212]

PROCEEDINGS OF THE BOARD

Chairperson

1. The directors may elect one of their numbers as chairperson of the Board
and determine the period for which he is to hold office.

2. If no chairperson is elected, or if at any meeting of the Board the
chairperson is not present within fifteen minutes after the time appointed for
the commencement of the meeting, the directors present may choose one of
their numbers to be chairperson of the meeting.

Notice of meeting

3. A director or, if requested by a director to do so, a secretary, may convene
a meeting of the Board by giving notice in accordance with paragraph 4.

4. A notice of a meeting of the Board shall be sent to every director who
is in Malaysia, and the notice shall include the date, time and place of the
meeting and the matters to be discussed.

5. An irregularity in the notice of a meeting is waived if all directors entitled
to receive notice of the meeting attend the meeting without objection to the
irregularity.

Methods of holding meetings

6. A meeting of the Board may be held either—

 (a) by a number of the directors who constitute a quorum, being assembled
together at the place, date and time appointed for the meeting; or

 (b) by means of audio, or audio and visual, communication by which all
directors participating and constituting a quorum can simultaneously
hear each other throughout the meeting.

Quorum

7. A quorum for a meeting of the Board shall be fixed by the Board and if
not so fixed shall be a majority of the directors.

8. No business may be transacted at a meeting of the Board if a quorum is
not present.

Laws of Malaysia556 Act 777

Voting

9. Every director has one vote.

10. The chairperson shall have a casting vote.

11. A resolution of the Board is passed if it is agreed to by all directors
present without dissent or if a majority of the votes cast on it are in favour
of it.

12. A director present at a meeting of the Board is presumed to have agreed
to, and to have voted in favour of, a resolution of the Board unless he expressly
dissents from or votes to object against the resolution at the meeting.

Minutes

13. The Board shall ensure that the minutes of all proceedings at meetings
of the Board are kept.

Resolution passed at adjourned meetings

14. Where a resolution is passed at an adjourned meeting of the Board, the
resolution shall, for all purposes, be treated as having been passed on the
date on which it was in fact passed and shall not to be deemed to have been
passed on any earlier date.

Resolution in writing

15. A resolution in writing, signed or assented to by all directors then entitled
to receive notice of meeting of the Board, is as valid and effective as if it
had been passed at a meeting of the Board duly convened.

16. Any such resolution may consist of several documents, including facsimile
or other similar means of communication, in similar form and each document
shall be signed or assented to by one or more directors.

17. A copy of any such resolution shall be entered in the minute book of
Board proceedings.

Other proceedings

18. Except as provided in this Schedule, the Board may regulate its own
proceedings.

Companies 557

Committees of the Board

19. The Board may delegate any of its powers to committees consisting of
such member or members of its body as the Board thinks fit and any committee
so formed shall in the exercise of the powers so delegated conform to any
terms or conditions that may be imposed on it by the Board.

20.  A committee may elect a chairperson of its meetings and may determine
its own proceedings.

21.  Any questions arising at any meeting of a committee shall be determined
by a majority of votes of the members present, and in the case of an equality
of votes the chairman shall have a second or casting vote.

Managing Directors

22. The Board may, from time to time, appoint one or more of its body
to the office of managing director for such period and on such terms as the
Board thinks fit and may revoke any such appointment.

23. A director appointed to the office of managing director shall not, while
holding that office, be subject to retirement by rotation or be taken into account
in determining the rotation of retirement of directors, but his appointment shall
be automatically determined if he ceases from any cause to be a director.

24.  A managing director shall, subject to the terms of any agreement entered
into in any particular case, receive such remuneration, whether by way of
salary, commission, or participation in profits, or partly in one way and partly
in another, as the Board may determine.

25.  The Board may entrust to and confer upon a managing director any of
the powers exercisable by the Board upon such terms and conditions and with
such restrictions as the Board may think fit, and either collaterally with or to
the exclusion of the Board’s own powers, and may from time to time revoke,
withdraw, alter or vary all or any of those powers.

Associate Directors

26. The Board may, from time to time, appoint any person to be an associate
director and may from time to time revoke any such appointment.

27. The Board may fix, determine and vary the powers, duties and remuneration
of any person so appointed, but a person so appointed shall not have any right
to attend or vote at any meeting of the Board except by the invitation and
with the consent of the Board.

Laws of Malaysia558 Act 777

Fourth schedule

[Paragraph 235(2)(a)]

APPROVED BODIES

1. Malaysian Institute of Chartered Secretaries and Administrators

2. Malaysian Institute of Accountants

3. Malaysian Bar

4. Malaysian Association of Company Secretaries

5. Malaysian Institute of Certified Public Accountants

6. Sabah Law Association

7. Advocates Association of Sarawak

FiFth schedule

[Section 253]

DIRECTORS’ REPORT

Part I

Contents of Directors’ Report

1. Each report to which section 252 relates, shall state the following details:

  (a) the net amount of the profit or loss of the company for the financial
year after provision for income tax;

 (b) the amounts and particulars of any material transfers to or from
reserves or provisions;

 (c) where, during the financial year, the company has issued any shares
or  debentures—

 (i) the purposes of the issue, the classes of shares or debentures
issued;

 (ii) the number of shares of each class and the amount of debentures
of each class; and

 (iii) the terms of issue of the shares and debentures of each class;

Companies 559

 (d) whether at the end of that financial year—

 (i) there is a subsist arrangements to which the company is a party,
being arrangements with the objects of enabling directors of
the company to acquire benefits by means of the acquisition
of shares in, or debentures of, the company or any other body
corporate; or

 (ii) there have, at any time in that year, subsisted such arrangements
as aforesaid to which the company was a party,

and if so, the report shall contain a statement explaining the effect of the
arrangements and giving the names of the persons who at any time in that
year were directors of the company and held, or whose nominees held, shares
or debentures acquired under the arrangements;

 (e) in respect of each person who, at the end of the financial year, was
a director of the company—

 (i) whether or not, according to the register kept by the company
for the purposes of section 59 relating to the obligation of a
director of a company to notify such company of his interests
in shares in, or debentures of, the company and of every other
body corporate, being the company’s subsidiary or holding
company or a subsidiary of the company’s holding company,
he was at the end of that year, interested in shares in, or
debentures of the company or any other body corporate and,
if he was so interested, the number and amount of shares
in, and debentures of, each body in which, according to that
register, he was then interested;

 (ii) whether or not, according to that register, he was, at the
beginning of that year or, if he was not then a director, when
he became a director, interested in shares in, or debentures
of, the company or any other such body corporate and, if he
was so interested, the number and amount of shares in, and
debentures of, each body in which according to that register,
he was interested at the beginning of that year or, as the case
may be, when he became a director; and

 (iii) the total number of shares in or debentures of the company or
any other such body corporate bought and sold by him during
that financial year;

 (f) the amount, if any, which the directors recommended should be paid
by way of dividend, and any amount which have been paid or
declared by way of dividend since the end of the previous financial
year, indicating which of those amounts, if any, have been shown
in a previous report under section 252 or under any corresponding
previous written law;

Laws of Malaysia560 Act 777

 (g) whether the directors, before the financial statements were prepared,
took reasonable steps to ascertain what action had been taken in
relation to the writing off of bad debts and the making of provision
for doubtful debts, and satisfied themselves that all known bad debts
had been written off and that adequate provision had been made for
doubtful debts;

 (h) whether at the date of the report the directors are aware of any
circumstances which would render the amount written off for bad debts
or the amount of the provision for doubtful debts inadequate to any
substantial extent and, if so, giving particulars of the circumstances;

 (i) whether the directors, before the financial statements were prepared,
have taken reasonable steps to ensure that any current assets which
were unlikely to be realized in the ordinary course of business
including the value of current assets as shown in the accounting
records of the company have been written down to an amount which
the current assets might be expected so to realize;

 (j) whether at the date of the report the directors are aware of any
circumstances—

 (i) which would render the values attributed to current assets in
the accounts misleading; and

 (ii) which have arisen which would render adherence to the existing
method of valuation of assets or liabilities of the company
misleading or inappropriate, and, if so, giving particulars of
the circumstances;

 (k) whether there exists at the date of the report—

 (i) any charge on the assets of the company which has arisen since
the end of the financial year which secures the liabilities of
any other person and, if so, giving particulars of any such
charge and, so far as practicable, of the amount secured; and

 (ii) any contingent liability which has arisen since the end of the
financial year and, if so, stating the general nature of the
liability and, so far as practicable, the maximum amount, or
an estimate of the maximum amount, for which the company
could become liable in respect of the liability;

 (l) whether any contingent or other liability has become enforceable, or
is likely to become enforceable, within the period of twelve months
after the end of the financial year which, in the opinion of the
directors, will or may affect the ability of the company to meet its
obligations when they fall due and, if so, giving particulars of any
such liability;

Companies 561

 (m) whether at the date of the report the directors are aware of any
circumstances not otherwise dealt with in the report or accounts
which would render any amount stated in the accounts misleading
and, if so, giving particulars of the circumstances;

 (n) whether the results of the company’s operations during the financial
year were, in the opinion of the directors, substantially affected by
any item, transaction or event of a material and unusual nature and,
if so, giving particulars of that item, transaction or event and the
amount or the effect of the item, transaction or event, if known or
reasonably ascertainable; and

 (o) whether there has arisen in the interval between the end of the financial
year and the date of the report any item, transaction or event of a
material and unusual nature likely, in the opinion of the directors,
to affect substantially the results of the company’s operations for
the financial year in which the report is made and, if so, giving
particulars of the item, transaction or event; and

 (p) any other details as determined by the Registrar.

2. The report shall state, in respect of the directors or past directors of the
company, the amount of—

 (a) fees and other benefits distinguished separately, paid to or receivable by
them from the company or its subsidiary companies as remuneration
for their services to the company or its subsidiary companies, inclusive
of all fees, percentages, bonuses, commissions, compensation for
loss of office, any contribution in respect of them under any pension
or retirement benefit scheme and inclusive of commission paid or
payable for subscribing or agreeing to subscribe or procuring or
agreeing to procure subscriptions for any shares in or debentures
of the company or of its holding company or any subsidiary of the
company:

  Provided that where a director or any firm of which the director
is a member, acts for the company in a professional capacity, the
amount paid to the director or to his firm for services rendered
to the company in that capacity shall not be included in all fees,
percentages, bonuses, commissions, compensation for loss of office,
any contribution in respect of them under any pension or retirement
benefit scheme and inclusive of commission paid or payable for
subscribing or agreeing to subscribe or procuring or agreeing to
procure subscriptions for any shares in or debentures of the company
or of its holding company or any subsidiary of the company but
shall be shown separately whether by way of note or otherwise;

 (b) by way of a note or otherwise, the estimated money value of any
other benefits received or receivable by them otherwise than in cash
from the company or from any of its subsidiary companies;

Laws of Malaysia562 Act 777

 (c) the total of the amount paid to or receivable by any third party in
respect of the services provided to the company or any of its subsidiary
companies by any director or past director of the company;

 (d) the total amount, if any, of any indemnity given to or insurance
effected for, any director, officer or auditor of the company.

3. The directors of a company shall state in the report whether he has, since
the end of the previous financial year, received or become entitled to receive a
benefit, other than a benefit included in the aggregate amount of remuneration
received or due and receivable by the directors shown in the accounts or the
fixed salary of a full-time employee of the company, by reason of a contract
made by the company or a related corporation with the director or with a firm
of which he is a member, or with a company in which he has a substantial
financial interest, and, if so, the general nature of the benefit.

4.  Where at the end of a financial year a company is the subsidiary of another
corporation, the directors of the company shall state in, or by way of note as
a statement annexed to, the company’s accounts the name of the corporation
regarded by the directors as being the company’s ultimate holding company
and if known to them, the country in which it is incorporated.

5.  Where any option has been granted during the period covered by the profit
and loss account to take up unissued shares of a company, the directors’ report
shall state—

 (a) the number and class of shares in respect of which the option has
been granted;

 (b) the date of expiration of the option;

 (c) the basis upon which the option may be exercised; and

 (d) whether the person to whom the option has been granted has any right
to participate by virtue of the option in any share issue of any other
company.

6. The directors’ report shall specify—

 (a) particulars of shares issued during the period to which the report relates
by virtue of the exercise of options to take up unissued shares of
the company, whether granted before or during that period; and

 (b) the number and class of unissued shares of the company under option
as at the end of that period, the price, or method of fixing the price,
of issue of those shares, the date of expiration of the option and
the rights, if any, of the persons to whom the options have been
granted to participate by virtue of the options in any share issue of
any other company.

7. The director’s report shall specify clearly either in the profit and loss
account of the holding company or consolidated profit and loss account of

Companies 563

the holding company and of its subsidiary companies the name, place of
incorporation, principal activities, and percentage of issued share capital
held by the holding company in each subsidiary to which that profit and loss
account or other document relates.

8. If the auditor’s report on the accounts of a subsidiary company is qualified
in any way, the consolidated balance sheet of the holding company, as the
case may be, shall contain particulars of the manner in which the report is
qualified in so far as the matter which is the subject of the qualification is
not covered by the holding company’s own accounts and is material from the
point of view of its members.

9. The auditor’s report shall be shown under separate headings in the balance
sheet of every subsidiary company the extent of its holding of shares in the
holding company and in other related corporations.

10. The total amount paid to or receivable by the auditors as remuneration for
their services as auditors, inclusive of all fees, percentages or other payments
or consideration given by or from the company or by or from any subsidiary
of the company.

Part II

Contents of business review

1. Each report prepared under section 252 may include a business review.

2. The business review may, to the extent necessary for an understanding of
the development, performance or position of the company’s business, contain—

 (a) a fair review of the company’s business;

 (b) a description of the principal risks and uncertainties facing the company;

 (c) a balanced and comprehensive analysis of—

 (i) the development and performance of the company’s business
during the financial year;

 (ii) the position of the company’s business at the end of that year,
consistent with the size and complexity of the business; and

 (iii) the key performance indicators of the company;

 (d) information about—

 (i) environmental matters, including the impact of the company’s
business on the environment;

 (ii) the company’s employees; and

 (iii) social and community issues,

Laws of Malaysia564 Act 777

  including information about any policies of the company in relation
to those matters and the effectiveness of those policies; and

 (e) subject to paragraph 7 of this Part, information about persons with
whom the company has contractual or other arrangements which are
essential to the business of the company.

3. If the review does not contain any of the information mentioned in
subparagraphs 2(a), (b), (c) and (d), it shall state which of the information it
does not contain.

4. The review may, where appropriate, include references to, and additional
explanations of, amounts included in the company’s financial statements.

5. In relation to a group directors’ report, this Part has effect as if the
references to the company include references to its subsidiary included in the
consolidation.

6. Nothing in this Part requires the disclosure of information about impending
developments or matters in the course of negotiation if the disclosure would,
in the opinion of the directors, be prejudicial to the interests of the company.

7. Nothing in subparagraph 2(e) requires the disclosure of information about
a person if the disclosure would, in the opinion of the directors, be prejudicial
to that person and contrary to the public interest.

8. For the purposes of this Part, “key performance indicators” means factors by
reference to which the development, performance or position of the company’s
business can be measured effectively.

sixth schedule

[Section 383]

POWERS OF RECEIVER OR RECEIVER AND MANAGER

1. Subject to the provisions of this Schedule, a receiver or receiver and
manager of the property of a company has the powers to do all things necessary
or convenient to be done for or in connection with, or as incidental to, the
attainment of the objectives for which the receiver or receiver and manager
was appointed.

2. Without limiting the generality of paragraph 1, but subject to any provision
of the Court order by which, or the instrument under which, the receiver was
appointed, being a provision that limits the receiver or receiver and manager’s
powers in any way, a receiver or receiver and manager of the property of the
company has, in addition to any powers conferred by that order or instrument,
as the case may be, or by any other law, power for the purpose of attaining
the objectives for which the receiver or receiver and manager was appointed—

 (a) to take possession and control of the property of the company in
accordance with the terms of that order or instrument;

Companies 565

 (b) to lease, let on hire or dispose of the property of the company;

 (c) to grant options over the property of the company on such conditions
as the receiver or receiver and manager thinks fit;

 (d) to borrow money on the security of the property of the company;

 (e) to insure the property of the company;

 (f) to repair, renew or enlarge the property of the company;

 (g) to convert the property of the company into money;

 (h) to carry on any business of the company;

 (i) to take on lease or on hire, or to acquire, any property necessary or
convenient in connection with the carrying on of the business of the
company;

 (j) to demand and recover, by action or otherwise, income of the property
in receivership;

 (k) to issue receipts for income recovered;

 (l) to inspect at any reasonable time books or documents that relate to
the property in receivership and that are in the possession or under
the control of the company;

 (m) to exercise, on behalf of the company, the right to inspect books or
documents that relate to the property in receivership and that are
in the possession or under the control of a person other than the
company;

 (n) to change the registered office or address for service of the company;

 (o) to execute any document, bring or defend any proceedings or do any
other act or thing in the name of and on behalf of the company;

 (p) to draw, accept, make and endorse a bill of exchange or promissory
note;

 (q) to use a seal of the company;

 (r) to engage or discharge employees on behalf of the company;

 (s) to appoint a solicitor, accountant or other professionally qualified
person to assist the receiver or receiver and manager;

 (t) to appoint an agent to do any business that the receiver or receiver
and manager is unable to do, or that it is unreasonable to expect
the receiver or receiver and manager to do, in person;

Laws of Malaysia566 Act 777

 (u) where a debt or liability is owed to the company, to prove the debt
or liability in a bankruptcy, insolvency or winding up and, in
connection with the bankruptcy, insolvency or winding up, to receive
dividends and to assent to a proposal for a composition or a scheme
of arrangement;

 (v) to make or defend an application for the winding up of the company;
and

 (w) to refer to arbitration any question affecting the company.

3. The conferring by this Schedule on a receiver or receiver and manager of
powers in relation to the property of the company does not affect any rights
in relation to that property of any person other than the company.

4. In this Schedule, a reference, in relation to a receiver or receiver and
manager, to property of a company is, unless the context otherwise requires,
a reference to the property of the company in relation to which the receiver
or receiver and manager was appointed.

seventh schedule

[Sections 394 and 401]

POWERS AND DUTIES OF NOMINEE FOR CORPORATE VOLUNTARY
ARRANGEMENT

1. During a moratorium, a nominee shall monitor the company’s affairs for
the purpose of forming an opinion as to whether—

 (a) the proposed voluntary arrangement has a reasonable prospect of being
approved and implemented; and

 (b) the company is likely to have sufficient funds available for the company
during the proposed moratorium to enable the company to carry on
its business.

2. The nominee may request from the directors or Official Receiver and the
directors or Official Receiver shall submit to the nominee, any information
necessary to enable the nominee to comply with paragraph 1.

3. The nominee is entitled to rely on information submitted to him under
paragraph 2 in forming his opinion on matters required under paragraph 1
unless he has reason to doubt its accuracy.

4. The reference in subparagraph 1(b) to the company’s business is to that
business as the company proposes to carry on during the moratorium.

Companies 567

5. The nominee shall withdraw his consent to act if, at any time during a
moratorium—

 (a) he forms the opinion that—

 (i) the proposed voluntary arrangement no longer has a reasonable
prospect of being approved or implemented; or

 (ii) the company will not have sufficient funds available for the
company during the remainder of the moratorium to enable
the company to carry on its business;

 (b) he becomes aware that, on the date of filing of documents under
section 398, the company was not eligible for a moratorium; or

 (c) the directors or Official Receiver fail to comply with their duty under
paragraph 2.

eighth schedule

[Section 398]

MORATORIUM FOR CORPORATE VOLUNTARY ARRANGEMENT

Eligibility for moratorium for corporate voluntary arrangement

1. A company is eligible for a moratorium for corporate voluntary arrangement
proposed by directors if—

 (a) the company is a private company;

 (b) the company is not a licensed institution or operator of a designated
payment system regulated under the laws enforced by the Central
Bank of Malaysia;

 (c) the company is not a financial market institution under the Capital
Markets and Services Act 2007; or

 (d) the company has not created a charge over its property or any of its
undertaking.

2. A company is eligible for a moratorium for corporate voluntary arrangement
proposed by judicial manager or liquidator if—

 (a) the company is being wound up;

 (b) the company is under a judicial management order;

 (c) the company is not a licensed institution or operator of a designated
payment system regulated under the laws enforced by the Central
Bank of Malaysia; or

 (d) the company is not a financial market institution under the Capital
Markets and Services Act 2007.

Laws of Malaysia568 Act 777

Duration and extension of moratorium

3. A moratorium shall remain in force for a period of twenty-eight days from
the time it commences under paragraphs 1 and 2 but a meeting summoned
under paragraph 4 may, subject to consent given by the nominee and members
of the company, and obtaining seventy-five per centum majority in value
of creditors who are present and voting either in person or by proxy at the
meeting, extend this period for not more than sixty days.

4. At any meeting where it is proposed to extend the moratorium, before a
decision is taken with respect to that proposal, the nominee shall inform the
meeting of the actions he has taken in order to comply with his duty under
the Seventh Schedule and the costs incurred as a result of his actions for the
company, and of any plans he intends to do to continue to comply with that
duty if the moratorium is extended and the expected costs of his actions for
the company.

5. A moratorium shall end at the end of the day of the meeting summoned
under section 399, unless it is extended under paragraph 3.

6. If a moratorium is extended under paragraph 3, it shall end at the end of
the day to which it is extended.

7. If no meeting under paragraph 4 is summoned by the nominee within the
period of twenty-eight days as required under paragraph 3, the moratorium
ends at the last day of that period.

8. A moratorium shall come to an end if a nominee withdraws his consent
to act under the Seventh Schedule.

Notification of commencement of moratorium

9. The directors of a company or Official Receiver shall, within seven
days after the commencement of a moratorium, notify the nominee of the
commencement.

10. After being notified under paragraph 9, the nominee shall, within seven
days of the commencement of the moratorium period—

 (a) notify the Registrar of the fact of the commencement of the moratorium;

 (b) notify the company and any petitioning creditor of the company of
whose claim he is aware of the fact of the commencement of the
moratorium; and

 (c) advertise the fact in the website of the Commission and in one widely
circulated newspaper in Malaysia in the national language and one
widely circulated newspaper in Malaysia in the English language.

11. For the purposes of this Schedule, “petitioning creditor” means a creditor
by whom a winding up petition has been presented before the commencement
of moratorium, as long as the petition has not been dismissed or withdrawn.

Companies 569

Notification of end of moratorium

12. A nominee shall, within seven days after a moratorium comes to an
end—

 (a) advertise the fact in the website of the Commission and in one widely
circulated newspaper in Malaysia in the national language or one
widely circulated newspaper in Malaysia in the English language;
and

 (b) notify the Court, the Registrar, the company and any creditor of the
company of whose claim he is aware, of the fact of the end of the
moratorium.

Moratorium committee

13. A meeting summoned under paragraph 4 to resolve that the period of
moratorium be extended may, with the consent of the nominee, establish a
moratorium committee to exercise the function conferred on it by the meeting.

14. The meeting under paragraph 13 shall approve an estimate of the expenses
to be incurred by the committee in the exercise of the proposed functions.

15. Any expenses not exceeding the amount of the approved estimate under
paragraph 14 incurred by the committee in the exercise of its functions shall
be reimbursed by the nominee.

16. The committee shall cease to exist when the moratorium comes to an
end.

Effects of moratorium

17. During the period for which a moratorium is in force—

 (a) no petition may be presented for the winding up of the company;

 (b) no meeting of the company may be called or requisitioned except with
the consent of the nominee or the leave of the Court and subject to,
where the Court gives leave, such terms as the court may impose;

 (c) no resolution may be passed or order may be made for the winding
up of the company;

 (d) no application for judicial management order may be made against
the company;

 (e) no judicial manager of the company may be appointed under
Subdivision 2 of Division 8 of Part III;

Laws of Malaysia570 Act 777

 (f) no landlord or other person to whom rent is payable may exercise any
right of forfeiture by peaceable re-entry in relation to premises let
to the company in respect of a failure by the company to comply
with any term or condition of its tenancy of such premises, except
with the leave of the Court and subject to such terms as the Court
may impose;

 (g) no other steps may be taken to impose any security over the company’s
property, or to repossess goods in the company’s possession under
any hire-purchase agreement, except with the leave of the Court and
subject to such terms as the Court may impose;

 (h) no other proceedings and no execution or other legal process may
be commenced or continued, and no distress may be levied, against
the company or its property except with the leave of the Court and
subject to such terms as the Court may impose; and

 (i) no steps shall be taken to transfer any share of the company or to alter
the status of any member of the company except with the leave of
the Court and, where the Court gives leave, subject to such terms
as the Court may impose.

Company invoices, orders for goods, etc.

18. At a time when a moratorium is in force in relation to a company, the
nominee’s name and a statement that a moratorium is in force for the company
shall appear on—

 (a) its business letters, notices and other official publications, including
in electronic mediums;

 (b) its websites;

 (c) its bills of exchange, promissory notes, endorsements and order forms;

 (d) cheques purporting to be signed by or on behalf of the company;

 (e) orders invoices and other demands for payment, receipts and letters
of credit purporting to be issued or signed by or on behalf of the
company; and

 (f) all other forms of its business correspondence and documentation.

Companies 571

ninth schedule

[Subsection 414(4)]

POWERS OF JUDICIAL MANAGER

The judicial manager may exercise all or any of the following powers:

 (a) to take possession of, collect and get in the property of the company
and, for that purpose, to take such proceedings as he seems expedient;

 (b) to sell or otherwise dispose of the property of the company by public
auction or private contract;

 (c) to borrow money and grant security for the borrowing over the property
of the company;

 (d) to appoint a solicitor or accountant or other professionally qualified
person to assist him in the performance of his functions;

 (e) to bring or defend any action or other legal proceedings in the name
and on behalf of the company;

 (f) to refer to arbitration any question affecting the company;

  (g) to effect and maintain insurances in respect of the business and property
of the company;

 (h) to use the company’s seal;

 (i) to do all acts and to execute in the name and on behalf of the company
any deed, receipt or other document;

 (j) to draw, accept, make and endorse any bill of exchange or promissory
note in the name and on behalf of the company;

 (k) to appoint any agent to do any business which he is unable to do
himself or which can more conveniently be done by an agent and
to employ and dismiss employees;

 (l) to do all such things, including the carrying out of works, as may be
necessary for the realisation of the property of the company;

 (m) to make any payment which is necessary or incidental to the performance
of his functions;

 (n) to carry on the business of the company;

 (o) to establish subsidiaries of the company;

Laws of Malaysia572 Act 777

 (p) to transfer to subsidiaries of the company the whole or any part of
the business and property of the company;

 (q) to grant or accept a surrender of a lease or tenancy of any of the
property of the company, and to take a lease or tenancy of any
property required or convenient for the business of the company;

 (r)  to make any arrangement or compromise on behalf of the company;

 (s)  to call up any uncalled capital of the company;

 (t) to rank and claim in the bankruptcy, insolvency, sequestration or
liquidation of any person indebted to the company and to receive
dividends, and to accede to trust deeds for the creditors of any such
person;

 (u) to make or defend an application for the winding up of a company;

 (v) to do all other things incidental to the exercise of the foregoing
powers.

tenth schedule

[Subsection 450(4)]

COMMITTEE OF INSPECTION

Appointment of committee of inspection in winding up by Court

1. The liquidator may, and shall if requested by any creditor or contributory,
summon separate meetings of the creditors and contributories for the purpose
of determining whether or not the creditors or contributories require the
appointment of a committee of inspection to act with the liquidator, and if
so elect members of the committee.

2. If there is a difference between the determination of the meetings of the
creditors and contributories, the Court shall decide the difference and make
such order as the Court thinks fit.

Appointment of committee of inspection in voluntary winding up

3. The creditors at the meeting summoned under section 447 or 449 or at
any subsequent meeting may, if the creditors think fit, appoint a committee
of inspection consisting of not more than five persons, whether creditors or
not and if such a committee is appointed the company may, either at the
meeting at which the resolution for voluntary winding up is passed or at any
time subsequently after the resolution for winding up is passed in a general
meeting, appoint not more than five persons as the company thinks fit to act
as members of the committee.

Companies 573

4.  Notwithstanding paragraph 3, the creditors may, if the creditors think fit,
resolve that all or any of the persons appointed by the company ought not
to be a member of the committee of inspection and if the creditors resolve
as such the person mentioned in the resolution shall not, unless the Court
otherwise directs, act as member of the committee, and on any application to
the Court under this paragraph the Court may, if the Court thinks fit, appoint
other persons to act as a member in place of the person mentioned in the
resolution.

Constitution

5.  The committee of inspection shall consist of creditors or contributories
of the company or persons holding—

 (a) general powers of attorney from creditors or contributories; or

 (b) special authority from creditors or contributories, to act on such a
committee,

appointed in a meeting of creditors and contributories in such proportions as
are agreed or in case of difference as are determined by the Court.

Proceedings

6. The committee shall meet at such times and places as the committee from
time to time appoint, and the liquidator or any member of the committee may
also call a meeting of the committee as the liquidator or the member thinks
necessary.

7. The committee may act by a majority of the members present at a meeting,
but shall not act unless a majority of the committee is present.

Resignation and removal of member

8. A member of the committee may resign by notice in writing signed by
him and delivered to the liquidator.

9. A member of the committee may be removed by an ordinary resolution
at a meeting of creditors, if he represents creditors, or of contributories, if he
represents contributories, of which meeting seven days’ notice has been given
stating the object of the meeting.

Vacation of office

10. If a member of the committee becomes bankrupt or assigns his estate
for the benefit of his creditors or makes an arrangement with his creditors
under any written law relating to bankruptcy or is absent from five consecutive
meetings of the committee without the leave of those members who together
with himself represent the creditors or contributories, as the case may be, his
office shall become vacant.

Laws of Malaysia574 Act 777

Vacancy

11. A vacancy in the committee shall be filled through an appointment by the
committee of the same or another creditor or contributory or person holding
a general power or special authority as specified in paragraph 5.

12. The liquidator, may at any time of his own motion and shall, within
seven days from a request in writing of a creditor or contributory, summon
a meeting of creditors or of contributories, as the case may be, to consider
any appointment made under paragraph 11 and the meeting may confirm or
revoke the appointment and appoint another creditor or contributory or person
holding a general power or special authority as specified in paragraph 5, as
the case may be, in his stead.

13. Notwithstanding any vacancy in the committee, the continuing members
may act if there are at least two continuing members.

eleventh schedule

[Section 456]

POWERS OF LIQUIDATOR IN VOLUNTARY WINDING UP

1.  The liquidator may in the case of a members’ voluntary winding up,
with the approval of a special resolution of the company and, in the case
of a creditors’ voluntary winding up, with the approval of the Court or the
committee of inspection, exercise any of the powers given to a liquidator
under the Twelfth Schedule in a winding up by the Court.

2. The liquidator may exercise any of the other powers by this Act given to
the liquidator in a winding up by the Court.

3. The liquidator may exercise the power of the Court under this Act of
settling a list of contributories, and the list of contributories shall be prima facie
evidence of the liabilities of the persons named in the list as contributories.

4. The liquidator may exercise the power of the Court of making calls or
summon general meetings of the company for the purpose of obtaining the
sanction of the company by special resolution in respect of any matter or for
any other purpose as the liquidator thinks fit.

5. The liquidator may pay the debts of the company and adjust the rights
of the contributories among themselves.

6. When several liquidators are appointed, any power given by this Act may
be exercised by one or more of the liquidators as is determined at the time
of their appointment, or in the absence of such determination by at least two
of the liquidators.

Companies 575

twelFth schedule

POWERS OF LIQUIDATOR IN WINDING UP BY COURT

Part I

[Section 472]

Powers exercisable without authority

The liquidator may—

 (a) bring or defend any action or other legal proceedings in the name
and on behalf of the company;

 (b) compromise any debt due to the company other than calls and liabilities
for calls and a debt where the amount claimed by the company to
be due to the company does not exceed ten thousand ringgit;

 (c) sell the immovable and movable property and things in action of the
company by public auction, public tender or private contract with
power to transfer the whole immovable and movable property and
things to any person or company or to sell the same in parcels;

 (d) do all acts and execute in the name and on behalf of the company all
deeds, receipts and other documents and for that purpose use when
necessary, the company’s seal;

 (e) prove rank and claim in the bankruptcy of any contributory or debtor
for any balance against his estate, and receive dividends in the
bankruptcy in respect of that balance as a separate debt due from
the bankrupt and rateably with the other separate creditors;

 (f) draw, accept, make and indorse any bill of exchange or promissory
note in the name and on behalf of the company with the same effect
with respect to the liability of the company as if the bill or note
had been drawn, accepted, made or indorsed by or on behalf of the
company in the course of its business;

 (g) raise on the security of the assets of the company any money requisite;

 (h) take out letters of administration of the estate of any deceased
contributory or debtor, and do any other act necessary for obtaining
payment of any money due from a contributory or debtor or his estate
which cannot be conveniently done in the name of the company, and
in all such cases the money due shall, for the purposes of enabling
the liquidator to take out the letters of administration or recover the
money, be deemed due to the liquidator;

 (i) make any payment as necessary in carrying on the affairs of the
company in its ordinary course of business including payment of
utility bills, statutory fees and all other such payments;

Laws of Malaysia576 Act 777

 (j) appoint an agent to do any business which the liquidator is unable to
do;

 (k) appoint an advocate to assist him in his duties; and

 (l) do all such other things as are necessary for winding up the affairs
of the company and distributing its assets.

Part II

[Section 486]

Powers exercisable with authority

1. The liquidator may, with the authority either of the Court or of the
committee of inspection—

 (a) carry on the business of the company so far as is necessary for the
beneficial winding up of the company, but the authority shall not be
necessary to so carry on the business during the one hundred and
eighty days after the date of the winding up order;

 (b) subject to the priorities under section 527, pay any class of creditors
in full;

 (c) make any compromise or arrangement with creditors or persons claiming
to be creditors or having or alleging themselves to have any claim,
present or future, certain or contingent, ascertained or sounding
only in damages against the company, or where the company may
be rendered liable;

 (d) compromise any calls and liabilities to calls, debts and liabilities
capable of resulting in debts and any claims, present or future, certain
or contingent, ascertained or sounding only in damages subsisting
or supposed to subsist between the company and a contributory or
other debtor or person apprehending liability to the company, and
all questions in any way relating to or affecting the assets or the
winding up of the company, on such terms as are agreed, and take
any security for the discharge of any such call, debt, liability or
claim, and give a complete discharge in respect of the call, debt,
liability or claim; and

 (e) compromise any debt due to the company other than calls and liabilities
for calls and a debt where the amount claimed by the company to
be due to the company exceeds ten thousand ringgit.

2. The liquidator may apply to the Court or the committee of inspection for
the authority given for the purpose of subparagraph 1(e) without additional
approval provided that the debts referred to in that paragraph does not exceed
fifty thousand ringgit.

Companies 577

thirteenth schedule

[Subsection 561(2)]

ACTIVITIES NOT REGARDED AS CARRYING ON BUSINESS IN MALAYSIA

A foreign company shall not be regarded as carrying on business in Malaysia
for the reasons only that the company does the following matters in Malaysia:

 (a) is or becomes a party to any action or suit or any administrative or
arbitration proceeding or effects settlement of an action, suit or
proceeding or of any claim or dispute;

 (b) holds meetings of its directors or shareholders or carries on other
activities concerning its internal affairs;

 (c) maintains any bank account;

 (d) effects any sale through an independent contractor;

 (e) solicits or procures any order which becomes a binding contract only
if the order is accepted outside Malaysia;

 (f) creates evidence of any debt, or creates a charge on movable or
immovable property;

 (g) secures or collects any of its debts or enforces its rights in regard to
any securities relating to those debts;

 (h) conducts an isolated transaction that is completed within a period of
thirty one days, but not being one of a number of similar transactions
repeated from time to time;

 (i) invests any of its funds or holds any property; or

 (j) imports goods temporarily under the Customs Act 1967 [Act 235] for
the purpose of display, exhibition, demonstration or as trade samples
with a view to subsequent re-exportation within a period of three
months or within such further period as the Director General of
Customs and Excise may in his discretion allow.

Hakcipta Pencetak H
PERCETAKAN NASIONAL MALAYSIA BERHAD
Semua Hak Terpelihara. Tiada mana-mana bahagian jua daripada penerbitan ini boleh diterbitkan semula atau disimpan di dalam bentuk

yang boleh diperolehi semula atau disiarkan dalam sebarang bentuk dengan apa jua cara elektronik, mekanikal, fotokopi, rakaman dan/

atau sebaliknya tanpa mendapat izin daripada Percetakan Nasional Malaysia Berhad (Pencetak kepada Kerajaan Malaysia yang
dilantik).

DICETAK OLEH

PERCETAKAN NASIONAL MALAYSIA BERHAD,

KUALA LUMPUR

BAGI PIHAK DAN DENGAN PERINTAH KERAJAAN MALAYSIA

WJW007258 BI Teks 1 (2).pdf

WJW007258 BI Teks 2 (2).pdf