Firms need more time to adjust to changes under Companies Act 2016
PETALING JAYA: Malaysian companies still need more time to adjust to the changes under the Companies Act 2016, which came into effect on Jan 31.
Yon See Ting, a partner of advocates and solicitors Christopher & Lee Ong, said there is still insufficient awareness among local firms following the implementation of the act.
“The level of awareness is still not there because even the top organisations are struggling and still trying to get up to speed,” she said at a half-day workshop yesterday called “Star Empowerment The New Companies Act 2016”.
“There are still a lot of questions and uncertainties about the new law,” she said. The workshop was organised by Star Media Group Bhd.
Among the changes introduced under the new law is the introduction of a single director company, which enables a company to be incorporated with only one member who can also double up as the sole director of the company. A company can also replace the memorandum and article of association from the previous act with a constitution lodged with the registrar.
Yon, however, said the implementation of the new law, which replaces the Companies Act 1965, was timely.
“It’s been 50 years and it’s a total overhaul of the Companies Act 1965. Many things have changed and we were still looking at old laws. So, in a sense, it’s timely!”
The new law also places more responsibility on company directors to act in the interest of shareholders and the company.
For example, a director has to ensure that the firm would be solvent immediately after the dividend is paid out to safeguard the company from financial losses.
Furthermore, the fines for offences and non-compliance are higher under the new act. Company directors can no longer claim ignorance.
Under the Companies Act 2016, Yon said many procedures have been shortened, adding that more stringent sanctions have been enforced.
“The heavier penalties would mean that people take it seriously. Compliance standards will go up and companies will also start doing the right thing.”
The workshop also saw Boardroom Corporate Services (KL) Sdn Bhd chief executive officer Samantha Tai speaking on changes affecting directors.
Among the changes, Tai said the new law required that dividends only be distributed out of available profits. “Directors may only authorise the distribution of dividends if they are satisfied that the company will be solvent immediately after the distribution is made.”
Star Media Group will be organising its next session on the Companies Act on Aug 2 at Menara Star. For further enquiries on registration, please contact 03-79671388 ext 1436, 1432 or 1657 or e-mail us at events@thestar.com.my.