What are Companies Act 2016 Major changes?

The Companies Act 2016 is a significant piece of legislation that governs the operations of companies in Malaysia. It was enacted to simplify and modernise the legal framework for business operations, as well as to enhance corporate governance and promote investor protection. Under the Companies Act 2016, companies can be registered as either a private or public company. The Company Registration process involves the submission of certain documents to the Companies Commission of Malaysia (CCM), including the company’s constitution, details of its directors and shareholders, and its proposed business activities.

Some of the major changes introduced by the Companies Act 2016 include the requirement for companies to have at least one resident director, the abolition of the requirement for companies to hold an Annual General Meeting (AGM) for certain types of companies, the introduction of new provisions on corporate rescue mechanisms, and the establishment of a new corporate liability regime. The Act also provides for enhanced shareholder rights, including the right to participate in virtual meetings and the right to seek court relief against oppressive conduct.

The Companies Act 2016 has a significant impact on small and medium enterprises (SMEs) in Malaysia. It aims to promote transparency and accountability in corporate governance, which is particularly important for SMEs, as they often lack the resources and expertise to implement robust corporate governance practices. The new provisions on corporate rescue mechanisms provide more options for SMEs to restructure their operations and avoid insolvency, which can help them stay afloat during challenging economic times. However, the Act also introduces new requirements and obligations for companies, which can be particularly burdensome for SMEs. For example, the requirement for at least one resident director may be challenging for small businesses that do not have a physical presence in Malaysia. SMEs should therefore take steps to understand the impact of the Act on their operations to ensure compliance with the new regulatory requirements.

The Companies Act 2016 imposes new changes and responsibilities on company secretaries in Malaysia. 

1. The Act requires that every company appoint a qualified company secretary within 30 days of its incorporation, and that the company secretary must have the necessary qualifications and experience to carry out their duties effectively. The company secretary plays a vital role in ensuring compliance with the Act and other regulatory requirements, including the maintenance of statutory registers and records, the preparation of board and shareholder meetings, and the filing of statutory returns.

2. The Act also expands the responsibilities of company secretaries to include new obligations, such as advising the board on matters of corporate governance and ensuring compliance with anti-money laundering and anti-terrorism financing regulations. Company secretaries must therefore have a comprehensive understanding of the Act and other relevant laws, as well as the ability to work closely with the board and management to ensure effective corporate governance practices.

The Companies Act 2016 has a significant impact on corporate governance in Malaysia, with key takeaways for business owners.

The Act aims to enhance corporate governance by promoting transparency, accountability, and shareholder rights. Business owners must ensure compliance with the new regulatory requirements, including the appointment of a qualified company secretary and the implementation of robust corporate governance practices.

The Act also introduces new provisions on corporate rescue mechanisms, which provide more options for companies to restructure their operations and avoid insolvency. Business owners must therefore stay abreast of changes in the regulatory environment and take advantage of new opportunities provided by the Act.

Overall, the Companies Act 2016 reflects a greater emphasis on good governance practices and highlights the importance of effective corporate governance for the long-term success of companies.

In conclusion, the Companies Act 2016 represents a significant milestone in the evolution of the regulatory framework governing companies in Malaysia. It introduces important changes aimed at improving corporate governance, streamlining business processes, and increasing transparency and accountability. While these changes may present challenges for businesses, they also offer opportunities for innovation, growth, and competitiveness. You can seek professional help with our lawyers if needed.

By understanding the major changes introduced by the Companies Act 2016 and adapting to the new regulatory landscape, companies can position themselves for long-term success in the Malaysian market.