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Recent Amendments to the Companies Act 2016

Effective on 31 January 2017 (with the exception of Section 241 and Division 8 of Part III of Companies Act 2016 (Act 777) (“CA 2016”) being effected subsequently on 15 March 2019 and 1 March 2018 respectively), CA 2016 has repealed Companies Act 1965 (Act 125) (“CA 1965”) and has changed the landscape of company law in Malaysia.

Recent enactment of the Companies (Amendment) Act 2019 (Act A1605) (“CAA 2019”) has come into force on 15 January 2020. The rationale behind enactment of the CAA 2019 is not to change or affect the original policies adopted by the Parliament at the time when CA 2016 was passed. Instead, CAA 2019 seeks to clarify identified provisions in the CA 2016 in order to facilitate effective and efficient implementation of the agreed policies, and full compliance by the company and/or its directors.1 This article sets out seven key amendments to the CA 2016 as introduced in the CAA 2019.


1.Section 4: Definition of “subsidiary and holding company”

Section 4 (1)(a)(iii) of the CA 2016 is now amended whereby “issued share capital” is substituted by “total number of issued shares”. This amendment clarifies that, for the purpose of determining a subsidiary of a company, such determination shall refer to the total number of issued shares instead of value of the issued shares.

This amendment is in line with the introduction of no par value regime in the CA 2016 which emphasizes number of shares over value of shares in determining shareholdings in a company.


2.Section 66: Execution of documents

 Section 66 of the CA 2016 which sets out formalities for execution of documents by a company is now clarified whereby “document” is defined to mean “a document which is required to be executed by any written law, resolution, agreement or constitution”.

This amendment enables effective daily operation of company by clarifying that the stringent compliance of the required formalities for execution of documents by a company (i.e. by affixing of common seal or by signatures of at least two authorized officers) applies to defined documents.


3.Section 72: Preference Shares

Section 72(5) of the CA 2016 is now amended whereby in the event of redemption of preference shares out of profits which would otherwise have been available for dividend, a sum equal to the amounts of shares redeemed shall be transferred into the share capital accounts of the company.


4.Section 84: Power of company to alter its share capital

Section 84 of the CA 2016 is now amended whereby power of a company to alter its share capital may be effected by passing of an ordinary resolution (previously a special resolution), unless otherwise provided in the constitution.


5.Section 340: Annual general meeting

Section 340 of the CA 2016 is now amended whereby “appointment and fixing of fee of directors” has been substituted by “appointment and fixing of fee of auditors” as one of the resolutions to be tabled at an annual general meeting of a public company. This amendment is in line with Section 271(4)(a) of the CA 2016 which provides that an auditor shall be appointed by an ordinary resolution at the annual general meeting.

Furthermore, this amendment clarifies the ambiguity in Section 274(1)(a) of the CA 2016 which merely provides that remuneration of auditor appointed shall be fixed by members of a company respectively and was silent on whether the remuneration of auditor shall be fixed at a general meeting as per Section 172(16) of the repealed CA 1965.2


6.Section 409: Dismissal of application for judicial management order

Section 409 of the CA 2016 is now amended whereby an application for judicial management order shall be dismissed by the court if it is satisfied that either a receiver or receiver and manager has been or will be appointed, or the application is opposed by a secured creditor (previously both must be satisfied).

This amendment is in line with the objective of the policy agreed at the time CA 2016 was passed, i.e. to provide protection for secured creditors and to provide right to the secured creditors to object to application for judicial management order.3


7.Section 580A: Security for costs

Section 580A is a new section to the CA 2016 whereby it confers discretion on the court to order a plaintiff company to give sufficient security for costs and to direct the costs of any action or proceedings to be borne by the party to the action or proceedings.

This amendment re-introduces Section 351 (Security for costs) of the repealed CA 1965, which may prevent frivolous claims and abuse of process by parties seeking to initiate legal proceedings.

All in all, the CAA 2019 addresses shortcomings of CA 2016 and provides clarification to the identified provisions in the CA 2016. It is believed that the amendments in the CAA 2019 will be welcomed by the business stakeholders.

Nonetheless, as CAA 2019 came into effect just recently, we shall keep an eye on the responses by the business community to the amendments.



1 FAQS on the Companies (Amendment) Bill 2019

2 ibid

3 ibid


Prepared by :

Moo Eng Thing (Partner)

Kate Lock Kah Yan (Associate)