Transformation In Malaysian Corporate Law

Transformation In Malaysian Corporate Law

In 2016 the Malaysian Parliament passed the Companies Bill 2015 (Bill) which is expected to transform Malaysia’s corporate landscape by spurring entrepreneurship and deregulating certain aspects of corporate process. Inasmuch as the Malaysian government has yet to finalize new regulations, rules and guidelines implementing the Companies Bill 2015, the Bill itself is not yet effective and awaiting an enforcement date. However, the Bill has passed and if you have corporate interests in Malaysia you should see your Ally Law member firm to begin planning for the significant changes.

One important feature of the new Bill is the adoption of a no par value capital regime for shares, which is in line with modern company accounting and practice. Under the existing Companies Act 1965, there are restrictions on how a company can deal with share premium and the method for which it is accounted.

Financial rates Ally Law

Upon the enforcement of the Bill, all shares, whether issued before or after the date of its commencement, will cease to have any par value. This change necessitates the parallel abolition of share premium, capital redemption reserve, and the requirement for authorised capital. As a result of this change, companies will be afforded greater flexibility to alter their share capital. For example, a company could capitalise its profits without issuing new shares, and issue bonus shares without increasing its share capital. The need for a capital reduction when the capital of a company falls below the aggregate par value of issued shares also becomes unnecessary when the value of shares reflect the true value of the company. The issue price of a share will simply be the subject of commercial bargaining between willing buyer and willing seller or a justifiable valuation of the company. The Bill provides transitory provisions relating to the abolition of nominal value.

A consequence of the changes required by this Bill will be more transparent and comprehensible company accounting. Wherever you do business, Ally Law member firms have attorneys dedicated to corporate, securities, and tax laws to counsel you as to the best  structure for your business. For more information about Ally Law member firm services and outstanding lawyers, contact us at team@ally-law.com.

Click here for the original article by Caesar Loong of Ally Law member Raslan Loong.

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