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Labuan Companies Act *

#LAWS OF MALAYSIA

Act 125 COMPANIES ACT 1965

PART I PRELIMINARY

Short title

1. (1) This Act may be cited as the Companies Act 1965.

(2) (Omitted).

2. (Omitted).

Repeals

3. (1) The written laws mentioned in the First Schedule to the extent to which they are therein expressed to be repealed or amended are hereby repealed or amended accordingly.

Transitory provisions

(2) Unless the contrary intention appears in this Act—

(a) all persons, things and circumstances appointed or created by or under any of the repealed or amended written laws or existing or continuing under any of such written laws immediately before the commencement of this Act shall under and subject to this Act continue to have the same status operation and effect as they respectively would have had if those written laws had not been so repealed or amended; and

(b) in particular and without affecting the generality of the foregoing paragraph, such repeal shall not disturb the continuity of status, operation or effect of any Order in Council, order, rule, regulation, scale of fees, appointment, conveyance, mortgage, deed, agreement, resolution, direction, instrument, document, memorandum, articles, incorporation, nomination, affidavit, call, forfeiture, minute, assignment, register, registration, transfer, list, licence, certificate, security, notice, compromise, arrangement, right, priority, liability, duty, obligation, proceeding, matter or thing made, done, effected, given, issued, passed, taken, validated, entered into, executed, lodged, accrued, incurred, existing, pending or acquired by or under any of such written laws before the commencement of this Act.

(3) Nothing in this Act shall affect the Table in any repealed written law corresponding to Table A of the Fourth Schedule or any part thereof (either as originally enacted or as altered in pursuance of any statutory power) or the corresponding Table in any former written law relating to companies (either as originally enacted or as so altered) so far as the same applies to any company existing at the commencement of this Act.

(4) The provisions of this Act with respect to winding up other than Subdivision (5) of Division 4 of Part X shall not apply to any company or society of which the winding up has commenced before the commencement of this Act, but every such company or society shall be wound up in the same manner and with the same incidents as if this Act had not been passed and for the purposes of the winding up the written laws under which the winding up commenced shall be deemed to remain in full force.

(5) Paragraphs 9(1)(c) and (d) shall not apply to any person in relation to a private company until the conclusion of the next annual general meeting held after the commencement of this Act if he was appointed as auditor of that company before the commencement of this Act.

Interpretation

4. (1) In this Act, unless the contrary intention appears— “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 Companies 25 and also includes such working papers and other documents as are necessary to explain the methods and calculations by which accounts are made up; “accounts” means profit and loss accounts and balance sheets and includes notes or statements required by this Act (other than auditors’ reports or directors’ reports) and attached or intended to be read with profit and loss accounts or balance sheets; “annual general meeting” in relation to a company means a meeting of the company required to be held by section 143; “annual return” means—

(a) in relation to a company having a share capital, the return required to be made by subsection 165(1); and

(b) in relation to a company not having a share capital, the return required to be made by subsection 165(5), and includes any document accompanying the return; “appointed date” has the same meaning as is assigned to that expression in the Companies Commission of Malaysia Act 2001 [Act 614]; “approved company auditor” means a person approved as such by the Minister under section 8 whose approval has not been revoked; “approved liquidator” means an approved company auditor who has been approved by the Minister under section 8 as a liquidator and whose approval has not been revoked; “articles” means articles of association; “banking corporation” means a licensed bank, a licensed merchant bank and an Islamic bank; “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) 26 Laws of Malaysia ACT 125 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 Division 4 of Part IV; “branch register” means—

(a) in relation to a company—

(i) a branch register of members of the company kept in pursuance of section 164; or

(ii) a branch register of holders of debentures kept in pursuance of section 70, as the case may require; and

(b) in relation to a foreign company, a branch register of members of the company kept in pursuance of section 342; “certified”, in relation to a copy of a document, means certified in the prescribed manner to be a true copy of the document and, in relation to a translation of a document, means certified in the prescribed manner 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; “company” means a company incorporated pursuant to this Act or pursuant to any corresponding previous enactment; “company having a share capital” includes an unlimited company with a share capital; “company limited by guarantee” means a company formed on the principle of having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up;

“company limited by shares” means a company formed on the principle of having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them; “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; “corporation” means any body corporate formed or incorporated or existing within Malaysia or outside Malaysia and includes any foreign company but does not include—

(a) any body corporate that is incorporated within 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;

(d) any trade union registered under any written law as a trade union; “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; “Court” means the High Court or a judge thereof; “creditors’ voluntary winding up” means a winding up under Division 3 of Part X, other than a members’ voluntary winding up; “debenture” includes debenture stock, bonds, notes and any other securities of a corporation whether constituting a charge on the assets of the corporation or not; “default penalty” means a default penalty within the meaning of section 370; “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 directors of a corporation are accustomed to act and an alternate or substitute director;

“Division” means a Division of this Act and a reference to a specified Division is a reference to that Division of the Part in which the reference occurs; “document” includes summons, order and other legal process, and notice and register; “emoluments”, in relation to a director or auditor of a company, includes any fees, percentages and other payments made (including the money value of any allowances or perquisites) or consideration given, directly or indirectly, to the director or auditor by that company or by a holding company or a subsidiary of that company, whether made or given to him in his capacity as a director or auditor or otherwise in connection with the affairs of that company or of the holding company or the subsidiary; “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; “filed” means filed under this Act or any corresponding previous written law; “financial year”, in relation to any corporation, means the period in respect of which any profit and loss account of the corporation laid before it in general meeting 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 Companies 29

(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; “limited company” means a company limited by shares or by guarantee or both by shares and guarantee; “liquidator” includes the Official Receiver when acting as the liquidator of a corporation; “lodged” means lodged under this Act or any corresponding previous written law; “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; “marketable securities” means debentures, funds, stocks, shares or bonds of any Government or of any local authority or of any corporation or society and includes any right or option in respect of shares in any corporation and any interest as defined in section 84; “members’ voluntary winding up” means a winding up under Division 3 of Part X, where a declaration has been made and lodged in pursuance of section 257; “memorandum” means memorandum of association; “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 in pursuance of paragraph 4(a) of the Fifth Schedule; 30 Laws of Malaysia ACT 125

(b) in relation to any issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, shares made pursuant to the Securities Commission Act 1993 [Act 498], means the amount stated in the prospectus relating to the issue, offer or invitation in pursuance of 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 or other proper officer of the Court; “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

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

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

(f) any liquidator appointed by the Court or by the creditors; “Official Receiver” means the Director General of Insolvency, Deputy Director General 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 thereof to the right to vote at a general meeting 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 or under this Act; “principal register”, in relation to a company, means the register of members of the company kept in pursuance of section 158; “printed” includes typewritten or lithographed or reproduced by any mechanical means; “private company” means—

(a) any company which immediately prior to the commencement of this Act was a private company under the repealed written laws;

(b) any company incorporated as a private company by virtue of section 15; or

(c) any company converted into a private company pursuant to section 26(1), being a company which has not ceased to be a private company under section 26 or 27; “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 thereof; but does not include any person by reason only of his acting in a professional capacity; “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 Securities Commission Act 1993, means a prospectus as defined under that Act; “public company” means a company other than a private company; “registered” means registered under this Act or any corresponding previous written law;

“Registrar” means the Registrar of Companies as designated under subsection 7(1); “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 6; “repealed written laws” means the written laws repealed by this Act; “resolution for voluntary winding up” means the resolution referred to in section 254; “rules” means rules of court; “securities” has the same meaning as is assigned to that word in the Securities Commission Act 1993; “share” means share in the share capital of a corporation and includes stock except where a distinction between stock and shares is expressed or implied; “statutory meeting” means the meeting referred to in section 142; “statutory report” means the report referred to in section 142;

“Subdivision” means a Subdivision of this Act and a reference to a specified subdivision is a reference to that Subdivision of the Division in which the reference occurs; “Table A” means Table A in the Fourth Schedule; “this Act” includes any regulations; “transparency”, in relation to a document, means—

(a) a developed negative or positive photograph of that document (in this definition referred to as an “original photograph”) made on a transparent base, by means of light reflected from or transmitted through the document;

(b) a copy of an original photograph made by the use of photo-sensitive material (being photo-sensitive material on a transparent base) placed in surface contact with the original photograph; or

(c) any one of a series of copies of an original photograph, the first of the series being made by the use of photosensitive material (being photo-sensitive material on a transparent base) placed in surface contact with a copy referred to in paragraph (b), and each succeeding copy in the series being made, in the same manner from any preceding copy in the series; “trustee corporation” means—

(a) a company registered as a trust company under the Trust Companies Act 1949 [Act 100]; or

(b) a corporation that is a public company under this Act or under the laws of any other country, which has been declared by the Minister to be a trustee corporation for the purposes of this Act; “unit”, in relation to a share, debenture or other interest, means any right or interest therein, by whatever term called; “unlimited company” means a company formed on the principle of having no limit placed on the liability of its members; “unlisted recreational club” has the same meaning as is assigned to that expression in the Securities Commission Act 1993; “voting share”, in relation to a body corporate, means an issued share of the body corporate, not being—

(a) a share to which, under no circumstances, there is attached a right to vote; or

(b) a share to which there is attached a right to vote only in 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.

(1A) In this Act—

(a) “licensed bank”, “licensed business”, “licensed discount house”, “licensed finance company”, “licensed institution”, “licensed merchant bank”, “licensed money broker”, “nonscheduled institution”, “scheduled business” and “scheduled institution” shall have the meanings assigned thereto in subsection 2(1) of the Banking and Financial Institutions Act 1989 [Act 372]; and

(b) “Islamic bank” or “Islamic banking business” shall have the meaning assigned thereto in the Islamic Banking Act 1983 [Act 276].

(2) For the purposes of this Act 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) For the purposes of this Act 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.

(4) For the purposes of this Act 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 thereof or by reference incorporated therein or issued therewith.

(5) For the purposes of this Act 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 acknowledgement 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 Companies 35 by a prescribed corporation as defined in subsection 38(7) 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 Division 4 of Part IV.

(6) Any reference in this Act to offering shares or debentures to the public shall, unless the contrary intention appears, be construed as including a reference to offering them 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 it 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 46 of the Securities Commission Act 1993 applies; or

(d) made to existing members of a company within the meaning of section 270 and relates to shares in the corporation within the meaning of that section.

(7) Unless the contrary intention appears 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.

(8) (Deleted by Act A21)

Definition of subsidiary and holding company

5. (1) For the purposes of this Act, a corporation shall, subject to subsection (3), be deemed to be a subsidiary of another corporation, if—

(a) that other corporation—

(i) controls the composition of the board of directors of the first-mentioned corporation;

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

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

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

(2) For the purposes of subsection (1), the composition of a corporation’s board of directors shall be deemed to be controlled by another corporation if that other corporation by the exercise of some power exercisable by it without the consent or concurrence of any other person can appoint or remove all or a majority of the directors, and for the purposes of this provision that other corporation shall be deemed to have power to make such an appointment if—

(a) a person cannot be appointed as a director without the exercise in his favour by that other corporation of such a power; 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 Companies 37

(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, 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 firstmentioned 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 last-mentioned company or corporation is a subsidiary.

Definition of ultimate holding company

5A. For the purposes of this Act, a corporation shall be deemed to be the ultimate holding company of another corporation if—

(a) the other corporation is a subsidiary of the first-mentioned corporation; and

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

Definition of wholly-owned subsidiary

5B. For the purposes of this Act, a corporation shall be deemed to be a wholly-owned subsidiary of another corporation if none of the members of the first mentioned corporation is a person other than—

(a) the second-mentioned corporation;

(b) a nominee of the second-mentioned corporation;

(c) a subsidiary of the second-mentioned corporation, being a subsidiary none of the members of which is a person other than the second-mentioned corporation or a nominee of the second-mentioned corporation; or

(d) a nominee of such a subsidiary. When corporations deemed to be related to each other

6. Where a corporation—

(a) is the holding company of another corporation;

(b) is a subsidiary of another corporation; or

(c) is a subsidiary of the holding company of another corporation, that first-mentioned corporation and that other corporation shall for the purposes of this Act be deemed to be related to each other.

Interests in shares

6A. (1) The following subsections have effect for the purposes of Division 3A of Part IV, sections 134 and 135.

(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, he shall be deemed to have an interest in those shares.

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

(a) a right (being a right or an interest described in the definition of “interest” in section 84) was issued or offered to the public for subscription or purchase;

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

(c) such a right is held by the management company and was issued for the purpose of an offer to the public within the meaning of section 84; or

(d) such a right is a right which has been prescribed by the Minister, after consultation with the Minister of Finance, as not being an interest in a share.

(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 the associates of that person or that person and his associates are entitled to exercise or control the exercise of not less than fifteen 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 first-mentioned 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.

(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 fulfillment 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 fulfillment of a condition or not; or

(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) There shall be disregarded—

(a) an interest in a share if the interest is that of a person who holds the share as bare trustee;

(b) an interest in a share of a person whose ordinary business includes the lending of money 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;

(d) a prescribed interest in a share 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 pursuant to the Securities Industry (Central Depositories) Act 1991 [Act 453].

PART II ADMINISTRATION OF ACT

Registrar of Companies, etc.

7. (1) The Chief Executive Officer of the Commission shall be the Registrar of Companies.

(1A) The Commission may appoint, on such terms and conditions as it may determine, from amongst persons in the employment of the Commission such number of Regional Registrars, Deputy Registrars, Assistant Registrars, clerks and servants for the proper administration of this Act, and may revoke the appointment of any person so appointed or deemed to have been so appointed under subsection (1B).

(1B) The persons holding office as Regional Registrars, Deputy Registrars, Assistant Registrars, clerks and servants under this Act before the appointed date who were given an option by the Government of Malaysia and have opted to serve as employees of the Commission shall, on the appointed date, be deemed to have been appointed Regional Registrars, Deputy Registrars, Assistant Registrars, clerks and servants by the Commission.

(2) Subject to the general direction and control of the Registrar and to such restrictions and limitations as may be prescribed, anything by this Act appointed or authorized or required to be done or signed by the Registrar may be done or signed by any Regional, Deputy or Assistant Registrar and shall be as valid and effectual as if done or signed by the Registrar.

(3) No person dealing with any Regional, Deputy or Assistant Registrar shall be concerned to see or inquire whether any restrictions or limitations have been prescribed, and every act or omission of a Regional Deputy or Assistant Registrar so far as it affects any such person shall be as valid and effectual as if done or omitted by the Registrar.

Certain signatures to be judicially noticed

(4) All courts, judges and persons acting judicially shall take judicial notice of the seal and signature of the Registrar and of any Regional, Deputy or Assistant Registrar.

(5)-(10) (Deleted by Act A836).

Power to call for information

(11) (a) The Registrar may require any corporation or person to give orally or may by notice under his hand require any corporation or person to give in writing within a time specified in the notice all such information in his possession or within his knowledge as may be required of it or him by the Registrar for the purposes of this Act.

(b) Any corporation or person who fails to supply any information, or who in supplying any information makes any statement which he knows to be false in material particular, or recklessly makes such statement, shall be guilty of an offence.

Penalty: Two thousand ringgit. Default penalty.

(12) For the purposes of this Act, any notice, letter or document sent by ordinary or registered post shall be deemed to have been served on the person, corporation or firm to whom it is addressed, on the day succeeding the day on which the notice, letter or document would have been received in the ordinary course of post if—

(a) in the case of a corporation or firm it is addressed to its last known registered office;

(b) in the case of a person, it is addressed to his last known address.

(13) Neither the Registrar nor any person appointed by the Commission under subsection (1A) or deemed to have been appointed under subsection (1B) shall be liable to be sued in any court for any act or matter done or ordered to be done or omitted to be done, by him in good faith and in the intended exercise of any power or performance of any duty, conferred or imposed on him by or under this Act.

Fees

(14) Subject to section 7A, there shall be paid to the Registrar—

(a) the fees specified in the Second Schedule; and

(b) such other fees as are prescribed, and such fees shall be collected by the Registrar in such manner as the Minister may, from time to time, direct.

Power of Minister to exempt from payment of fees

7A. The Minister may, by order published in the Gazette, exempt any statutory body or government agency from paying any or all of the fees specified in the Second Schedule or prescribed under this Act.

Power to conduct inspection

7B. (1) For the purpose of ascertaining whether a corporation or any officer of a corporation is complying with this Act, the Registrar may have access to any place or building and may inspect and make copies of or take extracts from any book, minute book, register or document required by or under this Act to be kept by the corporation.

(2) For the purposes of this section, the Registrar may by notice in writing require any officer of a corporation or any person to produce to him such books, registers or documents as are in the custody or under the control of that officer or person.

(3) A corporation which, any officer of the corporation or any person who—

(a) fails to produce any such books, registers or documents as required by the Registrar under this section; or

(b) obstructs or hinders the Registrar while exercising any of the powers under this section, shall be guilty of an offence against this Act.

Penalty: Imprisonment for three years or ten thousand ringgit or both.

(4) The Registrar, except for the purposes of this Act, or in the course of any criminal proceedings, shall not make a record of, or divulge or communicate to any other person, any information which he has acquired by reason of such inspection.

(5) Subsection (1) shall not be construed as limiting or affecting any power to make any such inspection conferred on any person by any other law.

Power to conduct investigation

7C. (1) Where the Registrar has reason to suspect that a person has committed an offence against this Act, he may make such investigation as he thinks expedient for the due administration of this Act.

(2) Whenever it appears to any Magistrate upon written information and after such enquiry as he thinks necessary, that there is reasonable cause to believe that in any place or building there is any object, article, material, thing, accounts, book or other document including any travel or other personal document, which may be used as evidence of the commission of an offence against this Act, he may by warrant empower the Registrar to enter the place or building, by force if necessary, and there to search for, seize, take possession of and detain any such object, article, material, thing, accounts, book or other document.

(3) Whenever it appears to the Registrar that there is reasonable cause to believe that in any place or building there is concealed or deposited any object, article, material, thing, accounts, book or other document including any travel or other personal document which may be used as evidence of the commission of an offence against this Act, and the Registrar has reasonable grounds for believing that by reason of the delay in obtaining a search warrant, such object, article, material, thing, accounts, book or other document may be interfered with or destroyed or the object of the search is

likely to be frustrated, he may in respect of the place or building exercise all the powers mentioned in subsection (2) in as full and ample measure as if he were empowered to do so by warrant issued under that subsection.

(4) The Registrar may grant permission to any person to inspect any accounts, book or other document seized and taken possession of by the Registrar during the course of an investigation under this Act if such person is entitled to inspect such accounts, book or document under this Act.

Power to call for examination

7D. (1) For the purpose of any investigation under section 7C, the Registrar may by notice in writing require any person supposed to be acquainted with the facts and circumstances of the case to appear before him and to be examined orally and shall reduce into writing any statement made by the person so examined.

(2) Such person shall be legally bound to answer all questions relating to such case put to him by the Registrar and to state the truth, whether or not the statement is made wholly or partly in answer to questions, and shall not refuse to answer any question on the ground that it tends to incriminate him.

(3) A statement made by any person under this section shall be taken down in writing and signed by the person making it or affixed with his thumb print, as the case may be, after it has been read to him and after he had been given an opportunity to make any correction he may wish:

Provided that where the person examined refuses to sign or affix his thumb print on the statement, the Registrar shall endorse thereon under his hand the fact of such refusal and the reason therefor, if any, stated by the person examined.

(4) Any statement made and recorded under this section shall be admissible as evidence in any proceedings under this Act in any court, either against the person who made it or any other person.

(5) Any person who—

(a) without reasonable excuse fails to appear before the Registrar as required under subsection (1);

(b) without reasonable excuse refuses to answer all questions put to him by the Registrar as required by subsection (2); or

(c) knowingly furnishes to the Registrar information or statement that is false or misleading in a material particular, shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or thirty thousand ringgit or both.

Company auditors and liquidators to be approved by Minister charged with responsibility for finance

8. (1) Any person may apply to the Minister charged with responsibility for finance to be approved as a company auditor for the purposes of this Act.

(2) The Minister charged with responsibility for finance 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 approved company auditor may apply to the Minister charged with responsibility for finance to be approved as a liquidator for the purposes of this Act, and the Minister, if satisfied as to the experience and capacity of the applicant, may on payment of the prescribed fee approve such person as a liquidator for the purposes of this Act.

(4) Any approval granted by the Minister charged with responsibility for finance pursuant to this section 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.

(5) Every approval under this section including a renewal of approval of a company auditor or liquidator shall be in force for a period of two years* after the date of issue thereof unless sooner revoked by the Minister charged with responsibility for finance.

(6) A person who immediately before the commencement of this Act was authorized pursuant to any corresponding previous written law to be an auditor of companies shall be deemed to have

*NOTE—Provided that any approval or renewal of approval in force immediately before the coming into operation of Act A616 shall continue in force until it expires or is sooner revoked by the Minister. been approved as a company auditor under this section on the date of the commencement of this Act but if such person’s approval was limited or conditional those limitations and conditions shall continue to apply.

(7) The Minister charged with responsibility for finance 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.

(8) Any person who is dissatisfied with any decision of the Minister charged with responsibility for finance under this section 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 Yang di-Pertuan Agong who may in his discretion confirm, reverse or vary the decision.

Company auditors

9. (1) A person shall not knowingly consent to be appointed, and shall not knowingly act, as 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—

(a) if he is not an approved company auditor;

(b) if he is indebted to the company or to a corporation that is deemed to be related to that company by virtue of section 6 in an amount exceeding two thousand five hundred ringgit;

(i) an officer of the company;

(ii) a partner, employer or employee of an officer of the company;

(iii) a partner or employee of an employee of an officer of the company; or

(iv) a shareholder or his spouse is a shareholder of a corporation whose employee is an officer of the company; or

(d) if 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 holders of debentures of the company.

Penalty: *Thirty thousand ringgit.

(2) For the purposes of subsection (1), 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 6 or except where the Minister if he thinks fit in the circumstances of the case directs otherwise, if he has, at any time within the preceding period of twelve months, been an officer or promoter of the company or of such a corporation.

(3) For the purposes of this section, a person shall not be deemed to be an officer by reason only of his having been appointed as auditor of a corporation.

(4) A firm shall not knowingly consent to be appointed, and shall not knowingly act, as 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 is disqualified under paragraph (1)(b), (c) or (d) from acting as the auditor of the company.

(5) If a firm contravenes subsection (4) each partner of the firm shall be guilty of an offence.

Penalty: *Thirty thousand ringgit.

(6) No company or person shall appoint a person as auditor of a company unless that last-mentioned person has prior to the appointment consented in writing to act as such auditor, and no company or person shall appoint a firm as auditor of a company unless the firm has prior to the appointment consented, in writing under the hand of at least one partner of the firm, to act as such auditor.

(7) The appointment of a firm in the name of the firm as auditors of a company shall take effect and operate as an appointment as auditors of the company of the persons who are members of that firm at the time of the appointment. *NOTE—Previously “two thousand ringgit”–see Companies (Amendment) (No. 2) Act 1992.

Disqualification of liquidators

10. (1) Subject to this section a person shall not, except with the leave of the Court, consent to be appointed, and shall not act, as liquidator of a company—

(a) if he is not an approved liquidator;

(b) if he is indebted to the company or to a corporation that is deemed to be related to the company by virtue of section 6 in an amount exceeding two thousand five hundred ringgit;

(i) an officer of the company;

(ii) a partner, employer or employee of an officer of the company; or

(iii) a partner or employee of an employee of an officer of the company;

(d) if he becomes bankrupt;

(e) if he assigns his estate for the benefit of his creditors or makes an arrangement with his creditors pursuant to any law relating to bankruptcy; or

(f) if he is convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for three months or more.

Penalty: *Thirty thousand ringgit.

(2) Paragraphs (1)(a) and (c) shall not apply—

(a) to a members’ voluntary winding up; or

(b) to 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 those paragraphs or either of them shall not apply.

(3) For the purposes of subsection (1), 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 6 or has, at any time within the preceding period of twenty-four months, been an officer or promoter of the company or of such a corporation.

(4) A person shall not be appointed as liquidator of a company unless he has prior to the appointment consented in writing to act as such liquidator.

(5) Nothing in this section shall affect any appointment of a liquidator made before the commencement of this Act.

Registers

11. (1) The Registrar shall, subject to this Act, keep such registers as he considers necessary in such forms as he thinks fit. Inspection of register

(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 subsection (11);

(b) require a certificate 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 pursuant to paragraph (a) or any certificate referred to in paragraph (b) to be given or given and certified by the Registrar.

(3) If a reproduction or transparency of a document or certificate is produced for inspection, a person is not entitled pursuant to paragraph 2(a) to require the production of the original of that document or certificate.

(4) The reference in paragraph 2(c) to a document or certificate includes, where 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 where such a reproduction or transparency has been so incorporated, a person is not entitled pursuant to that paragraph to a copy of or extract from the original of that document or certificate.

Evidentiary value of copies certified by Registrar

(5) A copy of or extract from any document filed or lodged at the office of the Registrar certified to be a true copy or extract under the hand and seal of the Registrar shall in any proceedings be admissible in evidence as of equal validity with the original document.

(6) The reference in subsection (5) to a document includes, where 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

(7) In any legal proceedings—

(a) a cerficate under the hand and seal of the Registrar that, at a date or during a period specified in the certificate, no company was registered under this Act or a corresponding previous law by a name specified in the certificate shall be received 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 any corresponding previous law; and

(b) a certificate under the hand and seal of 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 received as prima facie evidence of matters specified in the certificate.

(8) If the Registrar is of the opinion that a document lodged or registered with him—

(a) contains matter contrary to law;

(b) contains matter that, in a material particular, is false or misleading in the form or context in which it is included;

(d) does not comply with the requirements of this Act; or

(e) contains an error, alteration or erasure, the Registrar may request—

(f) that the document be appropriately amended or completed and resubmitted;

(g) that a fresh document be submitted in its place; or

(h) where the document has not been duly completed, that a supplementary document in the prescribed form be lodged.

(9) The Registrar may require a person who submits a document for lodgment with the Registrar to produce to the Registrar such other document, or to furnish to the Registrar such information, as the Registrar thinks necessary in order to form an opinion whether he may refuse to receive or register the document.

Appeal

(10) Any person aggrieved by the refusal of the Registrar to register any corporation or to register or receive any document or by any act or decision of the Registrar may appeal within thirty days of the decision of the Registrar to the Court which may confirm the refusal, act or decision or give such directions in the matter as seem proper or otherwise determine the matter but this subsection shall not apply to any act decision of the Registrar—

(a) in respect of which any provision in the nature of the appeal or review is expressly provided in this Act; or

(b) which is declared by this Act to be conclusive or final or is embodied in any document declared by this Act to be conclusive evidence of any act, matter or thing.

Destruction, etc., of old records

(11) The Registrar may, if in his opinion it is no longer necessary or desirable to retain them, 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 six years;

(ii) any annual return or balance-sheet 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 memorandum and articles or any other document affecting them) which has been lodged, filed or registered for not less than fifteen years;

(b) in the case of a corporation that has been dissolved or has ceased to be registered for not less than fifteen years, any document lodged, filed or registered; or

Electronic filing of documents

11A. (1) The Registrar may provide a service for the electronic filing or lodging of documents required by this Act to be filed or lodged with the Registrar.

(2) A person who intends to use the service provided under subsection (1) shall become a subscriber to the service by paying the prescribed fee and by complying with such terms and conditions as may be determined by the Registrar.

(3) Only a subscriber to the service provided under subsection (1) may electronically file or lodge documents with the Registrar.

(4) A document electronically filed or lodged under this section shall be deemed to have satisfied the requirement for filing or lodgment if the document is communicated or transmitted to the Registrar in such manner as may be prescribed by regulations or approved by the Registrar.

(5) The Registrar may, by order published in the Gazette, prescribe the documents that may be electronically filed or lodged.

(6) A document that is required to be stamped, signed or sealed shall, if it is to be electronically filed or lodged be certified or authenticated in such manner as may be prescribed by regulations or approved by the Registrar.

Evidentiary value of copies of electronically filed documents certified by Registrar

(7) A copy of or an extract from any document electronically filed or lodged with the Registrar under subsection (1) supplied or issued by the Registrar and certified to be a true copy thereof or extract therefrom under the hand and seal of the Registrar shall be admissible in evidence in any proceedings as of equal validity as the original document.

(8) Where a document is electronically filed or lodged with the Registrar, the Registrar or his authorized agents 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 was made in good faith and in the ordinary course of the discharge of the duties of the Registrar or of his authorized agents or 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.

Enforcement of duty to make returns

12. (1) If a corporation or person, having made default in complyingwith—

(a) any provision of this Act or of any other law which requires the lodging or filing in any manner with the Registrar or the Official Receiver of any return, account or other document or the giving of notice to him of any matter; or

(b) any request of the Registrar or the Official Receiver to amend or complete and resubmit any document or to submit a fresh document, fails to make good the default within fourteen days after the service on the corporations or person of a notice requiring it 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 the Official Receiver, make an order directing the corporation and any officer thereof or that person to make good the default within such time as is specified in the order.

(2) Any such order may provide that all costs of and incidental to the application shall be borne by the corporation or by any officers of the corporation responsible for the default or by that person.

(3) Nothing in this section shall limit the operation of any written law shall imposing penalties on a corporation or its officers or that person in respect of any such default as aforesaid.

Relodging of lost registered documents

13. (1) If in the case of any corporation incorporated or registered under this or any corresponding previous written law the memorandum or articles or any other document relating to the corporation filed or lodged with the Registrar has been lost or destroyed, the corporation may apply to the Registrar for leave to lodge a copy of the document as originally filed or lodged.

(2) On such application being made the Registrar may direct notice thereof to be given to such persons and in such manner as he thinks fit.

(2A) Where the Registrar has reasonable cause to believe that a document in relation to a corporation filed or lodged with him has been lost or destroyed, he may by notice in writing direct the corporation to lodge a copy of the document and the corporation or any officer of the corporation shall, within fourteen days after the service of the notice or such longer period as the Registrar may allow, comply with the direction of the Registrar.

(3) Where the Registrar is satisfied of or has reasonable cause to believe—

(a) the loss or destruction of the original document;

(b) the correctness of the date of filing or lodgment thereof with him; and

(c) the correctness of the copy of the document produced to him, the Registrar may certify the same upon the copy and direct that the copy be lodged in the manner required by law in respect of the original.

(4) Upon the lodgment the copy for all purposes shall, from such date as is mentioned in the certificate as the date of the filing or lodging of the original with the Registrar, have the same force and effect as the original.

(5) The Court may, by order upon application by any person aggrieved and after notice to any other person whom the Court directs, confirm, vary or rescind the certificate and the order may be lodged with the Registrar and shall be registered by him, but no payments, contracts, dealings, acts and things made, had or done in good faith before the registration of the order and upon the faith of and in reliance upon the certificate shall be invalidated or affected by the variation or rescission.

(6) No fee shall be payable upon the lodging of a document under this section.

(7) If default is made in complying with the direction of the Registrar under subsection (2A), the corporation and any officer of the corporation who is in default shall be guilty of an offence against this Act.

Penalty: Five thousand ringgit. Default penalty.

PART III CONSTITUTION OF COMPANIES DIVISION 1 INCORPORATION

Formation of companies

14. (1) Subject to this Act any two or more persons associated for any lawful purpose may by subscribing their names to a memorandum and complying with the requirements as to registration form an incorporated company.

(2) A company may be—

(a) a company limited by shares;

(b) a company limited by guarantee;

(d) an unlimited company.

Prohibition of unincorporated associations of more than twenty members for gain

(3) An association or partnership shall not be formed for the purpose of carrying on any business which has for its object the acquisition of gain by the association or partnership or the individual members thereof unless—

(a) it is an association or partnership formed for the purpose of carrying on any profession or calling which is declared by the Minister to be a profession or calling which is not customarily carried on by an association or partnership incorporated under this Act;

(b) in the case of any other association or partnership, it consists of not more than twenty members;

(d) it is formed in pursuance of some other written law or letters patent.

Prohibition of registration of company limited by guarantee with a share capital

14A. On or after the coming into operation of this Act, no company may be formed as, or become, a company limited by guarantee with a share capital.

Private company

15. (1) A company having a share capital may be incorporated as a private company if its memorandum or articles—

(a) restricts the right to transfer its shares;

(b) limits to not more than fifty the number of its members (counting joint holders of shares as one person and not counting any person in the employment of the company or of its subsidiary or any person who while previously in the employment of the company or of its subsidiary was and thereafter has continued to be a member of the company);

(d) prohibits any invitation to the public to deposit money with the company for fixed periods or payable at call, whether bearing or not bearing interest.

(2) Where, upon the commencement of this Act, neither the memorandum nor articles of a company that is a private company by virtue of paragraph (a) of the definition of “private company” in subsection 4(1) contain the restrictions, limitations and prohibitions required by subsection (1) to be included in the memorandum or articles of a company that may be incorporated as a private company, the articles of the company shall be deemed to include each such restriction, limitation or prohibition that is not so included and a restriction on the right to transfer its shares that is so deemed to be included in its articles shall be deemed to be a restriction that prohibits the transfer of shares except to a person approved by the directors of the company.

(3) Where a restriction, limitation or prohibition deemed to be included in the articles of a company under subsection (2) is inconsistent with any provision already included in the memorandum or articles of the company, that restriction, limitation or prohibition shall, to the extent of the inconsistency, prevail.

(4) A private company may, by special resolution, alter any restriction on the right to transfer its shares included, or deemed to be included, in its memorandum or articles or any limitation on the number of its members included, or deemed to be included, in its memorandum or articles, but not so that the memorandum and articles of the company cease to include the limitation required by paragraph (1)(b) to be included in the memorandum or articles of a company that may be incorporated as a private company.

Registration and incorporation

16. (1) Persons desiring the incorporation of a company shall lodge the memorandum and the articles, if any, of the proposed company with the Registrar together with the other documents required to be lodged by or under this Act, and the Registrar on payment of the appropriate fees shall subject to this Act register the company by registering the memorandum and articles, if any.

Statutory declarations

(2) The person named in the articles as the first secretary of the company shall lodge with the Registrar a declaration in the prescribed form stating that all or any of the requirements of this Act have been complied with and containing such information as may be prescribed, and the Registrar may accept such a declaration as sufficient evidence of compliance.

(3) (Deleted by Act A836).

Subscriber to lodge statutory declaration

(3A) Every promoter of a proposed company who is a natural person shall before the incorporation of the company make and lodge with the Registrar and the Official Receiver a statutory declaration in the form prescribed by regulations that he will not be acting in contravention of sections 125 and 130.

Certificate of incorporation

(4) On the registration of the memorandum the Registrar shall certify under his hand and seal that the company is on and from the date specified in the certificate incorporated, and that the company is—

(a) a company limited by shares;

(b) a company limited by guarantee;

(d) an unlimited company. as the case may be, and where applicable, that it is a private company.

Effect of incorporation

(5) On and from the date of incorporation specified in the certificate of incorporation but subject to this Act the subscribers to the memorandum together with such other persons as may from time to time become members of the company shall be a body corporate by the name contained in the memorandum capable forthwith of exercising all the functions of an incorporated company and of suing and being sued and having perpetual succession and a common seal with power to hold land but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is provided by this Act.

Members of company

(6) The subscribers to the memorandum shall be deemed to have agreed to become members of the company and on the incorporation of the company shall be entered as members in its register of members, and every other person who agrees to become a member of a company and whose name is entered in its register of members shall be a member of the company.

(7) The Registrar shall not register a memorandum and articles, if any, of a proposed company unless the memorandum or articles contain the names of at least two persons who are to be the first directors of the proposed company.

(8) Notwithstanding anything to the contrary in this Act or any rule of law, the Registrar shall refuse to register the memorandum of a proposed company if he is satisfied that—

(a) the proposed company is likely to be used for unlawful purposes or any purpose prejudicial to or incompatible with peace, welfare, security, public order, good order or morality in Malaysia; or

(b) it would be prejudicial to national security or public interest for the proposed company to be registered.

Membership of holding company

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

(2) Subsection (1) shall not apply where the subsidiary is concerned as personal representative, or where it is concerned as trustee, unless the holding company or a subsidiary thereof is beneficially interested under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(3) This section shall not prevent a subsidiary which is, at the commencement of this Act, a member of its holding company, from continuing to be a member but, subject to subsection (2), the subsidiary shall have no right to vote at meetings of the holding company or any class of members thereof.

(4) This section shall not prevent a subsidiary from continuing to be a member of its holding company if, at the time when it becomes a subsidiary thereof, it already holds shares in that holding company, but—

(a) subject to subsection (2), the subsidiary shall have no right to vote at meetings of the holding company or any class of members thereof; and

(b) the subsidiary shall, within the period of twelve months or such longer period as the Court may allow after becoming the subsidiary of its holding company, dispose of all of its shares in the holding company.

(5) Subject to subsection (2), subsections (1), (3) and (4) thereof shall apply in relation to a nominee for a corporation which is a subsidiary as if references in those subsections to such a corporation included references to a nominee for it.

(6) 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 the allotment is made by way of capitalization of reserves of the holding company and 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.

(7) Where but for this section a subsidiary would have been entitled to subscribe for shares in the holding company, the holding company may, on behalf of the subsidiary, sell the shares for which the subsidiary would otherwise have been entitled to subscribe.

(8) 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 as such, whatever the form of that interest.

Requirements as to memorandum

18. (1) The memorandum of every company shall be printed and divided into numbered paragraphs and dated and shall state, in addition to other requirements—

(a) the name of the company;

(b) the objects of the company;

(c) unless the company is an unlimited company, the amount of share capital, if any, with which the company proposes to be registered and the division thereof into shares of a fixed amount;

(d) if the company is a company limited by shares, that the liability of the members is limited;

(e) if the company is a company limited by guarantee, that the liability of the members is limited and that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company contracted before he ceases to be a member and of the costs, charges and expenses of winding up and for adjustment of the rights of the contributories among themselves, such amount as may be required not exceeding a specified amount in addition to the amount, if any, unpaid on any shares held by him;

(f) if the company is an unlimited company, that the liability of the members is unlimited;

(g) the full names, addresses and occupations of the subscribers thereto; and

(h) that the subscribers are desirous of being formed into a company in pursuance of the memorandum and (where the company is to have a share capital) respectively agree to take the number of shares in the capital of the company set out opposite their respective names.

(2) Each subscriber to the memorandum shall, if the company is to have a share capital, in his own handwriting state the number of shares (not less that one) that he agrees to take and, whether or not the company is to have a share capital, shall sign the memorandum in the presence of at least one witness (not being another subscriber) who shall attest the signature and add his address.

(3) A statement in the memorandum of a company limited by shares that the liability of members is limited shall mean that the liability of the members is limited to the amount, if any, unpaid on the shares respectively held by them.

DIVISION 2 POWERS

Powers of a company

19. (1) Subject to subsection (2) the powers of a company, whether incorporated before or after the commencement of this Act, shall include—

(a) power to make donations for patriotic or for charitable purposes;

(b) power to transact any lawful business in aid of Malaysia in the prosecution of any war or hostilities in which Malaysia is engaged; and

(c) unless expressly excluded or modified by the memorandum or articles, the powers set forth in the Third Schedule but the powers of a company which has by the licence of the Minister pursuant to section 24 been registered without the word “Berhad” or pursuant to any corresponding previous written law been registered without the addition of the word “Limited” to its name shall not include any of the powers set forth in the Third Schedule unless expressly included in the memorandum or articles with the approval in writing of the Minister.

Restriction as to power of certain companies to hold lands

(2) A company formed for the purpose of providing recreation or amusement or promoting commerce, industry, art, science, religion, or any other like object not involving the acquisition of gain by the company or by its individual members shall not acquire any land without the licence of the Minister but the Minister may by licence empower any such company to hold lands in such quantity and subject to such conditions as he thinks fit.

(3) A licence given by the Minister under subsection (2) shall be in the prescribed form or as near thereto as circumstances admit.

(4) Any company which is dissatisfied with any decision of the Minister under subsection (2) may within one month of such decision appeal to the Yang di-Pertuan Agong who shall have power to confirm, reverse or vary the decision.

(5) Every decision by the Yang di-Pertuan Agong and every decision by the Minister under this section, unless such decision is reversed or varied by the Yang di-Pertuan Agong under this section, shall be final and shall not be called into question by any court.

Ultra vires transactions

20. (1) No act or purported act of a company (including the entering into of an agreement by the company and including any act done on behalf of a company by an officer or agent of the company under any purported authority, whether express or implied, of the company) and no conveyance or transfer of property, whether real or personal, to or by a company shall be invalid by reason only of the fact that the company was without capacity or power to do the act or to execute or take the conveyance or transfer.

(2) Any such lack of capacity or power may be asserted or relied upon only in—

(a) proceedings against the company by any member of the company or, where the company has issued debentures secured by a floating charge over all or any of the company’s property, by the holder of any of those debentures or the trustee for the holders of those debentures to restrain the doing of any act or acts or the conveyance or transfer of any property to or by the company;

(b) any proceedings by the company or by any member of the company against the present or former officers of the company; or

(3) If the unauthorized act, conveyance or transfer sought to be restrained in any proceedings under paragraph (2)(a) is being or is to be performed or made pursuant to any contract to which the company is a party, the Court may, if all the parties to the contract are parties to the proceedings and if the Court deems it to be just and equitable, set aside and restrain the performance of the contract and may allow to the company or to the other parties to the contract (as the case requires) compensation for the loss or damage sustained by either of them which may result from the action of the Court in setting aside and restraining the performance of the contract but anticipated profits to be derived from the performance of the contract shall not be awarded by the Court as a loss or damage sustained.

General provisions as to alteration of memorandum

21. (1) The memorandum of a company may be altered to the extent and in the manner provided by this Act but not otherwise.

(1A) Notwithstanding subsection (1) and subject to section 33 and section 181, if a provision of the memorandum of a company could lawfully have been contained in the articles of the company, the company may, by special resolution, alter the memorandum—

(a) by altering; or

(b) by deleting, the provision, unless the memorandum itself prohibits the alteration or deletion of that provision.

(1B) Nothing in subsection (1A) permits the alteration or deletion of a provision of the memorandum that relates to rights to which only members included in a particular class of members are entitled.

(2) In addition to observing and subject to any other provision of this Act requiring the lodging with the Registrar of any resolution of a company or order of the Court or other document affecting the memorandum of a company, the company shall within fourteen days after the passing of any such resolution or the making of any such order lodge with the Registrar a copy of the resolution or other document or an office copy of the order together with (unless the Registrar dispenses therewith) a printed copy of the memorandum as altered, and if default is made in complying with this subsection the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(3) The Registrar shall register every resolution, order or other document lodged with him under this Act that affects the memorandum of a company and, where an order is so registered shall certify the registration of that order.

*NOTE—Previously “two hundred and fifty ringgit”–see Companies (Amendment) Act 1986

(4) The certificate of the Registrar shall be conclusive evidence that all the requirements of this Act with respect to the alteration and any confirmation thereof have been complied with.

(5) Notice of the registration shall be published in such manner, if any, as the Court or the Registrar directs.

(6) The Registrar shall, where appropriate, issue a certificate of incorporation in accordance with the alteration made to the memorandum.

Names of companies

22. (1) Except with the consent of the Minister, a company shall not be registered by a name that, in the opinion of the Registrar, is undesirable or is a name, or a name of a kind, that the Minister has directed the Registrar not to accept for registration.

(2) The Minister shall cause a direction given by him under subsection (1) to be published in the Gazette.

(3) A limited company shall have “Berhad” or the abbreviation “Bhd.” as part of and at the end of its name.

(4) A private company shall have the word “Sendirian” or the abbreviation “Sdn.” as part of its name, inserted immediately before the word “Berhad” or before the abbreviation “Bhd.” or in the case of an unlimited company, at the end of its name.

(5) It shall be lawful to use and no description of a company shall be deemed inadequate or incorrect by reason of the use of—

(a) the abbreviation “Sdn.” in lieu of the word “Sendirian” contained in the name of a company;

(b) the abbreviation “Bhd.” in lieu of the word “Berhad” contained in the name of a company; or

(6) Prior to the registration of—

(a) an intended company or foreign company; or

(b) the change of name of a company or foreign company, the applicant for registration shall apply in the prescribed form to the Registrar for a search as to the availability of the proposed name of the intended company, company or foreign company and for reservation of that name, if available.

(7) If the Registrar is satisfied as to the bona fides of the application and that the proposed name is a name by which the intended company, company or foreign company could be registered without contravention of subsection (1), he shall reserve the proposed name for a period of three months from the date of the lodging of the application.

(8) (Deleted by Act A836).

(9) During a period for which a name is reserved, no company or foreign company (other than the intended company, company or foreign company in respect of which the name is reserved) shall be registered under this Act, whether originally or on change of name, under the reserved name or under any other name that, in the opinion of the Registrar, so closely resembles the reserved name as to be likely to be mistaken for that name.

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

Change of name

23. (1) A company may by special resolution resolve that its name should be changed to a name by which the company could have been registered without contravention of subsection 22(1).

(2) If the Registrar approves the name which the company has resolved should be its new name he shall on payment of the prescribed fee issue a certificate of incorporation of the company under the new name and upon the issue of such certificate of incorporation the change of name shall become effective.

(3) If the name of a company is (whether through inadvertence or otherwise and whether originally or by change of name) a name by which the company could not be registered without contravention of subsection 22(1) the company may by special resolution change its name to a name by which the company could be registered without contravention of that subsection and, if the Registrar so directs, shall so change it within six weeks after the date of the direction or such longer period as the Registrar allows unless the Minister by written notice annuls the direction, and if the company fails to comply with the direction it shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(4) Where the name of a company incorporated pursuant to any corresponding previous written law has not been changed since the commencement of this Act, the Registrar shall not, except with the approval of the Minister, exercise his power under subsection (3) to direct the company to change its name.

(5) Upon the commencement of this Act a company which has the word “Limited” as the last word of its name shall be deemed to have changed its name by substituting for the word “Limited” the word “Berhad” and a company which has the abbreviation “Ltd.” at the end of its name shall be deemed to have altered its name by substituting for the abbreviation “Ltd.” the abbreviation “Bhd.” and where upon the date after the commencement of this Act a company which is a private company does not have the word “Sendirian” or the abbreviation “Sdn.” as part of its name immediately before the word “Berhad” or before the abbreviation “Bhd.” or in the case of an unlimited company at the end of its name, the company shall be deemed to have altered its name to include the abbreviation “Sdn.” immediately before the word “Berhad” or before the abbreviation “Bhd.” or in the case of an unlimited company at the end of its name and the Registrar shall as soon as practicable after the commencement of this Act alter the name of the company set forth in the memorandum accordingly and issue a new certificate of incorporation in the name of the company as so altered:

Provided that this section shall not operate to prevent a company which immediately before the commencement of this Act and which had the word “Limited” or the abbreviation “Ltd.” as part of its name or which was a private company and which did not have the word “Sendirian” or the abbreviation “Sdn.” as part of its name from continuing to use the name set forth in its memorandum immediately before the commencement of this Act until the expiration of two years after the commencement of this Act.

(6) A change of name pursuant to this Act shall not affect the identity of the company or any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced by or against it 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.

Omission of “Berhad” in name of charitable and other companies

24. (1) Where it is proved to the satisfaction of the Minister that a proposed limited company is being formed for the purpose of providing recreation or amusement or promoting commerce, industry, art, science, religion, charity, pension or superannuation schemes or any other object useful to the community, and will apply its profits, if any, or other income in promoting its objects and will prohibit the payment of any dividend to its members, the Minister may (after requiring, if he thinks fit, the proposal to be advertised in such manner as he directs either generally or in a particular case) by licence direct that it be registered as a company with limited liability without the addition of the word “Berhad” to its name, and the company may be registered accordingly.

(2) Where it is proved to the satisfaction of the Minister—

(a) that the objects of a limited company are restricted to those specified in subsection (1) and to objects incidental or conducive thereto; and

(b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members, the Minister may by licence authorize the company to change its name to a name which does not contain the word “Berhad”, being a name approved by the Registrar.

(3) A licence under this section may be issued on such conditions as the Minister thinks fit, and those conditions shall be binding on the company and shall if the Minister so directs be inserted in the memorandum or articles of the company and the memorandum or articles may by special resolution be altered to give effect to any such direction.

(4) Where the memorandum or articles of a company include as a result of a direction of the Minister given pursuant to subsection (3) or pursuant to any corresponding previous written law a provision that the memorandum or articles shall not be altered except with the consent of the Minister the company may with the consent of the Minister by special resolution alter any provision of the memorandum or articles.

(5) A company shall, while a licence granted by the Minister under this or under any corresponding previous written law is in force, be exempted from complying with this Act relating to the use of the word “Berhad” as any part of its name.

(6) A licence under this section or under any corresponding previous written law may at any time be revoked by the Minister and upon revocation the Registrar shall enter the word “Berhad” at the end of the name of the company upon the register, and the company shall thereupon cease to enjoy the exemption granted by reason of the licence under this section but before a licence is so revoked the Minister shall give to the company notice in writing of his intention and shall afford it an opportunity to be heard.

(7) Where a licence under this section or under any corresponding previous written law is revoked the memorandum or articles of the Company may be altered by special resolution so as to remove any provision in or to the effect that the memorandum or articles may be altered only with the consent of the Minister and paragraph 19(1)(c) shall apply to the company as if it had never had a licence under this section.

Registration of unlimited company as limited, etc.

25. (1) Subject to this section, an unlimited company may convert to a limited company by passing a special resolution determining so to convert and lodging with the Registrar for registration a copy of the resolution.

(2) On the lodging of the copy of the resolution the Registrar shall, subject to this Act—

(a) register the copy;

(b) make such endorsements in or alterations to his registers as are necessary to record the effect of the resolution with respect to the conversion; and

(c) issue to the company a certificate of incorporation of the company altered to meet the circumstances of the case and cancel the previous certificate of incorporation of the company.

(3) On issuing the certificate of incorporation the Registrar may, by notice in writing served on the company, dispense with the lodging by the company of any document which had been lodged with him on the occasion of or subsequent to the incorporation of the company.

(4) The conversion shall take effect on the issue of the certificate of incorporation under subsection (2) and the memorandum shall thereupon be altered in accordance with the terms of the resolution.

(5) A conversion of a company pursuant to this section shall not affect the identity of the company or any rights or obligations of the company or render defective any legal proceedings by or against the company and any legal proceedings that could have been continued or commenced by or against it prior to the conversion may, notwithstanding the conversion, be continued or commenced by or against it after the conversion.

Change from public to private and from private to public company

26. (1) A public company having a share capital may convert to a private company by lodging with the Registrar a copy of a special resolution—

(a) determining to convert to a private company and specifying an appropriate alteration to its name; and

(b) altering the provisions or its memorandum or articles so far as is necessary to impose the restrictions, limitations and prohibitions referred to in subsection 15(1).

(2) A private company may, subject to anything contained in its memorandum or articles, convert to a public company by lodging with the Registrar—

(a) a copy of a special resolution determining to convert to a public company and specifying an appropriate alteration to its name;

(b) a statement in lieu of prospectus; and

(c) a statutory declaration in the prescribed form verifying that paragraph 52(2)(b) has been complied with, and thereupon the restrictions, limitations and prohibitions referred to in subsection 15(1) as included in or deemed to be included in the memorandum or articles of the company shall cease to form part of the memorandum or articles.

(3) On compliance by a company with subsection (1) or (2) and on the issue of a certificate of incorporation of the company altered accordingly the company shall be a private company or a public company (as the case requires).

(4) A conversion of a company pursuant to subsection (1) or (2) shall not affect the identity of the company or any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceedings that could have been continued or commenced by or against it prior to the conversion may, notwithstanding any change in the company’s name or capacity in consequent of the conversion, be continued or commenced by or against it after the conversion.

Default in complying with requirements as to private companies

27. (1) Where, on the application of the Minister with respect to a private company or of any member or creditor of a private company, the Court is satisfied that default has been made in relation to the company in complying with a prohibition of a kind specified in paragraph 15(1)(c) or (d) that is included, or is deemed to be included, in the memorandum or articles of the company the Court may by order determine that, on such date as the Court specifies in its order, the company ceased to be a private company.

(2) Where—

(a) default has been made in relation to a private company in complying with a limitation of a kind specified in paragraph 15(1)(b) that is included, or is deemed to be included in the memorandum or articles of the company,

(b) a private company has been convicted of an offence under subsection (7);

(c) the memorandum or articles of a private company have been so altered that they no longer include restrictions, limitations or prohibitions of the kinds specified in subsection 15(1); or

(d) a private company has ceased to have a share capital, the Registrar may by notice served on the company determine that, on such date as is specified in the notice, the company ceased to be a private company.

(3) Where, under this section, the Court or 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 order or 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 a period of fourteen days after the date of the order or the notice, lodge with the Registrar—

(i) a statement in lieu of prospectus;

(ii) a statutory declaration in the prescribed form verifying that paragraph 52(2)(b) has been complied with; and

(iii) where an order has been made under subsection (1) an office copy of the order.

(4) Where the Court is satisfied that a default or alteration referred to in subsection (1) or (2) has occurred but that it was accidental or due to inadvertence or to some other sufficient cause or that on other grounds it is just and equitable to grant relief, the Court may, on such terms and conditions as to the Court seem just and expedient, determine that the company has not ceased to be a private company.

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

(6) If default is made in complying with paragraph (3)(c) the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(7) Where any subscription for shares in or debentures of, or any deposit of money with, a private company is arranged by or through an advocate, broker, agent or any other person (whether an officer of the company or not) who invites the public to make use of his services in arranging investments or who holds himself out to the public as being in a position to arrange investments, the company and every person, including an officer of the company, who is a party to the arrangement shall be guilty of an offence against this Act.

Penalty: Imprisonment for ten years or two hundred and fifty thousand ringgit or both.

(8) Where default is made in relation to a private company in complying with any restriction, limitation or prohibition of a kind specified in subsection 15(1) that is included, or deemed to be included, in the memorandum or articles of the company, the company and every officer of the company who is in default shall be guilty of an offence against this Act. . Alterations of objects in memorandum

28. (1) Subject to this section a company may by special resolution alter the provisions of its memorandum with respect to the objects of the company.

(2) Where a company proposes to alter its memorandum, with respect to the objects of the company it shall give by post twenty one days’ written notice specifying the intention to propose the resolution as a special resolution and to submit it for passing to a meeting of the company to be held on a day specified in the notice.

(3) The notice shall be given to all members, and to all trustees for debenture holders and if there are no trustees for any class of debenture holders to all debenture holders of that class whose names are, at the time of the posting of the notice, known to the company.

(4) The Court may, in the case of any person or class of persons for such reasons as to it seem sufficient, dispense with the notice required by subsection (2).

(5) If an application for the cancellation of an alteration is made to the Court in accordance with this section by—

(a) the holders of not less in the aggregate than ten per centum in nominal value of the company’s issued share capital or any class of that capital or, if the company is not limited by shares, not less than ten per centum of the company’s members; or

(b) the holders of not less than ten per centum in nominal value of the company’s debentures, the alteration shall not have effect except so far as it is confirmed by the Court.

(6) The application shall be made within twenty-one days after the date on which the resolution altering the company’s objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they appoint in writing for the purpose.

(7) On the application the Court—

(a) shall have regard to the rights and interests of the members of the company or of any class of them as well as to the rights and interests of the creditors;

(b) may if it thinks fit adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase (otherwise than by the company) of the interests of dissentient members;

(c) may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement; and

(d) may make an order cancelling the alteration or confirming the alteration either wholly or in part and on such terms and conditions as it thinks fit.

(8) Notwithstanding any other provision of this Act a copy of a resolution altering the objects of a company shall not be lodged with the Registrar before the expiration of twenty-one days after the passing of the resolution or if any application to the Court has been made before the application has been determined by the Court (whichever is the later).

(9) A copy of the resolution shall be lodged with the Registrar by the company within fourteen days after the expiration of the twenty-one days referred to in subsection (8), but if an application has been made to the Court in accordance with this section the copy shall be lodged with the Registrar together with an office copy of the order of the Court within fourteen days after the application has been determined by the Court.

(10) On compliance by a company with subsection (9) the alteration, if any, of the objects shall take effect.

Articles of association

29. (1) There may in the case of a company limited by shares and there shall in the case of a company limited by guarantee or limited both by shares and guarantee or an unlimited company be registered with the memorandum, articles signed by the subscribers to the memorandum prescribing regulations for the company.

(2) Articles shall be—

(a) printed;

(b) divided into numbered paragraphs; and

(c) signed by each subscriber to the memorandum in the presence of at least one witness (not being another subscriber) who must attest the signature and add his address.

(3) In the case of an unlimited company the articles, if the company has a share capital, shall state the amount of share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount.

(4) In the case of an unlimited company or a company limited by guarantee or a company limited both by shares and guarantee the articles shall state the number of members with which the company proposes to be registered.

(5) Where a company to which subsection (4) applies increases the number of its members beyond the registered number it shall, within one month after the increase was resolved on or took place, lodge with the Registrar notice of the increase.

(6) Every company which makes default in complying with subsection (5) and every officer of the company who is in default in complying with that subsection shall be guilty of an offence against this Act.

Adoption of Table A of Fourth Schedule

30. (1) Articles may adopt all or any of the regulations contained in Table A.

(2) In the case of a company limited by shares incorporated after the commencement of this Act, if articles are not registered, or if articles are registered then so far as the articles do not exclude or modify the regulations contained in Table A those regulations shall so far as applicable be the articles of the company in the same manner and to the same extent as if they were contained in registered articles.

Alteration of articles

31. (1) Subject to this Act and to any conditions in its memorandum, a company may by special resolution alter or add to its articles.

(2) Any alteration or addition so made in the articles shall subject to this Act, on and from the date of the special resolution or such later date as is specified in the resolution, be as valid as if originally contained therein and be subject in like manner to alteration by special resolution.

(3) Subject to this section, any company shall have the power and shall be deemed always to have had the power to amend its articles by the adoption of all or any of the regulations contained in Table A, by reference only to the regulations in the Table or to the numbers of particular regulations contained therein, without being required in the special resolution effecting the amendment to set out the text of the regulations so adopted.

As to memorandum and articles of companies limited by guarantee

32. (1) In the case of a company limited by guarantee and not having a share capital every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member shall be void.

(2) For the purposes of this Act relating to the memorandum of a company limited by guarantee and of this section, every provision in the memorandum or articles or in any resolution of a company limited by guarantee purporting to divide the undertaking of the company into shares or interests shall be treated as a provision for a share capital notwithstanding that the nominal amount or number of the shares or interests is not specified thereby.

Effect of memorandum and articles

33. (1) Subject to this Act the memorandum and articles shall when registered bind the company and the members thereof to the same extent as if they respectively had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles.

(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

As to effect of alterations on members who do not consent

(3) Notwithstanding anything in the memorandum or articles of a company no member of the company, unless either before or after the alteration is made he agrees in writing to be bound thereby, shall be bound by an alteration made in the memorandum or articles after the date on which he became a member so far as the alteration requires him to take or subscribe for more shares than the number held by him at the date on which the alteration is made or in any way increases his liability as at that date to contribute to the share capital of or otherwise to pay money to the company.

Copies of memorandum and articles

34. (1) A company shall on being so required by any member send to him a copy of the memorandum and of the articles, if any, subject to payment of five ringgit or such lesser sum as is fixed by the directors.

(2) Where an alteration is made in the memorandum or articles of a company, a copy of the memorandum or articles shall not be issued by the company after the date of alteration unless—

(a) the copy is in accordance with the alteration; or

(b) a printed copy of the order or resolution marking the alteration is annexed to the copy of the memorandum or articles and the particular clauses or articles affected are indicated in ink.

(3) Where an agreement required to be lodged with the Registrar under section 154 affects the memorandum or articles of a company, a copy of the memorandum or articles shall not be issued by the company after the agreement is entered into unless a copy of the agreement is annexed to the copy of the memorandum or articles.

(4) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Form of contracts

35. (1) Any contract or other transaction purporting to be entered into by a company prior to its formation or by any person on behalf of a company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it had been in existence at the date of the contract or other transaction and had been a party thereto.

(2) Prior to ratification by the company the person or persons who purported to act in the name or on behalf of the company shall in the absence of express agreement to the contrary be personally bound by the contract or other transaction and entitled to the benefit thereof.

(3) (Deleted by Act A616).

(4) Contracts on behalf of a company may be made as follows—

(a) a contract which if made between private persons would be by law required to be in writing under seal may be made on behalf of the company in writing under the common seal of the company;

(b) a contract which if made between private persons would be by law required to be in writing signed by the parties to be charged therewith may be made on behalf of the company in writing signed by any person acting under its authority express or implied; and

(c) a contract which if made between private persons would by law be valid although made by parol only (and not reduced into writing) may be made by parol on behalf of the company by any person acting under its authority express or implied, and any contract so made shall be effectual in law and shall bind the company and its successors and all other parties thereto and may be varied or discharged in the manner in which it is authorized to be made.

Authentication of documents

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

(6) A company may, by writing under its common seal empower any person either generally or in respect of any specified matters as its agent or attorney to execute deeds on its behalf and a deed signed by such an agent or attorney on behalf of the company and under his seal, or, subject to subsection (8), under the appropriate official seal of the company shall bind the company and have the same effect as if it were under its common seal.

(7) The authority of any such agent or attorney shall as between the company and any person dealing with him continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is there mentioned then until notice of the revocation or determination of his authority has been given to the person dealing with him.

Official seal for use abroad

(8) A company whose objects require or comprise the transaction of business outside Malaysia may, if authorized by its articles, have for use in any place outside Malaysia an official seal, which shall be a facsimile of the common seal of the company with the addition on its face of the name of the place where it is to be used and the person affixing any such official seal shall in writing under his hand certify on the instrument to which it is affixed the date on which and the place at which it is affixed.

Prohibition of carrying on business with fewer than statutory minimum of members

36. If at any time the number of members of a company (other than a company the whole of the issued shares of which are held by a holding company) is reduced below two and it carries on business for more than six months while the number is so reduced, a person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact that it is carrying on business with fewer than two members shall be liable for the payment of all the debts of the company contracted during the time that it so carries on business after those six months and may be sued therefor, and the company and that member shall be guilty of an offence against this Act if the company so carries on business after those six months.

PART IV SHARES, DEBENTURES AND CHARGES DIVISION 1

PROSPECTUSES

Non-application of Divisions 1 and 4 to offers under the Securities Commission Act 1993

36A. (1) In this section, unless the contrary intention appears— “borrower” has the same meaning as is assigned to that word in the Securities Commission Act 1993; “excluded offer or invitation” means the offer or invitation referred to in section 38 of the Securities Commission Act 1993; “guarantor” has the same meaning as is assigned to that word in the Securities Commission Act 1993.

(2) Except as provided in subsection (3) , on the coming into operation of this section, Divisions 1 and 4 of this Part 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 under the Securities Commission Act 1993, and any offer for subscription or purchase of, or invitation to subscribe for or purchase, debentures to which Division 4 of Part IV of the Securities Commission Act 1993 do not apply.

(3) The provisions of this Part shall apply to an offer or invitation in respect of shares or debentures made to the public by an unlisted recreational club.

(4) A corporation in respect of whose securities a prospectus or supplementary prospectus has been registered under the Securities Commission Act 1993 shall lodge a copy of the prospectus and any supplementary prospectus and a copy of the form of application accompanying or attached to the prospectus with the Registrar on or before the date of its issue.

(5) Every corporation or other person who contravenes or fails to comply with the requirements of subsection (4) and every officer of the corporation who is in default shall be guilty of an offence against this Act.

Penalty: One hundred thousand ringgit. Default penalty.

(6) Notwithstanding subsection (2), the provisions of section 70 relating to the keeping of a register of holders of debentures shall apply to every company which issues debentures and every company which fails to comply with this subsection shall be guilty of an offence against this Act.

Penalty: One hundred thousand ringgit. Default penalty.

(7) The directors of a borrower that is required to lodge a copy of the quarterly report or the profit and loss account and balance sheet of the borrower, and the directors of a guarantor that is required to lodge a copy of the profit and loss account and balance sheet of the guarantor with the Registrar under Division 4 of Part IV of the Securities Commission Act 1993 shall lodge such report or profit and loss account and balance sheet, as the case may be, within such time and in accordance with the provisions of that Division, and if the directors of the borrower or guarantor fail to comply with the requirements of this subsection each director who is in default shall be guilty of an offence against this Act.

Penalty: One hundred thousand ringgit. Default penalty.

Requirement to issue form of application for shares or debentures with a prospectus

37. (1) A person shall not issue, circulate or distribute any form of application for shares in or debentures of a corporation unless the form is issued, circulated or distributed together with a prospectus, a copy of which has been registered by the Registrar.

Penalty: Imprisonment for *five years or † one hundred thousand ringgit or both.

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

(a) the form of application is issued, circulated or distributed in connection with shares or debentures which are not offered to the public;

(b) the form of application 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 of application 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, for the time being in force, but otherwise that subsection shall apply to any such form of application whether issued, circulated or distributed on or with reference to the formation of a corporation or subsequently.

(2A) Nothing in this Division and Division 4 of this Part shall apply to an offer or invitation in respect of shares or debentures for sale to the public where the offer or invitation relates to shares or debentures that have previously been issued and the shares or debentures are of a class that are listed for quotation on a stock exchange.

As to invitations to the public to lend money to or to deposit money with a corporation

38. (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) a prospectus in relation to the invitation has been registered by the Registrar;

(b) the prospectus contains an undertaking by the corporation that it will within two months after the acceptance of any money as a deposit or loan from any person in response to the invitation issue to that person a document which acknowledges or evidences or constitutes an acknowledgement of the indebtedness of the corporation in respect of that deposit or loan; and

(c) the document is described or referred to in the prospectus and in any other document whether constituting or relating to the invitation as—

(i) an unsecured note or an unsecured deposit note;

(ii) a mortgage debenture or certificate of mortgage debenture stock; or

(iii) a debenture or certificate of debenture stock, in accordance with this section.

(1A) 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.

(1B) Notwithstanding subsection (1A) a corporation is not required to issue a prospectus if—

(a) it is not, at any one time, under a liability (whether or not such liability is present or future) to repay any money accepted by it on deposit or loan from more than ten persons; or

(b) any money accepted by it on deposit or loan is fully guaranteed by the Government.

(2) Where pursuant to an invitation referred to in subsection (1) a corporation has accepted from any person any money as a deposit or loan the corporation shall within two months after the acceptance of the money issue to that person a document which—

(a) acknowledges or evidences or constitutes 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.

(3) 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 pursuant to subsection (4) or (5) it is and may be otherwise described.

(4) The document may be described or referred to in the prospectus or in such other document or in the document itself as a mortgage debenture or certificate of mortgage debenture stock if, and only if, there is included in the prospectus the statements and the valuation referred to in paragraph 32 of the Fifth Schedule.

(5) The document may be described or referred to in the prospectus or in such other document or in the document itself as a debenture or certificate of debenture stock if, and only if—

(a) pursuant to subsection (4) it may be (but is not) described or referred to in that prospectus or document as a mortgage debenture or certificate of mortgage debenture stock; or

(b) there is included in the prospectus the statement and the summary referred to in paragraph 33 of the Fifth Schedule.

(6) Nothing in this section shall apply to a prescribed corporation and nothing in this Act shall require a prospectus to be issued in connection with any invitation to the public to deposit money with a prescribed corporation.

(7) 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 Bank Negara 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.

(8) The Minister charged with the responsibility for finance may, by notice published in the Gazette—

(a) specify terms and conditions subject to which subsection (6) shall have effect in relation to a corporation specified in paragraph (7)(b); or

(b) vary or revoke any declaration or specification made under this section.

(9) Every corporation or other person that contravenes or fails to comply with this section and every officer of a corporation who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or †one hundred thousand ringgit or both.

(10) The provisions of this section relating to the description of any document acknowledging or evidencing or intended to acknowledge or evidence the indebtedness of a corporation shall apply to and in relation to every such document issued after the commencement of this Act notwithstanding anything in any existing debenture or trust deed and any such document issued after the commencement of this Act may be described in accordance with the requirements of this section notwithstanding anything in any such existing debenture or trust deed.

(11) For the purposes of this section a document issued by a borrowing corporation certifying that a person named therein is 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, shall be deemed to be a document evidencing the indebtedness of that corporation in respect of that deposit or loan.

Contents of prospectuses

39. (1) To comply with the requirements of this Act a prospectus—

(a) shall be printed in type of a size not less 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;

(b) shall be dated and that date shall, unless the contrary is proved, be taken as the date of issue of the prospectus;

(c) shall as to one copy be lodged with the Registrar and shall state that a copy of the prospectus has been so lodged with and registered by the Registrar and shall also state immediately after that statement that the Registrar takes no responsibility as to its contents;

(d) shall subject to Part III of the Fifth Schedule state the matters specified in Part I of that Schedule and set out the reports specified in Part II of the Schedule;

(e) shall, where the persons making any report specified in Part II of that Schedule have made therein, or have, without giving the reasons, indicated therein, any such adjustments as are mentioned in paragraph 31 of that Schedule, have endorsed thereon or attached thereto, a statement by those persons setting out the adjustments and giving the reasons therefor;

(f) shall contain a statement that no shares or debentures or that no shares and debentures (as the case requires) shall be allotted on the basis of the prospectus later than six months after the date of the issue of the prospectus;

(g) shall, if it contains any statement made by an expert or contains what purports to be a copy of or extract from a report, memorandum or valuation of an expert, 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;

(h) shall not contain the name of any person as a trustee for holders of debentures or as an auditor or a banker or an advocate or a stock broker or share broker 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 as prescribed of the consent has been lodged with the Registrar;

(i) shall, where the prospectus offers shares in or debentures of a foreign company incorporated or to be incorporated, in addition contain particulars with respect to—

(i) the instrument constituting or defining the constitution of the company;

(ii) 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;

(iii) an address in Malaysia where the instrument, enactments or provisions or certified copies thereof may be inspected;

(iv) the date on which and the place where the company was or is to be incorporated; and

(v) whether the company has established a place of business in Malaysia and, if so, the address of its principal office in Malaysia; and

(j) shall, where the prospectus offers shares, notes or other marketable securities which have been specified by a stock exchange as prescribed securities under section 14 of the Securities Industry (Central Depositories) Act 1991 [Act 453], state that such shares, notes or marketable securities have been so prescribed and that applicants are required to have securities accounts when making their applications.

(2) Subparagraph (1)(i)(i), (ii) and (iii) shall not apply in the case of a prospectus issued more than two years after the day on which the company is entitled to commence business and in the application to a foreign company of Part I of the Fifth Schedule for the purposes of subsection (1), paragraph 2 of that Part of that Schedule shall have effect as if a reference to the constitution of the company were substituted for the reference to the articles.

(3) 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 him with notice of any contract, document or matter not specifically referred to in the prospectus shall be void.

(4) Where a prospectus relating to any shares in or debentures of a corporation is issued and the prospectus does not comply with this Act, each director of the corporation and other person responsible for the prospectus shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or thirty thousand ringgit.

(5) In the event of non-compliance with or contravention of any of the requirements set out in 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) as regards any matter not disclosed, he proves that he was not cognizant thereof;

(b) he 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 was in respect of matter which in the opinion of the court dealing with the case was immaterial or was otherwise such as ought, in the opinion of that court, having regard to all the circumstances of the case, reasonably to be excused.

(6) In the event of failure to include in a prospectus a statement with respect to the matters specified in paragraph 17 of the Fifth Schedule no director or other person shall incur any liability in respect of the failure unless it is proved that he had knowledge of the matters not disclosed.

(7) Nothing in this section shall limit or diminish any liability which any person may incur under any rule of law or any written law or under this Act apart from subsection (4).

39A. (Deleted by Act A1081).

Relief from requirements as to form and content of a prospectus

39B. (1) Without prejudice to subsection 37(2), the Registrar may, on the application in writing by any person referred to under subsection 37(1), make an order relieving him or approving any variation from the requirements of this Act relating to the form and content of a prospectus.

(2) In making an order under subsection (1), the Registrar may impose such terms and conditions as he deems fit.

(3) The Registrar shall not make an order under subsection (1) unless he is satisfied, having considered the nature and objectives of the corporation, that—

(a) such relief or variation shall 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) compliance with the requirements, for which such 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 it is issued in compliance with an order made under subsection (1).

Certain advertisements deemed to be prospectuses

40. (1) Every 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 shall be deemed to be a prospectus (and all written laws and rules of law as to the contents of prospectuses and as to liability in respect of statements in and omissions from prospectuses or otherwise relating to prospectuses shall apply and have effect accordingly) if it contains any information or matter other than the following:

(a) the number and description of the shares or debentures concerned;

(b) the name and date of registration of the corporation and its paid up share capital;

(d) the names, addresses and occupations of—

(i) the directors or proposed directors;

(ii) the brokers or underwriters to the issue; and

(iii) in the case of debentures, the trustee for the debenture holders;

(e) the name of the Stock Exchange of which the brokers or underwriters to the issue are members; and

(f) 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 unless it states that applications for shares or debentures will proceed only on one of the forms of application referred to in and attached to a printed copy of the prospectus.

(2) No statement that, or to the effect that, the advertisement is not a prospectus shall 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 whatsoever.

(4) 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 prospectuses, 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, shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or one hundred thousand ringgit or both.

(5) For the purposes of this section where—

(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, the corporation and each person who signed the certificate shall be deemed to be the persons who published or disseminated the advertisement, but no other person shall be deemed to be such a person.

(6) Any person who has obtained a certificate referred to in paragraph (5)(b) shall, when so requested by the Registrar forthwith deliver the certificate to the Registrar.

Penalty: Imprisonment for † three years or ten thousand ringgit.

Default penalty.

(7) Nothing in this section shall limit or diminish any liability which any person may incur under any rule of law or under any provision of this Act apart from this section.

As to retention of over-subscriptions in debenture issues

41. (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 it 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.

As to statement of asset-backing

(2) Subject to the Fifth Schedule where a corporation specifies in a prospectus relating to a debenture issue that it 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 corporations 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.

Penalty: Imprisonment for *five years or † one hundred thousand ringgit or both.

Registration of prospectus

42. (1) A prospectus shall not be issued, circulated or distributed by any person unless a copy thereof has first been registered by the Registrar.

(2) The Registrar shall not register a copy of any prospectus if it contains any statement or matter which is in his opinion misleading in the form and context in which it is included and unless—

(a) the copy signed by every director and by every person who is named therein 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 its issue;

(b) the prospectus appears to comply with the requirements of this Act; and

(c) there are also lodged with the Registrar copies verified as prescribed of any consents required by section 45 to the issue of the prospectus.

(3) If a prospectus is issued without a copy thereof having been so registered the corporation and every person who is knowingly a party to the issue of the prospectus shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or one hundred thousand ringgit or both.

Copy of contracts, etc., to be kept for inspection at registered office

(4) A corporation to which the prospectus relates shall—

(a) cause a copy of—

(i) every document referred to in paragraph (2)(c); and

(ii) all material contracts referred to in the prospectus and, in the case of such a contract not reduced into writing, a memorandum giving full particulars thereof, verified as prescribed, to be deposited within three days after the registration of the prospectus at the registered office of the corporation and if it has no registered office in Malaysia, at the address in Malaysia specified in the prospectus; and

(b) keep each such copy for a period of at least six months after the registration of the prospectus for inspection by any person without charge.

Supplemental prospectus

42A. (1) If, after the registration of a prospectus, but before its issue, the person who lodged the prospectus became aware that—

(a) a significant new matter has arisen being a matter, the information of which is required by this Act or by any requirements or guidelines of any authority, to be disclosed in a prospectus;

(b) there has been a significant change affecting a matter disclosed in the prospectus;

(d) there is a material omission from the prospectus, the person shall lodge with the Registrar a supplemental prospectus that contains information relating to the new matter or change or correct the false or misleading statement or omission as the case requires.

(2) A supplemental prospectus shall clearly identify the prospectus to which it relates and shall contain a statement in bold or coloured print that it is a supplemental prospectus to be read in conjunction with the prospectus.

(3) A supplemental prospectus shall be deemed to be part of the prospectus to which it relates and all written laws and rules of law as to the contents of prospectuses and to liability in respect of statements and non-disclosures in prospectuses or otherwise relating to prospectuses, shall apply and have effect accordingly.

(4) Where a supplemental prospectus has been lodged with the Registrar pursuant to subsection (1), every copy of the prospectus shall be issued, accompanied by a copy of the supplemental prospectus.

(5) A supplemental prospectus may be lodged for the purpose of subsection (1), notwithstanding that the prospectus to which it relates has been issued, if—

(a) the prospectus relates to an invitation or offer which is addressed to an identifiable category of persons to whom it is directly communicated by the person making the invitation or offer or by his appointed agent, and a copy of the supplemental prospectus is sent to each of those persons in compliance with subsection (6); or

(b) the prospectus relates to an invitation or offer to the general public and a copy of the supplemental prospectus is advertised in every newspaper which originally advertised the invitation or offer or calling attention to the invitation or offer in compliance with subsection (6).

(6) For the purpose of subsection (5), a notice shall—

(a) in the case of paragraph (5)(a), be sent together with a copy of the supplemental prospectus to every person referred to in that subsection;

(b) in the case of paragraph (5)(b), be advertised together with the supplemental prospectus, stating—

(aa) that a copy of the supplemental prospectus has been lodged with the Registrar; and

(bb) that every person who has submitted his application prior to the date of the notice is entitled to withdraw his application within seven days of the date of the notice and all application money received in respect thereof will be repaid in full without penalty.

(7) If default is made in complying with this section, every person who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or one hundred thousand ringgit or both.

Document containing offer of shares for sale to be deemed prospectus

43. (1) Where a corporation allots or agrees to allot to any person any shares in or debentures of the corporation with a view to all or any of them being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued by the corporation, and all written laws and rules of law as to the contents of prospectuses and to liability in respect of statements and non-disclosures in prospectuses, or otherwise relating to prospectuses, shall apply and have effect accordingly as if the shares or debentures had been offered to the public and as if persons accepting the offer in respect of any shares or debentures were subscribers therefor but without prejudice to the liability, if any, of the persons by whom the offer is made, in respect of statements or non-disclosures in the document or otherwise.

(2) For the purposes of this Act it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares or debentures was made with a view to the shares or debentures being offered for sale to the public if it is shown—

(a) that an offer of the shares or debentures or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or

(b) that at the date when the offer was made the whole consideration to be received by the corporation in respect of the shares or debentures had not been so received.

(3) The requirements of this Division as to prospectuses shall have effect as though the persons making an offer to which this section relates were persons named in a prospectus as directors of a corporation.

(4) In addition to complying with the other requirements of this Division 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.

(5) 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 sign by his agent authorized in writing.

44. (Deleted by Act A1081)

Expert’s consent to issue of prospectus containing statement by him

45. (1) A prospectus inviting subscription for or purchase of shares in or debentures of a corporation and including a statement purporting to be made by an expert or to be based on a statement made by an expert shall not be issued unless—

(a) he has given, and has not before delivery of a copy of the prospectus for registration withdrawn, his written consent to the issue thereof with the statement included in the form and context in which it is included; and

(b) there appears in the prospectus a statement that he has given and has not withdrawn his consent.

(2) If any prospectus is issued in contravention of this section the corporation and every person who is knowingly a party to the issue thereof shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or one hundred thousand ringgit or both.

Civil liability for misstatements in prospectus

46. (1) Subject to this section, each of the following persons shall be liable to pay compensation to all persons who subscribe for or purchase any shares or debentures on the faith of a prospectus for any loss or damage sustained by reason of any untrue statement therein, or by reason of the willful non-disclosure therein of any matter of which he had knowledge and which he knew to be material, that is to say every person who—

(a) is a director of the corporation at the time of the issue of the prospectus;

(b) authorized 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;

(d) authorized or caused the issue of the prospectus.

(2) Notwithstanding anything in subsection (1), where the consent of an expert is required to the issue of a prospectus and he has given that consent, he shall not by reason only thereof be liable as a person who has authorized or caused the issue of the prospectus except in respect of an untrue statement purporting to be made by him as an expert, and the inclusion in the prospectus of a name of a person as a trustee for debenture holders, auditor, banker, advocate or stock or share broker shall not for that reason alone be construed as an authorization by such person of the issue of the prospectus.

(3) No person shall be so liable if he proves—

(a) that, having consented to become a director of the corporation, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent;

(b) that the prospectus was issued without his knowledge or consent and he gave reasonable public notice thereof forthwith after he became aware of its issue;

(c) that after the issue of the prospectus and before allotment or sale there under he, on becoming aware of any untrue statement therein, withdrew his consent and gave reasonable public notice of the withdrawal and of the reason therefor; or

(d) that—

(i) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment or sale of the shares or debentures believe, that the statement was true;

(ii) as regards every untrue statement purporting to be a statement made by an expert or to be based on a statement made by an expert or contained in what purports to be a copy of or extract from a report of valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation, and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it and that that person had given the consent required by section 45 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration, or, to that person’s knowledge, before any allotment or sale there under; and

(iii) as regards every untrue statement purporting to bea statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document

(4) Subsection (3) shall not apply in the case of a person liable, by reason of his having given a consent required of him by section 45, as a person who has authorized or caused the issue of the prospectus in respect of an untrue statement purporting to have been made by him as an expert.

(5) 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 45, as a person who has authorized the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert shall not be so liable if he proves.

(a) that, having given his consent under section 45 to the issue of the prospectus, he withdrew it in writing before a copy of the prospectus was lodged with the Registrar;

(b) that, after a copy of the prospectus was lodged with the Registrar and before allotment or sale thereunder, he, on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reasons therefor; or

(c) that he was competent to make the statement and that he had reasonable ground to believe and did up to the time of the allotment or sale of the shares or debentures believe that the statement was true.

(6) Where—

(a) the prospectus contains the name of a person as a director of the corporation, or as having agreed to become a director, and he 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 the

(b) the consent of a person is required under section 45 to the issue of the prospectus and he either has not given that consent or has withdrawn it before the issue of the prospectus, the directors of the corporation except any without whose knowledge or consent the prospectus was issued, and any other person who authorized or caused the issue thereof shall be liable to indemnify the person so named or whose consent was so 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 therein of a statement purporting to be made by him as an expert, or in defending himself against any action or legal proceeding brought against him in respect thereof.

Criminal liability for statement in prospectus

47. (1) Where in a prospectus there is any untrue statement or willful non-disclosure, any person who authorized or caused the issue of the prospectus shall be guilty of an offence against this Act unless he proves either that the statement or non-disclosure was immaterial or that he had reasonable ground to believe and did, up to the time of the issue of the prospectus, believe the statement was true or the non-disclosure immaterial.

Penalty: Imprisonment for *five years or †one hundred thousand ringgit.

(2) A person shall not be deemed to have authorized or caused the issue of a prospectus by reason only of his having given the consent required by this Division to the inclusion therein of a statement purporting to be made by him as an expert.

Power of Minister to exempt

47A. (1) Subject to subsection (2) the Minister may, on the application in writing by any person interested and subject to the recommendation of the Registrar, by order declare that Division 1 and Division 4 of this Part shall not apply to any person makingan 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) Recommendation shall not be made by the Registrar to the Minister unless he is of the opinion that circumstances exist whereby—

(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.

Exempted offers

47B. (1) Nothing in Division 1 and Division 4 of this Part shall apply to an offer of shares or debentures, whether or not they have been previously issued, made to—

(a) a prescribed corporation;

(b) an insurance company registered under any written law relating to insurance companies;

(d) a statutory body established by an Act of Parliament or an Enactment of any State;

(e) a pension fund approved by the Director General of Inland Revenue under section 150 of the Income Tax Act 1967 [Act 53];

(f) a unit trust scheme as defined under the Securities Industry Act 1983 [Act 280];

(g) a person licensed as a dealer or investment adviser under the Securities Industry Act 1983;

(h) a corporation incorporated outside Malaysia;

(i) a public company which is engaged primarily in the making of investments in marketable securities for the purpose of revenue and for profit and not for the purpose of exercising control; and

(j) such other person as the Minister may, by order published in the Gazette, declare to be exempt purchasers, who or which pursuant to the offer, acquires the shares or debentures as principal, trustee or agent for accounts fully managed by him or it who, for the purposes of this section, shall be deemed to be dealing as principal.

(2) In this section, the term “prescribed corporation” has the same meaning as assigned to it in subsection 38(7).

(3) Any information memorandum purporting to describe the business and affairs of the person making the offer issued by the said 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 and a copy of the memorandum shall be lodged with the Registrar within seven days after it is first issued.

DIVISION 2 RESTRICTIONS ON ALLOTMENT AND COMMENCEMENT OF BUSINESS

Prohibition of allotment unless minimum subscription received

48. (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 pursuant to a prospectus that is registered under the Securities Commission Act 1993 unless—

(a) the minimum subscription has been subscribed; and

(b) the sum 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 it is drawn.

(2) The minimum subscription shall be—

(a) calculated on the nominal value of each share, and where the shares are issued at a premium, on the nominal value of, and the amount of the premium payable on, 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 pursuant to a prospectus that is registered under the Securities Commission Act 1993 shall not be less than five per centum of the nominal amount of the share.

(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, all money received from applicants for shares shall he forthwith repaid to them without interest, and, if any such money is not so repaid within five months after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of ten per centum per annum from the expiration of the period of five months but a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(5) An allotment made by a company to an applicant in contravention of this section or of subsection 50 (1) shall be voidable at the option of the applicant which option may be exercised by written notice served on the company within one month after the holding of the statutory meeting of the company, and not later, or, in any case where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment, and not later, and the allotment shall be so voidable notwithstanding that the company is in course of being wound up.

(6) Every director of a company who knowingly contravenes or permits or authorizes the contravention of this section or of subsection 50(1) shall be guilty of an offence against this Act and shall be liable in addition to the penalty or punishment for the offence to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee has sustained or incurred thereby 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.

Penalty: Imprisonment for three years or one million ringgit or both.

(7) Any condition requiring or binding any applicant for shares to waive compliance with any requirements of this section shall be void.

(8) No company shall allot, and no officer or promoter of a company or a proposed company shall authorize or permit to be allotted—

(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 under the Securities Commission Act 1993 on the basis of a prospectus that is registered under that Act later than such period after the date of issue of the prospectus as the Securities Commission may specify.

Penalty: Imprisonment for *three years or one million ringgit.

(9) Where 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 Securities Commission Act 1993 later than such 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.

Application moneys to be held in trust until allotment

49. (1) All applications and other moneys paid prior to allotment by any applicant on account of shares or debentures offered to the public or of any securities for which a prospectus is required under the Securities Commission Act 1993 shall until the allotment be held by the company, or in the case of an intended company by the persons named in the prospectus as proposed directors and by the promoters, upon trust for the applicant, but there shall be no obligation or duty on any bank or third person with whom any such moneys have been deposited to inquire into or see to the proper application of the moneys so long as the bank or person acts in good faith.

(2) If default is made in complying with this section every officer of the company in default or, in the case of an intended company, every person named in the prospectus as a proposed director and every promoter who knowingly and willfully authorizes or permits the default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *three years or ten thousand ringgit.

Restriction on allotment in certain cases

50. (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 at least three days before the first allotment of either shares or debentures there has been lodged with the Registrar a statement in lieu of prospectus which complies with the requirements of this Act.

(2) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *three years or ten thousand ringgit.

Requirements as to statements in lieu of prospectus

51. (1) To comply with the requirements of this Act a statement in lieu of prospectus lodged by or on behalf of a company—

(a) shall be signed by every person who is named therein as a director or a proposed director of the company or by his agent authorized in writing;

(b) shall subject to Part III of the Sixth Schedule, be in the form of and state the matters specified in Part I of that Schedule and set out the reports specified in Part II of that Schedule; and

(c) shall, where the persons making any report specified in Part II of that Schedule have made therein or have, without giving the reasons, indicated therein any such adjustments as are mentioned in paragraph 5 of Part III of that Schedule, have endorsed thereon or attached thereto a written statement signed by those persons setting out the adjustments and giving the reasons therefor.

(2) The Registrar shall not accept for registration any statement in lieu of prospectus unless it appears to him to comply with this Act.

(3) Where in any statement in lieu of prospectus, there is any untrue statement or willful non-disclosure any director, who signed the statement in lieu of prospectus shall be guilty of an offence against this Act unless he proves either that the untrue statement or non-disclosure was immaterial or that he had reasonable ground to believe and did, up to the time of the delivery for registration of the statement in lieu of prospectus, believe that the untrue statement was true or the non-disclosure immaterial.

Penalty: Imprisonment for *three years or ten thousand ringgit or both.

Restrictions on commencement of business in certain circumstances

52. (1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares or has issued a prospectus pursuant to the Securities Commission Act 1993 in relation to its shares the company shall not commence any business or exercise any borrowing powers—

(a) if any 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; or

(b) unless—

(i) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;

(ii) every director has paid to the company on each of the shares taken or contracted to be taken by him, and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription; and

(iii) there has been lodged with the Registrar a statutory declaration by the secretary or one of the directors of the company in the prescribed form verifying that the above conditions have been complied with.

(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 pursuant to the Securities Commission Act 1993 the company shall not commence any business or exercise any borrowing power unless—

(a) there has been lodged with the Registrar a statement in lieu of prospectus which complies with this Act;

(b) every director of the company has paid to the company on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and

(c) there has been lodged with the Registrar a statutory declaration by the secretary or one of the directors of the company in the prescribed form verifying that paragraph (b) has been complied with.

(3) The Registrar shall, on the lodging of the statutory declaration in accordance with this section certify that the company is entitled to commence business and to exercise its borrowing powers and that certificate shall be conclusive evidence thereof.

(4) Any contract made by a company before the date at which it is entitled to commence business shall be provisional only and shall not be binding on the company until that date, and on that date it shall become binding.

(5) Where shares and debentures are offered simultaneously by a company for subscription nothing in this section shall prevent the receipt by the company of any money payable on application for the debentures.

(6) If any company commences business or exercises borrowing powers in contravention of this section every person who is responsible for the contravention shall be guilty of an offence against this Act.

Penalty: *Ten thousand ringgit. Default penalty: Two hundred and fifty ringgit.

Restriction on varying contracts referred to in prospectus, etc.

53. A company shall not before the statutory meeting vary the terms of a contract referred to in the prospectus or statement in lieu of prospectus, unless the variation is made subject to the approval of the statutory meeting.

DIVISION 3 SHARES

Return as to allotments

54. (1) Where a company makes any allotment of its shares or any of its shares are deemed to have been allotted under subsection (6) the company shall within one month thereafter lodge with the Registrar a return of the allotments stating—

(a) the number and nominal amounts 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.

(2) The particulars mentioned in paragraph (1)(d) need not be included in the return where a company to which subsection 166(1) applies has allotted shares—

(a) for cash; or

(b) for a consideration other than cash and the number of persons to whom the shares have been allotted exceeds five hundred.

(3) 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 pursuant to a contract in writing, the company shall lodge with the return the contract evidencing the entitlement of the allottee or a copy of any such contract certified as prescribed.

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

(5) 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) pursuant to a contract not reduced to writing;

(b) pursuant to a provision in the memorandum or articles; or

(c) in satisfaction of a dividend declared in favour of, but not payable in cash to the shareholders, or in pursuance of 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 with the return a statement containing such particulars as are prescribed but where the shares are allotted pursuant to a scheme of arrangement approved by the Court under section 176 the company may lodge an office copy of the order of the Court in lieu of the statement in the prescribed form.

(6) For the purposes of this section any shares issued without formal allotment to subscribers to the memorandum shall be deemed to have been allotted to the subscribers on the date of the incorporation of the company.

(7) If default is made in complying with this section every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: One thousand ringgit. Default penalty: Two hundred and fifty ringgit.

As to voting rights of equity shares in certain companies

55. (1) Notwithstanding any provisions in this Act or in the memorandum or articles of a company to which this section applies, each equity share issued by such a company after the commencement of this Act shall confer the right at a poll at any general meeting of the company (subject as provided in subsection 148(1)) to one vote, and, to one vote only for each ringgit or part of a ringgit that has been paid up on that share.

(2) Where any company to which this section applies has, prior to the commencement of this Act, or, while it was a company to which this section did not apply, issued any equity share which does not comply with subsection (1), the company shall not issue any invitation to subscribe for or to purchase any shares or debentures of the company until the voting rights attached to each share of that company have been duly varied so as to comply with subsection (1).

(3) For the purposes of this section any alteration of the rights of issued preference shares so that they become equity shares shall be deemed to be an issue of equity shares.

(4) The Yang di-Pertuan Agong may by proclamation published in the Gazette declare that subsection (1) shall apply to all or any equity shares or any class of equity shares which have been issued before the commencement of this Act by a company to which this section applies and which is specified in the declaration and thereupon that subsection shall apply to such equity shares so issued by the company from such date as is specified in the declaration being a date not less than one year after the making of the proclamation.

(5) This section applies to—

(a) a public company having a share capital; and

(b) a subsidiary of such a public company.

(6) A person shall not make any invitation to the public in breach of subsection (2).

Penalty: Imprisonment for *five years or thirty thousand ringgit.

Differences in calls and payments, etc.

56. (1) A company if so authorized by its articles may—

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

(b) accept from any member 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.

Reserve liability

(2) A limited company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the company being wound up, and thereupon that portion of its share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up, but no such resolution shall prejudice the rights of any person acquired before the passing of the resolution.

Share warrants

57. (1) A company shall not issue any share warrant stating that the bearer of the warrant is entitled to the shares therein specified and which enables the shares to be transferred by delivery of the warrant.

(2) The bearer of a share warrant issued before the commencement of this Act shall be entitled, on surrendering it for cancellation to have his name entered in the register of members.

(3) The company shall be responsible for any loss incurred by any person by reason of the company entering in the register the name of a bearer of a share warrant issued before the commencement of this Act in respect of the shares therein specified without the warrant being surrendered and cancelled.

Power to pay certain commissions, and prohibition of payment of all other commissions, discounts, etc.

58. (1) A company may pay a commission to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any shares, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, if —

(a) the payment is authorized by the articles;

(b) the commission does not exceed ten per centum of the price at which the shares are issued or the amount or rate authorized by the articles, whichever is the less;

(i) in the case of shares of an unlisted recreational club which are offered to the public for subscription or in the case of shares other than of an unlisted recreational club which are offered for subscription or purchase pursuant to a prospectus that is registered under the Securities Commission Act 1993, disclosed in the prospectus; and

(ii) in the case of shares not so offered, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and lodged before the payment of the commission with the Registrar, and, where a circular or notice not being a prospectus inviting subscription for the shares is issued, also disclosed in that circular or notice; and

(d) the number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in the like manner.

(2) Except as provided in subsection (1) no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount or allowance to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any shares or procuring or agreeing to procure subscriptions whether absolute or conditional for any shares in the company, whether the shares or money are so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money is paid out of the nominal purchase money or contract price or otherwise.

(3) Nothing in this section shall affect the power of any company to pay such brokerage (in addition to or in lieu of the commission referred to in subsection (1)) as it has heretofore been lawful for company to pay but the amount or rate per centum of the brokerage paid or agreed to be paid by the company shall (in the case of shares of an unlisted recreational club which are offered to the public for subscription or in the case of shares other than of an unlisted recreational club which are offered for subscription or purchase pursuant to a prospectus that is registered under the Securities Commission Act 1993) be disclosed in the prospectus or in the statement in lieu of prospectus (if applicable) or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and lodged before the payment of the brokerage with the Registrar, and, where a circular or notice not being a prospectus inviting subscription for the shares is issued, also disclosed in that circular or notice.

(4) A vendor to, promoter of, or other person who receives payment in money or shares from, a company shall have power to apply any part of the money or shares so received in payment of any commission the payment of which if made directly by the company would have been lawful under this section.

(5) If default is made in complying with the provisions of this section relating to the lodging with the Registrar of the statement in the prescribed form, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Power to issue shares at a discount

59. (1) Subject to this section a company may issue shares at a discount of a class already issued if—

(a) the issue of the shares at a discount is authorized by resolution passed in general meeting of the company, and is confirmed by order of the Court;

(b) the resolution specifies the maximum rate of discount at which the shares are to be issued;

(c) at the date of the issue not less than one year has elapsed since the date on which the company was entitled to commence business; and

(d) the shares are issued within one month after the date on which the issue is confirmed by order of the Court or within such extended time as the Court allows.

(2) The Court, if having regard to all the circumstances of the case it thinks proper to do so, may make an order confirming the issue on such terms and conditions as it thinks fit.

(3) Every prospectus relating to the issue of the shares shall contain particulars of the discount allowed or of so much of that discount as has not been written off at the date of the issue of the prospectus.

(4) Notwithstanding any provision of its articles, a company shall not issue at a discount shares of any class unless it first offers the shares to every holder of shares of that class in the company proportionately to the number of those shares held by him.

(5) Every such offer shall be made by notice specifying the number of shares to which the member is entitled and limiting a time not being less than twenty-one days within which the offer may be accepted.

(6) If any such offer is not accepted within the time limited by the notice the shares may be issued on terms not more favourable than those offered to the shareholders.

(7) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Issue of shares at a premium

60. (1) In this section—

“arrangement” means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with section 176 or 270); “company” except in references to the issuing company, includes any body corporate; “equity share capital” means, in relation to a company, its issued share capital excluding any part thereof which neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution; “equity shares” means shares comprised in a company’s equity share capital; “issuing company” means the company issuing the shares in the circumstances referred to in this section; “minimum premium value” means the amount, if any, by which the base value of the shares transferred exceeds the aggregate nominal value of the shares allotted in consideration for the transfer; “non-equity shares” means shares of any class not comprised in a company’s equity share capital.

Share premium account

(2) Where a company issues shares for which a premium is received by the company whether in cash or in the form of other valuable consideration a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account called the “share premium account” and the provisions of this Act relating to the reduction of the share capital of a company shall subject to this section apply as if the share premium account were paid-up share capital of the company.

(3) The share premium account may be applied—

(a) in paying up unissued shares to be issued to members of the company as fully paid bonus shares;

(b) in paying up in whole or in part the balance unpaid on shares previously issued to members of the company;

(d) in the case of a company which carries on insurance business in Malaysia, by appropriation or transfer to any statutory fund established and maintained pursuant to any law of Malaysia relating to insurance;

(e) in writing off—

(i) the preliminary expenses of the company; or

(ii) the expenses of, or the commission or brokerage paid or discount allowed on, any duty, fee or tax payable on or in connection with, and issue of shares of the company; or

f) in providing for the premium payable on redemption of redeemable preference shares.

Merger relief

(4) (a) Subsection (2) shall not apply—

(i) where an issuing company has secured at least ninety per centum equity holding in another company in pursuance of any arrangement providing for the allotment of equity shares issued at a premium in the issuing company on terms that the consideration for the shares allotted is to be provided by the issue or transfer to the issuing company of equity shares in that other company or by the cancellation of any such shares not held by the issuing company; and

(ii) where the arrangement also provides for the allotment of any shares in the issuing company on terms that the consideration for those shares is to be provided by the issue or transfer to the issuing company of non-equity shares in the other company or by the cancellation of any such shares in that company not held by the issuing company.

(b) Subject to paragraph (c), the issuing company shall be regarded for the purposes of this subsection as having secured at least ninety per centum equity holding in another company in pursuance of any such arrangement as is mentioned in paragraph (a), if, in consequence of any acquisition or cancellation of equity shares in that company in pursuance of that arrangement it holds equity shares in that company (whether all or any of those shares were acquired in pursuance of that arrangement or not) of an aggregate nominal value equal to ninety per centum or more of the nominal value of the company’s equity share capital.

(c) Where the equity share capital of the other company in question is divided into different classes of shares this subsection shall not apply unless the requirements of paragraph (a) above are satisfied in relation to each of those classes taken separately.

(d) Shares held by a company which is the issuing company’s holding company or subsidiary of the issuing company’s holding company, or by its or their trustees, shall be regarded for the purposes of this subsection as held by the issuing company.

(5) (a) Where the issuing company—

(i) is a wholly-owned subsidiary of another company (the holding company); and

(ii) allots shares to the holding company or to another wholly-owned subsidiary of the holding company in consideration for the transfer to the issuing company of assets, other than cash, being assets of any company (the transferor company) which is a member of the group of companies which comprises the holding company and all its wholly-owned subsidiaries, the issuing company shall not be required by subsection (2) to transfer any amount in excess of the minimum premium value to the share premium account where the shares in the issuing company allotted in consideration for the transfer are issued at a premium.

(b) In paragraph (a), “the minimum premium value” means the amount, if any, by which the base value of the consideration for the shares allotted exceeds the aggregate nominal value of those shares.

(c) For the purposes of paragraph (b), the base value of the consideration for the shares allotted shall be the amount by which the base value of assets transferred exceeds the base value of any liabilities of the transferor company assumed by the issuing company as part of the consideration for the assets transferred.

(d) For the purposes of paragraph (c)—

(i) the base value of the assets transferred shall be taken as the cost of those assets to the transferor company or the amount at which those assets are stated in the transferor company’s accounting records immediately before the transfer, whichever is the less; and

(ii) the base value of the liabilities assumed shall be taken as the amount at which they are stated in the transferor company’s accounting records immediately before the transfer.

(e) Subsection (4) shall not apply in any case to which this subsection applies.

Restrospective relief in certain circumstances

(6) (a) Subject to paragraph (b), where—

(i) the issuing company has issued at a premium shares which were allotted in pursuance of any arrangement providing for the allotment of shares in the issuing company on terms that the consideration for the shares allotted was to be provided by the issue or transfer to the issuing company of shares in another company or by the cancellation of any shares in that other company not held by the issuing company; and

(ii) that other company must either have been, at the time of the arrangement, a subsidiary of the issuing company or of any company which was then the issuing company’s holding company or have become such a subsidiary on the acquisition or cancellation of its shares in pursuance of the arrangement, any part of the premiums on the shares so issued which was not transferred to the company’s share premium account in accordance with subsection (2) shall be treated as if subsection (2) had never applied to those premiums (and may accordingly be disregarded in determining the sum to be included in the company’s share premium account).

(b) This subsection applies only where a company has issued shares in circumstances to which the subsection applies before the coming into operation of the subsection.

(7) (a) An amount corresponding to any amount representing the premiums or part of the premiums on shares issued by a company which by virtue of subsection (4), (5) or (6) is not included in the company’s share premium account may also be disregarded in determining the amount at which any shares or other consideration provided for the shares issued is to be included in the company’s balance-sheet.

(b) References in subsections (4) to (6) and in this subsection (however expressed) to—

(i) the acquisition by any company of shares in another company; and

(ii) the issue or allotment of shares to or the transfer of shares to or by any company, include references respectively to the acquisition of any of those shares by and to the issue or allotment or (as the case may require) the transfer of any of those shares to or by trustees of that company; and the reference in subparagraph (5)(b)(i) to the company transferring the shares there-mentioned shall be construed accordingly.

(c) References in subsections (4) to (6) and in this subsection to the transfer of shares in a company include references to the transfer of right to be included in the company’s register of members in respect of those shares.

(8) Regulations may be made making provision for and in relation to—

(i) relief from the requirement of subsection (2) in relation to premium other than cash premium; or

(ii) restrictions or modification of any relief from those requirements provided by subsections (4) to (7).

Redeemable preference shares

61. (1) Subject to this section a company having a share capital may, if so authorized by its articles, issue preference shares which are, or at the option of the company are to be, liable to be redeemed and the redemption shall be effected only on such terms and in such manner as is provided by the articles.

(2) The redemption shall not be taken as reducing the amount of authorized share capital of the company.

(3) The shares shall not be redeemed—

(a) except out of profits which would otherwise be available for dividend, or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; and

(b) unless they are fully paid up.

(4) The premium, if any, payable on redemption shall be provided for out of profits or the share premium account before the shares are redeemed.

(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 to a reserve called the “capital redemption reserve” a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve were paid-up share capital of the company.

(6) Where in pursuance of this section a company has redeemed or is about to redeem any preferences shares, it may issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued, and accordingly the share capital of the company shall not for the purposes of any fee under this Act be deemed to be increased by such issue but where new shares are issued before the redemption of the old shares, the new shares shall not, so far as relates to any fee under this Act, be deemed to have been issued in pursuance of this subsection unless the old shares have been redeemed within one month after the issue of the new shares.

(7) The capital redemption reserve may be applied in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

(8) If a company redeems any redeemable preference shares it shall within fourteen days after so doing give notice thereof to the Registrar specifying the shares redeemed.

Power of company to alter its share capital

62. (1) A company if so authorized by its articles may in general meeting alter the conditions of its memorandum in any one or more of the following ways:

(a) increase its share capital by the creation of new shares of such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(c) convert all or any of its paid-up shares into stock and reconvert that stock into paid-up shares of any denomination;

(d) subdivide its shares or any of them into shares of smaller amount than is fixed by the memorandum, so however that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; or

(e) cancel shares which at the date of the passing of the resolution in that behalf have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

Cancellations

(2) A cancellation of shares under this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

As to share capital of unlimited company on re-registration

(3) An unlimited company having a share capital may by any resolution passed for the purposes of subsection 25(1)—

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but 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; and

(b) in addition or alternatively, 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.

Notice of increase of share capital

(4) Where a company has increased its share capital beyond the registered capital, it shall within fourteen days after the passing of the resolution authorizing the increase lodge with the Registrar notice of the increase.

(5) If any company fails to comply with subsection (4) the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Validation of shares improperly issued

63. Where a company has purported to issue or allot shares and the creation, issue or allotment of those shares was invalid by reason of any provision of this or any other written law or of the memorandum or articles of the company or otherwise or the terms of issue or allotment were inconsistent with or unauthorized by any such provision the Court may, upon application made by the company or by a holder or mortgagee of any of those shares or by a creditor of the company and upon being satisfied that in all the circumstances it is just and equitable so to do, make an order validating the issue or allotment of those shares or confirming the terms of issue or allotment thereof or both and upon an office copy of the order being lodged with the Registrar those shares shall be deemed to have been validly issued or allotted upon the terms of the issue or allotment thereof.

Special resolution for reduction of share capital

64. (1) Subject to confirmation by the Court a company may, if so authorized by its articles, by special resolution reduce its share capital in any way and in particular, without limiting the generality of the foregoing, may do all or any of the following:

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid-up;

(b) cancel any paid-up share capital which is lost or unrepresented by available assets; or

(c) pay off any paid-up share capital which is in excess of the needs of the company, and may so far as necessary alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(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 the Court so directs—

(a) every creditor of the company who at the date fixed by the Court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company shall be entitled to object to the reduction;

(b) the Court, unless satisfied on affidavit that there are no such creditors, shall settle a list of creditors so entitled to object and for that purpose shall ascertain as far as possible without requiring an application from any creditor the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a final day on or before which creditors not entered on the list may claim to be so entered; and

(c) where a creditor entered on the list whose debt or claim is not discharged or has not 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 like inquiry and adjudication as if the company were being wound up by the Court.

(3) Notwithstanding subsection (2) the Court may, having regard to any special circumstances of any case, direct that all or any of the provisions of that subsection shall not apply as regards any class of creditors.

(4) The Court, if satisfied with respect to every creditor who under subsection (2) is entitled to object, that either his consent to the reduction has been obtained or his debt or claim has been discharged or has determined or has been secured may make an order confirming the reduction on such terms and conditions as it thinks fit.

(5) An order made under subsection (4) shall show the amount of the share capital of the company as altered by the order, the number of shares into which it is to be divided and the amount of each share and the amount, if any, at the date of the order deemed to be paid up on each share.

(6) On the lodging of an office copy of the order with the Registrar the resolution for reducting share capital as confirmed by the order so lodged shall take effect.

(7) The certificate of 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 such as is stated in the order.

(8) On the lodging of the copy of the order the particulars shown in the order pursuant to subsection (5) shall be deemed to be substituted for the corresponding particulars in the memorandum and such substitution and any addition ordered by the Court to be made to the name of the company shall (in the case of any addition to the name, for such period as is specified in the order of the Court) be deemed to be alterations of the memorandum for the purposes of this Act.

(9) A member, past or present, shall not be liable in respect of any share to any call or contribution exceeding in amount the difference, if any, between the amount of the share as fixed by the order and the amount paid, or the reduced amount, if any, which is to be deemed to have been paid, on the share (as the case may be) but where any creditor entitled to object to the reduction is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with respect to his claim, not entered on the list of creditors, and after the reduction the company is unable, within the meaning of the provisions of this Act with respect to winding up by the Court, to pay the amount of his debt or claim—

(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 would have been liable to contribute if the company has commenced to be wound up on the day before the said date; and

(b) if the company is wound up the Court, on the application of any such creditor and proof of his ignorance of the proceedings for reduction or of their nature and effect with respect to his claim may, if it thinks fit settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list as if they were ordinary contributories in a winding up, but nothing in this subsection shall affect the rights of the contributories among themselves.

(10) Every officer of the company who—

(a) willfully conceals the name of any creditor entitled to object to the reduction;

(b) willfully 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, shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or thirty thousand ringgit.

(11) This section shall not apply to an unlimited company, but nothing in this Act shall preclude an unlimited company from reducing in any way its share capital, including any amount in its share premium account.

Rights of holders of classes of shares

65. (1) If in the case of a company the share capital of which is divided into different classes of shares provision is made by the memorandum or articles for authorizing the variation or abrogation of the rights attached to any class of shares in the company, subject to the consent of any specified proportion of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares, and in pursuance of the said provision the rights attached to any such class of shares are at any time varied or abrogated the holders of not less in the aggregate than ten per centum of the issued shares of that class, may apply to the Court to have the variation or abrogation cancelled, and, if any such application is made, the variation or abrogation shall not have effect until confirmed by the Court.

(2) An application shall not be invalid by reason of the applicants or any of them having consented to or voted in favour of the resolution for the variation or abrogation if the Court is satisfied that any material fact was not disclosed by the company to those applicants before they so consented or voted.

(3) The application shall be made within one month after the date on which the consent was given or the resolution was passed or such further time as the Court allows, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they appoint in writing.

(4) On the application the Court, after hearing the applicant and any other persons who apply to the Court to be heard and appear to the Court to be interested, may, if satisfied having regard to all the circumstances of the case that the variation or abrogation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation or abrogation as the case may be and shall, if not so satisfied, confirm it, and the decision of the Court shall be final.

(5) The company shall within fourteen days after the making of an order by the Court on any such application lodge an office copy of the order with the Registrar and if default is made in complying with this provision the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

(6) The issue by a company of preference shares ranking pari passu 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 first-mentioned shares was authorized by the terms of issue of the existing preference shares or by the articles of the company in force at the time the existing preference shares were issued.

(7) For the purposes of this section the alteration of any provision in the memorandum or articles of a company which affects or relates to the manner in which the rights attaching to the shares of any class may be varied or abrogated shall be deemed to be a variation or abrogation of the rights attached to the shares of that class.

(8) This section shall not operate so as to limit or derogate from the rights of any person to obtain relief under section 181.

Rights of holders of preference shares to be set out in memorandum or articles

66. (1) No company shall allot any preference shares or convert any issued shares into preference shares unless there is set out in its memorandum or articles the rights of the holders of those shares 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.

(2) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit.

Dealing by a company in its own shares, etc.

67. (1) Except as is otherwise expressly provided by this Act no company shall give, whether directly or indirectly and whether by means of a loan, guarantee or the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company or, where the company is a subsidiary, in its holding company or in any way purchase, deal in or lend money on its own shares.

(2) Nothing in subsection (1) shall prohibit—

(a) where the lending of money is part of the ordinary business of a company, the lending of money by the company in the ordinary course of its business;

(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 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; or

(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 themselves by way of beneficial ownership.

(3) If there is any contravention of this section, the company is, notwithstanding section 369, not guilty of an offence but each officer who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or one hundred thousand ringgit or both.

(4) Where a person is convicted of an offence under subsection (3) and the Court, by which he 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 that subsection, order the convicted person to pay compensation to the company or the person, as the case may be, of such amount as the Court specifies, and any such order may be enforced as if it were a judgment of the Court.

(5) The power of a Court under section 354 to relieve a person to whom that section applies, wholly or partly and on such terms as the Court thinks fit, from a liability referred to in that section, extends to relieving a person against whom an order may be made under subsection (4) from the liability to have such an order made against him.

(6) Nothing in this section shall operate to prevent the company or any person from 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.

Purchase by a company of its own shares, etc.

67A. (1) Notwithstanding section 67, a public company with a share capital may, if so authorized by its articles, purchase its own shares.

(2) A company shall not purchase its own shares unless—

(a) it 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

(3) Notwithstanding section 60, the company may apply its share premium account to provide the consideration for the purchase of its own shares.

(3A) 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 (in this Act referred to as "treasury shares"); or

(3B) The directors of the company may—

(a) distribute the treasury shares as dividends to shareholders, such dividends to be known as “share dividends”; or

(b) resell the treasury shares on the market of the Stock Exchange on which the shares are quoted, in accordance with the relevant rules of the Stock Exchange.

(3C) While the shares are held as treasury shares, the rights attached to them as to voting, dividends and participation in other distribution and otherwise are suspended and 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 articles of association of the company or the listing rules 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.

(3D) 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 either the share premium account or the funds otherwise available for distribution as dividends or both.

(3E) 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 and the amount by which the company’s issued capital is diminished shall be transferred to the capital redemption reserve.

(4) The capital redemption reserve may be applied in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

(5) A cancellation of shares made pursuant to subsection (3E) shall not be deemed to be a reduction of share capital within the meaning of this Act.

(6) A company shall, within fourteen days after the shares are purchased, lodge with the Registrar and the Stock Exchange a notice in the prescribed form.

(7) If default is made in complying with this section, the company, every officer of the company and any other person or individual who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or one hundred thousand ringgit or both.

Options over unissued shares

68. (1) An option granted after the commencement of this Act by a public company which enables any person to take up unissued shares of the company after a period of ten years has elapsed from the date on which the option was granted shall be void.

(2) Subsection (1) shall not apply in any case where the holders of debentures have an option to take up shares of the company by way of redemption of the debentures.

68A. (1) A company shall keep a register of options granted to persons to take up unissued shares in the company.

(2) The company shall, within fourteen days after 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 [Act78], 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;

(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 prescribed.

(3) Division 4 of Part V shall apply to a register kept under this section as if the register was the register of members.

(4) A company shall keep at the place where the register under this section is kept a copy of every instrument by which an option to take up unissued shares in the company is granted, and for the purposes of subsection (3) those copies shall be deemed to be part of the register.

(5) Failure by the company to comply with any provision in this section shall not affect any rights in respect of the option.

(6) If default is made in complying with this section, the company and any officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: One hundred thousand ringgit. Default penalty: Ten thousand ringgit.

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

69. 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 on so much of such share capital as is for the time being paid up and charge the interest so paid to capital as part of the cost of the construction or provision but—

(a) no such payment shall be made unless it is authorized, by the articles or by special resolution, and is approved by the Court;

(b) before approving of any such payment, the Court may at the expense of the company appoint a person to inquire and report as to the circumstances of the case, and may require the company to give security for the payment of the costs of the inquiry;

(c) the payment shall be made only for such period as is determined by the Court, but in no case extending beyond a period of twelve months after the works or buildings have been actually completed or the plant provided;

(d) the rate of interest shall in no case exceed five per centum per annum or such other rate as is for the time being prescribed; and

(e) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.

Furnishing of information and particulars of shareholding

69A. (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 them verified by statutory declaration.

(2) Any company, person or individual served with such notice shall within seven days of the receipt of such notice furnish the Registrar all the necessary information and particulars of any share so acquired or held and duly verified by statutory declaration.

(3) If default is made in complying with this section the company, every officer of the company and any other person or individual who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *three years or † one million ringgit.

Default penalty.

DIVISION 3A SUBSTANTIAL SHAREHOLDINGS

Application and interpretation of Division

69B. (1) This section has effect for the purpose of this Division but shall not prejudice the operation of any other provision of this Act.

(2) In this Division a reference to a company is a reference—

(a) to a company all or any of the shares in which are listed for quotation on the official list of a Stock Exchange as defined in the Securities Industry Act 1983;

(b) to a public company whose shares are not listed for quotation on the official list of a Stock Exchange as defined in the Securities Industry Act 1983;

(c) to a body corporate incorporated 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 Division; 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 Division.

(3) The Minister may, by notification in the Gazette, vary or revoke a notification published under subsection (2).

(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 nominal amount as the amount of that stock and having attached to it the same rights as are attached to that stock.

(5) A reference in the definition of “voting share” in subsection 4(1) to a body corporate includes a reference to a body referred to in paragraph (2)(d).

Persons obliged to comply with Division

69C. (1) The obligation to comply with this Division extends to all natural persons, whether resident in Malaysia or not and whether Malaysian citizens or not, and to all bodies corporate, whether incorporated or carrying on business in Malaysia or not.

(2) The provisions of this Division extends to acts done or omitted to be done outside Malaysia.

Substantial shareholdings and substantial shareholders

69D. (1) For the purposes of this Division, a person has a substantial shareholding in a company if he has an interest in one or more voting shares in the company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is not less than five per centum of the aggregate of the nominal amounts of all the voting shares in the company.

(2) For the purposes of this Division, a person has a substantial shareholding in a company, being a company the share capital of which is divided into two or more classes of the shares, if he has an interest in one or more voting shares included in one of those classes and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is not less than five per centum of the aggregate of the nominal amounts of all the voting shares included in that class.

(3) For the purposes of this Division, a person who has a substantial shareholding in a company is a substantial shareholder in that company.

Substantial shareholder to notify company of his interests

69E. (1) A person who is a substantial shareholder in a company shall give notice in writing to the company stating his name, nationality and address and full particulars of the voting shares in the company in which he has an interest (including, unless the interest cannot be related to a particular share, the name of the person who is registered as the holder) and full particulars of each such interest and of the circumstances by reason of which he has that interest.

(2) The notice shall be given—

(a) if the person was a substantial shareholder on the date on which this Division came into operation—within one month after that date; or

(b) if the person became a substantial shareholder after that date—within seven days after becoming a substantial shareholder.

(3) The notice shall be so given notwithstanding that the person has ceased to be a substantial shareholder before the expiration of whichever period referred to in subsection (2) is applicable.

Substantial shareholder to notify company of change in his interests

69F. (1) Where there is a change in the interest of a substantial shareholder in a company in voting shares in the company, he shall give notice in writing to the company stating his name and full particulars of the change, including the date of the change, and the circumstances by reason of which that change has occurred.

(2) The notice shall be given within seven days after the date of the change.

(3) For the purposes of subsection (1) where a substantial shareholder in a company acquires or disposes of voting shares in the company, there shall be deemed to be a change in the interest of the substantial shareholder in voting shares in that company.

Person who ceases to be substantial shareholder to notify company

69G. (1) A person who ceases to be a substantial shareholder in a company shall give notice in writing to the company stating his name and the date on which he ceased to be a substantial shareholder and full particulars of the circumstances by reason of which he ceased to be a substantial shareholder.

(2) The notice shall be given within seven days after the person ceased to be a substantial shareholder.

References to operation of section 6A

69H. The circumstances required to be stated in a notice under section 69E, 69F or 69G include circumstances by reason of which having regard to section 6A—

(a) a person has an interest in voting shares;

(b) a change has occurred in an interest in voting shares; or

Copy of notice to be served on Stock Exchange

69I. A person who gives a notice under section 69E, 69F or 69G to a company referred to in paragraph 69B(2)(a), shall, on the day on which he gives that notice, serve a copy of the notice on the Stock Exchange as defined in the Securities Industry Act 1983 and the Securities Commission as defined in the Securities Commission Act 1993.

Notice to non-residents

69J. (1) A person who holds voting shares in a company, being voting shares in which a non-resident has an interest, shall—

(a) give to the non-resident a notice in the prescribed form as to the requirements of this Division; or

(b) where the first-mentioned 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, give to the non-resident a notice in the prescribed form as to the requirements of this Division and direct the non-resident to give the notice or a copy of the notice to that other person.

(2) The notice shall be given—

(a) if the first-mentioned person holds the shares on the date on which this Division came into operation—within fourteen days after that date; or

(b) if the first-mentioned person did not hold the shares on that date—within fourteen days after becoming the holder of the shares.

(3) In this section, “non-resident” means a person who is not resident in Malaysia or a body corporate that is not incorporated in Malaysia.

(4) Nothing in this section affects the operation of section 69C.

Registrar may extend time for giving notice under this Division

69K. (1) The Registrar may, on the application of a person who is required to give a notice under this Division, in his discretion, extend or further extend the time for giving the notice.

(2) Application for an extension under subsection (1) may be made, and the power of the Registrar under the subsection may be exercised, notwithstanding that the period referred to in that subsection has expired.

Company to keep register of substantial shareholders

69L. (1) A company shall keep a register in which it shall forthwith enter—

(a) in alphabetical order the names of persons from whom it has received a notice under section 69E; and

(b) against each name so entered the information given in the notice and, where it receives a notice under section 69F or 69G, the information given in that notice.

(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 for each inspection of a sum of five ringgit or such lesser sum as the company requires.

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

(4) If default is made in complying with this section, the company, and every officer of the company who is in default is guilty of an offence.

Penalty: Five thousand ringgit. Default penalty: Five hundred ringgit.

(5) A company is not, by reason of anything done under this Division—

(a) to be deemed for any purpose to have notice of; or

(b) to be put upon inquiry as to, a right of a person to or in relation to a share in the company.

Offences against certain sections

69M. A person who fails to comply with section 69E, 69F, 69G or 69J shall be guilty of an offence.

Penalty: *One million ringgit. Default penalty: †

Fifty thousand ringgit.

Powers of Court with respect to defaulting substantial shareholders

69N. (1) Where a person (in this section referred to as “the substantial shareholder”) is, or at any time after the date on which this Division came into operation has been, a substantial shareholder in a company and has failed to comply with section 69E, 69F or 69G, the Court may, whether or not that failure still 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 holder of shares referred to in paragraph (a) from disposing of any interest in those 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;

(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) Any order under this section may include such ancillary or consequential provisions as the Court thinks just.

(3) An order under this section directing the sale of a share may provide that the sale shall be made within such time and subject to such conditions, if any, as the Court thinks fit, including, 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.

(4) The Court may direct that where a share is not sold in accordance with an order of the Court under this section, the share shall vest in the Registrar.

(5) The Court shall, before making an order under this section and in determining the terms of such an order, satisfy itself, so far as it can reasonably do so, that the order would not unfairly prejudice any person and the Court shall not make an order under this section, other than an order restraining the exercise of voting rights, if it is satisfied—

(a) that 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) that, in all the circumstances, the failure ought to be excused. The Court may, before making an order under this section, direct that notice of the application be given to such persons as it thinks fit or direct that notice of the application be published in such manner as it thinks fit, or both.

(7) The Court may rescind, vary or discharge an order made by it under this section or suspend the operation of such an order.

(8) Section 311 applies in relation to a share that vests in the Registrar under this section as the first-mentioned section applies in relation to an estate or interest in property referred to in the first-mentioned section.

(9) A person who contravenes or fails to comply with an order under this section which is applicable to him shall be guilty of an offence against this Act.

Penalty: Three thousand ringgit. Default penalty: Five hundred ringgit.

(10) Subsection (9) does not affect the powers of the Court in relation to the punishment of contempt of the Court.

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

69O. (1) Any company all or part of the shares in which are listed for quotation on the official list of a Stock Exchange as defined in the Securities Industry Act 1983 may by notice in writing require any member of the company within such reasonable time as is specified in the notice—

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

(b) if he holds them as trustee, to indicate so far as he can the persons for whom he holds them 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 in pursuance of a notice given to any person under subsection (1) or under this subsection 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 it whether he holds that interest as beneficial owner or as trustee; and

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

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

(4) Whenever a company receives information from a person in pursuance of a requirement imposed on him under this section with respect to shares held by a member of the company, it 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 69L—

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

(b) the information received in pursuance of the requirement.

(5) Section 69L shall apply in relation to the part of the register referred to in subsection (4) as they apply in relation to the remainder of the register and as if references to subsection 69L(1) included references to subsection (4).

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

(a) fails to comply with 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, shall be guilty of an offence against this Act.

Penalty: Imprisonment for two years or *one million ringgit.

(7) A person shall not be guilty of an offence under paragraph (6)(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 frivolous or vexatious.

(8) A Stock Exchange or the Securities Commission may by notice in writing direct a company to which this section applies to invoke its powers under subsections (1) and (2) and to forthwith provide it with the information so obtained.

(9) Where a company to which this section applies fails to comply with the direction of a Stock Exchange or the Securities Commission, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: One million ringgit.

69P. (Deleted by Act A1108)

DIVISION 4 DEBENTURES

70. (1) Every company which issues debentures (not being debentures transferable by delivery) shall keep a register of holders of the debentures at the registered office of the company or at some other place in Malaysia.

(2) Every company shall within seven days after the register is first kept at a place other than the registered office lodge with the Registrar notice of the place where the register is kept and shall within seven days after any change in the place at which the register is kept lodge with the Registrar notice of the change.

(3) The register shall except when 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 them.

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

(5) Every registered holder of debentures and every holder of shares in a company shall at his request be supplied by the company with a copy of the register of the holders of debentures of the company or any part thereof on payment of one dollar for every hundred words or part thereof 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 the sum of three ringgit or such less sum as is fixed by the company, or where the copy has to be specially made to meet the request on payment of one ringgit for every hundred words or part thereof required to be copied.

(7) If inspection is refused, or a copy is refused or not forwarded within a reasonable time (but not more than one month) after a request has been made pursuant to this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

(8) 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 Division 4 of Part V shall with such adaptations as are necessary apply to and in relation to the keeping of a branch register of debenture holders.

Penalty: *One thousand ringgit. Default penalty.

Specific performance of contracts

71. A contract with a company to take up and pay for any debentures of the company may be enforced by an order for specific performance.

Perpetual debentures

72. A condition contained in any debenture or in any deed for securing any debentures whether the debenture or deed is issued or made before or after the commencement of this Act shall not be invalid by reason only that the debentures are thereby made irredeemable or redeemable only on the happening of a contingency however remote or on the expiration of a period however long, any rule of law or equity to the contrary notwithstanding.

Reissue of redeemed debentures

73. (1) Where a company has redeemed any debentures whether before or after the commencement of this Act—

(a) unless any provision to the contrary, whether express or implied, is contained in the articles or in any contract entered into by the company; or

(b) unless the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled, the company shall have and shall be deemed always to have had power to reissue the debentures, either by reissuing the same debentures or by issuing other debentures in their place but the reissue of a debenture or the issue of one debenture in place of another under this subsection, whether the reissue or issue was made before or after the commencement of this Act, shall not be regarded as the issue of a new debenture for the purpose of any provision limiting the amount or number of debentures that may be issued by the company.

(2) After the reissue the person entitled to the debentures shall have and shall be deemed always to have had the same priorities as if the debentures had never been redeemed.

(3) Where a company has either before or after the commencement of this Act deposited any of its debentures to secure advances on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit while the debentures remain so deposited.

Qualifications of trustee for debenture holders

74. (1) Subject to this section every corporation which offers debentures to the public for subscription or purchase in Malaysia after the commencement of this Act shall make provision in those debentures or in a trust deed relating to those debentures for the appointment of a trustee corporation as trustee for the holders of the debentures.

(2) Where a borrowing corporation is required to appoint a trustee for the holders of any debentures in accordance with subsection (1) it shall not allot any of those debentures until the appointment has been made and the trustee corporation has consented to act as trustee.

(3) Without leave of the Court, a trustee corporation shall not be appointed, hold office or act as trustee for the holders of debentures of a borrowing corporation if that 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 it;

(c) a corporation that has entered into a guarantee in respect of the principal debt secured by those debentures or in respect of interest thereon; or

(d) a corporation that is by virtue of section 6 deemed to be related to—

(i) any corporation of a kind referred to in paragraphs (a) to (c); or

(ii) the borrowing corporation.

(4) Notwithstanding anything contained in subsection (3), that subsection shall not prevent a trustee corporation from being appointed, holding office or acting as trustee for the holders of debentures 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 6 to be related to the trustee corporation any moneys so long as such moneys are—

(i) moneys that (not taking into account any moneys referred to in subparagraphs (ii) and (iii)) do not, at the time of the appointment or at any time within a period of three months after the debentures are first offered to the public, exceed one-tenth of the amount of the debentures proposed to be offered to the public within that period and do not, at any time after the expiration of that period, exceed one-tenth of the amount owed by the borrowing corporation to the holders of the debentures;

(ii) moneys that are secured by, and 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 pursuant to the same trust deed as that creating 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 by virtue of section 6 deemed to be related to the trustee corporation, is not beneficially entitled; or

(iii) moneys to which the trustee corporation, or a corporation that is by virtue of section 6 deemed to be related to the trustee corporation, is entitled as trustee for holders of any debentures of the borrowing corporation in accordance with the terms of the debentures or of the relevant trust deed; or

(b) the trustee corporation, or a corporation that is deemed by virtue of section 6 to be related to the trustee corporation, is a shareholder of the borrowing corporation in respect of shares that it beneficially holds, so long as the shares in the borrowing corporation beneficially held by the trustee corporation and by all other corporations that are deemed by virtue of section 6 to be related to it, do not carry the right to exercise more than one-twentieth 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 pursuant to any such debentures or trust deed a further offer of debentures is made to the public after the commencement of this Act.

(6) If default is made in complying with this section, the corporation and every officer of the corporation who is in default shall be guilty of an offence against this Act.

Penalty: *Ten thousand ringgit. Default penalty.

Retirement of trustees

75. (1) Notwithstanding anything contained in any Act or in the relevant debentures or trust deed a trustee for the holders of debentures shall not cease to be the trustee until a corporation qualified pursuant to section 74 for appointment as trustee for the holders of the debentures has been appointed to be the trustee for the holders of the debentures and has taken office as such.

(2) Where provision has been made in the debentures or in the relevant trust deed for the appointment of a successor to a trustee for the holders of the debentures upon retirement or otherwise, the successor may subject to section 74, be appointed in accordance with that provision.

(3) Where 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 for appointment pursuant to section 74.

(4) 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 holders of the debentures, appoint as successor to the existing trustee any corporation which is qualified for appointment pursuant to section 74 and which is deemed by virtue of section 6 to be related to the existing trustee.

(5) Where the trustee for the holders of the debentures has ceased to exist or to be qualified under section 74 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 holders of the debentures or the holder of any of the debentures or the Minister appoint any corporation qualified pursuant to section 74 to be the trustee for the holders of the debentures in place of the trustee which has ceased to exist or to be qualified or which has failed or refused to act as trustee or is disqualified as aforesaid.

(6) Where a successor is appointed to be a trustee in place of any trustee the successor shall within one month after the appointment lodge with the Registrar notice in the prescribed form of the appointment.

Penalty: *One thousand ringgit. Default penalty.

Contents of trust deed

76. (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, pursuant to those debentures or that deed, borrow and shall contain covenants by the borrowing corporation, or if the debentures do not or the trust deed does not expressly contain those covenants they or it shall be deemed to contain covenants by the borrowing corporation, to the following effect—

(a) that the borrowing corporation will use its best endeavours to carry on and conduct its business in a proper and efficient manner;

(b) that, to the same extent as if the trustee for the holders of the debentures or any approved company auditor appointed by the trustee were a director of the corporation the borrowing corporation will—

(i) make available for its or his inspection the whole of the accounting or other records of the borrowing corporation; and

(ii) give to it or him such information as it or he requires with respect to all matters relating to the accounting or other records of the borrowing corporation; and

(c) that the borrowing corporation will, on the application of persons holding not less than one-tenth in nominal value of the issued debentures to which the covenant relates delivered to its registered office, by giving notice—

(i) to each of the holders of those debentures (other than debentures payable to bearer) at his address as specified in the register of debentures; and

(ii) by an advertisement in a daily newspaper circulating generally throughout Malaysia addressed to all holders of those debentures, summon a meeting of the holders of those debentures to consider the accounts and balance sheet which were last lodged with the trustee for the holders of the debentures by the borrowing corporation and to 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 chairmanship of a person nominated by the trustee or such other person as is appointed in that behalf by the holders of those debentures present at the meeting.

(2) Where after the date of the commencement of this Act any debenture (other than a debenture lawfully issued pursuant to a trust deed executed before that date) is issued and neither the debenture nor the trust deed relating to the issue of the debenture expressly contains the limitation on the amount that the borrowing corporation may borrow and the covenants referred to in subsection (1) the corporation that issued the debenture and every officer of the corporation who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit

Power of Court in relation to certain irredeemable debentures

77. (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 if on the application of the trustee for the holders of the debentures or (where there is no trustee) on the application of the holder of any of the debentures the Court is 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 thereon;

(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 pari passu, 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 thereon at such rate as the Court considers would be a fair rate to expect from a similar investment.

(2) 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.

Duties of trustees

78. (1) A trustee for the holders of debentures—

(a) shall 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) shall 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) shall ensure that the borrowing corporation complies with Division 7 so far as it relates to the debentures and is applicable;

(d) shall 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) except where it is satisfied that the breach will not materially prejudice the security, if any, for the debentures or the interests of the holders of the debentures, shall take all steps and do all such things as it 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;

(f) where the borrowing corporation or any of its guarantor corporations fails when so required by the trustee to remedy any breach of the covenants, terms and provisions of the debentures or the trust deed, may place the matter before a meeting of holders of the debentures, submit such proposals for the protection of their investment as the trustee considers necessary or appropriate and obtain the directions of the holders in relation thereto; and

(g) where the borrowing corporation submits to those holders a compromise or arrangement, shall give to them a statement explaining the effect of the compromise or arrangement and, if it thinks fit, recommend to them an appropriate course of action to be taken by them in relation thereto.

(2) Where, after due inquiry, the trustee for the holders of the debentures 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 available whether by way of security or otherwise, are insufficient, or likely to become insufficient, to discharge the principal debt as and when it becomes due, the trustee may apply to the Minister for an order under this subsection and the Minister may, on such application, after giving the borrowing corporation an opportunity of making representations in relation to that application, by order in writing served on the corporation at its registered office in Malaysia, 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 holders of the debentures or the Minister may, and if the borrowing corporation so requires, shall, direct the trustee to apply to the Court for an order under subsection (4) and the trustee shall apply accordingly.

(3) 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 available, whether by way of security or otherwise, are insufficient or likely to become insufficient, to discharge the principal debt as and when it becomes due; or

(b) the corporation has contravened or failed to comply with an order made by the Minister under subsection (2), the trustee may, and where the borrowing corporation has requested the trustee to do so, the trustee shall apply to the Court for an order under subsection (4).

(4) Where an application is made to the Court under subsection (2) or (3), the Court may, after giving the borrowing corporation an opportunity of being heard, by order, do all or any of the following things, namely:

(a) direct the trustee to convene a meeting of the holders of the debentures for the purpose of placing before them such information relating to their interests and such proposals for the protection of their interests as the trustee considers necessary or appropriate, and of obtaining their directions in relation thereto and give such directions 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 holders of debentures of the corporation or to any class of such holders;

(d) appoint a receiver of such of the property as constitutes the security, if any, for the debentures; and

(e) give such further directions from time to time as may be necessary to protect the interests of the holders of the debentures, the members of the borrowing corporation or any of its guarantor corporations or the public, but in making any such order the Court shall have regard to the rights of all creditors of the borrowing corporation.

(5) The Court may vary or rescind any order made under subsection (4) as the Court thinks fit.

(6) A trustee in making any application to the Minister or to the Court shall have regard to the nature and kind of the security given when the debentures were offered to the public, and if no security was given shall have regard to the position of the holders of the debentures as unsecured creditors of the borrowing corporation.

(7) 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 it has reasonable grounds for believing that such advocate, auditor or officer was competent to give or make the certificate, report or statement.

Powers of trustee to apply to the Court for directions, etc.

79. (1) The trustee for the holder of debentures 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 holders of debentures, and the Court may—

(d) if satisfied that the determination of the question will be just and beneficial accede wholly or partially to any such application on such terms and conditions as the Court thinks fit or make such other order on the application as the Court thinks just.

(2) The Court may on an application under this section order a meeting of all or any of the holders of debentures to be called to consider any matters in which they are concerned and to advise the trustee thereon and may give such ancillary or consequential directions as the Court thinks fit.

(3) The meeting shall be held and conducted in such manner as the Court directs, under the chairmanship of a person nominated by the trustee or such other person as the meeting appoints.

Obligations of borrowing corporation

80. (1) Where there is a trustee for the holders of any debentures of a borrowing corporation the directors of the borrowing corporation shall—

(a) at the end of a period not exceeding three months ending on a day (not later than six months after commencement of this Act or after the date of the relevant prospectus, whichever is the later) which the trustee is required to notify to the borrowing corporation in writing; and

(b) at the end of each succeeding period thereafter, being a period of three months or such shorter time as the trustee may, in any special circumstances, allow, prepare a report that relates to that period and complies with the requirements of subsection (2) and within one month after the end of each such period lodge a copy of the report relating to that period with the Registrar and with the trustee.

Penalty: *Ten thousand ringgit.

Default penalty: Two hundred and fifty ringgit.

(2) The report referred to in subsection (1) shall be signed by not less than two of the directors on behalf of all of them and shall set out in detail any matters adversely affecting the security or the interests of the holders of the debentures and, without affecting the generality of the foregoing, shall state.

(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 upon them respectively by or pursuant to 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 them have occurred which materially affect any security or charge included in or created by the debentures or any trust deed and if so, particulars of those 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, particulars of that change; and

(f) where the borrowing corporation has deposited money with or lent money to or assumed any liability of a corporation which pursuant to section 6 is deemed to be related to the borrowing corporation, particulars of—

(i) the total amounts so deposited or loaned and the extent of any liability so assumed during the period covered by the report; and

(ii) the total amounts owing to the borrowing corporation in respect of money so deposited or loaned and the extent of any liability so assumed as at the end of the period covered by the report, distinguishing between deposits, loans and assumptions of liabilities which are secured and those which are unsecured, but not including any deposit with or loan to or any liability assumed on behalf of a corporation if that 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 the holders of the debentures of the borrowing corporation.

(3) Where there is a trustee for the holders of any debentures issued by a borrowing corporation, the borrowing corporation and each of its guarantor corporations which has guaranteed the repayment of the moneys raised by the issue of those debentures shall (within twenty-one days after the creation of the charge) in writing furnish the trustee for the holders of the debentures, whether or not any demand therefor has been made, with particulars of any charge created by the corporation or the guarantor corporation, as the case requires, and when the amount to be advanced on the security of the charge is indeterminate (within seven days after the advance) with particulars of the amount in fact advanced but where any such advances are merged in a current account with bankers or trade creditors it shall be sufficient for particulars of the net amount outstanding in respect of any such advances to be furnished every three months.

(4) The directors of every borrowing corporation and of every guarantor corporation shall at some date not later than nine months after the expiration of each financial year of the corporation cause to be made out and lodged with the Registrar and with the trustee for the holders of the debentures, if any, a profit and loss account for the period from the end of that financial year until the expiration of six months after the end of that financial year and a balance sheet as at the end of the period to which the profit and loss account relates.

Penalty: *One thousand ringgit. Default penalty.

(5) Subsection 169(4) to (13) and subsection 174(1), (2) and (4) shall with such adaptations as are necessary be applicable to every profit and loss account and balance sheet made out and lodged pursuant to subsection (4) as if that profit and loss account and balance sheet were a profit and loss account and balance sheet referred to in those subsections.

(6) Where the directors of a borrowing corporation do not lodge with the trustee for the holders of debentures a report as required by subsection (1) or where the directors of a borrowing corporation or the directors of a guarantor corporation do not lodge with the trustee the balance sheet, profit and loss accounts and reports as required by subsection (4) within the time prescribed the trustee shall forthwith lodge notice of that fact with the Registrar.

Obligation of guarantor corporation to furnish information

81. (1) For the purpose of the preparation of a report that, by this Act, is required to be signed by or on behalf of the directors of a borrowing corporation or any of them, that corporation may, by notice in writing require any of its guarantor corporations to furnish it with any information relating to that guarantor corporation which is, by this Act, required to be contained in that report, and that guarantor corporation shall furnish the borrowing corporation with that information before such date, being a date not earlier than fourteen days after the notice is given, as may be specified in that behalf in the notice.

(2) A corporation which fails to comply with a requirement contained in a notice given pursuant to subsection (1) and every officer of that corporation who is in default shall be guilty of an offence against this Act.

Penalty: *Ten thousand ringgit. Default penalty.

Loans and deposits to be immediately repayable on certain events

82. (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 from time to time make reports to the trustee for the holders of those debentures as to the progress that has been made towards achieving that purpose or completing that project.

(2) Each such report shall be included in the report required to be furnished to the trustee for the holders of the debentures under subsection 80(1).

(3) When it appears to the trustee for the holders of the debentures 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 holders of the debentures, shall give notice in writing to the corporation requiring it to repay the moneys so received by the corporation and within one month after the notice is given, lodge with the Registrar a copy thereof.

(4) The trustee shall not give a notice pursuant to subsection (3) if it is satisfied—

(a) that the purpose or project has been substantially achieved or completed;

(b) that the interests of the holders of debentures 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) that the failure to achieve the purpose or project was due to circumstances beyond the control of the corporation that could not reasonably have been foreseen by the corporation at the time that the prospectus was issued.

(5) Upon receipt by the corporation of a notice referred to in subsection (3), the corporation shall be liable to repay, and on demand in writing by him shall immediately repay, to any person entitled thereto, any money owing to him as the result of a loan or deposit made in response to the invitation unless—

(a) before the moneys were accepted by the corporation the corporation had 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 by notice in writing served on the holders of the debentures—

(i) had specified the purpose or project for which the moneys would in fact be applied by the corporation; and

(ii) had offered to repay the moneys to the holders of the debentures, and that person had not within fourteen days after the receipt of the notice, or such longer time as was specified in the notice, in writing demanded from the corporation repayment of the money.

(6) Where the corporation has given a notice in writing as provided in subsection (5), specifying the purpose or project for which the moneys will in fact be applied by the corporation, this section shall apply and have effect as if the purpose or project so specified in the notice was the particular purpose or project specified in the prospectus as the purpose or project for which the moneys were to be applied.

Liability of trustees for debenture holders

83. (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 holders of debentures secured by a trust deed, shall be void so far as it would have the effect of exempting a trustee thereof from or indemnifying it against liability for breach of trust where it fails to show the degree of care and diligence required of it as trustee.

(2) Subsection (1) shall not invalidate—

(a) any release 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 such a release to be given—

(i) on the agreement thereto 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 its 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 deed in question; or

(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 was in force.

DIVISION 5 INTERESTS OTHER THAN SHARES, DEBENTURES, ETC.

Interpretation

84. (1) In this Division and in the Seventh Schedule, unless inconsistent with the context or subject matter—

“company” means a public company, and includes a corporation that is a public company under the law of a proclaimed country and is registered as a foreign company in Malaysia; “financial year”, in relation to a deed, means the period of twelve months ending on the thirty-first day of December or on such other date as is specified in lieu thereof in the deed; “interest” means any right to participate or interest, whether enforceable or not and whether actual, prospective or contingent—

(a) in any profits, assets or realization of any financial or business undertaking or scheme, whether in Malaysia or elsewhere;

(b) in any common enterprise whether in Malaysia or elsewhere, in which the holder of the right or interest is led to expect profits, rent or interest from the efforts of the promoter of the enterprise or a third party;

(d) in any investment contract, whether or not the right or interest is evidenced by a formal document and whether or not the right or interest relates to a physical asset, but does not include—

(e) any share in or debenture of a corporation;

(f) any interest in or arising out of a policy of life insurance;

(g) any interest in a partnership agreement unless the agreement—

(i) relates to an undertaking, scheme, enterprise or investment contract promoted by or on behalf of a person whose ordinary business is or includes the promotion of similar undertakings, schemes, enterprises or investment contracts, whether or not that person is a party to the agreement; or

(ii) is an agreement, or is within a class of agreements, prescribed by regulations for the purposes of this paragraph; or

(h) any participatory interest in a unit trust scheme as defined in section 2 of the Securities Industry Act 1983; “investment contract” means any contract, scheme or arrangement which in substance and irrespective of the form thereof involves the investment of money in or under such circumstances that the investor acquires or may acquire an interest in or right in respect of property which under or in accordance with the terms of investment will, or may at the option of the investor, be used or employed in common with any other interest in or right in respect of property acquired in or under like circumstances and includes any contract, scheme or arrangement which in substance and irrespective of the form thereof entitles the investor to a right to use or enjoy any sport, recreational, holiday or other related facilities for a consideration and for a duration of not less than twelve months whether or not on a recurring basis; “management company”, in relation to any interests issued or proposed to be issued or any deed that relates to any interests issued or proposed to be issued means a company by or on behalf of which the interests have been or are proposed to be issued and includes any person for the time being exercising the functions of the management company; “proclaimed country” means a country which the Minister has, by notice published in the Gazette, declared to be a proclaimed country for the purposes of the Division; “time-sharing scheme” means a scheme, undertaking or enterprise—

(a) participants in which are, or may become, entitled to use, occupy or possess, for two or more periods during the period for which the scheme, undertaking or enterprise, whether in Malaysia or elsewhere is to operate, property to which the scheme, undertaking or enterprise relates; and

(b) that is to operate for a period of not less than three years.

(2) A reference in this Division to a deed shall be read as including a reference to any instrument amending or affecting the deed.

Approved deeds

For the purposes of this Division, a deed shall be an approved deed if—

(a) the Registrar has granted his approval to the deed under this Division; and

(b) the Minister has granted his approval under this Division to the trustee or representative appointed for the purposes of the deed acting as trustee or representative and that approval has not been revoked and the trustee or representative has not ceased to hold office.

Approval of deeds

86. (1) Where a deed makes provision for the appointment of a company as trustee for or representative of the holders of interests issued or proposed to be issued by a company the Registrar may, subject to this section, grant his approval to the deed.

(2) The Registrar shall not grant his approval to a deed unless the deed—

(a) complies with the requirements of this Division; and

(b) makes provision for such other matters and things as are required by or under the regulations to be included in the deed and if regulations have been made prescribing the charges that may be made by a management company, unless the deed provides—

(i) that the charges to be made by the management company do not exceed such percentages or amounts as are prescribed; and

(ii) that the price at which the interests to which the deed relates are to be sold or purchased by the management company are consistent with the regulations relating to those prices.

(3) Within seven days after a deed has been approved under this section, the management company shall lodge in the office of the Registrar the deed, or a copy of the deed verified by statutory declaration, and the copy shall for all purposes, in the absence of proof that it is not a true copy, be regarded as an original.

Approval of trustees

87. (1) The Minister on the recommendation of Bank Negara Malaysia may, subject to such terms and conditions as he thinks fit, grant his approval to a company acting as trustee or representative for the purposes of a deed.

(2) Notwithstanding subsection (1) the Minister on the recommendation of Bank Negara Malaysia may, having regard to the nature of the undertaking, scheme or enterprise, contract or arrangement to which a deed relates, grant his approval subject to such terms and conditions as he thinks fit to such other person acting as trustee or representative for the purpose of the deed.

(3) The Minister may, at any time, by reason of a breach of a term or condition subject to which the approval was granted or for any other reason, revoke an approval granted by him under this section.

Covenants to be included in deeds

88. (1) A deed shall, for the purposes of paragraph 86(2)(a), contain covenants to the following effect, namely:

(a) a covenant binding the management company that it will use its best endeavours to carry on and conduct its business in a proper and efficient manner and to ensure that any undertaking, scheme or enterprise to which the deed relates is carried on and conducted in a proper and efficient manner;

(b) covenants binding the management company—

(i) that the management company will pay to the trustee or representative, within thirty days after their receipt by the company, any moneys that, under the deed, are payable by the company to the trustee or representative;

(ii) that the management company will not sell any interest to which the deed relates otherwise than at a price calculated in accordance with the deed;

(iii) that the management company will, at the request of the holder of an interest, purchase that interest from the holder and that the purchase price will be a price calculated in accordance with the deed; and

(iv) that the management company will not, without the approval of the trustee or representative, publish or cause to be published any advertisement, circular or other document containing any statement with respect to the sale price of interests to which the deed relates or the yield therefrom or containing any invitation to buy interests;

(i) exercise all due diligence and vigilance in carrying out its functions and duties and in watching the rights and interests of the holders of the interests to which the deed relates;

(ii) keep or cause to be kept proper books of account in relation to those interests;

(iii) cause those accounts to be audited at the end of each financial year by an approved company auditor; and

(iv) send or cause to be sent by post a statement of the accounts with the report of the auditor thereon within two months of the end of the financial year, to each of the holders of those interests;

(d) a covenant binding the management company and the trustee or representative, respectively, that no moneys available for investment under the deed will be invested in or lent to the management company, or to the trustee or representative, or to any company (other than a prescribed corporation within the meaning of subsection 38(6)) which is by virtue of section 6 deemed to be related to the management company or to the trustee or representative;

(e) a covenant binding the management company that, to the same extent as if the trustee or representative were a director of the company, the company will—

(i) make available to the trustee or representative, or to any approved company auditor appointed by it, for inspection the whole of the books of the company whether kept at the registered office or elsewhere; and

(ii) give to the trustee or representative or to any such auditor such oral or written information as it or he requires with respect to all matters relating to the undertaking, scheme or enterprise of the company or any property (whether acquired before or after the date of the deed) of the company or otherwise relating to the affairs thereof;

(f) a covenant binding the management company that the management company will make available, or ensure that there is made available, to the trustee or representative such details as the trustee or representative requires with respect to all matters relating to the undertaking, scheme or enterprise to which the deed relates;

(g) as from a day to be fixed by the Minister by notice published in the Gazette, covenants binding the management company and the trustee or representative respectively, that the management company or the trustee or representative, as the case may be, will not exercise the right to vote in respect of any shares relating to the interests to which the deed relates held by the management company, trustee or representative at any election for directors of a corporation whose shares are so held, without the consent of the majority of the holders of the interests to which the deed relates present in person and voting given at a meeting of those holders summoned in the manner provided for in paragraph (h)(i) and (ii) for the purpose of authorizing the exercise of the right at the next election; and

(h) a covenant binding the management company that the management company will within twenty-one days after an application is delivered to the company at its registered office, being an application by not less than fifty or one tenth in number, whichever is the less, of the holders of the interests to which the deeds relates—

(i) by sending notice by post of the proposed meeting at least seven days before the proposed meeting to each of those holders at his last known address or in the case of joint holders to the joint holder whose name stands first in the company's records; and

(ii) by publishing at least fourteen days before the proposed meeting an advertisement giving notice of the meeting in a newspaper circulating generally throughout Malaysia, summon a meeting of the holders for the purpose of laying before the meeting the accounts and balance sheet which were laid before the last preceding annual general meeting of the management company or the last audited statement of accounts of the trustee or representative, and for the purpose of giving to the trustee or representative such directions as the meeting thinks proper.

(2) A meeting summoned for the purposes of a covenant contained in a deed in pursuance of paragraph (1)(g) or (h) shall be held at the time and place specified in the notice and advertisement, being a time not later than two months after the giving of the notice, under the chairmanship of—

(a) such person as is appointed in that behalf by the holders of the interests to which the deed relates present at the meeting; or

(b) where no such appointment is made, a nominee of the trustee or representative approved by the Registrar, and shall be conducted in accordance with the deed or, so far as the deed makes no provision, as directed by the chairman of the meeting.

(3) Notwithstanding anything to the contrary contained in an approved deed, the undertaking, scheme, enterprise, contract or arrangement to which the deed relates may be continued in operation or existence if it appears to be in the interests of the holders of the interests to which the deed relates during such period as is or such periods as are agreed upon by the trustee or representative and the management company.

(4) Where a direction is given to the trustee or representative at a meeting summoned pursuant to a covenant complying with paragraph (1)(h), the trustee or representative—

(a) shall comply with the direction unless it is inconsistent with the deed or this Act; and

(b) shall not be liable for anything done or omitted to be done by it by reason only of its following that direction.

(5) Where the trustee or representative is of the opinion that any direction so given is inconsistent with the deed or this Act or is otherwise objectionable, the trustee or representative may apply to the Court for an order confirming, setting aside or varying the direction and the Court may make such order as it thinks fit.

Interests to be issued by companies only

89. No person except a company or an agent of a company authorized in that behalf under the seal of the company shall issue or offer to the public for subscription or purchase or shall invite the public to subscribe for or purchase any interest.

Statement to be issued

90. (1) Before a company or an agent of a company issues or offers to the public for subscription or purchase or invites the public to subscribe for or purchase any interest, the company shall issue or cause to be issued a statement in writing in connection therewith, which statement shall for all purposes be deemed to be a prospectus issued by a company, and subject to subsection (2) all provisions of this Act relating to prospectuses or to the offering or to an intended offering of shares for subscription or purchase to the public shall, with such adaptations as are necessary, apply and have effect accordingly as if the interest were shares offered or intended to be offered to the public for subscription or purchase and as if persons accepting any offer or invitation in respect of or subscribing for or purchasing any such interest were subscribers for shares.

(2) Subject to subsection (3) the statement shall set out—

(a) the matters and reports specified in the Seventh Schedule; and

(b) such other matters as are required by or under the regulations to be set out in the statement, with such adaptations as the circumstances of each case require and the Registrar approves.

(3) A matter or report referred to in subsection (2) may be omitted from a statement if having regard to the nature of the interest the Registrar is of the opinion that the matter or report is not appropriate for inclusion in the statement and has by writing under his hand approved the omission.

No issue without approved deed

91. (1) A person shall not issue or offer to the public for subscription or purchase or invite the public to subscribe for or purchase any interest unless, at the time of the issue, offer or invitation, there is in force, in relation to the interest, a deed that is an approved deed.

(2) A person shall not in any deed, prospectus, statement, advertisement or other document relating to any interest make any reference to an approval of a deed or of a trustee or representative granted under this Division.

(3) Where—

(a) an interest issued by a corporation before the date of commencement of this Act is in existence immediately before that date;

(b) this Division would have applied in relation to the issue of the interest if the interest had been issued on or after that date;

(c) there is not, at the expiration of three months after that date, a deed that is an approved deed in force in relation to the interest; and

(d) the corporation did not, within a period of one month after that date, apply for approval under this Division of a deed in relation to the interest or, if it did so apply, approval was refused, the corporation shall, within fourteen days after the expiration of the period referred to in paragraph (c), give to the holder of the interest and to the Registrar notice in writing that there is not in force in relation to that interest a deed that is an approved deed and, if this subsection is not complied with, each director of the corporation shall, in addition to the corporation, be deemed to have failed to comply with this subsection.

(4) The Minister may modify the application to a corporation of subsection (3) by extending any period referred to in that subsection or may exempt any corporation from compliance with that subsection.

(5) Nothing in subsection (3) shall be construed as authorizing the Registrar to grant his approval to a deed that relates to an interest issued by a corporation that is not a company for the purposes of this Division.

92. (1) The management company shall, in respect of each deed with which the company is concerned, keep a register of the holders of interests under the deed and enter therein—

(a) the names and addresses of the holders;

(b) the extent of the holding of each holder and, if his interest consists of a specific interest in any property, a description of the property and its location sufficient to identify it;

(d) the date at which any person ceased to be a holder.

(2) Division 4 of Part V shall so far as is applicable and with such adaptations as are necessary apply to and in relation to the register.

(3) A management company which—

(a) keeps a register of holders of interests at a place within three miles of the office of the Registrar or, where the registered office of a management company is within a regional area, within three miles of the office of the Regional Registrar; and

(b) provides reasonable accommodation and facilities for persons to inspect and take copies of its list of interest holders, need not comply with the provision of paragraph 93(1)(a) in relation to the deed under which the interests are held unless the Minister by notice published in the Gazette otherwise directs.

Returns, information, etc., relating to interests

93. (1) Where a deed is or has at any time been an approved deed, the management company shall, so long as the deed or any deed in substitution in whole or in part for the deed, remains in force, lodge with the Registrar, within two months after the end of each financial year applicable to the deed—

(a) a return containing a list of all persons who, at the end of the financial year, were holders of the interests to which the deed relates, showing the name and address of each holder and the extent of his holding and, if his interest consists of a specific interest in any property, a description of the property and its location sufficient to identify it;

(b) a summary of—

(i) all purchases and sales of land and marketable securities affecting the interests of the holders during the financial year; and

(ii) all other investments affecting the interests of the holders made during the financial year, showing the descriptions and quantities of those investments;

(c) a statement of the total amount of brokerage affecting the interests of the holders paid or charged by the management company during the financial year and the proportion thereof paid to any stock or share broker, or any partner employee or nominee of any stock or share broker, who is an officer of the company and the proportion retained by the company;

(d) a list of all parcels of land and marketable securities, and other investments, held by the trustee or representative in relation to the deed, as at the end of the financial year, showing the value of the land, securities or other investments and the basis of the valuations; and

(e) such other statements and particulars, if any, as may be prescribed.

(2) Any document required to be lodged with the Registrar by the management company under subsection (1) shall be signed by at least one director of the management company.

(3) A company to which subsection (1) applies shall, if so requested by any holder of an interest to which the deed relates within a period of one month after the end of the financial year, send by post or cause to be sent by post to the holder, within two months after the end of the financial year, a copy of the documents which the company is required to lodge with the Registrar by virtue of subsection (1)(b) to (e).

Penalty for contravention of Division, etc.

94. (1) A person shall not—

(a) contravene or fail to comply with this Division; or

(b) fail to comply with a covenant contained or deemed to be contained in any deed that is or at any time has been an approved deed.

Penalty: *Imprisonment for five years or one hundred thousand ringgit or both.

(2) A person shall not be relieved from any liability to any holder of an interest by reason of any contravention of, or failure to comply with this Division.

Winding up of schemes, etc.

95. (1) Where the management company under a deed is in liquidation or where, in the opinion of the trustee or representative, the management company has ceased to carry on business or has, to the prejudice of holders of interests to which the deed relates, failed to comply with the deed, the trustee or representative shall summon a meeting of the holders.

(2) A meeting under subsection (1) shall be summoned—

(a) by sending by post notice of the proposed meeting at least twenty-one days before the proposed meeting, to each holder at his last known address, or, in the case of joint holders, to the joint holder whose name stands first in the company’s records; and

(b) by publishing, at least twenty-one days before the proposed meeting, an advertisement giving notice of the meeting in a newspaper circulating generally throughout Malaysia.

(3) Subsection 88(2) shall apply to such a meeting as if the meeting were a meeting referred to in that section.

(4) If at any such meeting a resolution is passed by a majority in number representing three-fourths in value of the holders of the interests present and voting either in person or by proxy at the meeting that the undertaking, scheme, enterprise, contract or arrangement to which the deed relates be wound up, the trustee or representative shall apply to the Court for an order confirming the resolution.

(5) On an application by the trustee or representative the Court may, if it is satisfied that it is in the interest of the holders of the interests, confirm the resolution and may make such orders at it thinks necessary or expedient for the effective winding up of the undertaking, scheme, enterprise, contract or arrangement.

Power to exempt from compliance with Division and non application of Division in certain circumstances

96. (1) The Minister may, by notice published in the Gazette and subject to such terms and conditions as are specified in the notice,—

(a) exempt any company or class of companies or person or class of persons from complying with all or any of the provisions of this Division in relation to any interest or class of interests specified in the notice; or

(b) declare that all or any of the provisions of this Division shall not apply to any interest or class of interests specified in the notice, upon a request made by the Minister charged with the responsibility for finance on the grounds—

(i) that the interest or class of interests is more appropriately regulated as a securities or futures contract, as the case may be; and

(ii) that any issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, such interest or class of interests would be more appropriately regulated under the Securities Commission Act 1993, the Securities Industry Act 1983 or the Futures Industry Act 1993, as the case may be, and may, by notice published in the Gazette, revoke such notice or vary it in such manner as he thinks fit.

(1A) Where a company or person contravenes or fails to comply with any term or condition specified in a notice of exemption granted under paragraph (1)(a), every officer of the company or person who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or one hundred thousand ringgit or both.

(2) This Division shall not apply in the case of the sale of any interest by a personal representative, liquidator, receiver or trustee in bankruptcy in the normal course of realization of assets.

Liability of trustees

97. (1) Subject to this section, any provision contained in a deed that is or at any time has been an approved deed, or in any contract with the holders of interests to which such a deed relates, shall be void so far as it would have the effect of exempting a trustee or representative under the deed from, or indemnifying a trustee or representative against, liability for breach of trust where the trustee or representative fails to show the degree of care and diligence required of a trustee or representative.

(2) Subsection (1) shall not invalidate—

(a) any release otherwise validly given in respect of anything done or omitted to be done by a trustee or representative before the giving of the release; or

(b) any provision enabling such a release to be given—

(i) on the agreement thereto of a majority of not less than three-fourths of the holders of interests as vote in person or by proxy at a meeting summoned for the purpose; and

(ii) either with respect to specific acts or omissions or on the trustee or representative ceasing to act.

DIVISION 6 TITLE AND TRANSFERS

Nature of shares

98. The shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles, and shall not be of the nature of immovable property.

Numbering of shares

99. (1) Each share in a company shall be distinguished by an appropriate number.

(2) Notwithstanding subsection (1)—

(a) if at any time all the issued shares in a company or all the issued shares therein of a particular class are fully paid up and rank equally for all purposes, none of those shares need thereafter have a distinguishing number so long as each of those shares remains fully paid up and ranks equally for all purposes with all shares of the same class for the time being issued and fully paid up; or

(b) if all the issued shares in a company are evidenced by certificates in accordance with section 100 and each certificate is distinguished by an appropriate number and that number is recorded in the register of members, none of those shares need have a distinguishing number.

Certificate to be evidence of title

100. (1) A certificate under the common or official seal of a company specifying any shares held by any member of the company shall be prima facie evidence of the title of the member to the shares.

(2) Every share certificate shall be under the common seal of the company or (in the case of a share certificate relating to shares on a branch register) the common or official seal of the company and shall state as at the date of the issue of the certificate—

(a) the name of the company and the authority under which the company is constituted;

(b) the address of the registered office of the company in Malaysia, or where the certificate is issued by a branch office, the address of that branch office; and

(3) Failure to comply with this section shall not affect the rights of any holder of shares.

(4) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Company may have duplicate common seal

101. A company may if authorized by its articles have a duplicate common seal which shall be a facsimile of the common seal of the company with the addition on its face of the words “Share Seal” and a certificate under the duplicate seal shall be deemed to be sealed with the common seal of the company for the purposes of this Act.

Loss or destruction of certificates

102. (1) Subject to subsection (2) 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 two ringgit issue a duplicate certificate or document in lieu thereof to the owner on his application accompanied by—

(a) a statutory declaration that the certificate or documenthas been lost or destroyed, and has not been pledged sold or otherwise disposed of, and, if lost, that proper searches have been made; and

(b) an undertaking in writing that if it is found or received by the owner it will be returned to the company.

(2) Where the value of the shares or 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 shares or 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.

Instrument of transfer

103. (1) Notwithstanding anything in its articles, a company shall not register a transfer of shares or debentures unless a proper instrument of transfer in the prescribed form has been delivered to the company, but this subsection shall not prejudice any power to register as a shareholder or debenture holder any person to whom the right to any shares in or debentures of the company has been transmitted by operation of law.

(1A) Nothing in this section shall be construed as affecting the validity of any instrument which would be effective to transfer shares or debentures apart from this section; and any instrument purporting to be made in any form which was common or usual in use, or in any other form authorized or required for that purpose apart from this section before the commencement of this Act, shall be sufficient, whether or not it is completed in accordance with the prescribed form, if it complies with the requirements as to execution and contents which apply to a transfer:

Provided that a company shall be precluded from registering a transfer of shares or debentures, the title of which is evidenced by a certificate that is issued on or after the date of coming into operation of this subsection unless a proper instrument of transfer in the prescribed form has been delivered to the company.

Transfer by personal representatives

(2) A transfer of the share, debenture or other interest of a deceased person made by his personal representative shall, although the personal representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instrument of transfer.

(3) The production to a company of 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 some person shall be accepted by the company, notwithstanding anything in its articles, as sufficient evidence of the grant.

(4) In 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 at request of transferor

104. (1) On the request in writing of the transferor of any share, debenture or other interest in a company, the company shall enter in the appropriate register the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.

(2) On the request in writing of the transferor of a share or debenture the company shall by notice in writing require the person having the possession, custody or control of the share certificate or debenture and the instrument of transfer thereof or either of them to bring the same into the office of the company within a stated period, being not less than seven and not more than twenty-eight days after the date of the notice, to have the share certificate or debenture cancelled or rectified and the transfer registered or otherwise dealt with.

(3) If any person refuses or neglects to comply with a notice given under subsection (2), the transferor may apply to a judge to issue a summons for that person to appear before the Court and show cause why the documents mentioned in the notice should not be delivered up or produced as required by the notice.

(4) Upon appearance of a person so summoned, the Court may examine him upon oath and receive other evidence, or if he does not appear after being duly served with the summons, the Court may receive evidence in his absence and in either case the Court may order him to deliver up the documents to the company upon such terms or conditions as to the Court seem fit, and the costs of the summons and proceedings thereon shall be in the discretion of the Court.

(5) Lists of share certificates or debentures called in under this section and not brought in shall be exhibited in the office of the company and shall be advertised in such newspapers and at such times at the company thinks fit.

Notice of refusal to register transfer

105. (1) If a company refuses to register a transfer of any share, debentures or other interests in the company it shall, within one month after the date on which the transfer was lodged with it, send to the transferor and to the transferee notice of the refusal.

(2) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Certification of transfers

106. (1) The certification by a company of any instrument of transfer of shares, debentures or other interests in the company shall be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show a prima facie title to the shares, debentures or other interests in the transferor named in the instrument of transfer but not as a representation that the transferor has any title to the shares, debentures or other interests.

(2) Where any person acts on the faith of a false certification by a company made negligently, the company shall be under the same liability to him as if the certification had been made fraudulently.

(3) Where any certification is expressed to be limited to forty-two days or any longer period from the date of certification the company and its officers shall not in the absence of fraud be liable in respect of the registration of any transfer of shares debentures or other interests comprised in the certification after the expiration of the period so limited or any extension thereof given by the company if the instrument of transfer has not within that period been lodged with the company for registration.

(4) For the purposes of this section—

(a) an instrument of transfer shall be deemed to be certificated if it bears the words “certificate lodged” or words to the like effect;

(b) the certification of an instrument of transfer shall be deemed to be made by a company if—

(i) the person issuing the instrument is a person apparently authorized to issue certificated instruments of transfer on the company’s behalf; and

(ii) the certification is signed by a person apparently authorized to certificate transfers on the company’s behalf or by any officer either of the company or of a corporation so apparently authorized; and

(c) a certification that purports to be authenticated by a person’s signature or initials (whether hand-written or not) shall be deemed to be signed by him unless it is shown that the signature or initials were not placed there by him and were not placed there by any other person apparently authorized to use the signature or initials for the purpose of certificating transfers on the company’s behalf.

Duties of company with respect to issue of certificates

107. (1) Every company shall within two months after the allotment of any of its shares or debentures, and within one month after the date on which a transfer (other than such a transfer as the company is for any reason entitled to refuse to register and does not register) of any of its shares or debentures is lodged with the company, complete and have ready for delivery all the appropriate certificates and debentures in connection with the allotment or transfer.

(2) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Power of Court where default in issue of certificates

(3) If any company on which a notice has been served requiring the company to make good any default in complying with this section fails to make good the default within ten days after the service of the notice, the Court may, on the application of the person entitled to have the certificates or the debentures delivered to him, make an order directing the company and any officer of the company to make good the default within such time as is specified in the order, and the order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company in default in such proportions as the Court thinks fit.

DIVISION 6A PROVISIONS APPLICABLE TO COMPANIES WHOSE SECURITIES ARE DEPOSITED WITH THE CENTRAL DEPOSITORY

Interpretation

107A. In this Division, unless the contrary intention appears—

“central depository” has the same meaning as is assigned to that expression under subsection 2(1) of the Securities Industry (Central Depositories) Act 1991; “deposited securities” has the same meaning as is assigned to that expression under subsection 2(1) of the Securities Industry (Central Depositories) Act 1991; “depositor” has the same meaning as is assigned to that expression under subsection 2(1) of the Securities Industry (Central Depositories) Act 1991; “security” has the same meaning as is assigned to that expression under subsection 2(1) of the Securities Industry (Central Depositories) Act 1991; “stock exchange” has the same meaning as is assigned to that expression under subsection 2(1) of the Securities Industry Act 1983.

Depositor deemed to be member

107B. (1) Notwithstanding section 100, a depositor whose name appears in the record of depositors maintained by the central depository pursuant to 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 member, debenture holder, interest holder or option holder, as the case may be, of the company, and shall, subject to the provisions of the Securities Industry (Central Depositories) Act 1991 and any regulations made thereunder, be entitled to the number of securities stated in the record of depositors and all rights, benefits, powers and privileges and be subject to all liabilities, duties and obligations in respect of, or arising from, such securities (whether conferred or imposed by the Act or the memorandum or articles of association of the company).

(2) Nothing in this Division shall be construed as affecting the obligation of the company to keep a register of its members under section 158, a register of holders of debentures under section 70, a register of interest holders under section 92 and a register of option holders under section 68A and to open them for inspection in accordance with the provisions of 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 members, debenture holders, interest holders or option holders.

(3) 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 thereat unless his name appears on the record of depositors not less than three market days before the general meeting.

(4) The record of depositors shall be prima facie evidence of any matters inserted therein as required or authorized by this Act.

(5) For the purpose 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

107C. (1) On or after the coming into operation of this section, 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 sections 103 and 104, such company shall be precluded from registering and effecting any transfer of securities or class of securities which have been deposited.

(2) Subsection (1) shall not apply to a transfer of securities to a central depository or its nominee company.

Rectification of record of depositors

107D. (1) Notwithstanding anything in this Act or any written law or rule of 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).

(2) If the Court 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, it may award to the depositor mentioned 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.

Non-application of section 223 to disposition made by way of book entry

107E. Section 223 shall not apply to a disposition of property made by way of book entry by a central depository, but where the Court is satisfied that a party to the disposition, other than the central depository, had notice that a petition had been presented for the winding up of the other party to the disposition, it may award damages against that party on such terms as it thinks equitable or make such other orders as the Court thinks fit, including an order for the transfer of deposited securities by that party but not an order for the rectification of the record of depositors.

Exemption from Division 6A

107F. The Minister may, by notice published in the Gazette, exempt any company or class of companies, subject to such terms and conditions as he deems fit to impose, from complying with all or any provisions of this Division in relation to any securities of a company or any class of companies to which this Division applies and may, by notice published in the Gazette, revoke such a notice or vary it in such manner as he thinks fit.

DIVISION 7 REGISTRATION OF CHARGES

Registration of charges

108. (1) Subject to this Division where a charge to which this section applies is created by a company, there shall be lodged with the Registrar for registration within thirty days after the creation of the charge a statement of the prescribed particulars, and if this section is not complied with in relation to the charge, the charge shall, so far as any security on the company’s property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company.

(2) Nothing in subsection (1) shall prejudice any contract or obligation for repayment of the money secured by a charge and when a charge becomes void under this section, the money secured thereby shall immediately become payable.

(3) The charges to which this section applies are—

(a) a charge to secure any issue of debentures;

(b) a charge on uncalled share capital of a 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 therein;

(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) 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.

(4) Where a charge created in Malaysia affects property outside Malaysia, the statement of the prescribed particulars may be lodged for registration under and in accordance with subsection (1) notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the place in which the property is situate.

(5) When a series of debentures containing or giving by reference toany 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 are lodged with the Registrar for registration within thirty days after 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;

(d) the names of the trustee, (if any), for the debenture holders.

(e)—(g) (Deleted by Act A836)

(6) For the purposes of subsection (5) where more than one issue is made of debentures in the series there shall be lodged within thirty days after each issue particulars of the date and amount of each issue, but an omission so to do shall not affect the validity of the debentures issued.

(7) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his whether absolutely or conditionally subscribing or agreeing to subscribe or 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 per centum of the commission, allowance or discount so paid or made, but omission so to do shall not affect the validity of the debentures issued.

(8) The deposit of any debentures as security for any debt of the company shall not for the purposes of subsection (7) be treated as the issue of the debentures at a discount.

(9) No charge or assignment to which this section applies (except a charge or assignment relating to land) need be filed or registered under any other written law.

(10) Where a charge requiring registration under this section is created before the lapse of thirty days after the creation of a prior unregistered charge, and comprises all or any part of the property comprised in the prior charge, and the subsequent charge is given as a security for the same debt as is secured by the prior charge, or any part of that debt, then to the extent to which the subsequent charge is a security for the same debt or part thereof, and so far as respects the property comprised in the prior charge, the subsequent charge shall not be operative or have any validity unless it is proved to the satisfaction of the court that it was given in good faith for the 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 Division.

Duty to register charges

109. (1) Documents and particulars required to be lodged for registration in accordance with section 108 may be lodged for registration by the company concerned or by any person interested in the documents, but if default is made in complying with that section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(2) Where registration is effected by some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him on the registration.

Duty of company to register charges existing on property acquired

110. (1) Where a company acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Division or, where a foreign company becomes registered in Malaysia and has prior to such registration created a charge which if it had been created by the company while it was registered in Malaysia would have been required to be registered under this Division or, where 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 Division, the company shall cause a statement of the prescribed particulars to be lodged with the Registrar for registration within thirty days after the date on which the acquisition is completed or the date of the registration of the company in Malaysia (as the case may be).

(2) If default is made in complying with this section, the company or the foreign company and every officer of the company or foreign company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

111. (1) The Registrar shall keep a register of all the charges lodged for registration under this Division and 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, such particulars as are required to be contained in a statement furnished under subsection 108(5); and

(b) in the case of any other charge—

(i) if the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of the acquisition of the property;

(ii) the amount secured by the charge;

(iii) a description sufficient to identify the property charged; and

(iv) the name of the person entitled to the charge.

(2) The Registrar shall issue a certificate of every registration and the certificate shall be conclusive evidence that the requirements as to registration have been complied with.

Endorsement of certificate of registration on debentures

112. (1) The 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 so registered—

(a) a copy of the certificate of registration; or

(b) a statement that the registration has been effected and the date of registration.

(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) Every person who knowingly and willfully authorizes or permits the delivery of any debenture or certificate of debenture stock which is not endorsed as required by this section shall be guilty of an offence against this Act. Penalty: *Two thousand ringgit.

Assignment and variation of charges

112A. (1) Where, after a charge on property of a company has been created and registered under this Division, a person other than the original chargee becomes the holder of the charge, the person who becomes the holder of the charge shall, within thirty days after he becomes the holder of the charge—

(a) lodge with the Registrar a notice in the prescribed form stating that he has become the holder of the charge; and

(b) give the company a copy of the notice.

(2) Where, after a charge on property of a company has been created and registered under this Division, there is a variation in the terms of the charge having the effect of—

(a) increasing the amount of the debt or increasing the 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, within thirty days after the variation occurs, lodge with the Registrar a notice in the prescribed form setting out the particulars of the variation.

(3) Where the amount of debt or liability secured by a registrable charge created by the company is—

(a) unspecified; or

(b) specified with further advances, any payment or advance made by the chargee to the company in accordance with the terms of the charge shall not be regarded, for the purpose of subsection (2), to be a variation in the terms of the charge.

(4) A reference in this section to the chargee in relation to a charge shall, if the charge is constituted by a debenture or debentures and there is a trustee for the debenture holders, be construed as a reference to the trustee for debenture holders.

(5) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: One thousand ringgit. Default penalty.

Entries of satisfaction and release of property from charge

113. (1) Where, with respect to any 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 thereof has been released from the charge or has ceased to form part of the company’s property or undertaking of the company concerned, the company may lodge with the Registrar in the prescribed form a memorandum of satisfaction in whole or in part, or of the fact that the property or undertaking or any part thereof has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be, and the Registrar shall enter particulars of that memorandum in the register.

(2) The memorandum must be supported by evidence sufficient to satisfy the Registrar of the payment, satisfaction, release or ceasing referred to in subsection (1).

Extension of time and rectification of register of charges

114. The Court, on being satisfied that the omission to register a charge (whether under this 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 copies of charging instruments and register of charges

115. (1) Every company shall cause the instrument creating any charge requiring registration under this Division or a copy thereof to be kept at the registered office of the company but in the case of a series of debentures the keeping of a copy of one debenture of the series shall be sufficient for the purposes of this subsection.

(2) Every company shall keep at the registered office of the company a register of charges and enter therein 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 short description of the property charged, the amount of the charge and (except in the case of securities to bearer) the names of the persons entitled thereto.

(3) The instruments or copies thereof and the register of charges kept in pursuance of this section shall be open to the inspection of any creditor or member of the company without fee and the register of charges shall also be open to the inspection of any other person on payment of such fee not exceeding two ringgit for each inspection as is fixed by the company.

(3A) Any person shall, on application to a company and on payment of a fee not exceeding one ringgit for every page or part thereof, be furnished with a copy of any instrument of charge or debenture kept by the company in pursuance of this section within three days of his making the application.

(4) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

Documents made out of Malaysia

116. Where under this Division an instrument, deed, statement or other document is required to be lodged with the Registrar within a specified time, the time so specified shall, by force of this section, in relation to an instrument, deed, statement or other document executed or made in a place out of Malaysia, be extended by seven days or such further period as the Registrar may from time to time allow.

Charges, etc., created before commencement of Act

117. Except as is otherwise expressly provided this Division shall apply to any charge that at the date of the commencement of this Act was registrable under any of the repealed written laws but which at that date was not registered under any of those laws.

Application of Division

118. A reference in this Division to a company shall be read as including a reference to a foreign company to which Division 2 of Part XI applies, but nothing in this Division applies to a charge on property outside Malaysia of a foreign company.

PART V MANAGEMENT AND ADMINISTRATION DIVISION 1 OFFICE AND NAME

Registered office of company

119. (1) A company shall as from the day on which it begin to carry on business or as from the fourteenth day after the date of its incorporation, whichever is the earlier, have a registered office within Malaysia to which all communications and notices may be addressed and which shall be open and accessible to the public for not less than three hours during ordinary business hours on each day, Saturdays, weekly and public holidays excepted.

(2) If default is made in complying with subsection (1) the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Office hours

120. (1) Notice in the prescribed form of the situation of the registered office, the days and hours during which it is open and accessible to the public, and of any change therein shall be lodged with the Registrar within one month after the date of incorporation or of any such change, as the case may be, but no notice of the days and hours during which the office is open and accessible to the public shall be required if the office is open for at least five hours during ordinary business hours on each day, Saturdays, weekly and public holidays excepted.

Penalty

(2) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

Publication of name

121. (1) The name of the company (whether or not it is carrying on business under a business name) in legible romanized letters and the company number of the company shall appear on—

(a) its seal; and

(b) all business letters, statements of account, invoices, official notices, publications, bills of exchange, promissory notes, endorsements, cheques, orders, receipts and letters of credit of or purporting to be issued or signed by or on behalf of, the company, and if default is made in complying with this subsection the company shall be guilty of an offence against this Act.

(1A) Where a company has changed its name pursuant to section 23, the former name of the company shall also appear beneath its present name on all documents, business letters, statements of account, invoices, official notices, publications, bills of exchange, promissory notes, endorsements, cheques, orders, receipts and letters of credit of, or purporting to be issued or signed by or on behalf of, the company for a period of not less than twelve months from the date of the change, and if default is made in complying with this subsection the company shall be guilty of an offence against this Act.

(2) If an officer of a company or any person on its behalf—

(a) uses or authorizes the use of any seal purporting to be a seal of the company whereon its name does not so appear;

(b) issues or authorizes the issue of any business letter, statement of account, invoice, official notice or publication of the company wherein its name and former name (if applicable) is not so mentioned; or

(c) signs issues or authorizes to be signed or issued on behalf of the company any bill of exchange, promissory note, cheque or other negotiable instrument or any endorsement, order, receipt or letter of credit wherein its name and former name (if applicable) is not so mentioned, he shall be guilty of an offence against this Act, and where he has signed, issued or authorized to be signed or issued on behalf of the company any bill of exchange, promissory note or other negotiable instrument or any endorsement thereon or order wherein that name and former name (if applicable) is not so mentioned, he shall in addition be liable to the holder of the instrument or order for the amount due thereon unless it is paid by the company.

Name to be displayed on all offices

(3) Every company shall paint or affix and keep painted or affixed on the outside of every office or place in which its business is carried on, in a prominent position in romanized letters easily legible its name, and also, in the case of the registered office, the words “Pejabat Yang Didaftarkan” and if it fails so to do the company shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(4) In this section, “company number” means the number allocated by the Registrar to a company on its incorporation.

DIVISION 2 DIRECTORS AND OFFICERS

Directors

122. (1) Every company shall have at least two directors, who each has his principal or only place of residence within Malaysia.

(1A) In subsection (1), "director" shall not include an alternate or substitute director.

(2) No person other than a natural person of full age shall be a director of a company.

(3) The first directors of a company shall be named in the memorandum or articles of the company.

(4) Any provision in the memorandum or articles of a company which was in force immediately before the commencement of this Act and which operated to constitute a corporation as a director of the company shall be read and construed as if it authorized that corporation to appoint a natural person to be a director of that company.

(5) On the commencement of this Act any corporation which holds office as a director of a company shall cease to hold office and the vacancy may be filled as a casual vacancy in accordance with the articles of the company.

(6) Notwithstanding anything contained in this Act or in the memorandum or articles of a company or in any agreement with a company, 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 by subsection (1) and any purported resignation or vacation of office in contravention of this section shall be deemed to be invalid.

(7) Subsection (6) shall not apply where a director of a company is required to resign or vacate his office if he has not within the period referred to in subsection 124(1) obtained his qualification or by virtue of his disqualification under this Act or any other written law.

Persons connected with a director

122A. (1) For the purposes of this Division a person shall be deemed to be connected with a director if he is—

(a) a member of that director’s family; or

(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 his family is a beneficiary; or

(d) a partner of that director or a partner of a person connected with that director.

(2) In paragraph (1)(a), “a member of that directors’s family” shall include his spouse, parent, child (including adopted child and stepchild), brother, sister and the spouse of his child, brother or sister.

(3) For the purposes of paragraph (1)(b), a body corporate is associated with a director if—

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

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

(c) that director or persons connected with him, or that director and persons connected with him, are entitled to exercise, or control the exercise of, not less than fifteen per centum of the votes attached to voting shares in the body corporate.

Restrictions on appointment or advertisement of director

123. (1) A person shall not be named as a director or proposed director in the memorandum or articles of a company or in a prospectus or a statement in lieu of prospectus, unless before the registration of the memorandum or articles or the issue of the prospectus or the lodging of the statement in lieu of prospectus (as the case may be) he has by himself or by his agent authorized in writing for the purpose—

(a) signed the memorandum for a number of shares not less than his qualification, if any;

(b) signed and lodged with the Registrar an undertaking in writing to take from the company and pay for his qualification shares, if any;

(c) made and lodged with the Registrar a statutory declaration to the effect that a number of shares, not less than his qualification, if any, is registered in his name; or

(d) (in the case of a company formed or intended to be formed by way of reconstruction of another corporation or group of corporations or to acquire the shares in another corporation or group of corporations), made and lodged with the Registrar a statutory declaration that he was a shareholder in that other corporation or in one or more of the corporations of that group, and that as a shareholder he will be entitled to receive and have registered in his name a number of shares not less than his qualification, by virtue of the terms of an agreement relating to the reconstruction.

(2) Where a person has signed and lodged an undertaking to take and pay for his qualification shares, he shall, as regards those shares, be in the same position as if he had signed the memorandum for that number of shares.

(3) The foregoing provisions of this section shall not apply to—

(a) a company not having a share capital;

(b) a private company; or

(c) a prospectus or a statement in lieu of prospectus issued or lodged with the Registrar by or on behalf of a company or to articles adopted by a company after the expiration of one year from the date on which the company was entitled to commence business.

(4) Every person shall before he is appointed a director of a company make and lodge with the Registrar and the Official Receiver a statutory declaration in the form prescribed by regulations that he will not be acting in contravention of sections 125 and 130 and that he consents to act as a director of the company.

Qualification of director

124. (1) Without affecting the operation of any of the preceding provisions of this Division, every director, who is by the articles required to hold a specified share qualification and who is not already qualified, shall obtain his qualification within two months after his appointment or such shorter period as is fixed by the articles.

(2) Unless otherwise provided by the articles the qualification of any director of a company must be held by him solely and not as one of several joint holders.

(3) A director shall vacate his office if he has not within the period referred to in subsection (1) obtained his qualification or if after so obtaining it he ceases at any time to hold his qualification.

Penalty: One thousand ringgit. Default penalty.

(4) A person vacating office under this section shall be incapable of being reappointed as director until he has obtained his qualification.

Undischarged bankrupts acting as directors

125. (1) Every person who being an undischarged bankrupt acts as director of, or directly or indirectly takes part in or is concerned in the management of, any corporation except with the leave of the Court shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or one hundred thousand ringgit or both.

(2) The Court shall not give leave under this section unless notice of intention to apply therefor has been served on the Minister and on the Official Receiver and the Minister and the Official Receiver or either of them may be represented at the hearing of and may oppose the granting of the application.

Appointment of directors to be voted on individually

126. (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 it shall be so made has first been agreed to by the meeting without any vote being given against it.

(2) A resolution passed in pursuance of a motion made in contravention of this section shall be void, whether or not its being so moved was objected to at the time.

(3) Where a resolution pursuant to a motion made in contravention of this section is passed no provision for the automatic reappointment of retiring directors in default of another appointment shall apply.

(4) For the purposes of this section, 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) Nothing in this section shall apply to a resolution altering the company’s articles.

(6) Nothing in this section prevents the election of two or more directors by ballot or poll.

Validity of acts of directors and officers

127. The acts of a director or manager or secretary shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

Removal of directors

128. (1) A public company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its memorandum or articles or in any agreement between it and him but where any director so removed was appointed to represent the interests of any particular class of shareholders or debenture holders the resolution to remove him shall not take effect until his successor has been appointed.

(2) Notwithstanding anything to the contrary in the memorandum or articles of the company, special notice shall be required of any resolution to remove a director or to appoint some person in place of a director so removed at the meeting at which he is removed, and on receipt of notice of an intended resolution to remove a director the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.

(3) Where notice is given pursuant to subsection (2) and the director concerned makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so—

(a) in any notice of the resolution given to members of the company state the fact of the representations having been made; and

(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company), and if a copy of the representations is not so sent because they were received too late or because of the company’s default the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting (4) Notwithstanding subsections (1) to (3), 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 to secure needless publicity for defamatory matter and the Court may order the company’s costs on an application to be paid in whole or in part by the director, notwithstanding that he is not a party to the application.

(5) A vacancy created by the removal of a director if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

(6) A person appointed director in place of a person removed 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.

(7) Nothing in subsections (1) to (6) shall be taken as depriving a person removed there under of compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with that as director or as derogating from any power to remove a director which may exist apart from this section.

(8) A director of a public company shall not be removed by, or be required to vacate his office by reason of, any resolution request or notice of the directors or any of them notwithstanding anything in the articles or any agreement.

Age limit for directors

129. (1) Subject to this section but notwithstanding anything in the memorandum or articles of the company no person of or over the age of seventy years shall be appointed or act as a director of a public company or of a subsidiary of a public company.

(2) The office of a director of a public company or of a subsidiary of a public company shall become vacant at the conclusion of the annual general meeting commencing next after he attains the age of seventy years or if he has attained the age of seventy years before the commencement of this Act at the conclusion of the annual general meeting commencing next after the commencement of this Act.

(3) Any act done by a person as director shall be valid notwithstanding that it is afterwards discovered that there was a defect in his appointment or that his appointment had terminated by virtue of subsection (2).

(4) Where the office of a director has become vacant by virtue of subsection (2) no provision for the automatic reappointment of retiring directors in default of another appointment shall apply in relation to that director.

(5) If any such vacancy has not been filled at the meeting at which the office became vacant the office may be filled as a casual vacancy.

(6) Notwithstanding anything in this section a person of or over the age of seventy years may by a resolution of which no shorter notice than that required to be given to the members of the company of an annual general meeting has been duly given, passed by a majority of not less than three-fourths of such members of the company as being entitled so to do vote in person or, where proxies are allowed, by proxy, at a general meeting of that company, be appointed or reappointed as a director of that company to hold office until the next annual general meeting of the company or be authorized to continue in office as a director until the next annual general meeting of the company.

(7) The provisions of section 147 relating to the demanding of a poll and the holding of a poll shall apply to a resolution under this section.

(8) Nothing in this section shall limit or affect the operation of any provision of the memorandum or articles of a company preventing any person from being appointed a director or requiring any director to vacate his office at any age less than seventy years.

(9) The provisions of the articles of a company relating to the rotation and retirement of directors shall not apply to a director who is appointed or reappointed pursuant to this section but such provisions of the articles shall continue to apply to all other directors of the company.

Power to restrain certain persons from managing companies

130. (1) Where a person is convicted whether within or without Malaysia—

(a) of any offence in connection with the promotion formation or management of a corporation;

(b) of any offence involving fraud or dishonesty punishable on conviction with imprisonment for three months or more; or

(c) of any offence under section 132, 132A or 303, and that person, within a period of five years after his conviction or, if he is sentenced to imprisonment, after his release from prison, without the leave of the Court is a director or promoter of or is in any way whether directly or indirectly concerned or takes part in the management in Malaysia of a corporation he shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or one hundred thousand ringgit or both.

(2) A person intending to apply for the leave of the Court under this section shall give to the Registrar not less than ten days’ notice of his intention so to apply and the Registrar shall be made a party to the proceedings.

(3) On the hearing of any application under this section the Registrar may oppose the granting of the application.

Disqualification of directors of insolvent companies

130A. (1) Where on an application under this section it appears to the Court—

(a) that a person—

(i) is or has been a director of a company which has at any time gone into liquidation (whether while he was a director or subsequently) and was insolvent at that time; and

(ii) is or has been a director of such other company which has gone into liquidation within five years of the date on which the first-mentioned company went into liquidation; and

(b) that his conduct as director of any of those companies makes him unfit to be concerned in the management of a company, the Court may make an order that that person shall not, without the leave of the Court, be a director of or in any way, whether directly or indirectly, be concerned or take part in the management of a company for such period beginning on the date of the order and not exceeding five years as may be specified in the order.

(2) An application under this section shall be made by the Registrar or the Official Receiver.

(3) Where the Registrar or the Official Receiver intends to make an application under this section in respect of any person, he shall give not less than ten days' notice of his intention to that person, and on hearing of the application that person may appear and give evidence or call witnesses.

(4) A person intending to apply for the leave of the Court under subsection (1) shall give to the Registrar not less than ten days' notice of his intention so to apply and the Registrar shall be made a party to the proceedings.

(5) On the hearing of any application under subsection (4) the Registrar may oppose the granting of the application.

(6) If any person acts in contravention of an order made under subsection (1), he shall be guilty of an offence against this Act.

Penalty: Imprisonment for three years or ten thousand ringgit or both.

(7) The Registrar or the Official Receiver may require the liquidatoror former liquidator of any company—

(a) to furnish him with such information with respect to the company's affairs; and

(b) to produce and permit inspection of such books or documents of or relevant to the company, as the Registrar or the Official Receiver may reasonably require for the purpose of determining whether to make an application under this section in respect of any person who is or has been a director of that company; and if a person makes default in complying with any such requirement, the Court may, on the application of the Registrar or the Official Receiver make an order requiring that person to make good the default within such time as may be specified.

(8) Subsection (6) does not affect the powers of the Court in relation to the punishment of contempt of the Court.

(9) Subsection (1) does not apply unless at least one of the companies therein mentioned has gone into liquidation after the date of coming into operation of this section and the conduct to which regard may be had under paragraph (1)(b) does not include conduct as a director of a company that has gone into liquidation before that date.

(10) For the purposes of this section, a company goes into liquidation—

(a) if it is wound up by the Court on the date of the winding up order; and

(b) if it is wound up voluntarily on the date of passing of the resolution for voluntary winding up.

Disclosure of interests in contracts, property, offices, etc.

131. (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 his knowledge, declare the nature of his interest at a meeting of the directors of the company.

(2) The requirements of subsection (1) shall not apply in any case where the interest of the director consists only of being a member or creditor of a corporation which is interested in a contract or proposed contract with the first-mentioned company if the interest of the director may properly 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 he has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan; or

(b) in a 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 6 is deemed to be related to the company–that he is a director of that corporation, and this subsection shall have effect not only for the purposes of this Act but also for the purposes of any other law, but shall not affect the operation of any provision in the articles of the company.

(4) For the purposes of subsection (1), a general notice given to the directors of a company by a director to the effect that he 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 so made if it specifies the nature and extent of his interest in the specified corporation or firm and his 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, but no such notice shall be of effect unless either it is given at a meeting of the directors or the director takes reasonable steps to ensure that it is brought up and read at the next meeting of the directors after it is given.

(5) Every director of a company who holds any office or possesses any property whereby whether directly or indirectly duties or interests might be created in conflict with his duties or interests as director shall declare at a meeting of the directors of the company the fact and the nature, character and extent of the conflict.

(6) 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.

(7) The secretary of the company shall record every declaration under this section in the minutes of the meeting at which it was made.

(8) Except as provided in subsection (3) this section shall be in addition to and not in derogation of the operation of any rule of law or any provision in the articles 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.

Penalty: Imprisonment for *seven years or one hundred and fifty thousand ringgit, or both.

As to the duty and liability of officers

132. (1) A director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.

(2) An officer or agent of a company or officer of the Stock Exchange shall not make improper use of any information acquired by virtue of his position as an officer or agent of the company or officer of the Stock Exchange to gain directly or indirectly an advantage for himself or for any other person or to cause detriment to the company.

(3) An officer or agent or officer of the Stock Exchange who commits a breach of this section shall be—

(a) liable to the company for any profit made by him or for any damage suffered by the company as a result of the breach; and

(b) guilty of an offence against this Act.

Penalty: Imprisonment for *five years or thirty thousand ringgit.

(4) (Deleted by Act A616).

(5) This section is in addition to and not in derogation of any other written law or rule of law relating to the duty or liability of directors or officers of a company.

(6) In this section—

“agent” includes a banker, advocate and solicitor, auditor, accountant or stockbroker of the corporation and any person who is or at any time in the preceding six months has been knowingly connected with the corporation and has information which—

(a) he holds by virtue of being connected with the corporation;

(b) it would be reasonable to expect a person so connected and in the position by virtue he is so connected not to disclose except for the proper performance of the functions attaching to that position; and

(c) he knows is unpublished price sensitive information in relation to the securities of the corporation; “officer” includes a person who at any time has been an officer of the company.

Dealings by officers in securities

132A. (1) An officer, agent or employee of a corporation or officer of the Stock Exchange who in or in relation to a dealing in securities of the corporation by himself or any other person makes improper use to gain, directly or indirectly, an advantage for himself or any other person of specific confidential information acquired by virtue of his position as such officer, agent or employee or officer of the Stock Exchange which if generally known might reasonably be expected to affect materially the price of the subject matter of the dealing on a Stock Exchange shall, in addition to any penalty imposed under subsection (6), be liable to any person for loss suffered by that person by reason of the payment by him or to him of a consideration in respect of the securities greater or lesser, as the case may be, than the consideration that would have been reasonable if the information had been generally known at the time of the dealing.

(2) An officer, agent or employee of a corporation or officer of the Stock Exchange shall not be liable under subsection (1) to a person for any loss suffered by that person if that person knew or ought reasonably to have known of the information referred to in subsection (1) before entering into transaction relating to the dealing in securities of the corporation.

(3) Notwithstanding the provisions of the Limitation Act 1953 [Act 254], an action for the recovery of the amount of a loss referred to in subsection (1) shall not be commenced after the expiration of two years after the date of the completion of the dealing in securities in respect of which the loss was suffered.

(4) In this section—

(a) he holds by virtue of being connected with the corporation;

(c) he knows is unpublished price sensitive information in relation to the securities of the corporation; “corporation” includes a corporation that is related to a corporation under section 6; “dealing in securities in relation to a corporation” means a transaction relating to—

(a) shares in or debentures of the corporation or interests within the meaning of section 84 made available by the corporation or by a related corporation; or

(b) rights or options in respect of the acquisition or disposal of such shares, debentures or interests; “officer” includes a person who at any time within the preceding twelve months was an officer of the corporation.

(5) This section shall be extended to apply to an officer, agent or employee of a corporation or officer of the Stock Exchange who makes improper use to gain, directly or indirectly, an advantage for himself or any other person, by means of specific confidential information acquired by virtue of his position as such officer, agent or employee of the corporation or officer of the Stock Exchange, regarding—

(a) the possibility of a take-over offer or bid being made to another corporation by the corporation to which he belongs; or

(b) the possibility of his corporation entering into a substantial commercial transaction with another corporation, to deal in the securities of that corporation in the expectation that, if this information becomes generally known, the price of the securities of that other corporation on a Stock Exchange might be materially affected.

(6) An officer, agent or employee of a corporation or officer of the Stock Exchange who commits a breach of the provisions of this section shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or thirty thousand ringgit or both.

Prohibition on abuse of information obtained in official capacity

132B. Any person, who in or in relation to a dealing in securities of a corporation, has any information which if generally known might reasonably be expected to affect materially the price of the subject matter of the dealing on a Stock Exchange and which—

(a) he holds by virtue of his official capacity or former official capacity;

(b) it would be reasonable to expect a person in his official capacity or former official capacity not to disclose except for the proper performance of the functions attaching to that official capacity; and

(c) he knows is unpublished price sensitive information in relation to securities of the corporation, shall not make improper use of such information to gain, directly or indirectly, an advantage for himself or for any other person and any person who contravenes the provision of this section shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or thirty thousand ringgit or both.

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

132C. (1) Notwithstanding anything in a company’s memorandum or articles, the directors shall not carry into effect any proposal or execute any transaction for—

(a) the acquisition of an undertaking or property of a substantial value; or

(b) the disposal of a substantial portion of the company’s undertaking or property, which would materially and adversely affect the performance or financial position of the company, unless the proposal or transaction has been approved by the company in general meeting.

(2) The Court may, on the application of any member of the company, restrain the directors from entering into a transaction in contravention of subsection (1).

(3) A transaction entered into in contravention of subsection (1) shall, in favour of any person dealing with the company for valuable consideration, and without actual notice of the contravention, be as valid as if that subsection has been complied with.

(4) 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 and manager of any part of the undertaking or property of the company appointed under a power contained in any instrument or a liquidator of a company appointed in a voluntary winding up.

(5) Any director who contravenes the provision of this section shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or thirty thousand ringgit or both.

Approval of company required for issue of shares by directors

132D. (1) Notwithstanding anything in a company’s memorandum or articles, the directors shall not, without the prior approval of the company in general meeting, exercise any power of the company to issue shares.

(2) Approval for the purposes of this section 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.

(3) Any approval for the purposes of this section shall continue in force until—

(a) the conclusion of the annual general meeting commencing next after the date on which the approval was given; or

(b) the expiration of the period within which the next annual general meeting after that date is required by law to be held,whichever is the earlier; but any approval may be previously revoked or varied by the company in general meeting.

(4) The directors may issue shares notwithstanding that an approval for the purposes of this section has ceased to be in force if the shares are issued in pursuance of an offer, agreement or option made or granted by them while the approval was in force and they were authorized by the approval to make or grant an offer, agreement or option which would or might require shares to be issued after the expiration of the approval.

(5) Section 154 shall apply to any resolution whereby an approval is given for the purposes of this section.

(6) 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.

(6A) Notwithstanding subsection (1), the directors of a company shall not be required to obtain the prior approval of the company in a general meeting to issue shares where the said shares 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 said shares at least fourteen days before the date of the issue of the said shares.

(6B) For the purpose of subsection (6A), 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

(b) the copy of the statement has been advertised in a national language and an English language newspaper circulating generally throughout Malaysia.

(7) Any director who knowingly contravenes, or permits or authorizes the contravention of, this section with respect to any issue of shares 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 thereby; but no proceedings to recover any such loss, damages or costs shall be commenced, notwithstanding the provisions of the Limitation Act 1953, after the expiration of three years from the date of the issue.

(8) This section shall not apply to any issue of shares of a company before—

(a) the beginning of the annual general meeting commencing next after the commencement of this section; or

(b) the expiration of the period within which the next annual general meeting after the commencement of this section is required by law to be held, whichever is the earlier.

Substantial property transactions involving directors

132E. (1) Subject to section 132F, a company shall not enter into any arrangement or transaction with a director of the company or its holding company or with a person connected with such a director to acquire from or dispose to such a director or person any noncash assets of the requisite value unless the arrangement or transaction is first approved by a resolution of the company in general meeting and also, if the director or connected person is a director of its holding company or person connected with such a director, by a resolution of the holding company in general meeting.

(2) An arrangement entered into in contravention of subsection (1) and any transaction entered into in pursuance of the arrangement (whether by the company or any other person) shall be voidable at the instance of the company unless the arrangement and transaction are, within a reasonable period, ratified by the company in general meeting and also, if the arrangement and transaction are for the transfer of an asset to or by a director of its holding company or a person who is connected with such a director, by a resolution of the holding company in general meeting.

(3) Where an arrangement is entered into with a company by a director of the company or its holding company or a person connected with him in contravention of subsection (1) and any transaction is entered into in pursuance of the arrangement, that director and the person so connected and any director who authorized the arrangement 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.

(4) The Court may, on the application of any member of the company, restrain the company from entering into an arrangement or transaction in contravention of subsection (1)

(5) For the purposes of subsection (1), a non-cash asset is of the requisite value if, at the time of the arrangement or transaction for the acquisition or disposal of the asset, its value is not less than ten thousand ringgit but (subject to that) exceeds two hundred and fifty thousand ringgit or ten per centum of the company’s asset value, that is—

(a) except in a case falling within paragraph (b), the value of the company’s net assets determined by reference to the accounts prepared and laid under Part VI in respect of the last financial year prior to the arrangement or transaction; or

(b) where no accounts have been so prepared and laid before that time, the amount of the company’s called-up share capital.

(6) A director of a company or of its holding company, or a person connected with such a director, who enters into an arrangement or transaction with the company in contravention of this section, or a director who authorized the arrangement or transaction, shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or thirty thousand ringgit or both.

(7) For the purposes of this section and section 132F “non-cash asset” means any property or interest in property other than cash and for this purpose “cash” includes foreign currency.

(8) A reference to the acquisition or disposal of a non-cash asset includes the creation or extinction of an estate or interest in, or a right over, any property and also the discharge of any person’s liability, other than a liability for a liquidated sum.

Exception and definition

132F. Section 132E 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; or

(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.

Prohibited transaction involving shareholders and directors

132G. (1) Notwithstanding sections 132C and 132E, a company shall not enter into any arrangement or transaction to acquire the shares or assets of another company in which a shareholder or director of the acquiring company, or a person connected to such shareholder or director has a substantial shareholding as defined in section 69D whether or not for the benefit of such shareholder, director or connected person or for any other person unless the arrangement or transaction was entered into three years after such shareholder, director or connected person, as the case may be, first held the shares in that other company or after the assets were first acquired by the said company, as the case may be.

(2) An arrangement or transaction entered into in contravention of subsection (1) shall be void and any consideration given for the shares or assets shall be recoverable accordingly.

(3) Subsection (2) shall apply to any arrangement or transaction which is pending completion at the time of coming into force of this section.

(4) For the purposes of subsection (1)—

(a) a “person connected with a shareholder or a director” shall have the same meaning as that assigned to a “person connected with a director” in section 122A, except that a reference to a member of that shareholder’s or director’s family shall be limited to that shareholder’s or director’s spouse and child (including adopted child and stepchild); and

(b) a reference to a shareholder of an acquiring company is a reference to a shareholder who has a substantial shareholding, as defined in section 69D, in the acquiring company.

(5) If there is any contravention of this section, the acquiring company and every director of the said company shall be guilty of an offence against this Act save in respect of any arrangement or transaction which is pending completion at the time of coming into force of this section.

Penalty: Imprisonment for three years or fifty thousand ringgit or both.

(6) This section shall not apply to—

(a) subscription of new shares in a company for cash consideration;

(b) an arrangement or transaction for the acquisition of shares or assets entered into 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;

(c) an acquisition of any asset, other than shares, by a company from another company where the sale of the relevant asset is part of the ordinary course of business of the second-mentioned company;

(d) an acquisition of shares or assets by a company made in pursuance of a scheme of compromise or arrangement approved by the Court under section 176; or

(e) an acquisition of shares made by a company in connection with a takeover offer made in accordance with the relevant law applicable to such offers.

Loans to directors

133. (1) A company (other than an exempt private company) shall not make a loan to a director of the company or of a company which by virtue of section 6 is deemed to be related to that company, or enter into any guarantee or provide any security in connection with a loan made to such a director by any other person but nothing in this section shall apply—

(a) subject to subsection (2), to anything done to provide such a director with funds to meet 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;

(b) 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

(c) 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 at a general meeting approved of a scheme for the making of loans to employees of the company and the loan is in accordance with that scheme.

(2) 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—

(a) with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed; or

(b) on condition that, if the approval of the company is not given as aforesaid at or before the next following annual general meeting, the loan shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within six months from the conclusion of that meeting.

(3) 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 arising therefrom.

(4) Where 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 shall be guilty of an offence against this Act.

Penalty: *Ten thousand ringgit.

(5) 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.

Prohibition of loans to persons connected with directors

133A. (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) This section shall not apply—

(a) to anything done by a company 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, finance companies or insurance or are subject to supervision by Bank Negara 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 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 in general meeting.

(3) Nothing in this section shall operate to prevent the company 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.

(4) Where a company contravenes this section, any director who authorizes the making of any loan or the entering into of any guarantee contrary to this section shall be guilty of an offence against this Act.

Penalty: Ten thousand ringgit.

134. (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.

(2) A company need not show in its register with respect to any director particulars of shares in a related corporation, that is the wholly-owned subsidiary of the company or of another corporation.

(3) A company that is a wholly-owned subsidiary of another company shall be deemed to have complied with this section in relation to a director who is a director of that other company if the particulars required by this section to be shown in the register of the first-mentioned company with respect to the director are shown in the register of the second-mentioned company.

(4) (Deleted by Act A657).

(5) A company shall within three days after receiving notice from a director under paragraph 135(1)(a) 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—

(a) the price or other consideration for the transaction, if any, 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.

(6) A company shall, within three days after receiving a notice from a director under paragraph 135(1)(b), enter in its register the particulars of the change referred to in the notice.

(7) A company is not, by reason of anything done under this section, to be deemed for any purpose 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.

(8) A company shall, subject to this section, keep its register at the registered office of the company and the register shall be open for inspection by a member of the company without charge and by any other person on payment of a prescribed fee.

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

(10) 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 after the day on which the requirement is received by the company.

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

(12) In this section—

(a) a reference to a participatory interest is a reference to an interest within the meaning of section 84; and

(b) a reference to a person who holds or acquires share, 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.

(13) In determining, for the purposes of this section, whether a person has an interest in a debenture or participatory interest the provisions of section 6A, except for subsections (1) and (3) of that section, have effect and in applying those provisions, a reference to share shall be read as a reference to a debenture or participatory interest.

(14) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for three years or fifteen thousand ringgit.

Default penalty.

General duty to make disclosure

135. (1) A director of a company shall give notice in writing to the company—

(a) of such particulars relating to shares, debentures, participatory interests, rights, options and contracts as are necessary for the purposes of compliance by the first mentioned company with section 134;

(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;

(c) of such events and matters affecting or relating to himself as are necessary for the purposes of compliance by the company with the requirements of this Act; and

(d) if he is a director of a public company or of a subsidiary of a public company of the date on which he attains or will attain the age of seventy.

Penalty: Imprisonment for three years or fifteen thousand ringgit.

(2) A person required to give notice under subsection (1) shall give the notice—

(a) in the case of a notice under paragraph (1)(a), within fourteen days after—

(i) the coming into operation of this section;

(ii) the date on which the director became a director; or

(iii) 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), within fourteen days after the occurrence of the event giving rise to the change referred to in that paragraph; and

(i) the coming into operation of this section; or

(ii) the date on which the director became a director.

(2A) A person required to give notice under subsection (1) of any matters relating to shares or debentures which are listed on the official list of a Stock Exchange as defined in the Securities Industry Act 1983 shall, on the day on which he gives that notice, serve a copy of the notice on the Stock Exchange and the Stock Exchange may publish, in any manner as it may determine, any information contained in that notice.

Penalty: Ten thousand ringgit.

Default penalty: Five hundred ringgit.

(3) A company shall within seven days of receiving a notice given under subsection (1) send a copy of the notice to each of the other directors of the company.

Penalty: Ten thousand ringgit.

Default penalty: Five hundred ringgit.

(4) In this section a reference to a participatory interest is a reference to an interest within the meaning of section 84.

(5) In determining, for the purposes of this section, whether a person has an interest in a debenture or participatory interest section 6A, save for subsections (1) and (3) of that section, have effect and in applying those provisions a reference to a share shall be read as a reference to a debenture or participatory interest.

Prohibition of tax-free payments to directors

136. (1) A company shall not pay a director 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, except under a contract which was in force before the commencement of this Act, and which provides expressly, and not by reference to the articles, for payment of such remuneration.

(2) Any provision contained in a company’s articles, or in any contract other than a contract referred to in subsection (1) or in any resolution of a company or of a company’s directors 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 it provided for payment as a gross sum subject to income tax, of the net sum for which it actually provides.

(3) This section shall not apply to remuneration due before the commencement of this Act or in respect of a period before the commencement of this Act.

(4) Where a company contravenes this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *three years or ten thousand ringgit.

Payments to director for loss of office, etc.

137. (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, unless particulars with respect to the proposed payment (including the amount thereof) have been disclosed to the members of the company and the proposal has been approved by the company in general meeting 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) Where such 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, that director shall take all reasonable steps to secure that particulars with respect to the proposed payment, including the amount thereof, 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.

(3) A director who fails to comply with subsection (2) 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 that subsection and who fails so to do, shall be guilty of an offence against this Act, and if the requirements of that subsection 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.

(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 him is in excess of the price which could at the time have been obtained by other holders of the like shares 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, for the purposes of this section, be deemed to have been a payment made to him by way of compensation for loss of office or as consideration for or in connection with his retirement from office.

As to payments to directors

(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 the relevant repealed written laws;

(b) any payment under an agreement, particulars whereof have been disclosed to and approved by special resolution of the company;

(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 emoluments of the director in the three years immediately preceding his retirement or death; or

(e) any payment to a director pursuant to an agreement made between the company and him before he became a director of the company as the consideration or part of the 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 of law 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 6 deemed to be related to the company.

Provisions as to assignment of office

138. (1) If in the case of any public company provision is made by the articles or by any agreement entered into between any person and the company for empowering a director or manager of the company to assign his office as such to another person, any such assignment of office shall, notwithstanding anything in the said provision, be of no effect until approved by a special resolution of the company.

(2) This section shall not be construed so as to prevent the appointment by a director (if authorized by the articles and subject thereto) of an alternate or substitute director to act for or on behalf of the director during his inability for any time to act as director.

Secretary

139. (1) Every company shall have one or more secretaries each of whom shall be a natural person of full age who has his principal or only place of residence in Malaysia.

(1A) The first secretary of a company shall be named in the memorandum or articles of the company.

(1B) The office of secretary of a company shall not be left vacant for more than one month at any one time.

(1C) Notwithstanding subsection (1B), where none of the directors of the company can be communicated with at the last-known residential address, the secretary may, notwithstanding subsection 141(6), lodge with the Registrar a notice in the prescribed form notifying the Registrar of that fact and of his intention to vacate the office of secretary.

(1D) Where the secretary has lodged a notice in accordance with subsection (1C), the secretary shall cease to be the secretary of the company on the expiry of one month from the date of the notice.

(1E) Nothing in subsections (1C) and (1D) shall relieve the secretary from liability for any act or omission done before the secretary vacated that office.

(2) Subsection (1) shall not operate to prevent a corporation which was acting as the secretary of a company immediately before the commencement of this Act from continuing to act as secretary of that company for a period of twelve months after the commencement of this Act.

(3) The secretary shall be appointed by the directors and at least one of those secretaries shall be present at the registered office of the company by himself or his agent or clerk on the days and the hours during which the registered office is to be accessible to the public.

(4) Subject to subsection (1B), anything required or authorized to be done by or in relation to the secretary may, if the office is vacant or for any other reason the secretary is not capable of acting, be done by or in relation to any assistant or deputy secretary or, if there is no assistant or deputy secretary capable of acting, by or in relation to any officer of the company authorized generally or specially in that behalf by the directors.

(5) A provision requiring or authorizing a thing to be done by or in relation to a director and the secretary shall not be satisfied by its being done by or in relation to the same person acting both as director and as, or in place of, the secretary.

(6) Every person shall, before he is appointed a secretary of a company, make a declaration in the prescribed form that he is not in contravention of sections 139A and 139C and that he consents to act as a secretary of the company.

Qualification for company secretary

139A. No person shall act as a secretary of a company unless —

(a) he is a member of a professional body, or any other body, which has for the time being been prescribed by the Minister by notification published in the Gazette; or

(b) he is licensed by the Registrar for that purpose:

Provided that a person who is a secretary of the company before the coming into operation of this section and who is not a member of a professional or other body as prescribed by the Minister may continue to act as the secretary for the company for a period of not more than twelve months after the coming into operation of this section unless he has obtained a licence pursuant to paragraph (b).

Licence to act as company secretary

139B. (1) For the purpose of paragraph 139A(b), an application for a licence shall be made to the Registrar in the prescribed form and manner.

(2) The Registrar may require an applicant to supply him with such further information as he considers necessary in relation to the application.

(3) The Registrar shall only grant or renew the licence if—

(a) after consideration of the character, qualification and experience of the applicant; and

(b) after consideration of the interest of the public, he is of the opinion that the applicant is a fit and proper person to hold a licence.

(4) Every licence granted under this section, including a renewal of the licence, shall be in force for a period of three years after the date of the issue thereof, unless sooner revoked by the Registrar.

(5) An application for renewal of a licence shall be made not later than thirty days before the expiry of the licence.

(6) Notwithstanding subsection (5), where an application for the renewal of a licence is made less than thirty days but before the expiry date of the licence, the Registrar may for any special reasons he deems fit accept such application for consideration.

Disqualification

139C. (1) A person shall be disqualified to act as a secretary if—

(a) he is an undischarged bankrupt;

(b) he is convicted whether within or without Malaysia of any offence mentioned in subsection 130(1);

(d) he ceases to be a holder of a valid licence issued under section 139B.

(2) Notwithstanding subsection (1), the Registrar may require a person to show cause why his licence issued under section 139B should not be revoked or why he should not be disqualified from acting as a secretary of a company, if he is of the opinion that that person has failed to act honestly or has failed to use reasonable diligence in the discharge of his duties as a secretary.

(3) If a person continues to act as a secretary for a company after he is so disqualified under this section without leave of the Court, he and every director who knowingly permits him to act in that capacity shall be guilty of an offence.

Appeal

139D. (1) A person who is aggrieved by any decision of the Registrar under sections 139B and 139C may appeal to the Minister within thirty days of the decision of the Registrar.

(2) In any appeal under this section, the decision of the Minister shall be final and shall be given effect to by the Registrar.

Provisions indemnifying directors or officers

140. (1) Any provision, whether contained in the articles or in any contract with a company or otherwise, for exempting any officer or auditor of the company from, or indemnifying him 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.

(2) Notwithstanding anything in this section a company may pursuant to its articles or otherwise indemnify any officer or auditor against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application in relation thereto in which relief is under this Act granted to him by the Court.

141. (1) Every company shall keep at its registered office a register of its directors, managers and secretaries.

(2) The register shall contain with respect to each director his consent in writing to appointment as such and shall specify—

(a) his present full name, any former name, his usual residential address, his date of birth, and his business occupation, if any, and identification, if any; and

(b) 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 6 is deemed to be related to that company.

(3) Where a person is a director in one or more subsidiaries of the same holding company it shall be sufficient compliance with subsection (2) 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”.

(4) The register shall specify with respect to each manager and secretary his full name, identification and residential address and other occupation, if any.

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

(6) The company shall lodge with the Registrar—

(a) within one month after incorporation, a return in the prescribed form containing the particulars required to be specified in the register;

(b) within one month after a person ceases to be, or becomes, a director of the company, a return in the prescribed form notifying the Registrar of the change and containing, with respect to each then director of the company, the particulars required to be specified in the register;

(c) within one month after a person becomes a manager or secretary of the company, a return in the prescribed form notifying the Registrar of that fact and specifying the full name, address and other occupation, if any, of that person;

(d) within one month after a person ceases to be a manager or secretary of the company, a return in the prescribed form notifying the Registrar of that fact; and

(e) within one month of any change in the name, residential address and other prescribed particulars of any director, manager or secretary a notice in the prescribed form notifying the Registrar of the new name, residential address and other prescribed particulars of that person.

(7) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(8) A certificate of the Registrar stating that from any return lodged with the Registrar pursuant to this section it appears that at any time specified in the certificate any person was a director, manager or secretary of a specified company 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 of the facts stated therein and for the purposes of this subsection a person who appears from any return so lodged to be a director, manager or secretary of a company shall be deemed to continue as such until by a subsequent return so lodged or by a notification of change in the prescribed form so lodged it appears that he has ceased to be such a director, manager or secretary.

(9) 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, if any.

(10) In this section “director” includes an alternate, substitute or local director.

DIVISION 3 MEETINGS AND PROCEEDINGS

Statutory meeting and statutory report

142. (1) Every public company that is a limited company and has a share capital shall, within a period of not less than one month and not more than three months after the date at which it is entitled to commence business, hold a general meeting of the members of the company to be called the “statutory meeting”.

(2) The directors shall at least seven days before the day on which the meeting is to be held forward a report to be called the “statutory report” to every member of the company.

(3) The statutory report shall be certified by not less than two directors of the company and shall state—

(a) the total number of shares allotted distinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up the extent to which they are so paid up, and in either case the consideration for which they have been allotted;

(b) the total amount of cash received by the company in respect of all the shares allotted and so distinguished;

(c) an abstract of the receipts of the company and of the payments made there out up to a date within seven days of the date of the report exhibiting under distinctive headings the receipts from shares and debentures and other sources the payments made thereof and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses;

(d) the names and addresses and descriptions of the directors, trustees for holders of debentures, if any, auditors, if any, managers, if any, and secretaries of the company; and

(e) the particulars of any contract, the modification of which is to be submitted to the meeting for its approval together with the particulars of the modification or proposed modification.

(4) The statutory report shall, so far as it relates to the shares allotted and to the cash received in respect of those shares and to the receipts and payments on capital account, be examined and reported upon by the auditors, if any.

(5) The directors shall cause a copy of the statutory report and the auditor's report, if any, to be lodged with the Registrar at least seven days before the date of the statutory meeting.

(6) The directors shall cause a list showing the names and addresses of the members and the number of shares held by them respectively to be produced at the commencement of the meeting and to remain open and accessible to any member during the continuance of the meeting.

(7) The members present at the meeting shall be at liberty to discuss any matter relating to the formation of the company or arising out of the statutory report, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles may be passed.

(8) The meeting may adjourn from time to time and at any adjourned meeting any resolution of which notice has been given in accordance with the articles either before or subsequently to the former meeting may be passed and the adjourned meeting shall have the same powers as an original meeting.

(9) The meeting may by ordinary resolution appoint a committee of inquiry, and at any adjourned meeting a special resolution may be passed that the company be wound up if notwithstanding any other provision of this Act at least seven days notice of intention to propose the resolution has been given to every member of the company.

(10) In the event of any default in complying with this section every officer of the company who is in default and every director of the company who fails to take all reasonable steps to secure compliance with this section shall be guilty of an offence against this Act.

Penalty: *Five thousand ringgit:

Default penalty: One hundred ringgit.

Annual general meeting

143. (1) A general meeting of every company to be called the “annual general meeting” shall in addition to any other meeting be held once in every calendar year and not more than fifteen months after the holding of the last preceding annual general meeting, but so long as a company holds its first annual general meeting within eighteen months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

(2) Notwithstanding subsection (1) the Registrar on the application of the company, may if for any special reason he thinks fit so to do, extend the period of fifteen months or eighteen months referred to in that subsection, notwithstanding that such period is so extended beyond the calendar year.

(3) Subject to notice being given to all persons entitled to receive notice of the meeting a general meeting may be held at any time and the company may resolve that any meeting held or summoned to be held shall be at the annual general meeting of the company.

(4) If default is made in holding an annual general meeting—

(a) the company and every officer of the company who is in default shall be guilty of an offence against this Act;

Penalty: Five thousand ringgit.

Default penalty: One hundred ringgit; and

(b) the Court may on the application of any member order a general meeting to be called.

Convening of extraordinary general meeting on requisition

144. (1) The directors of a company, notwithstanding anything in its articles, shall on the requisition of members holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital as at the date of the deposit carries the right of voting at general meetings or, in the case of a company not having a share capital, of members representing not less than one-tenth of the total voting rights of all members having at that date a right to vote at general meetings, forthwith proceed duly to convene an extraordinary general meeting of the company to be held as soon as practicable but in any case not later than two months after the receipt by the company of the requisition.

(2) The requisition shall state the objects of the meeting and shall be signed by the requisitionists and deposited at the registered office of the company, and may consist of several documents in like form each signed by one or more requisitionists.

(3) If the directors do not within twenty-one days after the date of the deposit of the requisition proceed to convene a meeting the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves, in the same manner as nearly as possible as that in which meetings are to be convened by directors convene a meeting, but any meeting so convened shall not be held after the expiration of three months from that date.

(4) Any reasonable expenses incurred by the requisitionists by reason of the failure of the directors to convene a meeting shall be paid to the requisitionists by the company, and any sum so paid 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 their services to such of the directors as were in default.

(5) A meeting at which a special resolution is to be proposed shall be deemed not to be duly convened by the directors if they do not give such notice thereof as is required by this Act in the case of special resolutions.

Calling of meetings

145. (1) Two or more members holding not less than one-tenth of the issued share capital or, if the company has not a share capital, not less than five per centum in number of the members of the company or such lesser number as is provided by the articles may call a meeting of the company.

(2) A meeting of a company or of a class of members, other than a meeting for the passing of a special resolution, shall be called by notice in writing of not less than fourteen days or such longer period as is provided in the articles.

(3) A meeting shall, notwithstanding that it is called by notice shorter than is required by subsection (2) be deemed to be duly called if it is so agreed—

(a) in the case of a meeting called as the annual general meeting, by all the members entitled to attend and vote thereat; or

(b) in the case of any other meeting, by a majority in number of the members having a right to attend and vote thereat, being a majority which together holds not less than ninetyfive per centum in nominal value of the shares giving a right to attend and vote or, in the case of a company not having a share capital, together represents not less than ninety-five per centum of the total voting rights at that meeting of all the members.

(4) So far as the articles do not make other provision in that behalf notice of every meeting shall be served on every member having a right to attend and vote thereat in the manner in which notices are required to be served by Table A.

(5) The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any member shall not invalidate proceedings at a meeting.

Place of meeting

145A. Where any meeting (including an adjourned meeting) is required to be held under this Division it shall be held in the State where its registered office is situated.

Articles as to right to demand a poll

146. (1) Any provision contained in a company’s articles shall be void so far as it would have the effect—

(a) of excluding the right to demand a poll at a general meeting on any question or matter other than the election of the chairman of the meeting or the adjournment of the meeting;

(b) of making ineffective a demand for a poll on any question or matter other than the election of the chairman of the meeting or the adjournment of the meeting that is made—

(i) by not less than five members having the right to vote at the meeting;

(ii) by a member representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

(iii) 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 one-tenth of the total sum paid up on all the shares conferring that right; or

(c) of requiring the instrument appointing a proxy or any other document necessary to show the validity of or otherwise relating to the appointment of a proxy to be received by the company or any other person more than forty-eight hours before a meeting or adjourned meeting in order that the appointment may be effective thereat.

(2) The instrument appointing a proxy to vote at a meeting of a company shall be deemed to confer authority to demand or join in demanding a poll, and for the purposes of subsection (1) a demand by a person as proxy for a member of the company shall be deemed to be the same as a demand by the member.

(3) A person entitled to vote on a poll at a meeting shall be deemed to be a person entitled to vote for the purposes of this Act.

Quorum, chairman, voting, etc., at meetings

147. (1) So far as the articles do not make other provision in that behalf and subject to section 55—

(a) two members of the company, personally present shall be a quorum;

(b) any member elected by the members present at a meeting may be chairman thereof;

(i) on a show of hands each member who is personally present and entitled to vote shall have one vote; and

(ii) on a poll each member shall have one vote in respect of each share held by him and where all or part of the share capital consists of stock or units of stock each member shall have one vote in respect of the stock or units of stock held by him which is or are or were originally equivalent to one share; and

(d) in the case of a company not having a share capital every member shall have one vote.

(2) On a poll taken at a meeting a person 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.

(3) A corporation may by resolution of its directors or other governing body—

(a) if it is a member of a company, authorize such person as it thinks fit to act as its representative, either at a particular meeting or at all meetings of the company or of any class of members; or

(b) if it is a creditor (including a holder of debentures) of a company, authorize such person as it thinks fit to act as its representative either at a particular meeting or at all meetings of any creditors of the company, and a person so authorized shall, in accordance with his authority and until his authority is revoked by the corporation be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual member, creditor or holder of debentures of the company.

(4) Where—

(a) a person present at a meeting is authorized to act as the representative of a corporation at the meeting by virtue of an authority given by the corporation under subsection (3); and

(b) the person is not otherwise entitled to be present at the meeting, the corporation shall, for the purposes of subsection (1), be deemed to be personally present at the meeting.

(5) A certificate under the seal of the corporation shall be prima facie evidence of the appointment or of the revocation of the appointment, as the case may be, of a representative pursuant to subsection (3).

(6) Where a holding company is beneficially entitled to the whole of the issued shares of a subsidiary and a minute is signed by a representative of the holding company authorized pursuant to subsection (3) stating that any act, matter, or thing, or any ordinary or special resolution, required by this Act or by the memorandum or articles of the subsidiary to be made, performed, or passed by or at an ordinary general meeting or an extraordinary general meeting of the subsidiary has been made, performed, or passed, that act, matter, thing, or resolution shall, for all purposes, be deemed to have been duly made, performed, or passed by or at an ordinary general meeting, or as the case requires, by or at an extraordinary general meeting of the subsidiary.

(7) Where by or under this Act any notice, copy of a resolution, or other document relating to any matter is required to be lodged by a company with the Registrar, and a minute referred to in subsection (6) is signed by the representative in pursuance of that subsection and the minutes relates to such a matter the company shall, within one month after the signing of the minute, lodge a copy thereof with the Registrar.

As to member’s rights at meetings

148. (1) Subject to subsection (2), every member shall notwithstanding any provision in the memorandum or articles have a right to attend any general meeting of the company and to speak and vote on any resolution before the meeting:

Provided that the company’s articles may provide that a member shall not be entitled to vote unless all calls or other sums personally payable by him in respect of shares in the company have been paid.

(2) Notwithstanding subsection (1), the articles may provide that the right of holders of preference shares to attend and vote at a general meeting of the company may be suspended upon such conditions as may be specified:

Provided that any preference shares issued after the commencement of this Act shall carry the right to attend any general meeting and in a poll thereat to at least one vote for each ringgit or part of a ringgit that is paid up on each share—

(a) during such period as the preferential dividend or any part thereof remains in arrear and unpaid, such period starting from a date not more than twelve months, or such lesser period as the articles may provide, after the due date of the dividend;

(b) upon any resolution which varies the rights attached to such shares; or

(3) For the purposes of subsection (2), a dividend shall be deemed to be due on the date appointed in the articles for the payment of the dividend for any year or other period, or if no such date is appointed, upon the day immediately following the expiration of the year or other period and whether or not such dividend shall have been earned or declared.

Proxies

149. (1) A member of a company entitled to attend and vote at a meeting of the company, or at a meeting of any class of members of the company, shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of the member at the meeting and a proxy appointed to attend and vote instead of a member shall also have the same right as the member to speak at the meeting, but unless the articles otherwise provide—

(a) a proxy shall not be entitled to vote except on a poll;

(b) a member shall not be entitled to appoint a person who is not a member as his proxy unless that person is an advocate, an approved company auditor or a person approved by the Registrar in a particular case;

(d) where a member appoints two proxies the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

(2) In every notice calling a meeting of a company or a meeting of any class of members of a company there shall appear with reasonable prominence a statement as to the rights of the member to appoint proxies to attend and vote instead of the member, and that a proxy need not also be a member; and if default is made in complying with this subsection as respects any meeting, every officer of the company who is in default shall be guilty of an offence against this Act.

(3) 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 some only of the members entitled to be sent a notice of the meeting and to vote thereat by proxy shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit.

(4) No person shall be guilty of an offence under subsection (3) by reason only of the issue to a member at his request of a form of appointment naming the proxy or a list of persons willing to act as proxies if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

(5) 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 or circulated shall be guilty of an offence against this Act unless the invitation is accompanied by a form of proxy which shall entitle the member to direct the proxy to vote either for or against the resolution.

Power of Court to order meeting

150. If for any reason it is impracticable to call a meeting in any manner in which meetings may be called or to conduct the meeting in the manner prescribed by the articles or this Act the Court may, either of its own motion or on the application of any director or of any member who would be entitled to vote at the meeting or of the personal representative of any such member, order a meeting to be called, held and conducted in such manner as the Court thinks fit, and may give such ancillary or consequential directions as it thinks expedient, including a direction that one member present in person or by proxy shall be deemed to constitute a meeting or that the personal representative of any deceased member may exercise all or any of the powers that the deceased member could have exercised if he were present at the meeting.

Circulation of members’ resolutions, etc.

151. (1) Subject to this section a company shall on the requisition in writing of such number of members of the company as is specified in subsection (2) and (unless the company otherwise resolves) at the expense of the requisitionists—

(a) give to the members of the company entitled to receive notice of the next annual general meeting notice of any resolution which may properly be moved and is intended to be moved at that meeting; and

(b) circulate to members entitled to have notice of any general meeting sent to them any statement of not more than one thousand words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting.

(2) The number of members necessary for a requisition under subsection (1) shall be—

(a) any number of members representing not less than one twentieth of the total voting rights of all the members having at the date of the requisition a right to vote at the meeting to which the requisition relates; or

(b) not less than one hundred members holding shares in the company on which there has been paid up an average sum, per member, of not less than five hundred ringgit.

(3) Notice of a resolution referred to in subsection (1) shall be given, and any statement so referred to shall be circulated, to members of the company entitled to have notice of the meeting sent to them by serving a copy of the resolution or statement on each member in any manner permitted for service of notice of the meeting, and notice of the resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving him notice of meetings of the company, and the copy shall be served, or notice of the effect of the resolution shall be given, as the case may be, in the same manner and, so far as practicable, at the same time as notice of the meeting and, where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.

(4) A company shall not be bound under this section to give notice of any resolution or to circulate any statement unless—

(a) a copy of the requisition signed by the requisitionists (or two or more copies which between them contain the signatures of all the requisitionists) is deposited at the registered office of the company—

(i) in the case of a requisition requiring notice of a resolution, not less than six weeks before the meeting; and

(ii) in the case of any other requisition, not less than one week before the meeting; and

(b) there is deposited or tendered with the requisition a sum reasonably sufficient to meet the company’s expenses in giving effect thereto, but if, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called for a date six weeks or less after the copy has been deposited, the copy though not deposited within the time required by this subsection shall be deemed to have been properly deposited for the purposes thereof.

(5) The company shall not be bound under this section to circulate any statement 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 to secure needless publicity for defamatory matter and the Court may order the company’s costs on an application under this section to be paid in whole or in part by the requisitionists, notwithstanding that they are not parties to the application.

(6) Notwithstanding anything in the company’s articles, the business which may be dealt with at an annual general meeting shall include any resolution of which notice is given in accordance with this section, and for the purposes of this subsection notice shall be deemed to have been so given notwithstanding the accidental omission, in giving it, of one or more members.

(7) In the event of any default in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Ten thousand ringgit.

Special resolutions

152. (1) A resolution shall be a special resolution when it has been passed by a majority of not less than three-fourths of such members as being entitled so to do vote in person or, where proxies are allowed, by proxy, at a general meeting of which not less than twenty-one days’ notice specifying the intention to propose the resolution as a special resolution has been duly given.

(2) Notwithstanding subsection (1), if it is so agreed by a majority in number of the members having the right to attend and vote at the meeting, being a majority which together holds not less than ninety-five per centum in nominal value of the shares giving that right or, in the case of a company not having a share capital, together represents not less than ninety-five per centum of the total voting rights that could be exercised at that meeting, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one days’ notice has been given.

(3) At any meeting at which a special resolution is submitted a declaration of the chairman that the resolution is carried shall unless a poll is demanded be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

(4) At any meeting at which a special resolution is submitted a poll shall be deemed to be effectively demanded if demanded—

(a) by such number of members for the time being entitled under the articles to vote at the meeting as is specified in the articles, but it shall not in any case be necessary for more than five members to make the demand;

(b) if no such provision is made by the articles, by three members so entitled, or by one member or two members so entitled, if that member holds or those two members together hold not less than ten per centum of the paidup share capital of the company or if that member represents or those two members together represent not less than one-tenth of the total voting rights of all the members having a right to vote at the meeting.

(5) In computing the majority on a poll demanded on the question that a special resolution be passed reference shall be had to the number of votes cast for and against the resolution and to the number of votes to which each member is entitled by this Act or the articles of the company.

(6) For the purposes of this section notice of a meeting shall be deemed to be duly given and the meeting shall be deemed to be duly held when the notice is given and the meeting held in manner provided by this Act or by the articles.

Transitory provisions

(7) Any extraordinary resolution, duly and appropriately passed before the commencement of this Act, shall for the purposes of this Act be treated as a special resolution.

(8) Where in the case of a company incorporated before the commencement of this Act any matter is required or permitted to be done by extraordinary resolution that matter may be done by special resolution.

Resolution signed by all members deemed to be duly passed at meeting

152A. (1) Notwithstanding anything to the contrary in this Act or the articles of the company, a resolution in writing signed by or on behalf of all persons for the time being entitled to receive notice of, and to attend and vote at general meetings of a company shall, for the purposes of this Act and the articles of the company, be treated as a resolution duly passed at a general meeting of the company and, where relevant, as a special resolution so passed.

(2) Any such resolution shall be deemed to have been passed at a meeting held at the registered office on the date on which it was signed by the last member.

(3) This section shall not be construed as requiring that the persons signing a resolution under this section shall sign the same document containing the resolution; but where two or more documents are used for the purpose of obtaining signatures under this section in respect of any resolution, each such document shall be certified in advance by the secretary of the company as containing the true and correct version of the proposed resolution.

Resolution requiring special notice

153. Where by this Act special notice is required of a resolution, the resolution shall not be effective unless notice of the intention to move it has been given to the company not less than twenty eight days before the meeting at which it is moved, and the company shall give its members notice of any such resolution at the same time and in the same manner as it gives notice of the meeting or, if that is not practicable, shall give them notice thereof, in any manner allowed by the articles, not less than fourteen days before the meeting, but if after notice of the intention to move such a resolution has been given to the company, a meeting is called for a date twenty-eight days or less after the notice has been given, the notice, although not given to the company within the time required by this section, shall be deemed to be properly given, Registration and copies of certain resolutions and agreements

154. (1) A printed copy of—

(a) every special resolution; and

(b) every resolution or agreement which effectively binds any class of shareholders whether agreed to by all the members of that class or not, shall except where otherwise expressly provided by this Act within one month after the passing or making thereof, be lodged by the company with the Registrar.

(2) Where articles have not been registered a printed copy of every resolution or agreement to which this section applies shall be forwarded to any member at his request on payment of one ringgit or such less sum as the company directs.

(3) In the event of any default in complying with subsection (1) the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

(4) In the event of any default in complying with subsection (2) the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Twenty-five ringgit for each copy in respect of which default is made.

Resolutions at adjourned meetings

155. Where a resolution is passed at an adjourned meeting of a company or of holders of any class of shares or of directors 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.

Minutes of proceedings

156. (1) Every company shall cause—

(a) minutes of all proceedings of general meetings and of meetings of its directors and of its managers, if any, to be entered in books kept for that purpose within fourteen days of the date upon which the relevant meeting was held; and

(b) those minutes to be signed by the chairman of the meeting at which the proceedings were had or by the chairman of the next succeeding meeting.

(2) Any minute so entered that purports to be signed as provided in subsection (1) shall be evidence of the proceedings to which it relates.

(3) Where minutes have been so entered and signed, then, until the contrary is proved—

(a) the meeting shall be deemed to have been duly held and convened;

(b) all proceedings had thereat shall be deemed to have been duly had; and

(4) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

Inspection of minute books

157. (1) The books containing the minutes of proceedings of any general meeting shall be kept by the company at the registered office of the company, and shall be open to the inspection of any member without charge.

(2) Any member shall be entitled to be furnished within fourteen days after he has made a request in writing in that behalf to the company with a copy of any minutes specified in subsection (1) at a charge not exceeding one ringgit for every hundred words thereof.

(3) If any copy required under this section is not so furnished the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: † Five hundred ringgit. Default penalty.

DIVISION 4 REGISTER OF MEMBERS

158. (1) Every company shall keep a register of its members and enter therein—

(a) the names, addresses, the number of the identity card issued under the National Registration Act 1959 if any, nationality and any other relevant information and particulars of the members, and in the case of a company having a share capital a statement of the shares held by each member, distinguishing each share by its number, if any, or by the number, if any, of the certificate evidencing the members’ holding and of the amount paid or agreed to be considered as paid on the shares of each member;

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

(d) 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 anything in subsection (1) 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)(a).

(3) Notwithstanding anything in subsection (1) 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.

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

Index of members of company

(5) Every company having more than fifty members shall, unless the register of members is in such a form as to constitute in itself an index, keep an index in convenient form of the names of the members and shall, within fourteen days after the date on which any alteration is made in the register of members, make any necessary alteration in the index.

(6) 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 found.

(7) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

Where register to be kept

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

(a) if the work of making them up is done at another office of the company within Malaysia they may be kept at that other office; or

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

(2) Every company shall, within fourteen days after the register and index, if any, are first kept at a place other than the registered office, lodge with the Registrar notice of the place where the register and index, if any, are kept and shall within fourteen days after any change in the place at which the register and index, if any, are kept, lodge with the Registrar notice of the change.

(3) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

Inspection and closing of register

160. (1) A company may, on giving not less than fourteen days notice to the Registrar, close the register of members or any class of members for any time, but so that no part of the register shall be closed for more than thirty days in the aggregate in any calendar year.

(2) The register and index shall be open to the inspection of any member without charge and of any other person on payment for each inspection of one ringgit or such less sum as the company requires.

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

(4) If any copy so requested is not sent within the period prescribed by subsection (3) the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Five hundred ringgit. Default penalty.

Consequences of default by agent

161. Where, by virtue of paragraph 159 (1)(b), the register of members is kept at the office of some person other than the company, and by reason of any default of his the company fails to comply with subsection 159(1) or (2) or with section 160 or with any requirements of this Act as to the production of the register, that other person shall be liable to the same penalties as if he were an officer of the company who was in default, and the power of the Court under section 362 shall extend to the making of orders against that other person and his officers and servants.

Power of Court to rectify register

162. (1) If—

(a) the name of any person is without sufficient cause entered in or omitted from the register; or

(b) default is made or unnecessary delay takes place in entering in the register the fact of any person having ceased to be a member, the person aggrieved or any member or the company may apply to the Court for rectification of the register, and the Court may refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party to the application.

(2) On any application under subsection (1) the Court may decide—

(a) any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members or between members or alleged members on the one hand and the company on the other hand; and

(b) generally, any question necessary or expedient to be decided for the rectification of the register.

(3) The Court when making an order for rectification of the register shall by its order direct a notice of the rectification to be so lodged.

(4) No application for the rectification of a register in respect of an entry which was made in the register more than thirty years before the date of the application shall be entertained by the Court.

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

163. (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 that 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 them as being held in respect of the trust.

(4) Except as provided in this section 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 shall be affected by anything done in pursuance of subsection (1), (2) or (3) or pursuant to 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.

Branch registers

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

(2) The company shall lodge with the Registrar notice of the situation of the office where any branch register is kept and of any change in its situation, and if it is discontinued of its discontinuance, and any such notice shall be lodged within one month after 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 by this Act required to be kept.

(4) The company shall transmit to the office at which its principal register is kept a copy of every entry in its branch register as soon as may be after the entry is made, and shall cause to be kept at that office duly entered up from time to time a copy of its branch register, which shall for all purposes of this Act be deemed to be part of the principal register.

(5) Subject to the provisions of 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 during the continuance of that registration be registered in any other register.

(6) A company may discontinue a branch register and thereupon 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) This section shall apply to all companies incorporated within Malaysia by or under any Federal or State law.

(8) If by virtue of the law in force in any other country any corporation incorporated under that law keeps in Malaysia a branch register of its members, 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 to and in relation to any such branch register kept in Malaysia as they apply to and in relation to the registers of companies under this Act and thereupon those provisions shall apply accordingly.

(9) If default is made in complying with this section the company and every officer of the company who is in default and every person who, pursuant to section 159 has arranged to make up the principal register, and who is in default shall be guilty of an offence against this Act.

Penalty: *One thousand ringgit. Default penalty.

DIVISION 5 ANNUAL RETURN

Annual return by company having a share capital

165. (1) Every company having a share capital shall make a return containing the particulars referred to in Part l of the Eighth Schedule and accompanied by such copies of documents as are required to be included in the return in accordance with Part ll of that Schedule and such of the certificates and other particulars prescribed in that Part as are applicable to the company.

(2) The return shall be in accordance with the form set out in Part II of the Eighth Schedule or as near thereto as circumstances admit and shall be made up to the date of the annual general meeting of the company in the year or a date not later than the fourteenth day after the date of the annual general meeting.

(3) In the case of a company keeping a branch register the particulars of the entries in that register shall, so far as they relate to matters which are required to be stated in the return, be included in the return made next after copies of those entries are received at the registered office of the company.

(4) The annual return signed by a director or by the manager or secretary of the company shall be lodged with the Registrar within one month or in the case of a company keeping pursuant to its articles a branch register in any place outside Malaysia within two months after the annual general meeting.

Annual return by company not having a share capital

(5) A company not having a share capital shall, within one month after each annual general meeting of the company, lodge with the Registrar a return in the prescribed form containing the particulars referred to in subsection (6) and made up to the date of the annual general meeting or a date not later than the fourteenth day after the date of the annual general meeting.

(6) The return of a company not having a share capital shall contain-—

(a) the address of the registered office of the company;

(b) in a case in which the register of members is, under this Act, kept elsewhere than at that office, the address of the place where it is kept;

(c) particulars of the total amount of the indebtedness of the company in respect of all charges, whether required to be registered with the Registrar or not;

(d) all such particulars with respect to the persons who, on the day to which the return is made up, are the directors, managers or secretaries of the company as are required to be contained in the register of directors, managers and secretaries;

(e) the name and address of the auditor of the company; and

(f) such other matters relating to the accounts of the company and to the unclaimed moneys held by the company as are prescribed.

(7) If a company fails to comply with this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

Auditor’s statements

165A. (1) A company that is not required by this Act to lodge accounts with the Registrar shall include in or attach to its annual return under section 165 a statement relating to the accounts of the company required to be laid before the company at its annual general meeting held on the date to which the return is made up or if an annual general meeting is not held on that date, the annual general meeting last preceding that date, 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 accounts have been audited in accordance with this Act;

(c) stating whether the auditor’s report on the accounts was made subject to any qualification, or included any comment made under subsection 174(3), and, if so, particulars of the qualification or comment; and

(d) stating whether as at the date to which the profit and loss account has been made up, the company appeared to have been able to meet its liabilities as and when they fall due.

(2) If a company fails to comply with this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Exemption from filing list of members with annual return for certain public companies

166. (1) A public company which—

(a) has more than five hundred members; and

(b) provides reasonable accommodation and facilities for persons to inspect and take copies of its list of members and its particulars of shares transferred, need not comply with such of the provisions of this Division and the Eighth Schedule as relate to the inclusion in the annual return of a list of members if there 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.

(2) The Minister may, by notice published in the Gazette require any company to which subsection (1) applies to comply with all or any of the provisions of this Division or of the Eighth Schedule referred to in subsection (1).

(3) If default is made in complying with the notice given under subsection (2), the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit. Default penalty.

PART VI ACCOUNTS AND AUDIT DIVISION 1 ACCOUNTS

Compliance with approved accounting standards

166A. (1) In this Part unless the contrary intention appears, “approved accounting standards” shall have the meaning assigned thereto in section 2 of the Financial Reporting Act 1997 [Act 558].

(2) The approved accounting standards shall apply to the accounts of a company or the consolidated accounts of a holding company if, at the time when the accounts or consolidated accounts 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 accounts or consolidated accounts relate; and

(b) are relevant to those accounts or consolidated accounts.

(3) Without prejudice to the generality of the provisions of this Division, the directors of a company shall ensure that the accounts of the company and, if the company is a holding company for which consolidated accounts are required, the consolidated accounts of the company, laid before the company at its annual general meeting are made out in accordance with the applicable approved accounting standards.

(4) Notwithstanding subsection (3), the directors of a company or holding company shall not be required to ensure that the accounts or consolidated accounts, as the case may be, are made out in accordance with a particular approved accounting standard if they are of the opinion that making out the accounts or consolidated accounts in accordance with the approved accounting standard would not give a true and fair view of the matters required by section 169 to be dealt with in the accounts or consolidated accounts or a true and fair view 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 accounts.

(5) Where the accounts or consolidated accounts of a company are not made out in accordance with a particular approved accounting standard under subsection (4), the directors of the company shall—

(a) disclose by way of a note on the accounts their reason for not making out the accounts or consolidated accounts in accordance with the approved accounting standard; and

(b) give particulars in the note of the quantified financial effect on the accounts or consolidated accounts if the relevant approved accounting standard was complied with.

(6) Notwithstanding subsection 169(14), where any conflict or inconsistency arises between the provisions of an applicable approved accounting standard and a provision in the Ninth Schedule in their respective applications to the accounts or consolidated accounts of a company, the provisions of the applicable approved accounting standard shall prevail.

Accounts to be kept

167. (1) Every company and the directors and managers thereof shall cause to be kept such accounting and other records as will 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 from time to time, and shall cause those records to be kept in such manner as to enable them to be conveniently and properly audited.

(1A) Every company and the directors and managers thereof shall cause appropriate entries to be made in the accounting and other records within sixty days of the completion of the transactions to which they relate.

(2) The company shall retain the records referred to in subsection (1) for seven years after the completion of the transactions or operations to which they respectively relate.

(3) The records referred to in subsection (1) shall be kept at the registered office of the company or at such other place in Malaysia as the directors think fit and shall at all times be open to inspection by the directors.

(4) Notwithstanding the provisions in subsection (3), the accounting and other records of operations outside Malaysia may be kept by the company at a place outside Malaysia and there shall be sent to and kept at a place in Malaysia and be at all times open to inspection by the directors, such statements and returns with respect to the business dealt with in the records so kept as will enable to be prepared true and fair profit and loss accounts and balance sheets and any documents required to be attached thereto.

(5) If any accounting and other records are kept at a place outside Malaysia pursuant to subsection (4), the company shall, if required by the Registrar to produce those records at a place in Malaysia, comply with the requirements.

(6) 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, but only upon an undertaking in writing given to the Court that information acquired by the auditor during his inspection shall not be disclosed by him except to that director.

(7) If default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment of *six months or five thousand ringgit or both.

As to accounting periods of companies within the same group

168. (1) Subject to subsections (11) and (12) the directors of every holding company that is not a foreign company shall take such steps as are necessary to ensure that—

(a) within two years after the commencement of this Act, the financial years of each of its subsidiaries coincide with the financial year of the holding company; and

(b) 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 such steps as are necessary to ensure that without the consent of the Registrar the financial year of the holding company or any of its subsidiaries is not altered so that all such financial years do not coincide.

(3) Where 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 of their reasons for seeking the order.

(5) The Registrar may require the directors who make an application under this section to supply such information relating to the operation of the holding company and of any corporation that is deemed by virtue of section 6 to be related to the holding company as he thinks necessary for the purpose of determining the application.

(6) 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.

(7) The Registrar may rely upon any report obtained pursuant to subsection (6) from the approved company auditor.

(8) The Registrar may make on 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.

(9) Where the applicants are aggrieved by any order made by the Registrar, the applicants may, within two months after the service of the order upon the holding company, appeal against the order to the Minister.

(10) 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 might have exercised in relation to the original application.

(11) Where 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.

(12) 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, but where an application for such an order 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 twelwe 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 coincide with that of the holding company and the application and the appeal, if any, arising out of that application, have 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.

Profit and loss account, balance sheet and directors’ report

169. (1) The directors of every company shall, at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year at intervals of not more than fifteen months, lay before the company at its annual general meeting a profit and loss account for the period since the preceding account (or in the case of the first account,since the incorporation of the company) made up to a date not more than six months before the date of the meeting.

(2) Notwithstanding subsection (1) the Registrar on application by the company, if for any special reason he thinks fit so to do, may extend the periods of eighteen months and fifteen months referred to in that subsection and with respect to any year extend the period of six months referred to in that subsection, notwithstanding that period is so extended beyond the calendar year.

(3) The directors of every company shall cause to be made out, and to be laid before the company at its annual general meeting with the profit and loss account required by subsection (1) a balance sheet as at the date to which the profit and loss account is made up.

(4) The profit and loss account and the balance sheet of a company shall be duly audited before they are laid before the company at its annual general meeting as required by this section.

(5) The directors of a company shall cause to be attached to every balance sheet made out under subsection (3) a report made in accordance with a resolution of the directors and signed by not less than two of the directors with respect to the profit or loss of the company for the financial year and the state of the company’s affairs as at the end of the financial year and if the company is a holding company also a report with respect to the state of affairs of the holding company and all its subsidiaries.

(6) Each report to which subsection (5) relates shall state with appropriate details—

(a) the names of the directors in office since the date of the last report;

(b) the principal activities of the company in the course of the financial year and any significant change in the nature of those activities during the period;

(d) the amounts and particulars of any material transfer to or from reserves or provisions;

(e) where, during the financial year, the company has issued and shares or debetures—the purposes of the issue, the classes of shares or debentures issued, the number of shares of each class and the amount of debentures of each class, and the terms of issue of the shares and debentures of each class;

(f) whether at the end of that financial year—

(i) there subsist arrangements to which the company is a party, being arrangements with the object 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 in pursuance of the arrangements;

(g) 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 134 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 such body corporate and , if he was so interested, the number and amount of shares in, and debentures of, each body (specifying it) 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 (specifying it) 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 corporate bought and sold by him during that financial year;

(h) the amount, if any, which the directors recommended should be paid by way of dividend, and any amounts 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 this subsection or under a corresponding repealed provision of this Act;

(i) whether the directors (before the profit and loss account and balance sheet were made out) 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;

(j) 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;

(k) whether the directors (before the profit and loss account and balance sheet were made out) have taken reasonable steps to ensure that any current assets which were unlikely to be realized in the ordinary course of business including their value as shown in the accounting records of the company have been written down to an amount which they might be expected so to realize;

(l) 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 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;

(m) 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 thereof and, so far as practicable, the maximum amount, or an estimate of the maximum amount, for which the company could become liable in respect thereof;

(n) whether any contingent or other liability has become enforceable, or 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 liability of the company to meet its obligations when they fall due and, if so, giving particulars of any such liability;

(o) 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;

(p) 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 thereof, if known or reasonably ascertainable; and

(q) whether there has arisen in the interval between the end of the financial year and the date 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.

(7) In subsection (6) of this section, the expression “any item, transaction or event of a material and unusual nature” includes but is not limited to—

(a) any change in accounting policies adopted since the last report;

(b) any material change in the method of valuation of the whole or any part of the trading stock;

(c) any material item appearing in the accounts or consolidated accounts for the first time or not usually included in the accounts or consolidated accounts; and

(d) any absence from the accounts or consolidated accounts of any material item usually included in the accounts or consolidated accounts.

(8) The directors of a company shall state in the report whether a director of the company 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 emoluments 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.

(9) Every statements, report or other document relating to the affairs of a company or any of its subsidiaries attached to, or included with, a report of the directors laid before the company at its general meeting or sent to the members under section 170 (not being a statements, report or document required by this Act to be laid before the company in general meeting) shall, for the purposes of section 364 be deemed to be part of that last-mentioned report.

(10) 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 in a note as a statement annexed to, the company’s accounts laid before the company at its annual general meeting 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.

(11) 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 report required by subsection (5) shall state—

(a) the name of the person to whom the option has been granted;

(b) the number and class of shares in respect of which the option has been granted;

(d) the basis upon which the option may be exercised; and

(e) whether the person to whom the option has been granted has any right to participate by virtue of the option in any share of any other company.

(12) Each report required by subsection (5) 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;

(13) Paragraph (11)(a) shall not apply in any case where the option to take up shares of the company has been conferred generally on all the holders of a class of shares or debentures of the company.

(14) Every balance sheet referred to in subsection (3) shall give a true and fair view of the state of affairs of the company as at the end of the period to which it relates and every profit and loss account referred to in subsection (1) shall give a true and fair view of the profit or loss of the company for the period of accounting as shown in the accounting and other records of the company, and without affecting the generality of the foregoing, every such balance sheet and profit and loss account shall comply with the requirements of the Ninth Schedule so far as applicable thereto.

(15) The directors of a company shall cause to be attached to every balance sheet and profit and loss account laid before the company in general meeting (including any consolidated balance sheet and consolidated profit and loss account of a holding company) a statement made in accordance with a resolution of the directors and signed by at least two directors stating whether, in the opinion of the directors—

(a) the profit and loss account and, where applicable, the consolidated profit and loss account, is or are drawn up so as to give a true and fair view of the results of the business of the company and, if applicable, of all the companies the accounts of which are dealt with in the consolidated profit and loss account for the period covered by the account;

(b) the balance sheet, and where applicable the consolidated balance sheet, is or are drawn up so as to give a true and fair view of the state of affairs of the company and, if applicable, of all the companies the affairs of which are dealt with in the consolidated balance sheet as at the end of that period; and

(c) the accounts, and where applicable the consolidated accounts, have been made out in accordance with the applicable approved accounting standards.

(16) Every balance sheet and profit and loss account of a company laid before the company in general meeting (including any consolidated balance sheet and consolidated profit and loss account annexed to the balance sheet and profit and loss account of a holding company) shall be accompanied by a statutory declaration by a director or where that director 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 balance sheet and profit and loss account and, where applicable, the consolidated balance sheet and consolidated profit and loss account.

(17) Any document (other than a balance sheet prepared in accordance with this Act) or advertisement published issued or circulated by or on behalf of a company (other than a banking 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—by a statement showing the manner in which and the security upon which it is invested; or

(b) if the reserve is being used in the business of the company— by a statement to the effect that the reserve is being so used.

(18) To the extent that any company registered under any written law relating to insurance is required to prepare balance sheets, revenue accounts and profit and loss accounts in the form prescribed by that law, the company shall be deemed to have complied with the requirements of subsections (5) to (17) and the Ninth Schedule if its balance sheet and profit and loss account is made out in accordance with that law but if the company carries on business other than insurance business so far as that law does not require the company to deal with any matters which are required to be dealt with under the Ninth Schedule, it shall be necessary for the company to comply with this section and the Ninth Schedule.

(19) The provisions of this Act relating to the form and content of the report of the directors and the annual balance sheet and profit and loss account shall apply to a banking corporation and a licensed finance company, a licensed discount house, a licensed money-broker, a scheduled institution in respect of which the Minister charged with responsibility for finance has made an order under subsection 24(1) of the Banking and Financial Institutions Act 1989 and a non-scheduled institution in respect of which such Minister has made an order under subsection 93(1) of that Act with such modifications and exceptions as are determined either generally or in any particular case by the Bank Negara Malaysia.

Relief from requirements as to form and content of accounts and reports

169A. (1) The directors of a company may apply to the Registrar in writing for an order relieving them from any requirement of this Act relating to the form and content of accounts or consolidated accounts or to the form and content of the report required by subsection 169(6) 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 accounts or consolidated accounts or report as the Registrar thinks fit to impose.

(2) 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 accounts or consolidated accounts or to the form and content of the report required by subsection 169(6) and the order 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 accounts or consolidated accounts or report as the Registrar thinks fit to impose.

(3) 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—

(i) render the accounts or consolidated accounts or report, as the case may be, misleading or inappropriate to the circumstances of the company; or

(ii) impose unreasonable burdens on the company or any officer of the company.

(4) The Registrar may make an order under subsection (1) which may be limited to a specific period and may from time to time either on application by the directors or without any such application (in which case the Registrar shall give to the directors an opportunity of being heard) revoke or suspend the operation of any such order.

Power of Registrar to require a statement of valuation of assets

169B. (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 and in his absolute discretion, extend the period of time so specified in the notice referred to in subsection (1).

Members of company entitled to balance sheet, etc.

170. (1) A copy of every profit and loss account and balance sheet (including every document required by law to be attached thereto) which is to be laid before company in general meeting accompanied by a copy of the auditor’s report thereon shall, not less than fourteen days before the date of the meeting, be sent to all persons entitled to receive notice of general notice of general meeting of the company:

Provided that if the copies of the documents aforesaid are sent less than fourteen days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by all the members entitled to attend and vote at the meeting.

(2) Any member of a company (whether he is or is not entitled to have sent to him copies of the profit and loss accounts and balance sheets) to whom copies have not been sent and any holder of a debenture shall, on a request being made by him to the company, be furnished by the company without charge with a copy of the last profit and loss account and balance sheet of the company (including every document required by this Act to be attached thereto) together with a copy of the auditor’s report thereon.

(3) If default is made in complying with subsection (1) or (2) the company and every officer of the company who is in default shall be guilty of an offence against this Act, unless it is proved that the member or holder of a debenture in question has already made a request for and been furnished for and been furnished with a copy of the document.

Penalty: Two thousand five hundred ringgit. Default penalty.

Penalty

171. (1) If any director of a company fails to comply or to take all reasonable steps to secure compliance by the company with the foregoing provisions of this Division or has by his own willful act been the cause of any default by the company there under, he shall be guilty of an offence against this Act.

Penalty: Imprisonment for *five years or thirty thousand ringgit.

(2) (Deleted by Act A616).

(3) A person shall not be sentenced to imprisonment for any offence under this section unless in the opinion of the Court dealing with the case the offence was committed willfully.

DIVISION 2 AUDIT

Appointment and remuneration of auditors

172. (1) At any time before the first annual general meeting of a company, the directors of the company may appoint, or (if the directors do not make an appointment) the company at a general meeting may appoint, a person to be the auditor of the company, and any auditor so appointed shall, subject to this section, hold office until the conclusion of the first annual general meeting.

(2) A company shall at each annual general meeting of the company appoint a person to be the auditor of the company, and any auditors so appointed shall, subject to this section, hold office until the conclusion of the next annual general meeting of the company.

(3) Subject to subsections (7) and (8), the directors of a company may appoint an approved company auditor to fill any casual vacancy in the office of auditor of the company, but while such a vacancy continues the surviving or continuing auditor, if any, may act.

(4) An auditor of a company may be removed from office by resolution of the company at a general meeting of which special notice has been given, but not otherwise.

(5) Where special notice of a resolution to remove an auditor is received by a company—

(a) it shall forthwith send a copy of the notice to the auditor concerned and to the Registrar; and

(b) the auditor may, within seven days after the receipt by him of the copy of the notice make representations in writing to the company (not exceeding a reasonable length) and request that, prior to the meeting at which the resolution is to be considered, a copy of the representations be sent by the company to every member of the company to whom notice of the meeting is sent.

(6) Unless the Registrar on the application of the company otherwise orders, the company shall send a copy of the representations as so requested and the auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.

(7) Where an auditor of a company is removed from office in pursuance of subsection (4) at a general meeting of the company—

(a) the company may, at the meeting, by a resolution passed by a majority of not less than three-fourths of such members of the company as being entitled so to do vote in person or, where proxies are allowed, by proxy forthwith appoint another person nominated at the meeting as auditor; or

(b) the meeting may be adjourned to a date not earlier than twenty days and not later than thirty days after the meeting and the company may, by ordinary resolution, appoint another person as auditor, being a person notice of whose nomination as auditor has, at least ten days before the resumption of the adjourned meeting, been received by the company.

(8) A company shall, forthwith after the removal of an auditor from office in pursuance of subsection (4), give notice in writing of the removal to the Registrar and, if the company does not appoint another auditor under subsection (7), the Registrar shall appoint an auditor.

(9) An auditor appointed in pursuance of subsection (7) or (8) shall, subject to this section, hold office until the conclusion of the next annual general meeting of the company.

(10) If a company does not appoint an auditor as required by this section, the Registrar may on the application in writing of any member of the company make the appointment.

(11) Subject to subsection (7), a person shall not be capable of being appointed auditor of a company at an annual general unless he held office as auditor of the company immediately before the meeting or notice of his nomination as auditor was given to the company by a member of the company not less than twenty-one days before the meeting.

(12) Where notice of nomination of a person as an auditor of a company is received by the company whether for appointment at an adjourned meeting under subsection (7) or at an annual general meeting, the company shall, not less than seven days before the adjourned meeting or the annual general meeting, send a copy of the notice to the person nominated, to each auditor, if any, of the company and to each person entitled to receive notice of general meetings of the company.

(13) If, after notice of nomination of a person as an auditor of a company has been given to the company, the annual general meeting of the company is called for a date twenty-one days or less after the notice has been given, subsection (11) shall not apply in relation to the person and, if the annual general meeting is called for a date not more than seven days after the notice has been given and a copy of the notice is, at the time notice of the meeting is given, sent to each person to whom, under subsection (12), it is required to be sent, the company shall be deemed to have complied with that subsection in relation to the notice.

(14) An auditor of a company may resign—

(a) if he is not the sole auditor of the company; or

(b) at a general meeting of the company, but not otherwise.

(15) If an auditor gives notice in writing to the directors of the company that he desires to resign, the directors shall call a general meeting of the company as soon as is practicable for the purpose of appointing an auditor in place of the auditor who desires to resign and on the appointment of another auditor the resignation shall take effect.

(16) The fees and expenses of an auditor of a company—

(a) in the case of an auditor appointed by the company at a general meeting—shall be fixed by the company in general meeting or, if so authorized by the members at the last preceding annual general meeting, by the directors; and

(b) in the case of an auditor appointed by the directors or by the Registrar—may be fixed by the directors or by the Registrar, as the case may be and, if not so fixed, shall be fixed as provided in paragraph (a) as if the auditor had been appointed by the company.

Auditors’ remuneration

173. (1) If a company is served with a notice sent by or on behalf of—

(a) at least five per centum of the total number of members of the company; or

(b) the holders in aggregate of not less than five per centum in nominal value of the company’s issued share capital, requiring particulars of all emoluments paid to or receivable by the auditor of the company or any person who is a partner or employer or 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—

(c) prepare or cause to be prepared a statement showing particulars of all emoluments paid to the auditor or other person and of the services in respect of which the payments have been made for the financial year immediately preceding the service of the notice;

(d) forward a copy of the statement to all persons entitled to receive notice of general meetings of the company; and

(e) lay the statement before the company in general meeting.

(2) If default is made in complying with this section the company and every director of the company who is in default shall be guilty of an offence against this Act.

Penalty: Two thousand five hundred ringgit.

Powers and duties of auditors as to reports on accounts

174. (1) Every auditor of a company shall report to the members on the accounts required to be laid before the company in general meeting and on the company’s accounting and other records relating to those accounts and if it is a holding company for which consolidated accounts are prepared shall also report to the members on the consolidated accounts.

(2) An auditor shall, in a report under this section, state—

(a) whether the accounts and, if the company is a holding company for which consolidated accounts are prepared, the consolidated accounts are in his opinion property drawn up—

(i) so as to give a true and fair view of the matters required by section 169 to be dealt with in the accounts and, if there are consolidated accounts, in the consolidated accounts;

(ii) in accordance with the provisions of 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;

(aa) if in his opinion the accounts, and where applicable the consolidated accounts, have not been drawn up in accordance with a particular applicable approved accounting standard—

(i) whether in his opinion the accounts or consolidated accounts, as the case may be, would, if drawn up in accordance with the approved accounting standard, have given a true and fair view of the matters required by section 169 to be dealt with in the accounts or consolidated accounts;

(ii) if in his opinion the accounts or consolidated accounts, 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 subsection 166A(5), his opinion concerning the particulars; and

(iv) in a case to which neither subparagraph (ii) nor

(iii) applies, particulars of the quantified financial effect on the accounts or consolidated accounts of the failure to so draw up the accounts or consolidated accounts, as the case may be;

(b) whether the accounting and other records and the registers required by this Act to be kept by the company and, if it is a holding company, by the subsidiaries other than those of which he has not acted as auditor have been, in his opinion, properly kept in accordance with the provisions of this Act;

(i) the names of the subsidiaries, if any, of which he has not acted as auditor;

(ii) whether he has considered the accounts and auditor’s reports of all subsidiaries of which he has not acted as auditor, being accounts that are included (whether separately or consolidated with other accounts) in the consolidated accounts;

(iii) whether he is satisfied that the accounts of the subsidiaries that are consolidated with other accounts are in form and content appropriate and proper for the purposes of the preparation of the consolidated accounts, and whether he has received satisfactory information and explanations as required by him for those purposes; and

(iv) whether the auditor’s report on the accounts of any subsidiary was made subject to any qualification (other than a qualification that is not material in relation to the consolidated accounts), or included any comment made under subsection (3), and, if so, particulars of the qualification or comment;

(d) any defect or irregularity in the accounts or consolidated accounts and any matter not set out in the accounts or consolidated accounts without regard to which a true and fair view of the matters dealt with by the accounts or consolidated accounts 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.

(3) It is the duty of an auditor of a company to form an opinion as 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;

(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 he shall state in his report 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 accounts are required has a right of access at all reasonable times to the accounting and other records (including registers) of any subsidiary, if necessary, and is entitled to require from any officer or auditor of any subsidiary, at the expense of the holding company, such information and explanations in relation to the affairs of the subsidiary as he requires for the purpose of reporting on the consolidated accounts.

(6) The auditor’s report shall be attached to or endorsed on the accounts or consolidated accounts and shall, if any member so requires, be read before the company in general meeting and shall be open to inspection by any member at any reasonable time.

(7) An auditor of a company or his agent authorized by him in writing for the purpose 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 accounts or consolidated accounts 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.

Penalty: Imprisonment for two years or thirty thousand ringgit or both.

(9) 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 access, in accordance with this section, to any accounting and other records (including registers) of the corporation in his custody or control, or to give any information or explanation as and when required under this section, or otherwise hinders, obstructs or delays an auditor in the performance of his duties or the exercise of his powers, shall be guilty of an offence against this Act.

Penalty: Imprisonment for two years or thirty thousand ringgit or both.

Auditors and other persons to enjoy qualified privilege in certain circumstances

174A. (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 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 by or under this Act to be lodged with the Registrar.

(3) 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.

Duties of auditors to trustee for debenture holders

175. (1) The auditor of a borrowing corporation shall within seven days after furnishing the corporation with any balance sheet or profit and loss account 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, send by post to every trustee for the holders of debentures of the borrowing corporation a copy thereof.

(2) Where in the performance of his duties as 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 holders of debentures of the corporation he shall, within seven days after so becoming aware of the matter, send by post a report in writing on the matter to the borrowing corporation and a copy thereof to the trustee.

Penalty: *One thousand ringgit. Default penalty.

PART VII ARRANGEMENT AND RECONSTRUCTIONS

Power to compromise with creditors and members

176. (1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them or between the company and its members or any class of them the Court may, on the application in a summary way of the company or of any creditor or member of the company, or in the case of a company being wound up of the liquidator, order a meeting of the creditors or class of creditors or of the members of the company or class of members to be summoned in such manner as the Court directs.

(2) A meeting held pursuant to an order of the Court made under subsection (1) may be adjourned from time to time if the resolution for adjournment is approved by a majority in number representing three-fourths in 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.

(3) If a majority in number representing three-fourths in 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 agrees to any compromise or arrangement the compromise or arrangement shall, if approved by order of the Court, be binding on all the creditors or class of creditors or on the members or class of members, as the case may be, and also on the company or, in the case of a company in the course of being wound up, on the liquidator andcontributories of the company.

(4) The Court may grant its approval to a compromise or arrangement subject to such alterations or conditions as it 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 lodgment 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 memorandum of the company issued after the order has been made, or, in the case of a company not having a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the company.

(7) The Court may, by order, exempt a company from compliance with the requirements of subsection (6) or determine the period during which the company shall so comply.

(8) Where 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 companies 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 so 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 may be; 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 as provided in subsection (1).

(9) Every company which makes default in complying with subsection (6) or (8) and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: *Two thousand ringgit.

Power of Court to restrain proceedings

(10) Where no order has been made or resolution passed for the winding up of a company and any such 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 of 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 such terms as the Court imposes.

(10A) The Court may grant a restraining order under subsection (10) to a company for a period of not more than ninety days or such longer period as the Court may for good reason allow if and only if—

(a) it 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 restraining order is necessary to enable the company and its creditors to formalize the scheme of compromise or arrangement for the approval of the creditors or members pursuant to subsection (1);

(c) a statement in the prescribed form 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) it approves the person nominated by a majority of the creditors in the application by the company under subsection (10) to act as a director or if that person is not already a director, notwithstanding the provisions of this Act or the memorandum and articles of the company, appoints the person to act as a director.

(10B) The person approved or appointed by the Court to act as a director of the company under subsection (10A) shall have 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 such information and explanation as he may require for the purposes of his duty.

(10C) Any disposition of the property of the company, including things in action and any acquisition of property by the company, other than those made in the ordinary course of business, made after the grant of the restraining order by the Court shall, unless the Court otherwise orders, be void.

(10D) Where a company disposes or acquires any property, other than in the ordinary course of its business, without leave of the Court, every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for five years or one million ringgit or both.

(10E) Where an order is made under subsection (10), 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 a daily newspaper circulating generally throughout Malaysia, and every company which makes default in complying with this subsection and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: One hundred thousand ringgit.

(10F) An order made by the Court under subsection (10) shall not have the effect of restraining further proceedings in any action or proceeding against any person other than the company that had applied for the restraining order.

(10G) For the purpose of subsection (10F) , the term “any person” includes a guarantor of the company.

Interpretation

(11) In this section—

“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 these methods; “company” means any corporation or society liable to be wound up under this Act.

Information as to compromise with creditors and members

177. (1) Where a meeting is summoned under section 176 there shall—

(a) with every notice summoning the meeting which is sent to a creditor or member, be sent also 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 thereon of the compromise or arrangement so far as it is different from the effect on the like interests of other persons; and

(b) in every notice summoning the meeting which is given by advertisement, be included either such a statement or a notification of the place at which and the manner in which 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) Where a notice given by advertisement includes a notification that copies of such a statement can be obtained, every creditor or member entitled to attend the meeting shall on making application in the manner indicated by the notice be furnished by the company free of charge with a copy of the statement.

(4) Each director and each trustee for debenture holders shall give notice to the company of such matters relating to himself as may be necessary for the purposes of this section within seven days of the receipt of a request in writing for information as tothose matters.

(5) Where default is made in complying with any requirement of this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

Penalty: Imprisonment for *three years or ten thousand ringgit.

(6) For the purpose of subsection (5) the liquidator of the company and any trustee for debenture holders shall be deemed to be an officer of the company

(7) Notwithstanding subsection (5) a person shall not be liable under that subsection if he shows that the default was due t

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