draft companies bill 2013 comparison with companies act 1965

7/26/2019 Draft Companies Bill 2013 Comparison With Companies Act 1965

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DRAFT COMPANIES BILL 2013COMPARISON WITH COMPANIES ACT 1965

PART IIIMANAGEMENT OF COMPANY

ARRANGEMENT OF CLAUSES SUBDIVISION SECTIONS PAGE

DIVISION 1SHARE AND CAPITAL

MAINTENANCE

SUBDIVISION 1

SHARE CAPITAL

68 - 96 3 - 33

SUBDIVISION 3

SOLVENCY STATEMENT

111 - 113 34 35

SUBDIVISION 4REDUCTION OF SHARE CAPITAL

114 - 121 36 43

SUBDIVISION 5

ASSISTANCE BY A COMPANY INTHE PURCHASE OF ITS OWN

SHARES

122 - 129 44 51

SUBDIVISION 6

DIVIDENDS

130 - 132 52 - 53

SUBDIVISION 8

THE CENTRAL DEPOSITORYSYSTEM A BOOK-ENTRY OR

SCRIPLESS SYSTEM FOR THETRANSFER OF SECURITIES

146 - 151 54 - 56

SUBDIVISION 9

PROSPECTUS

152 - 169 57 - 78

SUBDIVISION 10

DEBENTURES

170 - 184 79 - 95

SUBDIVISION 11

RESTRICTIONS ON ALLOTMENTAND COMMENCEMENT OF

BUSINESS

185 - 190 96 - 101


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DRAFT COMPANIES BILL 2013COMPARISON WITH COMPANIES ACT 1965


ARRANGEMENT OF CLAUSES SUBDIVISION SECTIONS PAGE

DIVISION 2SHAREHOLDERS, DIRECTORS

AND OFFICERS OFCOMPANIES

SUBDIVISION 1

MEMBERSLIABILITIES, RIGHTSAND OBLIGATIONS

191 - 194 102 103

SUBDIVISION 2

DIRECTORS

195 - 208 104 - 111

SUBDIVISION 3

DIRECTORSDUTIES ANDRESPONSIBILITIES

209 - 233 112 - 131

SUBDIVISION 4

SECRETARY

234 - 239 132 - 135

DIVISION 3ACCOUNTS AND AUDIT

SUBDIVISION 1

ACCOUNTS AND REPORT

240 - 258 136 - 156

SUBDIVISION 2AUDITORS

259 - 283 157 - 176

DIVISION 4INDEMNITY AND INSURANCEFOR DIRECTORS, OFFICERS

AND AUDITORS

284 177 - 178


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COMPANIES BILL COMPANIES ACT 1965DIVISION 1

SHARE AND CAPITAL MAINTENANCE

SUBDIVISION 1SHARE CAPITAL

68. Nature, rights and powers attaching to shares(1) A share or other interest of a member in a company ispersonal property and transferable in accordance tosection 103.

(2) A share in a company confers on the holder(a) the right to one vote on a poll on any resolution of thecompany;

(b) the right to an equal share in dividends authorized bythe Board; or(c) the right to an equal share in the distribution of thesurplus assets of the company.

(3) Notwithstanding paragraph (2)(b), the right todividends as specified therein may be negated, altered, oradded to by the constitution of the company or inaccordance with the terms on which the share is issued.

Section 98. Nature of shares.The shares or other interest of any member in acompany shall be movable property, transferable in themanner provided by the articles, and shall not be of thenature of immovable property.

69. Types of shares(1) Subject to the constitution of the company, shares in acompany may(a) be issued in different classes;(b) be redeemable in accordance with section 70;(c) confer preferential rights to distributions of capital or

income;(d) confer special, limited, or conditional voting rights; or(e) not confer voting rights.

No provision in the existing Act

70. Redeemable preference shares(1) Subject to this section, a company having a sharecapital may, if authorized by its constitution, issue

preference shares which are, or at the option of thecompany are to be, liable to be redeemed and theredemption shall be effected in accordance with theconstitution.

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

(3) The shares shall be redeemable only if the shares are

Section 61. Redeemable preference shares.(1) Subject to this section a company having a sharecapital may, if so authorized by its articles, issue

preference shares which are, or at the option of thecompany are to be, liable to be redeemed and theredemption shall be effected only on such terms and insuch manner as is provided by the articles.

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

(3) The shares shall not be redeemed


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COMPANIES BILL COMPANIES ACT 1965fully paid up and the redemption shall be out of(a) profits; or(b) a fresh issue of shares; or(c) capital of the company.

(4) Where any such shares are redeemed otherwise thanout of the proceeds of a fresh issue, there shall, out ofprofits which would otherwise have been available fordividend, be transferred a sum equal to the amount of theshares redeemed into the contributed capital.

(5) Subject to subsection (3) the shares shall only beredeemed out of the capital subject to the following(a) all the directors have made a solvency statementpursuant to section 96 in relation to such redemption;and(b) the company has lodged a copy of the solvency

statement with the Registrar.

(6) The company shall within fourteen days of theredemption give notice to the Registrar specifying theshares redeemed.

(a) except out of profits which would otherwise beavailable for dividend, or out of the proceeds of afresh issue of shares made for the purposes of theredemption; and(b) unless they are fully paid up.

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

(5) Where any such shares are redeemed otherwisethan out of the proceeds of a fresh issue, there shall,out of profits which would otherwise have beenavailable for dividend, be transferred to a reservecalled the "capital redemption reserve" a sum equal tothe nominal amount of the shares redeemed, and the

provisions of this Act relating to the reduction of theshare capital of a company shall, except as provided inthis section, apply as if the capital redemption reservewere paid-up share capital of the company.

(6) Where in pursuance of this section a company hasredeemed or is about to redeem any preferencesshares, it may issue shares up to the nominal amount ofthe shares redeemed or to be redeemed as if thoseshares had never been issued, and accordingly theshare capital of the company shall not for the purposesof any fee under this Act be deemed to be increased bysuch issue but where new shares are issued before theredemption of the old shares, the new shares shall not,so far as relates to any fee under this Act, be deemedto have been issued in pursuance of this subsectionunless the old shares have been redeemed within onemonth after the issue of the new shares.

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

(8) If a company redeems any redeemable preferenceshares it shall within fourteen days after so doing give

notice thereof to the Registrar specifying the sharesredeemed.

71. Prohibition to issue share warrants

(1) No company shall have the power to issue a sharewarrant.

Section 57. Share warrants.

(1) A company shall not issue any share warrant statingthat the bearer of the warrant is entitled to the sharestherein specified and which enables the shares to be


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COMPANIES BILL COMPANIES ACT 1965(2) Prohibition to this effect has been in force in Malaysiasince 15 April 1966.

(3) A bearer of share warrant shall within twelve monthsupon the commencement of this Act surrender it for

cancellation to have the bearers name entered in theregister of members of the company.

(4) Notwithstanding subsection (3), a bearer of sharewarrant may apply to court for an order to have his nameentered in the register of members of the company.

(5) The company shall be responsible for any lossincurred by any person by reason of the companyentering in the register of members, the name of a bearerof a share warrant issued without the warrant beingsurrendered and cancelled.

transferred by delivery of the warrant.

(2) The bearer of a share warrant issued before thecommencement of this Act shall be entitled, on

surrendering it for cancellation to have his nameentered in the register of members.

(3) The company shall be responsible for any lossincurred by any person by reason of the companyentering in the register the name of a bearer of a sharewarrant issued before the commencement of this Act inrespect of the shares therein specified without thewarrant being surrendered and cancelled.

72. No par value shares(1) Shares of a company shall have no par or nominalvalue.

(2) Subsection (1) shall apply to all shares, whether issuedbefore or upon the commencement of this section.

Section 59. Power to issue shares at a discount.

(1) Subject to this section a company may issue sharesat a discount of a class already issued if

(a) the issue of the shares at a discount isauthorized by resolution passed in general meetingof the company, and is confirmed by order of theCourt;

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

(c) at the date of the issue not less than one yearhas elapsed since the date on which the companywas entitled to commence business; and

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

(2) The Court, if having regard to all the circumstancesof the case it thinks proper to do so, may make anorder confirming the issue on such terms and

conditions as it thinks fit.

(3) Every prospectus relating to the issue of the sharesshall contain particulars of the discount allowed or ofso much of that discount as has not been written off atthe date of the issue of the prospectus.

(4) Notwithstanding any provision of its articles, acompany shall not issue at a discount shares of any


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COMPANIES BILL COMPANIES ACT 1965class unless it first offers the shares to every holder ofshares of that class in the company proportionately tothe 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 entitledand limiting a time not being less than twenty-one dayswithin which the offer may be accepted.

(6) If any such offer is not accepted within the timelimited by the notice the shares may be issued on termsnot more favourable than those offered to theshareholders.

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

Penalty: One thousand ringgit. Default penalty.

Section 60. Issue of shares at a premium.

(1) In this section"arrangement" means any agreement, scheme orarrangement (including an arrangement sanctioned inaccordance 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 whichneither as respects dividends nor as respects capital,carries any right to participate beyond a specifiedamount in a distribution;

"equity shares" means shares comprised in a company'sequity share capital;

"issuing company" means the company issuing theshares in the circumstances referred to in this section;

"minimum premium value" means the amount, if any,

by which the base value of the shares transferredexceeds the aggregate nominal value of the sharesallotted in consideration for the transfer;

"non-equity shares" means shares of any class notcomprised in a company's equity share capital.

Share premium account


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COMPANIES BILL COMPANIES ACT 1965(2) Where a company issues shares for which apremium is received by the company whether in cash orin the form of other valuable consideration a sum equalto the aggregate amount or value of the premiums onthose shares shall be transferred to an account called

the "share premium account" and the provisions of thisAct relating to the reduction of the share capital of acompany shall subject to this section apply as if theshare premium account were paid-up share capital ofthe company.

(3) The share premium account may be applied(a) in paying up unissued shares to be issued tomembers of the company as fully paid bonusshares;

(b) in paying up in whole or in part the balanceunpaid on shares previously issued to members of

the company;

(c) in the payment of dividends if such dividendsare satisfied by the issue of shares to members ofthe company;

(d) in the case of a company which carries oninsurance business in Malaysia, by appropriation ortransfer to any statutory fund established andmaintained pursuant to any law of Malaysiarelating to insurance;

(e) in writing off(i) the preliminary expenses of the company; or(ii) the expenses of, or the commission orbrokerage paid or discount allowed on, anyduty, fee or tax payable on or in connectionwith, and issue of shares of the company; or

(f) in providing for the premium payable onredemption of redeemable preference shares.

Merger relief

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

(i) where an issuing company has secured atleast ninety per centum equity holding inanother company in pursuance of anyarrangement providing for the allotment ofequity shares issued at a premium in the issuingcompany on terms that the consideration for theshares allotted is to be provided by the issue ortransfer to the issuing company of equity sharesin that other company or by the cancellation of


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COMPANIES BILL COMPANIES ACT 1965any such shares not held by the issuingcompany; and(ii) where the arrangement also provides for theallotment of any shares in the issuing companyon terms that the consideration for those shares

is to be provided by the issue or transfer to theissuing company of non-equity shares in theother company or by the cancellation of anysuch shares in that company not held by theissuing company.

(b) Subject to paragraph (c), the issuingcompany shall be regarded for the purposes ofthis subsection as having secured at least ninetyper centum equity holding in another companyin pursuance of any such arrangement as ismentioned in paragraph (a), if, in consequenceof any acquisition or cancellation of equity

shares in that company in pursuance of thatarrangement it holds equity shares in thatcompany (whether all or any of those shareswere acquired in pursuance of thatarrangement or not) of an aggregate nominalvalue equal to ninety per centum or more of thenominal value of the company's equity sharecapital.

(c) Where the equity share capital of the othercompany in question is divided into differentclasses of shares this subsection shall not applyunless the requirements of paragraph (a) aboveare satisfied in relation to each of those classestaken separately.

(d) Shares held by a company which is theissuing company's holding company orsubsidiary of the issuing company's holdingcompany, or by its or their trustees, shall beregarded for the purposes of this subsection asheld 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 toanother wholly-owned subsidiary of the holdingcompany in consideration for the transfer to theissuing company of assets, other than cash,being assets of any company (the transferorcompany) which is a member of the group ofcompanies which comprises the holding


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COMPANIES BILL COMPANIES ACT 1965company and all its wholly-owned subsidiaries,the issuing company shall not be required bysubsection (2) to transfer any amount in excessof the minimum premium value to the sharepremium account where the shares in the

issuing company allotted in consideration forthe transfer are issued at a premium.

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

(c) For the purposes of paragraph (b), the basevalue of the consideration for the shares allottedshall be the amount by which the base value ofassets transferred exceeds the base value of anyliabilities of the transferor company assumed by the

issuing company as part of the consideration forthe assets transferred.

(d) For the purposes of paragraph (c)(i) the base value of the assets transferred shallbe taken as the cost of those assets to thetransferor company or the amount at whichthose assets are stated in the transferorcompany's accounting records immediatelybefore the transfer, whichever is the less; and

(ii) the base value of the liabilities assumed shallbe taken as the amount at which they are statedin the transferor company's accounting recordsimmediately before the transfer.

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

Restrospective relief in certain circumstances

(6) (a) Subject to paragraph (b), where(i) the issuing company has issued at a premiumshares which were allotted in pursuance of anyarrangement providing for the allotment of

shares in the issuing company on terms that theconsideration for the shares allotted was to beprovided by the issue or transfer to the issuingcompany of shares in another company or bythe cancellation of any shares in that othercompany not held by the issuing company; and

(ii) that other company must either have been,at the time of the arrangement, a subsidiary of


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COMPANIES BILL COMPANIES ACT 1965the issuing company or of any company whichwas then the issuing company's holdingcompany or have become such a subsidiary onthe acquisition or cancellation of its shares inpursuance of the arrangement,

any part of the premiums on the shares soissued which was not transferred to thecompany's share premium account inaccordance with subsection (2) shall be treatedas if subsection (2) had never applied to thosepremiums (and may accordingly be disregardedin determining the sum to be included in thecompany's share premium account).

(b) This subsection applies only where a companyhas issued shares in circumstances to which thesubsection applies before the coming into

operation of the subsection.

(7) (a) An amount corresponding to any amountrepresenting the premiums or part of the premiumson shares issued by a company which by virtue ofsubsection (4), (5) or (6) is not included in thecompany's share premium account may also bedisregarded in determining the amount at whichany shares or other consideration provided for theshares issued is to be included in the company'sbalance-sheet.(b) References in subsections (4) to (6) and in this

subsection (however expressed) to(i) the acquisition by any company of shares inanother company; and(ii) the issue or allotment of shares to or thetransfer of shares to or by any company,

include references respectively to the acquisition ofany of those shares by and to the issue or allotmentor (as the case may require) the transfer of any ofthose shares to or by trustees of that company; andthe reference in subparagraph (5)(b)(i) to thecompany transferring the shares there-mentionedshall be construed accordingly.

(c) References in subsections (4) to (6) and in thissubsection to the transfer of shares in acompany include references to the transfer ofright to be included in the company's register ofmembers in respect of those shares.

(8) Regulations may be made making provision for andin relation to


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COMPANIES BILL COMPANIES ACT 1965(i) relief from the requirement of subsection (2) inrelation to premium other than cash premium; or

(ii) restrictions or modification of any relief fromthose requirements provided by subsections (4) to

(7).

73. Transitional provisions for section 72(1) Where a share is issued before the commencement ofsection 72(a) the amount paid on the share shall be the sum of allamounts paid to the company at any time for the share,but not including any premium; and(b) the amount unpaid on the share shall be thedifference between the price of issue of the share, but notincluding any premium, and the amount paid on theshare.

(2) Upon the commencement of section 72, any amountstanding to the credit of a companys share premiumaccount and capital redemption reserve shall becomepart of the companys share capital.

(3) Notwithstanding subsection (2), a company may,within twenty four months upon the commencement ofsection 72, use the amount standing to the credit of itsshare premium account to(a) provide for the premium payable on redemption ofdebentures or redeemable preference shares issuedbefore the commencement of section 72;(b) write off(i) the preliminary expenses of the company incurredbefore the commencement of section 56; or(ii) expenses incurred, or commissions or brokerages paidor discounts allowed, before or upon the commencementof section 72, for any duty, fee or tax payable on or inconnection with any issue of shares of the company;(c) pay up, pursuant to an agreement made before thecommencement of section 72, shares which wereunissued before that date and which are to be issuedupon that date to members of the company as fully paidbonus shares;

(d) pay up in whole or in part the balance unpaid onshares issued before the commencement of section 72 tomembers of the company; or(e) pay dividends declared before the commencement ofsection 72, if such dividends are satisfied by the issue ofshares to members of the company.

(4) Notwithstanding subsection (2), any company carryingout the business of insurance in Malaysia immediately



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COMPANIES BILL COMPANIES ACT 1965before the commencement of section 72, may apply theamount standing to the credit of its share premiumaccount immediately before such date by appropriationor transfer to any fund established and maintainedpursuant to the Insurance Act 1996 [Act 553].

(5) Notwithstanding subsection (1), the liability of ashareholder for calls in respect of money unpaid onshares issued before the commencement of section 72,whether on account of the par value of the shares or byway of premium, shall not be affected by the sharesceasing to have a par value.

(6) For the purpose of interpreting and applying, upon thecommencement of section 72, a contract, including theconstitution of the company, entered into before thecommencement of section 72 or a trust deed or otherdocument executed before such date

(a) a reference to the par or nominal value of a shareshall be a reference to(i) if the share is issued before such date, the par ornominal value of the share immediately before such date;(ii) if the share is issued upon such date but shares of thesame class were on issue immediately before such date,the par or nominal value that the share would have had ifit had been issued then; or(iii) if the share is issued upon such date and shares of thesame class were not on issue immediately before suchdate, the par or nominal value determined by thedirectors, and a reference to share premium shall betaken to be a reference to any residual share capital inrelation to the share;(b) a reference to a right to a return of capital on a shareshall be taken to be a reference to a right to a return ofcapital of a value equal to the amount paid in respect ofthe shares par or nominal value; and(c) a reference to the aggregate par or nominal value ofthe companys issued share capital shall be taken to be areference to that aggregate as it existed immediatelybefore that date as(i) increased to take account of the par or nominal valueas defined in paragraph (a) of any shares issued uponthat date; and

(ii) reduced to take account of the par or nominal valueas defined in paragraph (a) of any shares cancelled uponthat date.

(7) A company may file with the Registrar a notice of itsshare capital(a) at any time before(i) the date it is required to lodge its annual return afterthe end of the period referred to under subsection (3); or


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COMPANIES BILL COMPANIES ACT 1965(ii) the expiry of 180 days after the end of the periodreferred to under subsection (3), whichever is the earlier;or(b) within such longer period as the Registrar may, if hethinks fit in the circumstances of the case, allow.

(8) Notwithstanding subsection (7), a company may filewith the Registrar a notice of its share capital earlier thanthe periods referred to under paragraph (7)(a) if thecompany(a) has no amount standing to the credit of its sharepremium account; or(b) it has utilised the amount standing to the credit of itsshare premium accounts pursuant to subsection (3).

(9) Unless a company has filed a notice of its sharecapital under subsection (7) or (8), the Registrar may forthe purposes of the records maintained by the Registrar

adopt, as the share capital of the company, theaggregate value of the shares issued by the company asthat value appears in the Registrars records immediatelyafter the end of the period referred to paragraph 7(a).

74. Exercise by directors of power to allot shares or grantrights(1) The directors of a company shall not exercise anypower(a) to allot shares in the company; or(b) to grant rights to subscribe for shares in the company,or(c) to convert any security into shares in the company.

(2) Subsection (1) does not apply to(a) an allotment of shares, or grant of rights, under anoffer made to the members of the company in proportionto their shareholdings;(b) an allotment of shares, or grant of rights, on a bonusissue of shares to the members of the company inproportion to their shareholdings;(c) an allotment of shares to a promoter of a companythat the said promoter has agreed to take; or(d) where the said shares are to be issued as

consideration or part consideration for the acquisition ofshares or assets by the company and members of thecompany have been notified of the intention to issue thesaid shares at least fourteen days before the date of issueof the said shares.Provided that for the purpose of paragraph (2)(d),members of the company are deemed to have beennotified of the intention to issue shares of the companyif

Section 48. Prohibition of allotment unless minimumsubscription received.

(1) No allotment shall be made of any shares of acompany offered to the public or offered forsubscription or purchase or where an invitation tosubscribe for or purchase shares is made pursuant to aprospectus that is registered under the SecuritiesCommission Act 1993 unless

(a) the minimum subscription has beensubscribed; and(b) the sum payable on application for the sharesso subscribed has been received by the company,

but if a cheque for the sum payable has been receivedby the company, the sum shall be deemed not to havebeen received by the company until the cheque is paidby 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, onthe nominal value of, and the amount of thepremium payable on, each share; and

(b) reckoned exclusively of any amount payableotherwise than in cash.


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COMPANIES BILL COMPANIES ACT 1965(i) a copy of the statement explaining the purpose of theintended issue of shares has been sent to every memberat his last known address according to the register ofmembers; and(ii) the copy of the statement has been advertised in a

national language and an English language newspaperwhich is widely circulated in Malaysia.

(3) A director who(a) contravenes this section; or(b) authorizes or permits, participates in, or fails to takeall reasonable steps to prevent, a contravention of thissection, commits an offence.

(4) Any issue of shares made by a company incontravention of this section shall be void andconsideration given for the shares shall be recoverableaccordingly.

(5) Any director who knowingly contravenes, or permits orauthorizes the contravention of, this section with respectto any issue of shares shall be liable to compensate thecompany and the person to whom the shares were issuedfor any loss, damages or costs which the company or thatperson may have sustained or incurred thereby,Provided that no proceedings to recover any such loss,damages or costs shall be commenced, notwithstandingthe Limitation Act 1953 [Act 254], after the expiration ofthree years from the date of the issue.

75. Allotment of shares or grant of rights with companyapproval(1) Notwithstanding section 74, the directors of acompany may exercise any power(a) under subsection 74(1); or(b) to allot shares pursuant to an agreement or option oroffer, provided prior approval by resolution by thecompany has been obtained.

(2) Approval for the purposes of this section may beconfined to a particular exercise of that power or mayapply to the exercise of that power generally; and anysuch approval may be unconditional or subject to

conditions.

(3) An approval expires(a) if the company is required to hold an annual generalmeeting(i) at the conclusion of the annual general meeting heldnext after the approval was given; or(ii) at the expiry of the period within which the next annualgeneral meeting after the approval was given is required

(3) The amount payable on application on each shareoffered to the public or offered pursuant to aprospectus that is registered under the SecuritiesCommission 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 fourmonths after the first issue of the prospectus, all moneyreceived from applicants for shares shall he forthwithrepaid to them without interest, and, if any such moneyis not so repaid within five months after the issue of theprospectus, the directors of the company shall be jointlyand severally liable to repay that money with interest atthe rate of ten per centum per annum from theexpiration of the period of five months but a directorshall not be so liable if he proves that the default in the

repayment of the money was not due to anymisconduct or negligence on his part.

(5) An allotment made by a company to an applicant incontravention of this section or of subsection 50 (1)shall be voidable at the option of the applicant whichoption may be exercised by written notice served on thecompany within one month after the holding of thestatutory meeting of the company, and not later, or, inany case where the company is not required to hold astatutory meeting, or where the allotment is made afterthe holding of the statutory meeting, within one monthafter the date of the allotment, and not later, and theallotment shall be so voidable notwithstanding that thecompany is in course of being wound up. (6) Everydirector of a company who knowingly contravenes orpermits or authorizes the contravention of this sectionor of subsection 50(1) shall be guilty of an offenceagainst this Act and shall be liable in addition to thepenalty or punishment for the offence to compensatethe company and the allottee respectively for any loss,damages or costs which the company or the allotteehas sustained or incurred thereby but no proceedingsfor the recovery of any such compensation shall becommenced after the expiration of two years from the

date of the allotment.

Penalty: Imprisonment for three years or one millionringgit or both.

(7) Any condition requiring or binding any applicant forshares to waive compliance with any requirements ofthis section shall be void.


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COMPANIES BILL COMPANIES ACT 1965to be held, whichever is the earlier; or(b) if the company is not required to hold an annualgeneral meeting shall not be more than twelve monthsafter the approval was given.

(4) Notwithstanding subsection (3), an approval may berevoked or varied at any time by a resolution of thecompany.

(5) The directors may allot shares or grant rights after anapproval has expired if(a) the shares are allotted, or the rights are granted,under an agreement, option, or offer made or granted bythe company before the approval expired; and(b) the approval allowed the company to make or grantan agreement, option, or offer that would or mightrequire shares to be allotted, or rights to be granted, afterthe approval had expired.

(6) An approval made under subsection (1) shall belodged with the Registrar.

(7) If the company contravenes this section, the companyand every officer who is in default commit an offence andshall, on conviction, be liable to a fine not exceeding fivehundred thousand ringgit and, in the case of a continuingoffence, to a further fine not exceeding ten thousandringgit for each day during which the offence continuesafter conviction.

76. Registration of allotment in the register of members(1) A company shall register an allotment of shares withinfourteen days after the date of the allotment, by enteringin the register of its members the information below(a) the names and addresses of its members;(b) the date on which each person is entered in theregister as a member;(c) the shares held by each member by distinguishingeach share by its number if the share has a number; and

(d) the amount, if any, paid, deemed to be paid, or dueand payable on the shares of each member.

(2) If the company fails to comply with this section, thecompany and every officer who is in default commit anoffence and shall, on conviction, be liable to a fine notexceeding ten thousand ringgit and, in the case of acontinuing offence, to a further fine not exceeding fivehundred ringgit for each day during which the offence

(8) No company shall allot, and no officer or promoterof a company or a proposed company shall authorizeor permit to be allotted

(a) any shares or debentures to the public on the

basis of a prospectus after the expiration of sixmonths or such longer period as the Registrar mayallow from the date of issue of the prospectus; or

(b) any securities as defined under the SecuritiesCommission Act 1993 on the basis of a prospectusthat is registered under that Act later than suchperiod after the date of issue of the prospectus asthe Securities Commission may specify.

Penalty: Imprisonment for three years or one millionringgit.

(9) Where an allotment of

(a) shares or debentures is made on the basis of aprospectus after the expiration of six months orsuch longer period as the Registrar may allow fromthe date of issue of the prospectus; or

(b) securities is made on the basis of a prospectusthat is registered under the Securities Commission

Act 1993 later than such period after the date ofissue of the prospectus as the SecuritiesCommission may specify,

the allotment shall not by reason only of that fact bevoidable or void.

Section 49. Application moneys to be held in trust untilallotment.

(1) All applications and other moneys paid prior toallotment by any applicant on account of shares ordebentures offered to the public or of any securities forwhich a prospectus is required under the SecuritiesCommission Act 1993 shall until the allotment be heldby the company, or in the case of an intended

company by the persons named in the prospectus asproposed directors and by the promoters, upon trust forthe applicant, but there shall be no obligation or dutyon any bank or third person with whom any suchmoneys have been deposited to inquire into or see tothe proper application of the moneys so long as thebank or person acts in good faith.

(2) If default is made in complying with this section


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COMPANIES BILL COMPANIES ACT 1965continues after conviction. every officer of the company in default or, in the case

of an intended company, every person named in theprospectus as a proposed director and every promoterwho knowingly and wilfully authorizes or permits thedefault shall be guilty of an offence against this Act.

Penalty: Imprisonment for three years or ten thousandringgit.

Section 50. Restriction on allotment in certain cases.

(1) A public company having a share capital whichdoes not issue a prospectus on or with reference to itsformation shall not allot any of its shares or debenturesunless at least three days before the first allotment ofeither shares or debentures there has been lodged withthe Registrar a statement in lieu of prospectus whichcomplies with the requirements of this Act.

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

Penalty: Imprisonment for three years or ten thousandringgit.

Section 51. Requirements as to statements in lieu ofprospectus.

(1) To comply with the requirements of this Act astatement in lieu of prospectus lodged by or on behalfof a company

(a) shall be signed by every person who is namedtherein as a director or a proposed director of thecompany 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 specifiedin Part I of that Schedule and set out the reportsspecified in Part II of that Schedule; and

(c) shall, where the persons making any report

specified in Part II of that Schedule have madetherein or have, without giving the reasons,indicated therein any such adjustments as arementioned in paragraph 5 of Part III of thatSchedule, have endorsed thereon or attachedthereto a written statement signed by thosepersons setting out the adjustments and giving thereasons therefor.


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COMPANIES BILL COMPANIES ACT 1965(2) The Registrar shall not accept for registration anystatement in lieu of prospectus unless it appears to himto comply with this Act.

(3) Where in any statement in lieu of prospectus, there

is any untrue statement or wilful non-disclosure anydirector, who signed the statement in lieu of prospectusshall be guilty of an offence against this Act unless heproves either that the untrue statement or non-disclosure was immaterial or that he had reasonableground to believe and did, up to the time of thedelivery for registration of the statement in lieu ofprospectus, believe that the untrue statement was trueor the non-disclosure immaterial.

Penalty: Imprisonment for three years or ten thousandringgit or both.

Section 52. Restrictions on commencement of businessin certain circumstances.(1) Where a company having a share capital has issueda prospectus inviting the public to subscribe for itsshares or has issued a prospectus pursuant to theSecurities Commission Act 1993 in relation to its sharesthe company shall not commence any business orexercise any borrowing powers

(a) if any money is or may become liable to berepaid to applicants for any shares or debenturesoffered for public subscription by reason of anyfailure to apply for or obtain permission for listingfor quotation on any Stock Exchange; or

(b) unless

(i) shares held subject to the payment of thewhole amount thereof in cash have beenallotted to an amount not less in the whole thanthe minimum subscription;

(ii) every director has paid to the company oneach of the shares taken or contracted to betaken by him, and for which he is liable to pay

in cash, a proportion equal to the proportionpayable on application and allotment on theshares offered for public subscription; and

(iii) there has been lodged with the Registrar astatutory declaration by the secretary or one ofthe directors of the company in the prescribedform verifying that the above conditions havebeen complied with.


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COMPANIES BILL COMPANIES ACT 1965

(2) Where a public company having a share capital hasnot issued a prospectus inviting the public to subscribefor its shares or has not issued a prospectus pursuant tothe Securities Commission Act 1993 the company shall

not commence any business or exercise any borrowingpower unless

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

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

(c) there has been lodged with the Registrar astatutory declaration by the secretary or one of thedirectors of the company in the prescribed formverifying that paragraph

(b) has been complied with.

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

(4) Any contract made by a company before the date atwhich it is entitled to commence business shall beprovisional only and shall not be binding on thecompany until that date, and on that date it shallbecome binding.

(5) Where shares and debentures are offeredsimultaneously by a company for subscription nothingin this section shall prevent the receipt by the companyof any money payable on application for thedebentures.

(6) If any company commences business or exercisesborrowing powers in contravention of this section everyperson who is responsible for the contravention shall beguilty of an offence against this Act.

Penalty: Ten thousand ringgit. Default penalty: Twohundred and fifty ringgit.


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Section 53. Restriction on varying contracts referred toin prospectus, etc.

A company shall not before the statutory meeting varythe terms of a contract referred to in the prospectus orstatement in lieu of prospectus, unless the variation ismade subject to the approval of the statutory meeting.

77. Return of allotment(1) Within fourteen days after an allotment of shares isregistered pursuant to section 76, a company shall lodgewith the Registrar for registration a return of the allotment.

(2) The return of the allotment shall include a statementof capital as at the date of the allotment and shall state

(a) the number and amount of the shares comprised inthe allotment;(b) the amount, if any, paid, deemed to be paid, or dueand payable on the allotment of each share;(c) where the capital of the company is divided intoshares of different classes the class of shares to whicheach share comprised in the allotment belongs; and(d) the full name and the address of each of the allotteesand the number and class of shares allotted to him.

(3) The particulars mentioned in paragraph (2)(d) neednot be included in the return of the allotment of a publiccompany which has allotted shares(a) for cash; or(b) for a consideration other than cash,where the number of persons to whom the shares havebeen allotted exceeds five hundred.

(4) Where shares are allotted or deemed to have beenallotted as fully or partly paid up otherwise than in cashand the allotment is made pursuant to a contract inwriting the company shall lodge together with the returnthe contract evidencing the entitlement of the allottee or acopy of any such contract certified in a manner as may bedetermined by the Registrar.

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

(6) Where shares are allotted or are deemed to havebeen allotted as fully or partly paid up otherwise than incash and the allotment is made(a) pursuant to a contract not reduced to writing;

Section 54. Return as to allotments.

(1) Where a company makes any allotment of its sharesor any of its shares are deemed to have been allottedunder subsection (6) the company shall within onemonth thereafter lodge with the Registrar a return of theallotments stating

(a) the number and nominal amounts of the sharescomprised in the allotment;

(b) the amount, if any, paid, deemed to be paid, ordue and payable on the allotment of each share;

(c) where the capital of the company is divided intoshares of different classes, the class of shares towhich each share comprised in the allotmentbelongs; and

(d) the full name and the address of each of theallottees and the number and class of sharesallotted to him.

(2) The particulars mentioned in paragraph (1)(d) neednot be included in the return where a company towhich subsection 166(1) applies has allotted shares

(a) for cash; or(b) for a consideration other than cash and thenumber of persons to whom the shares have beenallotted exceeds five hundred.

(3) Where shares are allotted or deemed to have beenallotted as fully or partly paid up otherwise than in cashand the allotment is made pursuant to a contract inwriting, the company shall lodge with the return thecontract evidencing the entitlement of the allottee or acopy of any such contract certified as prescribed.

(4) If a certified copy of a contract is lodged the originalcontract duly stamped shall, if the Registrar so requests,


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COMPANIES BILL COMPANIES ACT 1965(b) pursuant to a provision in the constitution; or(c) in satisfaction of a dividend declared in favour of, butnot payable in cash to the shareholders, or in pursuanceof the application of moneys held by the company in anaccount or reserve in paying up unissued shares to which

the shareholders have become entitled, the companyshall lodge together with the return a statementcontaining such particulars as may be determined by theRegistrar.

(7) Where shares are allotted pursuant to a scheme ofarrangement approved by the Court under section 431the company may lodge an office copy of the order of theCourt in lieu of the statement referred to in subsection (6)in a manner as may be determined by the Registrar.

(8) Any shares issued to subscribers without formalallotment for the purpose of incorporation of a company

shall be deemed to have been allotted on the date ofsuch incorporation.

(9) If a company contravenes this section, the companyand every officer who is in default commit an offence andshall, on conviction, be liable to a fine not exceeding tenthousand ringgit and, in the case of a continuing offence,to a further fine not exceeding five hundred ringgit foreach day during which the offence continues afterconviction.

be produced at the same time to the Registrar.

(5) Where shares are allotted or are deemed to havebeen allotted as fully or partly paid up otherwise than incash and the allotment is made

(a) pursuant to a contract not reduced to writing;(b) pursuant to a provision in the memorandum orarticles; or(c) in satisfaction of a dividend declared in favourof, but not payable in cash to the shareholders, orin pursuance of the application of moneys held bythe company in an account or reserve in paying upunissued shares to which the shareholders havebecome entitled,

the company shall lodge with the return a statementcontaining such particulars as are prescribed but where

the shares are allotted pursuant to a scheme ofarrangement approved by the Court under section 176the company may lodge an office copy of the order ofthe Court in lieu of the statement in the prescribedform.

(6) For the purposes of this section any shares issuedwithout formal allotment to subscribers to thememorandum shall be deemed to have been allottedto the subscribers on the date of the incorporation ofthe company.

(7) If default is made in complying with this sectionevery officer of the company who is in default shall beguilty of an offence against this Act.

Penalty: One thousand ringgit. Default penalty: Twohundred and fifty ringgit.

78. Voting right of equity shares in certain companies(1) Notwithstanding any provision in this Act, where apublic company or its subsidiary has, before or on thecommencement of the Companies Act 1965, issued anyequity share which does not comply with paragraph68(2)(a), the company shall not issue any invitation to

subscribe for or to purchase any shares or debentures ofthe company until the voting rights attached to eachshare of that company have been duly varied so as tocomply with paragraph 68(2)(a).

(2) Where the rights of issued preference shares havebeen altered to become equity shares, the issuedpreference shares shall be deemed to be issued equityshares.

Section 55. As to voting rights of equity shares incertain companies.

(1) Notwithstanding any provisions in this Act or in thememorandum or articles of a company to which thissection applies, each equity share issued by such a

company after the commencement of this Act shallconfer the right at a poll at any general meeting of thecompany (subject as provided in subsection 148(1)) toone vote, and, to one vote only for each ringgit or partof a ringgit that has been paid up on that share.

(2) Where any company to which this section applieshas, prior to the commencement of this Act, or, while itwas a company to which this section did not apply,


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COMPANIES BILL COMPANIES ACT 1965(3) Any person who makes an invitation in contraventionof this section commits an offence and shall, uponconviction, be liable to a term of imprisonment notexceeding ten years or a penalty not exceeding fivehundred thousand ringgit or to both.

issued any equity share which does not comply withsubsection (1), the company shall not issue anyinvitation to subscribe for or to purchase any shares ordebentures of the company until the voting rightsattached 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 therights of issued preference shares so that they becomeequity shares shall be deemed to be an issue of equityshares.

(4) The Yang di-Pertuan Agong may by proclamationpublished in the Gazette declare that subsection (1)shall apply to all or any equity shares or any class ofequity shares which have been issued before thecommencement of this Act by a company to which thissection applies and which is specified in the declaration

and thereupon that subsection shall apply to suchequity shares so issued by the company from such dateas is specified in the declaration being a date not lessthan 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 publicin breach of subsection (2).

Penalty: Imprisonment for five years or thirty thousandringgit.

79. General prohibition of commissions, discounts andallowances(1) A company shall not apply any of its shares or cash,either directly or indirectly, in payment of anycommission, discount or allowance to a person inconsideration of the person(a) subscribing or agreeing to subscribe, whetherabsolutely or conditionally, for shares in the company; or(b) procuring or agreeing to procure subscriptions,

whether absolute or conditional, for shares in thecompany.

(2) For the purposes of subsection (1), it is immaterialhow the shares or cash are applied, whether by beingadded to the purchase money of property acquired by thecompany or to the contract price of work to be executedfor the company, or being paid out of the nominalpurchase money or contract price, or otherwise.

Section 58. Power to pay certain commissions, andprohibition of payment of all other commissions,discounts, etc.(1) A company may pay a commission to any person inconsideration of his subscribing or agreeing tosubscribe whether absolutely or conditionally for anyshares, or procuring or agreeing to procuresubscriptions, whether absolute or conditional, for anyshares in the company, if

(a) the payment is authorized by the articles;(b) the commission does not exceed ten per centumof the price at which the shares are issued or theamount or rate authorized by the articles,whichever is the less;

(c) the amount or rate of the commission is


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(3) Nothing in this section shall affect the payment ofbrokerage by a company.

80. Permitted commissions

(1) Notwithstanding section 79, a company may applyany of its shares or cash, either directly or indirectly, inpayment of a commission to a person in consideration ofthe person(a) subscribing or agreeing to subscribe, whetherabsolutely or conditionally, for shares in the company; or(b) procuring or agreeing to procure subscriptions,whether absolute or conditional, for shares in thecompany, if(i) the payment of the commission is authorized by theconstitution of a company;(ii) the commission paid or agreed to be paid does notexceed

(A) ten per centum of the price at which the shares areissued; or(B) the amount or rate authorized by the constitution,whichever is the lesser;

(iii) the amount or rate of the commission is(A) in the case of shares of an unlisted recreational clubwhich are offered to the public for subscription or in thecase of shares other than of an unlisted recreational clubwhich are offered for subscription or purchase pursuant toa prospectus that is registered under the Capital Marketsand Services Act 2007, disclosed in the prospectus;(B) in the case of shares not so offered, disclosed in thestatement in lieu of prospectus, or in a statement as maybe determined by the Registrar, signed in like manner asa statement in lieu of prospectus and lodged before thepayment of the commission with the Registrar, and, wherea circular or notice not being a prospectus invitingsubscription for the shares is issued, also disclosed in thatcircular or notice; and

(iv) the number of shares which persons have agreed fora commission to subscribe absolutely is disclosed in thelike manner.

(2) A vendor to, promoter of, or other person whoreceives payment in cash or shares from, a company mayapply any part of the cash or shares so received inpayment of any commission the payment of which directlyby the company would be permitted by this section.

(3) If the company fails to comply with this section, thecompany and every officer who is in default commit anoffence and shall, on conviction, be liable to a fine not

(i) in the case of shares of an unlistedrecreational club which are offered to thepublic for subscription or in the case of sharesother than of an unlisted recreational clubwhich are offered for subscription or purchase

pursuant to a prospectus that is registeredunder 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 ofprospectus, or in a statement in the prescribedform signed in like manner as a statement inlieu of prospectus and lodged before thepayment of the commission with the Registrar,and, where a circular or notice not being aprospectus inviting subscription for the sharesis issued, also disclosed in that circular or

notice; and

(d) the number of shares which persons haveagreed for a commission to subscribe absolutely isdisclosed in the like manner.

(2) Except as provided in subsection (1) no companyshall apply any of its shares or capital money eitherdirectly or indirectly in payment of any commission,discount or allowance to any person in consideration ofhis subscribing or agreeing to subscribe whetherabsolutely or conditionally for any shares or procuringor agreeing to procure subscriptions whether absoluteor conditional for any shares in the company, whetherthe shares or money are so applied by being added tothe purchase money of any property acquired by thecompany or to the contract price of any work to beexecuted for the company, or the money is paid out ofthe nominal purchase money or contract price orotherwise.

(3) Nothing in this section shall affect the power of anycompany to pay such brokerage (in addition to or inlieu of the commission referred to in subsection (1)) asit has heretofore been lawful for company to pay but

the amount or rate per centum of the brokerage paidor agreed to be paid by the company shall (in the caseof shares of an unlisted recreational club which areoffered to the public for subscription or in the case ofshares other than of an unlisted recreational club whichare offered for subscription or purchase pursuant to aprospectus that is registered under the SecuritiesCommission Act 1993) be disclosed in the prospectusor in the statement in lieu of prospectus (if applicable)


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COMPANIES BILL COMPANIES ACT 1965exceeding five hundred thousand ringgit and, in the caseof a continuing offence, to a further fine not exceedingten thousand ringgit for each day during which theoffence continues after conviction.

or in a statement in the prescribed form signed in likemanner as a statement in lieu of prospectus andlodged before the payment of the brokerage with theRegistrar, and, where a circular or notice not being aprospectus inviting subscription for the shares is issued,

also disclosed in that circular or notice.

(4) A vendor to, promoter of, or other person whoreceives payment in money or shares from, a companyshall have power to apply any part of the money orshares so received in payment of any commission thepayment of which if made directly by the companywould have been lawful under this section.

(5) If default is made in complying with the provisionsof this section relating to the lodging with the Registrarof the statement in the prescribed form, the companyand every officer of the company who is in default shall

be guilty of an offence against this Act.


81. Differences in calls and payments, etc.

(1) Unless otherwise provided in the constitution, acompany may(a) make arrangements on the issue of shares for varyingthe amounts and times of payment of calls as betweenshareholders;(b) accept from any member the whole or a part of theamount remaining unpaid on any shares although nopart of that amount has been called up; and(c) pay dividends in proportion to the amount paid up oneach share where a larger amount is paid up on someshares than on others.(2) The directors may, if they think fit, receive from anymember willing to advance the same all or any part of themoney uncalled and unpaid upon any shares held byhim, and upon all or any part of the money so advancedmay, until the same would, but for the advance, becomepayable, pay interest at such rate not exceeding, unlessthe company in general meeting shall otherwise direct,eight per centum per annum as may be agreed upon

between the directors and the member paying the sum inadvance.

Section 56. Differences in calls and payments, etc.

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

(a) make arrangements on the issue of shares forvarying the amounts and times of payment of callsas between shareholders;

(b) accept from any member the whole or a part ofthe amount remaining unpaid on any sharesalthough no part of that amount has been calledup; and

(c) pay dividends in proportion to the amount paidup on each share where a larger amount is paidup on some shares than on others.

Reserve liability

(2) A limited company may by special resolutiondetermine that any portion of its share capital which

has not been already called up shall not be capable ofbeing called up except in the event and for thepurposes of the company being wound up, andthereupon that portion of its share capital shall not becapable of being called up except in the event and forthe purposes of the company being wound up, but nosuch resolution shall prejudice the rights of any personacquired before the passing of the resolution.


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COMPANIES BILL COMPANIES ACT 196582. Calls on Shares(1) The directors may make calls upon the members inrespect of any money unpaid on their shares and not bythe conditions of allotment thereof made payable at fixedtimes.

(2) Any sum which by the terms of issue of a sharebecomes payable on allotment or at any fixed date, shallbe deemed to be a call duly made and payable on thedate on which by the terms of issue the same becomespayable.

(3) Subject to the companys constitution(a) no call shall exceed one-fourth of the issued price ofthe share or be payable at less than one month from thedate fixed for the payment of the last preceding call;(b) each member shall, subject to receiving at leastfourteen daysnotice specifying the date, time and place

of payment, pay to the company the amount called on hisshares.

(4) A call may be revoked or postponed as the directorsmay determine.

(5) A call shall be deemed to have been made at the timewhen the resolution of the directors authorizing the callwas passed and such resolution may authorize the call tobe paid by instalments.

(6) The joint holders of a share shall be jointly andseverally liable to pay all calls in respect of their shares.

(7) If a sum called in respect of a share is not paid beforeor on the day appointed for payment thereof, the personfrom whom the sum is due shall not be required to payany interest on that sum unless stated in its constitution.

(8) For the purpose of subsection (7), the rate stated inthe constitution shall not exceed eight per centum perannum from the day appointed for the payment thereof tothe time of actual payment as the directors maydetermine.

(9) The directors may waive payment of the interest duewholly or in part from the person referred to in subsection(7).


83. Forfeiture of Shares(1) The board of directors may, if a member fails to payany call or instalment of a call within the stipulated time,serve a notice on the member requiring payment of the



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COMPANIES BILL COMPANIES ACT 1965amount unpaid, together with any interest which mayhave accrued.

(2) The notice in subsection (1) shall(a) specify a date on or before which the payment

required shall be made; and(b) state that in the event of non-payment on or beforethe specified date, the shares in respect of which the callwas made, shall be liable to be forfeited.

(3) Upon failure to comply with the notice served undersubsection (1), the share in respect of which the noticehas been given, shall be forfeited by a resolution of thedirectors unless the payment as required by the notice hasbeen made before such resolution.

(4) For the purposes of subsection (3), the forfeiture shallinclude all dividends declared in respect of the forfeited

shares and not actually paid before the forfeiture.

(5) A person whose shares have been forfeited undersubsection (3) shall cease to be a member in respect ofthe forfeited shares.

(6) Notwithstanding subsection (5), the person shallremain liable to pay to the company all money which, atthe date of forfeiture was payable by him to the companyin respect of the shares, together with interest at the rateof eight per centum per annum from the date of theforfeiture on the money for the time being unpaid if thedirectors think fit to enforce payment of the interest, andthe liability shall cease if and when the company receivespayment in full of all such money in respect of the shares.

(7) A statutory declaration in writing by the director or thesecretary of the company that a share in the company hasbeen duly forfeited on a date stated in the declaration,shall be conclusive evidence of the facts therein stated asagainst all persons claiming to be entitled to the share.

(8) A forfeited share may be sold or otherwise disposed ofon such terms and in such manner as the board ofdirectors think fit.

(9) The forfeiture may be cancelled on such terms as theboard of directors think fit, at any time before a sale ordisposition of the forfeited shares.

(10) The company may receive the consideration, if any,given for a forfeited share on any sale or dispositionthereof and may execute a transfer of the share in favourof the person to whom the share is sold or disposed of


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COMPANIES BILL COMPANIES ACT 1965and such person shall(a) be registered as the holder of the share;(b) not be bound to see to the application of thepurchase money, if any;and

(c) not have his title to the share be affected by anyirregularity or invalidity in the proceedings in reference tothe forfeiture, sale, or disposal of the share.

(11) This section shall apply in the case of non-paymentof any amount of money which, by the terms of issue of ashare, becomes payable to the company at a fixed time,as if the same had been payable by virtue of a call dulymade and notified.

84. Power of company to alter its share capital(1) Unless otherwise provided in the constitution, a

company may, in a general meeting alter the conditionsof its constitution in any one or more of the followingways:(a) consolidate and divide all or any of its share capital;(b) convert all or any of its paid-up shares into stock andmay reconvert that stock into paid-up shares;(c) subdivide its shares or any of them, whatever is in thesubdivision, the proportion between the amount paid andthe amount, if any, unpaid on each subdivided shareshall be the same as it was in the case of the share fromwhich the subdivided share is derived; or(d) cancel the number of shares which, at the date of thepassing of the resolution for cancellation, have not beentaken or agreed to be taken by any person or which havebeen forfeited and diminish the amount of its sharecapital by the number of the shares so cancelled.

(2) The company shall lodge with the Registrar notice ofany alteration referred to in paragraph (1)(a), (b), (c) or(d) in the manner as may be determined by the Registrarwithin fourteen days from the date of the alteration.

(3) A cancellation of shares under this section shall not bedeemed to be a reduction of share capital within themeaning of this Act.

(4) In the case of an unlimited company having a sharecapital may by any resolution passed for the purposes ofregistration of an unlimited company as a limitedcompany(a) increase the amount of its share capital by increasingthe issue price of each of its shares, but subject to thecondition that no part of the increased capital shall becapable of being called up except in the event and for the

Section 62. Power of company to alter its share capital.

(1) A company if so authorized by its articles may ingeneral meeting alter the conditions of itsmemorandum in any one or more of the followingways:

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

(b) consolidate and divide all or any of its sharecapital into shares of larger amount than itsexisting shares;

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

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

(e) cancel shares which at the date of the passingof the resolution in that behalf have not been taken

or agreed to be taken by any person and diminishthe amount of its share capital by the amount ofthe shares so cancelled.

Cancellations

(2) A cancellation of shares under this section shall notbe deemed to be a reduction of share capital within the


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COMPANIES BILL COMPANIES ACT 1965purposes of the company being wound up; or(b) provide that a specified portion of its uncalled sharecapital shall not be capable of being called up except inthe event and for the purposes of the company beingwound up.

meaning of this Act.

As to share capital of unlimited company on re-registration

(3) An unlimited company having a share capital mayby any resolution passed for the purposes of subsection25(1)

(a) increase the nominal amount of its share capitalby increasing the nominal amount of each of itsshares, but subject to the condition that no part ofthe increased capital shall be capable of beingcalled up except in the event and for the purposesof the company being wound up; and

(b) in addition or alternatively, provide that aspecified portion of its uncalled share capital shall

not be capable of being called up except in theevent and for the purposes of the company beingwound up.

Notice of increase of share capital

(4) Where a company has increased its share capitalbeyond the registered capital, it shall within fourteendays after the passing of the resolution authorizing theincrease 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 isin default shall be guilty of an offence against this Act.


85. Pre-emptive rights to new shares(1) Where a company issues shares which rank equally orprior to existing shares as to voting or distribution rights,those shares shall be offered to the holders of existingshares in a manner which would, if the offer wereaccepted, maintain the relative voting and distributionrights of those shareholders.

(2) An offer under subsection (1) shall remain open foracceptance for a reasonable time.


86. Conversion of shares into stock(1) Subject to the constitution of a company, the companymay by ordinary resolution passed at a general meeting



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COMPANIES BILL COMPANIES ACT 1965convert any paid-up shares into stock and reconvert anystock into paid-up shares of any number.

(2) The stockholders may transfer the same or any partthereof in the same manner as provided under the Act for

transfer of the shares from which the stock arose might,before the conversion, have been transferred or in theclosest manner as circumstances allow.

(3) The directors may fix the minimum amount of stocktransferable and restrict or forbid the transfer of fractionsof that minimum, but the minimum shall not exceed theissued price of the shares from which the stock arose.

(4) For the purpose of this section, any reference in theAct as are applicable to paid-up shares shall apply tostock, and the words ! share"and ! shareholder"shallinclude ! stock"and ! stockholder".

87. Rights and privileges of stockholders(1) The stockholders of shall, according to the amount ofthe stock held by them, have the same rights, privilegesand advantages as regards dividends, voting at meetingsof the company and other matters as if they held theshares from which the stock arose.

(2) Notwithstanding subsection (1), no such privilege oradvantage shall be conferred by any such part of stockwhich would not, if existing in shares, have conferred thatprivilege or advantage, except participation in thedividends and profits of the company and in the assets onwinding up.

88. Rights attached to sharesIn this Act, a reference to the rights attached to a share ina class of shares in a company is a reference to the rightsof the holder of that share as a member of the company.

Section 65. Rights of holders of classes of shares.

(1) If in the case of a company the share capital ofwhich is divided into different classes of sharesprovision is made by the memorandum or articles forauthorizing the variation or abrogation of the rightsattached to any class of shares in the company, subjectto the consent of any specified proportion of theholders of the issued shares of that class or the sanctionof a resolution passed at a separate meeting of theholders of those shares, and in pursuance of the saidprovision the rights attached to any such class of sharesare at any time varied or abrogated the holders of notless in the aggregate than ten per centum of the issuedshares of that class, may apply to the Court to have thevariation or abrogation cancelled, and, if any suchapplication is made, the variation or abrogation shallnot have effect until confirmed by the Court.

(2) An application shall not be invalid by reason of theapplicants or any of them having consented to or votedin favour of the resolution for the variation orabrogation if the Court is satisfied that any material fact

was not disclosed by the company to those applicantsbefore they so consented or voted.

(3) The application shall be made within one monthafter the date on which the consent was given or theresolution was passed or such further time as the Courtallows, and may be made on behalf of theshareholders entitled to make the application by suchone or more of their number as they appoint in writing.


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(4) On the application the Court, after hearing theapplicant and any other persons who apply to theCourt to be heard and appear to the Court to beinterested, may, if satisfied having regard to all the

circumstances of the case that the variation orabrogation would unfairly prejudice the shareholders ofthe class represented by the applicant, disallow thevariation or abrogation as the case may be and shall, ifnot so satisfied, confirm it, and the decision of theCourt shall be final.

(5) The company shall within fourteen days after themaking of an order by the Court on any suchapplication lodge an office copy of the order with theRegistrar and if default is made in complying with thisprovision the company and every officer of thecompany 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 sharesranking pari passu with existing preference sharesissued by the company shall be deemed to be avariation of the rights attached to those existingpreference shares unless the issue of the first-mentionedshares was authorized by the terms of issue of theexisting preference shares or by the articles of thecompany in force at the time the existing preferenceshares were issued.

(7) For the purposes of this section the alteration of anyprovision in the memorandum or articles of a companywhich affects or relates to the manner in which therights attaching to the shares of any class may bevaried or abrogated shall be deemed to be a variationor abrogation of the rights attached to the shares ofthat class.

(8) This section shall not operate so as to limit orderogate from the rights of any person to obtain reliefunder section 181.

Section 66. Rights of holders of preference shares to beset out in memorandum or articles.

(1) No company shall allot any preference shares orconvert any issued shares into preference shares unlessthere is set out in its memorandum or articles the rightsof the holders of those shares with respect to repaymentof capital, participation in surplus assets and profits,


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COMPANIES BILL COMPANIES ACT 1965cumulative or non-cumulative dividends, voting, andpriority of payment of capital and dividend in relationto 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 indefault shall be guilty of an offence against this Act.

Penalty: Two thousand ringgit.

89. Classes of shares(1) For the purposes of this Act, shares are in the sameclass if the rights attached to them are identical in allrespects.

(2) Notwithstanding subsection (1), the rights attached toshares are not to be regarded as different from those

attached to other shares in the same class only becausethey do not carry the same rights to dividends in thetwelve months immediately following their allotment.


90. Description of shares of different classes(1) A company that has different classes of shares shall, inits constitution, state prominently the following(a) that the companys share capital is divided intodifferent classes of shares; and(b) the voting rights attached to shares in each class.

(2) If a company has a class of shares the holders ofwhich are not entitled to vote at general meetings of thecompany(a) the descriptive title of shares in the class shall includethe words ! nonvoting"; and(b) the company shall ensure that those words appearlegibly on any share certificate, prospectus or directorsreport issued by the company.

(3) Subsection (2) does not apply to shares that aredescribed as preference shares.

(4) No company shall allot any preference shares or

convert any issued shares into preference shares unlessprovided in its constitution.

(5) Notwithstanding subsection (4), a company may allotany preference shares or convert any issued shares intopreference shares if the rights of the holders of thoseshares with respect to repayment of capital, participationin surplus assets and profits, cumulative or non-cumulative dividends, voting, and priority of payment of



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COMPANIES BILL COMPANIES ACT 1965capital and dividend in relation to other shares or otherclasses of preference shares are set out in theconstitution.

(6) If a company contravenes this section, the company,

and every responsible person of the company, commitsan offence, and each is liable to a fine of five hundredringgit and, in the case of a continuing offence, to afurther fine of ten thousand ringgit for each day duringwhich the offence continues.

91. Variation of class rights(1) Rights attached to shares in a class of shares in acompany may be varied only(a) in accordance with provisions in the constitution forthe variation of those rights; or(b) if there are no such provisions, with the consent of

holders of shares in that class given in accordance withthis section.

(2) Subsection (1) is without prejudice to any otherrestrictions on the variation of the rights.

(3) For the purposes of paragraph (1)(b), the consent ofholders required for the purposes of this section is(a) written consent representing at least seventy five percentum of the total voting rights of holders of shares inthe class; or(b) a special resolution passed at a separate generalmeeting of holders of shares in the class sanctioning thevariation.

(4) A variation of class rights takes effect(a) if no application is made under section 93 for it to bedisallowed, at the end of the period in which applicationsmay be made under that section; or(b) if an application is made within that period, at thetime the application is finally determined, unless thevariation is disallowed.

(5) The issue by a company of preference shares rankingpari passu with existing preference shares issued by the

company shall be deemed to be a variation of the rightsattached to those existing preference shares unless theissue of the first-mentioned shares was authorized by theterms of issue of the existing preference shares or by theconstitution of the company in force at the time theexisting preference shares were issued.



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COMPANIES BILL COMPANIES ACT 196592. Notifying class members of variation(1) If the rights attached to shares in any class of shares ina company are varied, the company shall give writtennotice of the variation to each holder of shares in thatclass within fourteen days after the date on which the

variation is made.

(2) If a company contravenes this section, the company,and every responsible person of the company, commitsan offence and shall, on conviction, be liable to a finenot exceeding five hundred thousand ringgit and, in thecase of a continuing offence, to a further fine notexceeding ten thousand ringgit for each day during whichthe offence continues after conviction.


93. Disallowance or confirmation of variation by Court(1) If the rights attached to shares in any class of shares ina company are varied, holders representing at least ten

per centum of the total voting rights of shareholders in theclass may apply to the Court to have the variationdisallowed.

(2) The variation shall not have effect until confirmed bythe Court.

(3) An application shall be made within thirty days afterthe date on which the variation is made.

(4) An application may be made on behalf of theshareholders entitled to apply under subsection (1) by anyshareholders appointed in writing by all suchshareholders.

(5) The following persons are entitled to be heard on anapplication(a) the applicant; or(b) any other person who appears to the Court to beinterested in the application.

(6) The Court shall, upon hearing of the applicationmade under subsection (1), make the following order(a) if the Court is satisfied that the variation would unfairlyprejudice the shareholders represented by the applicant,

disallow the variation; or (b) if the Court is satisfied thatthe variation would not unfairly prejudice theshareholders, confirm the variation.


94. Delivery of order of Court to Registrar(1) The company shall lodge a copy of the order to theRegistrar within twenty one days after the making of theorder by the Court.



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COMPANIES BILL COMPANIES ACT 1965(2) If a company contravenes this section, the company,and every responsible person of the company, commitsan offence and shall, on conviction, be liable to a finenot exceeding five thousand ringgit and, in the case of acontinuing offence, to a further fine not exceeding five

hundred ringgit for each day during which the offencecontinues after conviction.

95. Notifying Registrar of variation(1) If the rights attached to shares in any class of shares ina company are varied, the company shall lodge to theRegistrar, within thirty days after the date on which thevariation takes effect(a) a copy of the resolution or other document thatauthorized the variation; and(b) a notice as may be determined by the Registrarincluding a statement of capital, as at the date on which

the variation takes effect.(2) Subsection (1)(a) does not apply if the company isrequired to lodge a copy of the resolution or otherdocument to the Registrar under another provision of this

Act.(3) If a company contravenes this section, the companyand every officer who is in default commit an offence andshall, on conviction, be liable to a fine not exceeding tenthousand ringgit and, in the case of a continuing offence,to a further fine not exceeding five hundred ringgit foreach day during which the offence continues afterconviction.


96. Variation includes abrogation(1) A reference to a variation of class rights under thisDivision or the companys constitution includes anabrogation of those rights.(2) This section shall not operate so as to limit orderogate from the rights of any person to obtain reliefunder any remedy in cases of oppression.



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COMPANIES BILL COMPANIES ACT 1965SUBDIVISION 3SOLVENCY STATEMENT

Solvency test

111. (1) For the purposes of provisions relating toredemption of preference shares, financial assistance andreduction of share capital, a company satisfies thesolvency test in relation to a transaction if(a) immediately after the transaction there will be noground on which the company could be found to beunable to pay its debts;(b) either(i) it is intended to commence the winding up of thecompany within twelve months after the date of thetransaction, the company will be able to pay its debts infull within twelve months after the commencement of thewinding up; or

(ii) in any other case, the company will be able to pay itsdebts as they become due during the period of twelvemonths immediately following the date of the transaction;and(c) the asset of the company is more than the liability ofthe company at the date of the transaction.

(2) For the purpose of share buy-back, a companysatisfies the solvency test in relation to a transaction if theshare buy back would not result in the company beinginsolvent or its capital being impaired at the date of thesolvency statement

(3) For the purposes of subsection (2)(a) a company shall be deemed to be solvent if it is ableto continue to meet its obligations as and when theybecome due without any substantial disposition of itsassets outside the ordinary course of its business,restructuring its debts, externally forced revisions of itsoperations or other similar actions;(b) the capital of a company shall be deemed to beimpaired when the value of its assets is less than theaggregate amount of all the shares of the company afterthe share buy back.

Solvency statement

112. (1) A solvency statement in relation to a transactionis a statement that each of the directors making it hasformed the

draft companies bill 2013 comparison with companies act 1965

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