The application of the companies act 2016 to minority shareholders in private companies in Malaysia
The Companies Act 2016 (CA 2016) introduces novel laws affecting minority shareholders in private companies who are neither involved in its management nor on its board of directors. The law on shareholders' meetings is changed by the absence of annual general meeting and the passing of resoluti...
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| Format: | Thesis |
| Language: | eng eng eng |
| Published: |
2018
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| Online Access: | https://etd.uum.edu.my/9202/1/s821730_01.pdf https://etd.uum.edu.my/9202/2/s821730_02.pdf https://etd.uum.edu.my/9202/3/s821730_references.docx |
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| Summary: | The Companies Act 2016 (CA 2016) introduces novel laws affecting minority shareholders in private companies who are neither involved in its management nor on its board of directors. The law on shareholders' meetings is changed by the absence of annual general meeting and the passing of resolution by a written resolution procedure without holding a meeting. The CA 2016 also introduces a new corporate governance system which is confusing and a stricter rule for payment of dividends. The purpose of this study is to examine the effects of the changes, in the law on shareholders' meetings, corporate governance system and the dividend rule, on the minority shareholders in private companies. The methodology employed is library-based research that relates to those areas of law under the CA 2016 by comparing it with similar laws in the Commonwealth countries and the Companies Act 1965 (CA 1965). It reveals that, on the corporate governance system, the CA 2016 has opted for internal management rules known as Replaceable Rules, governing the relationship between shareholders and directors, which are located all over the Act without any guidance to identify them, which is a clear disadvantage to the minority shareholders in knowing their rights as compared to Table A under the CA 1965. The novel laws on meetings provide for 'written resolution' procedures enabling resolutions to be passed without a meeting so long as the requisite number of members have agreed to it, which allows for possible abuse by the controlling shareholders in passing a resolution without any debate. Another novel law dispenses with the requirement of annual general meeting (AGM), thus, disregarding its importance as an accountability mechanism by the directors to the shareholders. Finally, payment of dividends are hampered by the rules which relied on undefined terms such as 'profits' and 'debts due'; and outdated common law case decisions. It is recommended that a table to identify the internal management rules be provided; safeguards be in place for the novel laws of written
resolution' and absence of AGM; terms in the dividend rule be defined and the reversal of outdated common law decisions. |
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