Wednesday 31 July 2013

Malaysia: Company law reform - draft Companies Bill published

The Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) has published for consultation a draft Companies Bill: see here (pdf). The Bill, once enacted, will replace the Companies Act 1965. Amongst other things, the Bill will require company directors to be at least 18 years of age; corporate directors will not be permitted (section 195). A mechanism for bringing a derivative action on the company's behalf is included (sections 347-352). Shares will no longer have a par or nominal value (section 72).

Section 211 contains the director's duty to exercise powers in good faith as well as the duty to exercise reasonable care, skill and diligence. Breaches of these duties may result in a fine or imprisonment. Section 209 provides that "... director includes chief executive officer, chief financial officer, chief operating officer or any other person primarily responsible for the management of the company.". This definition raises several questions. Would it include a non-executive director? Is it appropriate to define 'director' with reference to specific roles/titles?

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