The new Companies Bill will transform Malaysia's corporate landscape. It will support start-ups and entrepreneurship, simplify compliance, reduce the cost of doing business, strengthen and enhance internal control, corporate governance and corporate responsibility.
Malaysia is taking steps to transform itself into a nation of high-incomes and quality growth by 2020. The New Economic Model and the Economic Transformation Programme provided the economic framework to significantly increase productivity, innovation and creativity, leading to a more favourable investment environment and increased business opportunities. Following on from these major policies, the Dewan Rakyat recently passed the Companies Bill, which is expected to come into force at the end of 2016.
The new Bill has the full support of the Companies Commission of Malaysia (CCM) as it is in line with the CCM's goal to ensure that the corporate law framework maintains its edge in attracting foreign and domestic investments and expanding entrepreneurship. The commission also aims to ease and cheapen the cost of doing business in Malaysia, whilst giving strong emphasis on corporate governance. Hence, it is anticipated that in the upcoming months, the CCM will release new regulations under the Companies Bill for public consultation.
The strengthening of corporate governance practices is key in attracting private sector investments into the country. A 2015 study by ACCA and KPMG showed that Malaysia is leading other developing nations in this area.
This has been achieved by regulations and policies being developed in recent years specifically designed to improve corporate governance. For example, the Malaysian Code on Corporate Governance 2012 (MCCG 2012) is targeted at companies listed on Bursa Malaysia. However, all Malaysian companies are encouraged to adopt the principles and recommendations of MCCG 2012 and make good corporate governance an integral part of their business dealings and culture.
Key changes introduced by the Companies Bill
The Companies Bill, which will replace the existing 50 year-old Companies Act 1965, will include many key changes including:
Easier Incorporation of Companies
The Bill will introduce the ability for a single person to incorporate a company. That same person can be both the sole shareholder and sole director. This will make incorporating a company more attractive for businesses and entrepreneurs. A single individual can have complete control of...