Companies
201
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.
*NOTE--Previously "six months or one thousand ringgit"see Companies (Amendment) Act 1986
[Act A657].
Laws of Malaysia
202
ACT 125
(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 liquidator
or 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
Companies
203
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 companythat 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 companythat 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
Laws of Malaysia
204
ACT 125
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.
*NOTE--Previously "one years or two thousand five hundred ringgit"see Companies (Amendment)
Act 1986 [Act A657].
Companies
205
(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.
*NOTE--Previously "one year or two thousand five hundred ringgit"see Companies (Amendment)
Act 1985 [Act A616].
Laws of Malaysia
206
ACT 125
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--
"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;
Companies
207
"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.
Laws of Malaysia
208
ACT 125
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).
Companies
209
(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.
Laws of Malaysia
210
ACT 125
(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.
Companies
211
(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 non-
cash 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
m a d e 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.
Laws of Malaysia
212
ACT 125
(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;
Companies
213
(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.
Laws of Malaysia
214
ACT 125
(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;
Companies
215
(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
c o m p a n y , 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
Laws of Malaysia
216
ACT 125
(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;
*NOTE--Previously "one thousand ringgit"see Companies (Amendment) Act 1985 [Act A616]
Companies
217
(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.
Register of directors' shareholdings, etc.
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;
Laws of Malaysia
218
ACT 125
(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.
Companies
219
(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.
Laws of Malaysia
220
ACT 125
(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;
Companies
221
(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
(c) in the case of a notice under paragraph (1)(d), within
fourteen days after--
(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.
Laws of Malaysia
222
ACT 125
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.
*NOTE--Previously "one year or two thousand five hundred ringgit"see Companies (Amendment)
Act 1986 [Act A657].
Companies
223
(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;
Laws of Malaysia
224
ACT 125
(c) any bona fide payment by way of damages for breach of
contract;
(d) any bona fide payment by way of pension or lump sum
p a y m e n t 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.
Companies
225
(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
o f 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.
Laws of Malaysia
226
ACT 125
(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
No person shall act as a secretary of a company unless --
139A.
(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
t h i s 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.
Companies
227
(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);
(c) he ceases to be a member of the body prescribed by the
Minister under section 139A; or
(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.
Laws of Malaysia