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On Capital Maintenance Rules and Share Capital: Simplifying and Streamlining Provisions Applicable to Share​s


Introduction

This Consultation Paper focuses on the first stage of the review work that has been carried out by Working Group B of the Corporate Law Reform Committee (‘CLRC’) established by the Companies Commission Malaysia to review the Companies Act 1965.

The CLRC, whilst carrying out its current review and making its recommendations as reflected in this Consultation Paper, was guided by two key principles:

  • simplifying company operations with the objective of reducing compliance cost; and
  • promoting corporate governance.

With this in mind, the CLRC has proposed to abandon two key concepts that currently mould the rules regulating capital raising by companies. These are the concepts that:

  • shares issued must be issued with par or nominal value; and
  • companies must be registered with an authorised share capital clause.

The CLRC believes that its proposal to do away with par or nominal value of shares will, in addition to simplifying company operations, also promote corporate governance. This is because, as will be discussed in the accompanying Consultation Paper, company accounting will be simplified as ‘share premium accounts’ and ‘capital redemption reserves’ will be irrelevant. Hence, company accounting will become more transparent and easier to understand.

This Consultation Paper will, amongst other things, provide reasons for the CLRC’s recommendations and address some of the concerns that the public may have in respect of the CLRC’s recommendations.

The accompanying Consultation Paper is made up to two parts:-

  1. Part I of the Consultation Paper focuses on the proposals to abolish the requirement to issue shares with par/nominal value and the requirement to register a company limited by shares with an authorised share capital clause;
  2. Part II of the Consultation Paper focuses on the proposals to simplify and streamline other provisions that are applicable to shares.

We hope to receive views and comments on the recommendations stated in this Consultation Paper. Please reply to Nor Azimah Abdul Aziz at the Companies Commission of Malaysia (SSM) by 22 SEPTEMBER 2005.

Download consultation document “On Capital Maintenance Rules and Share Capital: Simplifying and Streamlining Provisions Applicable to Share” (.pdf)

Download “Responses On Capital Maintenance Rules and Share Capital: Simplifying and Streamlining Provisions Applicable to Share” (.pdf)



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