A Consultative Document on Review of Provisions Regulating Substantial Property Transactions, Disclosure Obligations and Loans to Directors
This Consultation Document is a result of the collaboration between Working Groups B and C of the Corporate Law Reform Committee (CLRC) on issues pertaining to substantial property transactions with related parties. The purpose of this Consultation Document was to ascertain the continued relevance of the current regulations, to improve the current regulation where necessary, to provide clarity to the law and to ensure that the minority shareholders have sufficient protection under the law.
In 1999, the High Level Finance Committee released its Report on Corporate Governance. In this report, it was highlighted that steps needed to be taken to check abuses by controlling shareholders in relation with related party transactions, steps to achieve greater transparency of ownership and measures to enhance and raise standards of disclosure and protect creditors’ rights.
The main areas of review covered by this Consultation Document are, the need to formulate statutory provisions for substantial property transactions with related parties, the need to define what constitutes ‘persons connected to directors’, the requirement for shareholders to obtain approval, defining what constitutes ‘substantial non-cash asset’, the effect of any arrangement or transaction entered into without the approval of the shareholders, clear demarcation of what are the exceptions to the substantial property transactions, reviewing section 132C of the Companies Act 1965, reviewing loans to directors and persons connected to directors under sections 133 and 133A of the Companies Act 1965, reviewing the requirements under section 131 of the Companies Act 1965 and the rule of disclosure by a shareholder.
We hope to receive views and comments on the recommendations stated in this Consultation Paper. Please reply to Nor Azimah Abdul Aziz of the Companies Commission of Malaysia (SSM) before 29 August 2007.
Download “A Consultative Document on Review of Provisions Regulating Substantial Property Transactions, Disclosure Obligations and Loans to Directors” (.pdf)