I. Introduction
After a long wait, the much-anticipated Companies Act 2016 has finally come into force on 31st January 2017 replacing the 1965 Act, which has been around for more than half a century. Incorporating new provisions and amendments, the whole Act has overhauled its content from a 374 sections’ Act to a 620 one.
This article aims to give a broad overview of the differences between the old act and the new act and its implications.
II. Differences in the New Act
A) Incorporation of Companies
A company’s incorporation creates a separate legal entity from the owner, in which a company is capable of suing and being sued under its own name. Furthermore, a company can be incorporated to have limited liability status, where the liability of each member or shareholder is limited. However, under the old act, a company needs at least a minimum of 2 directors and shareholders to be incorporated. [1]
Under the new Act, incorporation is made easier by allowing private companies to be incorporated with one individual, being the single shareholder and single director. [2] This means that a director can have complete control of the company while enjoying separate liability as compared to having to register as a sole proprietor. Furthermore, as evidence of registration under the Act, the issuance of a notice of registration will be the legal document replacing the Certificate of Incorporation. [3]
This article was written by Liew Yen Fern, a law student at the University of Malaya (Reviewed by Dr. Kalavathy a/p Maruthavanar) (Edited by Leeroy Ting Kah Sing)
[1] Section 16(7), Companies Act 1965, Act 125
[2] Section 9(d), Companies Act 2016, Act 777
[3] Section 15, Companies Act 2016, Act 777
[4] Section 18, Companies Act 1965, Act 125
[5] Section 29, Companies Act 1965, Act 125
[6] Section 31, Companies Act 2016, Act 777
[7] Section 32, Companies Act 2016, Act 777
[8] Section 34(c), Companies Act 2016, Act 777
[9] Section 290(1)(a), Companies Act 2016, Act 777
[10] Section 300(1), Companies Act 2016, Act 777
[11] Section 61, Companies Act 2016, Act 777
[12]Section 66(2), Companies Act 2016, Act 777
[13] Section 39, Companies Act 2016, Act 777
[14] Section 230, Companies Act 2016, Act 777
[15] Section 232, Companies Act 2016, Act 777
[16] Section 74, Companies Act 2016, Act 777
[17] Section 347(3), Companies Act 2016, Act 777
[18] Section 112, Companies Act 2016, Act 777
[19] Section 114, Companies Act 2016, Act 777
[20] Section 397, Companies Act 2016, Act 777
[21] Section 400(2), Companies Act 2016, Act 777
[22] Section 414(3)(a), Companies Act 2016, Act 777
[23] Section 420, Companies Act 2016, Act 777