Malaysian Companies Act 2016 – Changes and Modifications

The Malaysian companies act 1965 was very famous. It is through this act that the companies in Malaysia followed the prior rules and regulations. Then it is known that the companies act changed from 1965 to 2016. The companies act has been newly formed from 1965 to 2016.

The Malaysian Companies Act 2016 came into function after 31st January 2017. But there are certain sections under the act which has not come into operation yet. The companies act 2016 mainly focuses on; company secretary registration, registration of companies and corporate rescue mechanism. As of 2017 end and currently the companies in Malaysia is functioned according to the 2016 companies act.


As per the new companies act 2016 there are certain changes and reformed rules and regulation. The following are the important changes in this companies act.

According to the 2016 companies act section 9(b). It is stated that the company is required to have at least 1 or more members. The provision as per the companies’ act will only be allowed for 1 member.

The types of companies are as follows;

  • Limited and unlimited liability companies.
  • Public and private companies.


As per section 10(1) companies act 2016 it is stated that the company functioned has to be as follows;

The company members are limited with the unpaid amount of shares.

Company members liability is limited according to their agreed amount.

There is no limited placed on the liability of a member of an unlimited company.

As per section 25(1) to find the difference of an unlimited company the names unlimited is required to be in the ending. Every company names has to be eneded with ‘Sendirian’ or also shortly ‘Sdn’.


A company can either be a private or a public company.

In order to have a private company, a company is required some of the orders of 2016 companies act. They are as follows;

  • The company is limited by shares (s42(1)).
  • The company is required to not to have more than 50 shareholders (s42(1)).
  • There are restrictions for the transfer of shares (s42(2)).

There is no offer for shares or debentures to the public (s43(1). This was also present in the 1965 companies act.

There is no invitation for public to deposit money with the company (s43(1))

As per (s25(1)) mandates that the name of private company requires to be ended in ‘Sendirian Berhad’ or short form ‘Sdn Bhd’.

As for the case of public company it must end in ‘Berhad’ or ‘Bhd’. A public company may or may not have an extra character on a private company.

Minimum number of residential directors in a private company is 1. For public it is required to have 2 residential directors.

As per (s290) it is only stated that a private company can only pass a written resolution.

As per (s390) only the public company has the authority to place an annual general meeting.

As per (s255) there are few categories of private companies which do not have the audited accounts.


According to the 2016 companies act section 15. The following are the steps of company formation;

  • Pre-incorporation contract.
  • Publication of company name.
  • Company constitution.
  • Company’s objects.

Share capital:

  • Authority of shares
  • Classes of shares
  • Capital maintenance
  • Share certificate.
  • Transfer of shares.


  • Number of directors.
  • Service contracts.
  • Directors fees and benefits.
  • Directors indemnity.
  • Non-cash asset of directors and shareholder.

Related Article: Hiring a Nominee Director in Malaysia

Company secretary:

  • Citizenship and residency.
  • Removal and resignation.
  • Company accounts.
  • Auditor.

Related Article: Duties of company secretary in Malaysia

Company meetings:

  • Annual general meeting.
  • Notice of meeting.
  • Venue.
  • Proxy.
  • Resolutions.
  • Corporate restructuring.

Liquidation of companies:

  • Commencement.
  • Not able to pay.
  • Secured creditor.

The companies act 2016 is the updated version of 1956 companies act in Malaysia. The Malaysian Act 2016 has a lot of sections. Each section gives a brief explanation of the rules and regulations which needs to be followed by each and every company in Malaysia. The country has decided to update the companies act from 1956 to 2016. Since there are continuously new arising businesses in Malaysia, the corporate law of Malaysia has decided to update the law.

Malaysia is a strict country when it comes to following the law. For those who do not know to oblige the law shall be severely punished. The 2016 companies act has made it simple there is no complications in it. It is easy to understand the rules and regulations. It is important for every company in Malaysia to follow the steps of the new Malaysian companies act 2016.


Company Registration Expert Since 2012