Company Law Reform in Malaysia: A red herring? (PART 2)

"In our previous post, we brought you the first part of an article from our legal department entitled ‘Company Law Reform in Malaysia: A Red Herring?’ We now continue with the second part of the critical analysis of the New Malaysian Companies (Amendment) Act 2007 that was supposed to address the problems in the Companies Act 1965, or does it?"

Allow me to take you on a tour to find the red herring.
In the new section 131B, subsection (1) uses the word “must” in respect of business and affairs of a company. The section requires a company to be managed by the board of directors. However, the powers of the company director may be qualified by the company’s constitution, as provided in subsection (2) of the same section. Therefore, in theory at least, the company must be managed by the board, but the Act or articles can also validly take away all or a substantial portion of their powers. So is this where the red herring lie? This section apparently recognises the role of the board of directors, but does it really confer rights onto the directors?

A new section 132 (1F) was introduced in the Act which allows for the delegation of directors duties to a delegate or committee who may act in the directors’ capacity. The directors are, however bound by the actions of the delegatee and will be liable for acts and/or omissions of the latter. However, two defenses are afforded to the directors who delegate their duties. In section 132(1G)(a), it states that if the directors believed on reasonable grounds that the delegatee would exercise his powers in conformity with the mandate provided by the directors and the company’s constitution, the directors would not be held responsible. This section is, however silent in terms on the state of knowledge of the delegate and it therefore, raises some interesting questions. Must the directors be aware of the company’s constitution and does the delegatee have a duty to inform/ procure in writing his mandate and/or the constitution of the company? Does the delegatee have a duty to inquire further about the boundaries of the company’s constitution, so as to avoid acting ultra vires? These sections may seem to have conferred powers onto the directors to delegate their duties, however it is humbly submitted that it is of low practicality as the responsibility may be too vague to be of any benefit. May this be another red herring?

In section 132(1G)(b), it is a 3-prong test where, the directors have to believe on (1) reasonable grounds, (2) good faith and after making a (3) proper enquiry to ensure that the delegate was reliable and competent enough to perform the duties delegated to them. A burning question that begs answering is that, if the directors themselves lack knowledge about a particular delegated task, what then is the standard to determine the reliability and competency of the delegate? Is it based on the extent of knowledge of the director about the task delegated or based on his mere evaluation of the knowledge of the delagatee?

These questions and inconsistencies may only be solved by cases decided in courts by learned judges and the eloquent arguments by counsels attempting to make sense of these provisions, as it may seem that the new amendments in the Act may be insufficient to address the problems in the Malaysian Company Law. Only then we may capture the ever elusive red herring.

For more information or questions about Legal Matters please don't hesitate to contact us:  

EUROGAIN Group

Legal Department

Call: 603-9100 1050

Email:  andrew.wong@eurogain.com.my

Contact: Andrew Wong, Kevin Kiew, Dennis De Witt or Felicia Lee

Company Law Reform in Malaysia: A red herring? (PART 1)

Long has many awaited for a new and improved Companies Act here in Malaysia, however there were only piecemeal and sporadic amendments made to the old Companies Act 1965, which was based upon the ancient English Companies Act of 1940, left much to be desired. With the passing of the new Companies (amendment) Act 2007 (W.E.F. 15th of August 2007), questions that beg answering are, who are the amendments made for? Is it, prima facie, just to make it “seem” as though our Company Law is going places, but in truth it’s just a dog after its own tail?

Although intentions may be genuine, legislators and professional bodies who play an active role on advisory still seem to fail to address many potholes and shortcomings of the old Companies Act 1965. To paraphrase Section 172 of the UK’s Companies Act 2006, it states that the Directors acting in good faith owe their duty to promote the success of the company for the benefit of its members and must have “regard” to other stakeholders (ie. employees, creditors, environment etc.). For Malaysia, we have no equivalent of Section 172, which compels directors to at least consider their duties to the company’s stakeholders, and at the least, entrenches their “quasi-rights” therein.

Mohammad Rizal Salim noted that “director’s duties to creditors are underdeveloped and inadequate”, although we can say that with regards to secured creditors in general, the directors themselves have to personally undertake to secure the credit. For employees, they are inadequately protected by Company Law, since there are no entrenchments of their rights in the Companies (Amendment) Act 2007, however there are other forums for them to voice their dissatisfaction such as via the Employment Act 1955. Public stakeholders such as NGO’s, Environmental watchdogs and societies affected by acts of companies, however, are not so fortunate. They are at the mercy of these companies due to the lack of enforceability of their rights against such companies who have flaunted and continue to flaunt the law due to lack of enforcement imposed by the government and relevant authorities.

However, as of all pieces of legislation, it is humbly opined that there are 2 purposes of law. Firstly to recognise the existence of whoever or whatever it is legislated for, or confers “quasi-rights” ie. It looks like a right, but in actual fact, not. Secondly, is legislation that genuinely entrenches rights, that gives rise to a cause of action, ie. It is actionable upon. The former is therefore known as the red-herring of the law.

For more information or questions about Legal Matters please don't hesitate to contact us:  

EUROGAIN Group

Legal Department

Call: 603-9100 1050

Email:  andrew.wong@eurogain.com.my

Contact: Andrew Wong, Kevin Kiew, Dennis De Witt or Felicia Lee

Seminar: The do’s and don’ts by the Registrar of Societies and how to keep your records for non-profit organizations most practical

Tuesday, 12th of July 2011- Eurogain TRE Ventures Sdn. Bhd. organised a seminar for non-profit organizations at Hotel Midah, Kuala Lumpur. The seminar started off with a welcome note from Mr. Dennis de Witt, Head of the Secretarial Department and Vice President of Eurogain. He welcomed the visitors and introduced the first speakers, Puan Norhayatee and Ms. Tan Poh Ling.

Puan Hayatee was the former director of the Register of Societies in the Federal Territory. Her past experiences include the areas of governmental procurement, administration and human resource development. She was also previously in the Ministry of Culture, Arts and Tourism, and received an award of excellence in 2008.

Puan Hayatee gave a very animated and informative talk on the do's and don'ts of an association that is governed by the Registrar of Societies. She provided a lot of practical and useful information for the attendees to use in their non-profit organizations.

There was a very informal atmosphere during the talk and the attendees were able to ask many questions and obtain precise and practical answers to all their questions.

The second talk was conducted by Ms. Tan Poh Ling, the Founder and Managing Partner of TPL & Associates, a Chartered Accounting firm in Kuala Lumpur.

Ms. Tan possesses about 22 years of experience in fields of audit, financial management and tax compliance for corporations and individuals. She was previously attached with one of the big-five accounting firms in the audit division where she obtained her Chartered Accountants' qualification.

Ms. Tan Poh Ling's presentation was about how to keep accurate and practical records, especially for non-profit organizations. The presentation gave the attendees a clear idea on how to provide for accurate financial record-keeping, income tax implications, as well as other matters related to accounts. During the presentation there were many examples given by the presenter so that everybody would have a clear idea on the proper accounting entries.

The event ended with a question and answer session and a note of thanks to the two speakers.

The attendees were very enthusiastic about the seminar and even requested a second part to be conducted so that more people could learn more about the legal requirements of a non-profit organisation that is governed by the Registrar of Societies, especially since there is little information available to the public on this interesting topic.

From this positive feedback, Eurogain has decided to conduct a follow-up event with a similar topic in the near future. Please keep track of our Facebook page for further details to come soon.

For more information about our services, please don’t hesitate to contact us:

EUROGAIN Group

Call: 603-9100 1050
Email:  info@eurogain.com.my
Contact: Kevin Kiew, Dennis De Witt or Felicia Lee

Participation in the BBX fair, 25 July 2011

On Saturday the 25^th of July 2011, BBX organised their first members fair at the PJ Trade Centre in Damansara Perdana. This fair gave the opportunity for businesses to sell and promote their products and services. With over 30 booths, members were able to sell and buy their product using BBX points.

More than 50 people visited the fair. The biggest part of the visitors was business people who came with their families. For the children special activities were organised and a clown was there to entertain them. Eurogain took up a booth at the fair and took active part in promoting our services. 

The fair started off with three different talks. The first talk was given by LK Tan from Perigagah Sdn. Bhd. His topic was about Refinancing. The second talk was given by our CEO, Mr. Kevin Kiew, who spoke about outsourcing. The last speaker was by Tan Poh Ling, Eurogain TRE ventures, about Tax. After the talks, active trading good began.  

The organisers planed for each member who attended this fair to visit every stand of each company to collect the business stamp of the company. Those stamps were collected in a "passport" and those who completed their passport were awarded BBX points that could be spent at the fair.

The fair was concluded with an auction and the revenue raised from this auction will be donated for charity.

Our participation in the event was a great success. To share an impression about this day Eurogain created two small movies.
Video BBX talk
Video BBX fair
 
For more information about our services offered by BBX points, please don’t hesitate to contact us:

 

EUROGAIN Group

Call: 603-9100 1050

Email:  info@eurogain.com.my

Contact: Kevin Kiew, Dennis De Witt or Felicia Lee

The advantage of using barter exchange

"No matter what you have as an asset, nor what your wants or needs are, someone, somewhere needs what you have or has what you want and is willing to trade for it."

Barter exchange has several great advantages for you as a business owner. It creates possibilities which are not achievable without this service. Eurogain uses BBX barter exchange and we would like to share the top 7 of reasons to use barter exchange. This is so that you can benefit from it as well!

BARTER INCREASES SALES
Barter Exchange markets your company to other businesses who are members. Your company will secure incremental sales because of the demand of the buyers looking for barter opportunities from within the trade network. Businesses trade so that they can purchase what they need or want, and pay for it with the additional sales of their own product or service.

BARTER MEANS NEW CASH SALES

The number one source of advertising for small businesses is "word of mouth." If you do a good job for a Barter Exchange client, they'll refer their cash-paying friends, clients, family and associates to you. Growing your business will always be tied directly to referrals from your happy customers. Additionally, barter revenue can be used for radio, television, print, direct mail, online campaigns and other methods of advertising to attract more cash customers and build your corporate awareness.

BARTER IMPROVES CASH FLOW
There are two main ways to increase cash flow - by increasing sales and reducing costs. Barter does both! Barter allows you to pay for what you need with what you have. When you re-roof your building, surface your parking lot, paint your offices or buy office furniture/equipment with Barter Points, you can use your cash to cover other important costs. When you purchase something using Barter Points, it will be paid for with new sales - sales that would likely not have happened without Barter Exchange.

BARTER PROVIDES A COMPETITIVE EDGE
Barter Exchange participants patronize your establishment over the competition because your barter affiliation is an incentive to do business with you. Barter attracts new customers to your business, without affecting the existing cash sales already being generated by your company.

BARTER MEANS WHOLESALE BUYING POWER
With barter, the real cost of the products you purchase on trade is actually the wholesale cost of your Barter Points earned. Making sales with built-in profits makes the cost of your purchases more economical on trade. When you join Barter Exchange, you open the door to a new, cash-free way of handling every day business and personal expenses.

BARTER CAN HELP COLLECT RECEIVABLES
A small business might find it hard to pay you in cash but would be glad to fulfil their obligation in product or services. Barter exchange can offer these goods and services and credit your account for the balance you were owed. Your uncollectable just became revenue that can be spent on a number of your business needs.

BARTER IS A GREAT WAY TO OFFER EMPLOYEES INCENTIVES
Do you offer your employees dental coverage? By using our member Dentists, you can provide a hugely appreciated benefit to employees without having to pay cash for it. Barter is also a great way to offer contest prizes, bonuses, wellness programs and tickets - all accessible to you without using cash and all based on the incremental business the Barter Exchange has brought you.

These are a few reasons for Eurogain to use barter exchange.

At Eurogain, we provide all our Company secretary services in 100% barter points. Are you looking for the assistance of a company secretary?

We welcome fellow BBX members who wish to take advantage of this offer to utilise their BBX credit points.

For more information please contact us:

EUROGAIN Group

Call: 603-9100 1050

Email:  info@eurogain.com.my

Contact: Kevin Kiew, Dennis De Witt or Felicia Lee

Barter exchange services

‘The buyer and seller determine the pricing of the goods and services.’

Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. ‘One person’s trash can be another’s treasure’ is a saying and it is proven by the barter exchange service. Many of us have things we just can’t sell for cash and too often we have to settle for less than its value. For these cases, the barter exchange service is excellent.

Modern trade and barter developed into a sophisticated tool that can sometimes help businesses increase their efficiencies by monetizing their unused capacities and excess inventories. The worldwide organized barter exchange and trade industry has grown to an $8 billion a year industry and is used by thousands of businesses.

One of these barter exchange services is BBX International, founded in 1993 by Touma. It has operations in Australia, India, Costa Rica, Taiwan, Singapore, New Zealand and Malaysia. The barter trading platform functions as a credit and debit card system that allows businesses to access a variety of goods and services in a less competitive market place. The buyer and seller determine the pricing of the goods and services.

BBX allows buyers and sellers to gain exposure to a new and confined market, reduce any inactive capacity in their business (excess stock), improve profitability of the business trough extra sales as well as lower cost purchasing and increase turnover and market share trough incremental sales.

An example is: what if you are the owner of a restaurant and a every meal service you have an average of 10 tables that don’t produce revenue. By advertising you will accept BBX credit payments for dining. New barter business will fill those empty tables with customers you have never done business with, and provide you with TCredit dollars to offset your cash expenses.

What’s the actual cost of accepting TCredit dollars for your meals instead of cash? Let’s say your cost to deliver a meal is RM60. By serving added new customers at the tables that would have gone empty and produces no income, your sales to BBX members generate RM1,000 in TCredit. You use RM1,000 in TCredit income for much needed repairs that you would normally paid for with Cash. The bottom line is that your RM1,000 in repairs had an actual cost of RM600 and you realized an actual RM400 hard cash savings!

Because of these advantages Eurogain makes use of the barter service. We offer our company secretary service trough BBX where our fees may be paid trough 100% barter points. For more information about this or barter services please don’t hesitate to contact us:

 

EUROGAIN Group

Call: 603-9100 1050

Email:  info@eurogain.com.my

Contact: Kevin Kiew, Dennis De Witt or Felicia Lee

The Company Secretary

“A company secretary is there to see to all the legal formalities of your company so you can focus on your businesses.”

Every company in Malaysia is required by the Companies Act 1965 to have at least one qualified Company Secretary. A Company Secretary is a professional whose role in a company is that of an advisor for legal matters and he/she is a very important member of the company's management to handle all official paperwork, statutory documents and procedural matters in the running of the company as required by the Companies Act and all other applicable laws.

Most small & medium enterprises (SMEs) engage the services of an external Company Secretary from a professional secretarial firm so as to enjoy cost savings and at the same time, to maximise the expertise offered by the experienced Company Secretary.

If you want to incorporate a private limited company in Malaysia, the Company Secretary will be the right person to assist you.

Before you begin the incorporation process, you will need to choose a name for your company. Once the name has been approved, the Company Secretary will assist you to draft out the company’s memorandum and articles of association and to prepare the other pre-incorporation documents and forms.

If it is your intention to take over a business, the Company Secretary will play an instrumental role in preparing the necessary for the change of the target company’s ownership and to offer related legal advice on the process.

During the course of your company’s business, the Company Secretary will also be assisting in the preparation and submission of statutory returns of the Company as required by the Companies Act 1965, arranging for the company’s board and general meetings and the preparation of the minutes of meetings. The Company Secretary will assist to prepare resolutions in accordance to the powers given under the provisions of the Memorandum & Articles of Association, give advice on Company Secretarial matters and to perform other related secretarial duties as may be required from time to time.

In short, a Company Secretary is there to see to all the legal formalities of your company so you can focus on your business.

At Eurogain, we have two highly experienced Company Secretaries to advise you and a highly competent and experienced team in our secretarial department to assist in producing all the required corporate documents for the directors and shareholders.

Eurogain is also a member of BBX Malaysia and we offer incorporation and secretarial services where our fees may be 100% paid using BBX credit points. BBX offers a cashless trading system that allows local small businesses to trade goods and services worldwide. Therefore, we also welcome fellow BBX members who wish to take advantage of this offer to utilise their BBX credit points.

Are you looking for the assistance of a company secretary? Please don’t hesitate to contact us:

EUROGAIN Group

Call: 603-9100 1050

Email:  info@eurogain.com.my

Contact: Kevin Kiew, Dennis De Witt or Felicia Lee