OCT 2022 – FEB 2023

CRG 660
Company Secretarial Practice

Topic 1:
1. Legal Framework for CSP
2. Forms of Business
Ownership MOHAMAD HAFIZ BIN HAJI ROSLI A.M. (M)
Lecturer
Faculty of Accountancy, UiTM Johor, Segamat Campus

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Begin everything with
Niat and Dua…..
DUA FOR STUDYING
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GROUP WHATSAPP (E)

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 Course Descriptions

Company Secretarial Practice is a course that will equip students with the
knowledge on the roles and functions of a company secretary. The position of a
company secretary is a statutory requirement under Section 235 of the
Companies Act 2016. The practice of company secretary ship in this course
extends to both the strategic and functional contents, in advising the board, in
leading teams in secretarial best practice, in ensuring compliance with law and
regulations, and in establishing efficient internal communication of board
decisions and external reporting. Therefore, company secretaries are the primary
source of advice on the conduct of business and this span from legal advice on
conflict of interest, through accounting advice on financial reports, to the
development of strategy and corporate planning.

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Who is Malaysia Company Secretary?

https://www.malaysiasecretary.com/

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 Chapter 1
THE LEGAL FRAMEWORK OF
CORPORATE
SECRETARYSHIP

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Learning Outcome
⚫ Laws and regulations affecting corporations
⚫ Guardian of the laws affecting corporations

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Guardians of the Laws
Affecting Corporations

⚫ Companies Commission of Malaysia

⚫ Securities Commission of Malaysia
⚫ Bursa Malaysia Securities Berhad
⚫ Bank Negara Malaysia

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Financial Reporting Environment in Malaysia

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Companies Commission of
Malaysia
⚫ Administers and enforces the Companies Act
2016, and all its subsidiary legislations
⚫ Submission of relevant documents to get
approval for incorporation of companies
⚫ Reports to the Ministry of Domestic Trade and
Consumer Affairs
⚫ Powers to inspect, investigate and compound
offences under the relevant Acts it administers.

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 Companies Commission of
Malaysia
Function
1. To ensure that the provisions of the Companies Commission of Malaysia Act and laws are
administered, enforced, given effect to, carried out and complied with;
2. To act as agent of the Government and provide services in administering, collecting and enforcing
payment of prescribed fees or any other charges under the laws administered;
3. To regulate matters relating to corporations, companies and businesses in relation to laws
administrated;
4. To encourage and promote proper conduct amongst directors, secretaries, managers and other
officers of a corporation, self-regulated corporations, companies, businesses, industry groups and
professional bodies in the corporate sector in order to ensure that all corporate and business
activities are conducted in accordance with established norms of good corporate governance;
5. To enhance and promote the supply of corporate information under any of the laws
administrated, and create and develop a facility whereby any corporate information received by
the Companies Commission may be analysed and supplied to the public;
6. To carry out research and commission studies on any matter relating to corporate and business
activities;
7. To advise the Minister generally on matters relating to corporate and business activities in
relation to the laws administered; and
8. To carry out all such activities and do all such things as are necessary or advantageous and proper
for the administration of the Companies Commission or for such other purpose as may be
directed by the Minister.
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https://www.ssm.com.my/Pages/Home.aspx

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Companies Commission of
Malaysia
⚫ The Companies Commission of
Malaysia (Suruhanjaya Syarikat Malaysia,
abbreviated SSM), is a statutory body formed
under an Act of Parliament that regulates
corporate and business affairs in Malaysia.

⚫ The SSM was formed in 2002 under

the Companies Commission of Malaysia Act
2001, assuming the functions of the Registrar
of Companies and Registry of Business
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Companies Commission of
Malaysia
⚫ The main purpose of SSM is to serve as an agency to
incorporate companies and register businesses as
well as to provide company and business information
to the public.

⚫ SSM launched e-Info Services to allow information on

companies and businesses obtainable via its website.

⚫ SSM handles monitoring and enforcement activities to

ensure compliance with business registration and
corporate legislation.
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Companies Commission of
Malaysia
⚫ In 2003, the SSM began a review of the Companies
Act 1965, with the aim of simplifying the process of
incorporation in Malaysia and reducing businesses'
costs of compliance with Malaysian corporate law.
⚫ Companies Act 1965 was eventually replaced
by Companies Act 2016 Major changes such as:
⚫ Only one director is needed to register the company as a
Company Limited by Shares instead of two,
⚫ Heavier penalties on directors who do not comply with the
Act,
⚫ Annual General Meeting (AGM) is no longer mandatory to
be held by private companies.

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Companies Commission of
Malaysia
Business owners may choose to incorporate
their business in the form corporation with SSM
under:
⚫ Sole proprietorship or

⚫ Partnership or

⚫ Limited Liability Partnership (LLP) or

⚫ Companies incorporated under the

Companies Act 2016

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https://www.sc.com.my/

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Securities Commission of
Malaysia
⚫ Central authority responsible for the regulation and
development of the securities and futures industries in
Malaysia
⚫ Established under the Securities Commission Act 1993
(Incorporating latest amendment – Act A1539/2017)
⚫ Reports to the Minister of Finance and tables its account
to Parliament annually
⚫ Broad powers to make rules, interpret rules, investigate
and enforce rules relating to the securities law
⚫ Regulates conduct of brokers, dealers, investment
advisors, the exchanges, public companies
⚫ Supervises and monitors the capital and futures markets

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Securities Commission of
Malaysia
Our areas of responsibilities include:
⚫ Developing the overall capital market and its
market segments such as the equity market,
bond and sukuk market, Islamic capital
market, fund management, derivatives and
other market-based platforms and services;
⚫ Facilitating innovation and digital services
through the capital market;
⚫ Creating avenues for a sustainable financing
ecosystem;
⚫ Ensuring proper conduct of all market
participants through our supervisory,
surveillance and enforcement work;
⚫ Championing good corporate governance
practices; and
⚫ Facilitating greater cross-border regulatory
co-operation and thought leadership.
The SC’s many regulatory functions include:
• Registering authority for prospectuses of
corporations other than unlisted recreational
clubs;
• Approving authority for corporate bond issues;
• Regulating all matters relating to securities and
futures contracts;
• Regulating the take-over and mergers of
companies;
• Regulating all matters relating to unit trust
schemes;
• Licensing and supervising all licensed persons;
• Supervising exchanges, clearing houses and
central depositories;
• Encouraging self-regulation; and
• Ensuring proper conduct of market institutions
and licensed persons.
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Securities Commission of Malaysia
Functions of the SC as stated in the Securities Commission Act
• To advise the Finance Minister on all matters relating to the capital market
• To regulate all matters relating to the capital market
• To ensure that the provisions of the securities laws are complied with
• To regulate the take-overs and mergers of companies
• To promote and regulate all matters relating to fund management, including unit trust and private
retirement schemes
• To consider and make recommendations for the reform of the securities laws
• To encourage and promote the development of the capital market in Malaysia including research and
training
• To encourage and promote self-regulation by professional associations or market institutions in the capital
market
• To license, register, authorise, approve and supervise all persons engaging in regulated activities or
providing capital market services as may be provided for under any securities law
• To promote and maintain the integrity of all licensed persons, registered persons, approved persons and
participants in the capital market
• To register or recognise all auditors of public interest entities or schedule funds, and to exercise oversight
over any person who prepares a report in relation to financial information of public interest entities or
schedule funds, in relation to capital market activities
• To promote confidence in the quality and reliability of audited financial statements in Malaysia, and to
promote and develop an effective and robust audit oversight framework in Malaysia
• To take all reasonable measures to monitor, mitigate and manage systemic risks arising from the capital
market
• To promote and regulate corporate governance and approved accounting standards of listed corporations;
and to set and approve standards for professional qualification for the capital market 22
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Bursa Malaysia Securities
Berhad
⚫ Exchange holding company approved under section 15
of the Capital Markets and Services Act 2007
⚫ Operates a trading, clearing, settlement and depository
services
⚫ Governed by Securities Commission
⚫ Objective: to maintain an efficient, secure and active
trading for investors
⚫ Empowered to govern the stock exchange, brokers and
companies through the Listing Requirements and
Practice Notes

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Bursa Malaysia Securities
Berhad
⚫ Bursa Malaysia is an exchange holding company incorporated in 1976 and
listed in 2005. One of the largest bourses in ASEAN, Bursa Malaysia helps
over 900 companies raise capital – whether through the Main Market for
established large-cap companies, the ACE Market for emerging companies
of all sizes, or the LEAP Market for up-and-coming SME companies.
⚫ Bursa Malaysia is one of the largest bourses in ASEAN. We operate and
regulate a fully integrated exchange offering a comprehensive range of
exchange-related facilities including listing, trading, clearing, settlement and
depository services.
⚫ As an inclusive marketplace, Bursa Malaysia provides easy access to many
investment products and services, connecting domestic and foreign market
participants to all types of opportunities to help them to expand or invest
with impact.
⚫ Bursa Malaysia’s diverse product range includes equities, derivatives,
offshore and Islamic assets as well as Exchange Traded Funds (ETFs),
Real Estate Investment Trusts (REITs) and Exchange Traded Bonds and
Sukuk (ETBS).
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https://www.bnm.gov.my/

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Bank Negara Malaysia
⚫ Bank Negara Malaysia (the Central Bank of Malaysia), is a statutory
body which started operations on 26 January 1959. Bank Negara
Malaysia is governed by the Central Bank of Malaysia Act
2009. Statutory body wholly owned by the Government of Malaysia
⚫ Bank Negara Malaysia, as the central bank for Malaysia, is
mandated to promote monetary stability and financial stability
conducive to the sustainable growth of the Malaysian economy.
⚫ Reports to the Minister of Finance
⚫ Objective: to safeguard monetary stability and maintaining a sound
financial system
⚫ Acts as a banker and adviser to the Government
⚫ Broad powers to develop, enhance and enforce rules relating to
financial institutions.

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Bank Negara Malaysia
⚫ Among the major roles of the Bank is the prudent conduct of monetary policy, which has
seen generally low and stable inflation for decades and thereby, preserving the
purchasing power of the ringgit. The Bank is also responsible for bringing about financial
system stability and fostering a sound and progressive financial sector. There is now in
place a well diversified, comprehensive and resilient financial sector, that is able to meet
the increasingly sophisticated needs of consumers and businesses, and which has
become a growth driver in the economy.
⚫ The Bank also plays a significant developmental role, including development of financial
system infrastructure with major emphasis placed on building the nation's efficient and
secured payment systems as well as the necessary institutions (including Securities
Commission, KLSE, now known as Bursa Malaysia and Credit Guarantee Corporation)
which are important towards building a comprehensive, robust and resilient financial
system.
⚫ The Bank actively promotes financial inclusion, which has led to improved access to
financial services for all economic sectors and segments of society, thereby supporting
balanced economic growth.
⚫ Other important roles of the Bank are being a banker and adviser to the Government,
playing an active role in advising on macroeconomic policies and managing the public
debt. It is also the sole authority in issuing currency as well as managing the country's
international reserves.

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 Chapter 2
FORMS OF BUSINESS
OWNERSHIP

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Learning Outcome
⚫ Form of Business Ownership
⚫ Form of ownership of businesses
⚫ Corporations incorporated pursuant to other
written laws
⚫ Comparing sole proprietor, partnership,
limited liability partnership and incorporated
company

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Form of ownership of
businesses
From the perspective of ownership, business
organisations can be classified into:
⚫ Sole proprietorship
⚫ Partnership
⚫ Limited Liability Partnership (LLP)
⚫ Companies incorporated under the Companies Act 2016
Corporations/bodies incorporated in pursuance to other
written law
⚫ Joint venture (This form of arrangement normally will
incorporate a company Sdn Bhd)

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Form of ownership of
businesses
CCM

REGISTRAR OF REGISTRAR OF
COMPANIES BUSINESSES
(ROC) (ROB)

Incorporation of Registration of a
companies sole proprietorship
and partnership firm

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Form of ownership of
businesses
​Before starting a business, you will need to consider the type of business entities that suit you best.
Here are the types of business entities that can be registered under SSM:

a) Sole Proprietorship / Partnership - Enacted under the Registration of Business Act 1956 (Act
197);
b) Private Limited Company (Private Company (Sdn. Bhd.) / Public Company (Berhad) - A business
incorporated under the Companies Act 2016 (Act 777); and
c) Limited Liability Partnerships - An alternative business entity under the Limited Liability
Partnership Act 2012 (Act 743) that combines the characteristics of private companies and
conventional partnerships.

For a foreigner, you may choose to:

(a) Incorporate a local company; or​​

(b) Register a foreign company.

Business entities that can be registered by foreigners in SSM include:

(a) Limited Liability ​Partnership (LLP); and
(b) Private Limited Company (Sdn. Bhd. or foreign company).

https://www.ssm.com.my/Pages/SSM-Business-Advisory.aspx

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Form of ownership of
businesses
Factors to consider in selecting the most appropriate form
of business ownership:
⚫ease of formation of business
⚫nature of the business

⚫impact of income taxes

⚫capital required

⚫business plan of the business

⚫personal interest of those involved

⚫inherent risks associated with the products of the firm

⚫specific type of business ownership preferred or required by the

customers/suppliers/regulatory bodies
⚫debt financing requirement

⚫licensing requirement

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Form of ownership of
businesses – Sole Proprietorship
⚫ Simplest and cheapest to register (approx.
RM70)
⚫ Only Malaysian or permanent resident can
register
⚫ Owned by a single person
⚫ Due to legal restrictions, all auditing and
advocate and solicitors firms are either
formed as sole proprietorship or partnership

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Form of ownership of
businesses
Sole Proprietor
Advantages Disadvantages
Easy to form No “separate legal entity” status
Owner is the ‘boss’ Owner personally liable for all debts
Compliance cost of running is low Upon his death, his estate is liable for
his debts
All assets of the firm belong to the Funds are limited to the resources of
owner and registered under the the owner and his capacity to borrow
personal name of the owner from external sources
All profits belong to the owner and
there is no restriction on how much he
wants to draw out from the firm

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Form of ownership of
businesses
Sole Proprietor
Advantages Disadvantages
No requirement to file accounts with Must still prepare financial statements
the CCM and this protects the sole for filing with Inland Revenue
proprietorship from public/competitors
scrutiny

No requirement to have accounts Liability to pay taxes are imposed on

audited the owner and not the firm
Not required to appoint a company
secretary
Ease of dissolving Firm is automatically dissolved upon
death, insanity or bankruptcy of the
owner
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Form of ownership of
businesses – Partnership
⚫ Two, but not more than 20 persons jointly carry on a
business with a view to share profits (does not apply to a
partnership firm of lawyers, doctors, dentists and accountants whose
professions are governed by specific statutes)
⚫ Only Malaysian and permanent residents
⚫ Partnership Agreement
- partners’ responsibility, powers, duties
- capital contribution
- profit sharing
- rights and liabilities

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Form of ownership of
businesses
Partnership
Advantages Disadvantages
Wider base of capital and human No “separate legal entity”
resource
Easy to form (RM60) Every partner is an agent of the firm
Compliance cost of running is low – The act of every partner in the normal
governed by Partnership Act 1961 course of business bind the firm and
his partners
All assets of the firm belong to the Every partner is liable for all debts
partnership and registered under the incurred while he is a partner, after his
personal or joint names of the partners death his estate is also severally liable
for such debt

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Form of ownership of
businesses
Partnership
Advantages
No requirement to file accounts with
the CCM and this protects the
partnership from public/competitors
scrutiny
No requirement to have accounts
audited
Not required to appoint a company
secretary
Disadvantages
Any wrongful act of any partner where
loss or injury is caused to any third
party or any penalty incurred, the firm
is liable to the same extent as the
partner so acting
Where a partner receiving money or
property of a third person and
misapplies it, the firm is liable to make
good the loss
A partner who retires from a firm does
not cease to be liable for partnership
debts incurred before his retirement
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Form of ownership of
businesses – Joint Venture (JV)

❖ A collaboration of 2 or more separate entities

with a view to share profits
❖ Some JV are formalised through the
incorporation of separate company jointly
undertaken by the joint venturers
❖ Some JV are collaboration between joint
venturers without any separate company.
❖ Unincorporated JV is not a separate legal entity

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Form of ownership of
businesses – Company
❖ Incorporated and governed by the Companies Act 2016
❖ The powers, purpose and objectives of the company are
defined under a constitution (if any), if not govern under
the act.
❖ The rules and regulations within the company, for e.g
rules of meetings, are spelt out in the Constitution
❖ Contributors to the capital of the company are called
“members”
– issue “shares” as acceptance of contribution
– rights to vote, dividend

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Form of ownership of
businesses – Company
❖ Managed by officers, including directors
❖ Minimum number of director is 1 (Public 2)
- board of directors
- appointed by members at general meetings
- control, manage and direct the company
❖ Required to appoint a secretary to assist the board
❖ Required to appoint an auditor to audit the books of the
company
❖ At least 1 members; 1 Director
❖ No maximum number (except for private company- max 50)
❖ Treated as an artificial legal person

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Form of ownership of
businesses
Company
Advantages Disadvantages
Insure that members of the company Expensive to incorporate a company
have limited financial risk
Company’s assets are not owned by Cost of compliance is very high
its members
Company’s liabilities are not owed by Complexity of the laws governing
the members in their personal corporations
capacity
Liability of members is limited by Required to file returns and accounts
shares periodically (except for exempt private
companies)

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Form of ownership of
businesses
Company
Advantages Disadvantages
The law accords the company a Disclose certain information to the
perpetual succession: CCM
✓ Company exists irrespective of changes For public companies, disclose
in management and membership information to SC and Bursa Malaysia
- Open to public scrutiny
✓ Membership may be transferred without
affecting the personality of the company
as a legal entity
✓ Assets and liabilities are held under the
name of the company
✓ Can enter into contract with its own
members and directors, sue and be
sued under its own name
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Form of ownership of
businesses
Sole Partnership Company
proprietorship

Number of One person Min: 2 persons Min: 1 member

members Max: not more than Max:
20 (except for Public: no limit
partnership for Private: 50
lawyers, doctors
and accountants)
Ability to Belongs to the Belongs to the Company
hold owner partners jointly possesses its
property own property

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Form of ownership of
businesses
Sole Partnership Company
proprietorship

Ease of Easy Easy to form. Winding up

formation and Termination procedures are
termination subject to costly and
agreement complex

Members’ Liability is Partners jointly Liability of

liability for unlimited and severally members is
debts liable for the limited
debts of the
unlimited

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Form of ownership of
businesses
Sole Partnership Company
proprietorship
Mode of Any legal No legal entity Can sue and be
taking proceedings brought sued in its own
legal in the name of the name to enforce
proceedings sole proprietor not its rights or
the name of the firm liabilities owed by
itself it.
No legal entity
Duration When the sole Dissolved upon Perpetual
proprietor dies the death, bankruptcy, or succession
firm will be closed insanity of a partner,
or in accordance with
the partnership
agreement

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Form of ownership of
businesses
Sole Partnership Company
proprietorship
Management Sole discretion Every partner has the Members do not
right to manage manage the company.
the firm They appoint directors
to do so.

Income tax Tax of the firm is Tax of the firm is Tax is imposed on the
imposed on the imposed on the company not the
owner respective partners members or directors

Governance Not applicable Terms of partnership Subject to variety of

agreement. statutes, laws and
Not subject to public regulations.
scrutiny Open to public
scrutiny
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 Form of ownership of
businesses

Sole Partnership Company

proprietorship
Profits Belong to the Shared between Distribute to
owner partners in shareholders in
accordance with the form of
terms of partnership dividends, subject
agreement to approval by
directors
Transferability Must sell the All partners must Freely transferable
business to agree, subject to without affecting
transfer his rights terms of partnership the company
agreement (public company)

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Form of ownership of businesses
– Limited Liability Partnership (LLP)
⚫ A new form of business vehicle that would complement the
traditional options of carrying on a business either by way of
sole proprietorships, partnerships or companies.
⚫ The LLP is governed by the Limited Liability Partnership Act
2012 (Act 743) (as at 31 March 2017)
⚫ An LLP combines the characteristics of a company and a
partnership firm that provides the protection of limited liability for
its partners and flexibility of the partnership arrangement for the
internal management of its business
⚫ The LLP will provide businessmen and investors the flexibility
and freedom to select the best business model that suits their
needs and the requirements of their respective business
structure

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Form of ownership of businesses
– Limited Liability Partnership (LLP)

Registration of a new LLP

Submit an application to the Registrar with the following

documents:
1)Name of the proposed LLP

2)General nature of the proposed business of the LLP

3)Proposed registered office of the LLP

4)Name and details of every person who is to be a partner

of the LLP
5)Name and details of compliance officer(s) of the LLP

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Form of ownership of businesses
– Limited Liability Partnership (LLP)

Conversion into a Limited Liability Partnership

1)From conventional partnership to LLP

2)From private company to LLP

3)From conventional professional firm to LLP for

professional practice

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Reference
⚫ Seven types of business entities in Malaysia -
https://malaysia.acclime.com/guides/business-entities/

⚫ 4 Type of Business Incorporations in Malaysia - https://www.sql.com.my/types-of-

business-in-malaysia/

⚫ LLP or Sdn Bhd Which is the better vehicle for your business? -
https://www.crowe.com/my/insights/llp-or-sdn-
bhd#:~:text=Nevertheless%2C%20partners%20in%20an%20LLP,exposed%20to%20
unlimited%20personal%20liability.&text=The%20shareholders%20and%20directors%
20in,generally%20exposed%20to%20unlimited%20liability

⚫ limited Liability Partnership LLP FAQ in Malaysia - https://www.3ecpa.com.my/limited-

liability-partnership/llp-faq/

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 OUR 15 MINUTES
BREAK TIME
(lecture class)

MY MALAYSIA… MY STORY…
• 5 simple questions but need someone to think

• About Malaysia (food, attractive place, culture, history, etc)

• Prepared by group but answered individually

• Using online platform: Quizizz / kahoot! / quizmaker / slido /

pooleverywhere / mentimeter / baambozzle / quizlet /
edpuzzle / nearpod / Blooket / Socrative / educandy

• Each group needs to have chant (class rep please

coordinate…)

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Thank you!
Any
questions?

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