A 1965. Under the Act provided, incorporation can

A
simplified procedure of incorporation of companies

Incorporation means a company when comes into
formation to become a legal entity. An incorporated company can have a
fundamental impact on many aspects of business operation, from owner liability
to taxes to raising capital. A company can raise its capital by selling the
shares to investors. The company who incorporated also can enjoy tax advantages
such as the entitlement for certain tax deduction of business expenses.
Besides, an incorporated company served as a separate legal entity which can
have protection from liabilities. To incorporate a company in Malaysia might
need to fulfill certain requirements under the Companies Act 1965. Under the
Act provided, incorporation can be done by a company limited by shares and
unlimited company. The company limited by shares also comprises of private
limited or public company.

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Rationale

The procedure of incorporation of companies consists
of several steps and procedures which making the process becomes unduly
complicated and may be seen as unnecessary obstacles. By examining this complex
process, the new Companies Act 2016 has replaced, some of the procedures and requirements
could be revoked or simplified in order to simple and efficient way of
incorporating companies.

Under the new Act, the company’s name reservations
become optional by implementing the concept of ‘guaranteed name approval’. The
individuals who want to incorporate a company have the option to use the
proposed name or if the proposed name has not approved by the Registrar, the
company could use the company registration number for a temporary period. Other
than the application of company name, the adoption of Memorandum and Article of
Association (now regarded as Constitution) is also optional under section 31 of
Companies Act 2016. Although it is optional to adopt a company constitution,
the company still required to notify the nature of business to Registrar. The
companies who opt to adopt a company constitution may submit after
incorporation.

In the procedure of incorporating a company, the
statutory declaration of the company’s promoters or directors which previously
required to be completed before the 
commissioner’s oath is currently has been replaced to the ‘Statement of
Compliance. (SSM, 2017) In the
meantime, the Act also provided that the appointment of a company secretary is
now optional. The company director can also act as the company secretary for
private companies unless the proviso stated the same person is restricted to
act as both director and secretary to perform such actions that require separate
duties.

The principle of the new Act is to modernizing the
Companies Act. The incorporation procedures and requirements have been
simplified in order to encourage more entrepreneurs and businessman to
incorporate a company. According to the new Act, there are certain changes in
the procedures of incorporation. The Companies Act 2016 provided incorporation process
no longer requires multiple forms for application. The registration forms now
have been replaced with only one form, known as Super Form. (Refer to appendix
1) It can be accessed via online through the MyCoID 2016 portal.

According to the new Act provided the company
secretary is optional at point incorporation. The company can choose whether to
appoint a secretary. The Board shall appoint a company secretary within 30 days
from the date of incorporation and also have to notify Registrar within 14 days.
Upon the registration is success and approved, a notice of registration will be
sent to the company’s email. This notice will be conclusive evidence since
there is no certificate of incorporation.

Impacts
to the companies

With these simplified procedures of incorporation, the
promoters may incorporate company easily once complied with all simplified laws
and procedures. The Super Form implemented to facilitate starting a business
and minimize the time and the cost of doing business, the company no need to
submit multiple forms to SSM thus increase the business efficiency. Moreover,
the abolishment of MoA and AoA enables the company more flexibility in the
operations of company under the new Act. However, if a company choose to adopt
constitution to strengthen the rights, powers, duties and obligations for each
directors and members under Section 31 (2) Companies Act 2016.

In conclusion, the simplified incorporation process
enables the smooth running in the company operations. However, in the new
Companies Act 2016 still have some practical issues to understand. Companies
can consider seeking further clarifications and advices related to this. Since
the advance in technology and everything can access through online, the
business process is now become more flexible, there will be more reforms,
restatements and modifications coming in.

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