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| MAGNIFIELD RESOURCES | ||||||||||||||||||||||||||||||||||||||||||||
| 24-2, Medan Setia 2, Plaza Damansara, | ||||||||||||||||||||||||||||||||||||||||||||
| Damansara Heights, 50490 KL. | ||||||||||||||||||||||||||||||||||||||||||||
| Tel: 03-2092 5626 ext 558 | ||||||||||||||||||||||||||||||||||||||||||||
| Fax: 03-2093 1241 | ||||||||||||||||||||||||||||||||||||||||||||
| FREQUENTLY ASKED QUESTIONS | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What is the difference between a private limited (Sdn Bhd) and a public limited company (Berhad)? | ||||||||||||||||||||||||||||||||||||||||||||
| A: A Sdn Bhd restricts the right to transfer shares (subject to approval of directors); its number of members can be from two to a maximum of fifty. It also prohibits any invitation to the public to subscribe to shares or debentures in the company and prohibits any invitation to the public to deposit money with the company for fixed periods or payable at call. In comparison a public limited (Berhad) company may transfer shares freely, its members may be as few as two but have no limit and it may make an invitation to the public to subscribe to shares or debentures in the company. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What are the steps to incorporate a company ? | ||||||||||||||||||||||||||||||||||||||||||||
| A: Provided you already have a name in mind, as an initial step you have to submit a request for the availability of name to the CCM (ROC) i.e. form 13A. After approval from CCM, you file a statutory declaration of compliance with respect to the new company, statutory declaration by two would-be directors of the new company, the company's Memorandum and Articles of Association, an Attachtment A, along with a copy of the approval letter from the CCM. This whole process would take anything from six to ten days if all the papers are in order.. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What is an exempt private company and what are its advantages ? | ||||||||||||||||||||||||||||||||||||||||||||
| A: An Exempt Private Company is a private limited company (Sdn Bhd) with membership of no more than twenty with no corporation listed as member. It is exempted from filing its annual accounts with the CCM if it files a certificate signed by its director, secretary and auditor that it is able to meet its liabilities as and when they fall due. In addition to this it is in certain situations exempted from the rule that no company may give loans to its directors. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: Is it compulsory to have a Company Secretary? | ||||||||||||||||||||||||||||||||||||||||||||
| A: This is a statutory requirement for all companies in Malaysia. The company must ensure that the office of Company Secretary must not be left vacant for more than one month. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What is the requirement to be a Company Secretary? | ||||||||||||||||||||||||||||||||||||||||||||
| A: To become Company Secretary, a person must meet the following criteria.He must be a member of a professional body prescribed by the Minister; or duly licenced by the CCM as a certified Company Secretary. Over and above this stipulation, he must not be an undischarged bankrupt; and also must not be convicted of any offence under s130(1) Companies Act 1965. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: Can Director function as a Company Secretary? | ||||||||||||||||||||||||||||||||||||||||||||
| A: person who is appointed as Company Secretary may also act as Company Secretary of any other company, but there are certain situations wherein it would not be practical for him to be a director as well as Secretary in the same company. One is where he is required to endorse the common seal of the company. This cannot be done by the director and the Secretary if he is one and the same person. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What are the advantages of a sole proprietorship or a partnership? What are its drawbacks? | ||||||||||||||||||||||||||||||||||||||||||||
| A: The advantages of operating a sole proprietorship or a partnership are that of simplicity for e.g. in order to form one of these two there are fewer formalities with respect to paperwork and registration. You are also not required to disclose your financial statements to the public. However if the business fails creditors can sue the sole proprietor or the partners as though they themselves were involved in the dealing with the creditors in their personal capacity and their personal assets can be executed against upon court judgment. Another drawback is that a change in an essential element of the business e.g. ownership may necessitate dissolution of the partnership. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What are the pros and cons of operating a limited company? | ||||||||||||||||||||||||||||||||||||||||||||
| A: A limited company involves a more elaborate procedure and is more costly to incorporate but naturally affords better protection to the proprietors of the business. The shareholders are not liable for the company's debts beyond the amount of share capital they have subscribed and paid for. Another advantage is that it is easy to transfer ownership of all or part of the company without having to wind it up. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What are the duties of a Company Secretary? | ||||||||||||||||||||||||||||||||||||||||||||
| A: A primary responsibility of a Company Secretary is to be accessible to the public during normal office hours at the registered office of the company either in person or through his agent. Besides these there are other major duties imposed by statute on a Company Secretary. These include being present at all company meetings and taking down minutes thereof; keeping and maintaining the statutory books i.e. Share Registers, Register of Charges, Minute Books; filing all the company's necessary returns with the CCM i.e. Annual Returns, certain resolutions; issuing Notices of Meetings to Members; registering & recording share transfers; countersigning all essential documents and those relating to Share Certificates; and maintaining the common seal of the company. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What other competencies are required of the Company Secretary? | ||||||||||||||||||||||||||||||||||||||||||||
| A: To function effectively as the company advisor at its statutory meetings it would be highly expected for the Company Secretary to be versed in the laws of meetings; meeting procedures e.g. quorum requirements; and voting procedures and proxy requirements. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: Just what kind of services are offered by MAGNIFIELD RESOURCES? | ||||||||||||||||||||||||||||||||||||||||||||
| A: Magnifield Resources offers these services: New company/business incorporation; Instruments pertaining to the appointment, resignation, removal, retirement, death and remuneration of directors, loan procedures to directors and disclosures required of directors; Maintenance of the clients? Memorandum and Articles of Association and amending object clauses: Alterations to company's name/registered address etc; Cash and non-cash allotments of share capital; Transfers, forfeiture, dividends, options, premiums, bonus and rights with respect to shares; Documentation and the holding of annual general meeting, extraordinary general meeting, annual returns, circulars and general meetings of wholly-owned subsidiaries; Documentation with respect to new current account, new fixed deposit account, amending banking account, bank borrowings and money lending; Section 132C, 132E and 132G restrictions for property transactions; Creation and registration of charges; Application for scheme of arrangement under section 176; Application for members' voluntary winding-up; and Documentation pertaining to auditors appointment, removal, retirement and resignation. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What is authorised capital? | ||||||||||||||||||||||||||||||||||||||||||||
| A: The authorised capital of a company is the maximum share capital which may be issued by a company by way of allotment of shares. It must be stated in the company's Form 24. The issued share capital of a company may thus be no higher than its authorised share capital. Therefore a company which anticipates increase in its total issued share capital pursuant to change in shareholding structure e.g. dilution of shareholding or allotment of bonus shares would customarily apply for registration of a high authorised capital in excess of its issued share capital. However the authorised capital carries with it a certain fee to be paid to the CCM and the higher the authorised capital the higher is the fee. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What should a company registered in a foreign country do to continue operating in Malaysia? | ||||||||||||||||||||||||||||||||||||||||||||
| A: Companies incorporated outside Malaysia but which set up places of business within Malaysia are referred to as foreign companies. A foreign company is required to register with the CCM, subject to an approval from the Ministry of Domestic Trade and Consumer Affairs. After that like their Malaysian counterparts there are other obligations which the foreign company has to observe. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: In this age of increasing corporate governance required of Malaysian companies, what should company directors be advised of? | ||||||||||||||||||||||||||||||||||||||||||||
| A: Basically they should be aware of their primary duties and the likelihood of breach of those duties. The days of the passive director, who attends the meetings just to make up the numbers are practically over. Primarily, the duties of a director are the following. To act bona fide for the benefit of the company as a whole; to use their powers bona fide, for the purpose for which they were conferred. In this respect a director may be considered to be in breach of duty if he acts ultra vires, breaches the Companies Act or uses his powers improperly to secure an advantage for himself, or for a third party. Besides this a director has a duty to avoid a conflict of duty and personal interest e.g. in contracts involving the company, if he has interest in it the Company may void it at its choosing. Also a director must account for the profit which he makes to the Company. A director also has a duty of care, skill and diligence i.e. to use reasonable skill in performance of his duties. As for a statutory duty to make disclosure under section 135 Companies Act, a director has 14 days to notify the company of any interest on shares, debentures, participatory rights, options and/or contracts. There is also the duty to keep accounts which technically belongs to the directors. Books of accounts must be kept at the registered office and must be open for inspection by members. Thus if these books are not in order the directors have to be accountable and can not blame anyone else. | ||||||||||||||||||||||||||||||||||||||||||||
| Q: What type of meetings must a company hold? | ||||||||||||||||||||||||||||||||||||||||||||
| A: Meetings are a means to record the statutory health / good upkeep of the company. Some are compulsory e.g. the Annual General Meeting. And some may be called as the occasion arises and at the frequency which the company deems expedient e.g. Extraordinary General Meeting, Board of Directors Meeting. Each of these have elaborate rules and formalities to be observed e.g. quorum requirements, adjournments and voting procedures. The documentation attendant to these meetings include agenda, attendance sheets and resolutions adopted therein. Prior to holding these meetings there are certain notice periods to observe and different meetings and/or types of resolutions require different notice periods. | ||||||||||||||||||||||||||||||||||||||||||||
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