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COVID-19: GOVERNANCE: NEW INITIATIVES BY THE COMPANIES COMMISSION DURING THE MOVEMENT CONTROL ORDER (Malaysia)

17 April 2020 | Kuala Lumpur
Legal Briefings – By John Ling and Nicole Ong

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On 6 April 2020, the Prime Minister of Malaysia unveiled the PRIHATIN Economy Stimulus Package (ESP) to reduce the burden on the business community and corporate sector caused by the COVID-19 pandemic. With this, the Companies Commission of Malaysia (CCM) announced seven initiatives in line with the ESP in light of the Movement Control Order (MCO).

1. Temporary increase in threshold for notice of demand

 
The most common method of winding up a company is through the issuance of a notice of demand for the sum or at least RM10,000. The company is given 21 days to respond to settle (or negotiate the settlement of) the sum demanded, failing which, the creditor may proceed to file a winding up petition.
 
To assist companies facing difficulties in paying debts, the threshold for the issuance of a notice of demand will be increased to RM50,000. Further, instead of the current 21-day period, companies will be given a period of six months to settle (or negotiate the settlement of) the sum demanded. These two measures are temporary, and will be in place until 31 December 2020.
 
CCM has provided a brief FAQ on this initiative. 
 

2. Extension of time to hold AGM

 
This initiative by the CCM allows public companies to apply for an extension of time (of 90 days from the date the MCO ends) to hold their Annual General Meetings (AGMs). This application can be made to CCM by email. The usual payment of RM100 for such extension applications is waived. As AGMs are not compulsory for private companies under CA 2016, private companies are not eligible to apply for this extension.  Further details are available in the FAQs issued by the CCM on this initiative. 
 

3. Moratorium for lodgement of statutory documents

 
CCM agrees to grant a 30-day moratorium from the last day of the MCO for companies to submit the requisite statutory documents under the Companies Act 2016 (CA 2016) and Limited Liability Partnerships Act 2012. During this automatic moratorium, late lodgement fees will be exempted. 
 

4. Extension for lodgement of financial statements

 
The deadline for companies with financial years beginning 1 September 2019 until 31 December 2019 to submit their financial statements is also extended for three months from the last day of the MCO. Companies are required to apply to CCM via email for this extension CCM. However, CCM will waive the fees for such applications.
 

5. Permission for CLBG to solicit donations

 
CCM introduces an exemption for Companies Limited by Guarantee (CLBG) from the need to obtain approval before soliciting donations from the public to help those affected by the COVID-19 pandemic. This exemption is applicable for CLBGs which have been approved by the Inland Revenue Board of Malaysia (IRB) and will be applicable until 31 December 2020. However, for those CLBGs who have not been approved by the IRB, they can proceed to solicit for donations but must make an official application within 30 days after the MCO ends. Further details are available in the FAQs issued by the CCM on this initiative. 
 

6. Extension of “2020 Compliance Campaign”

 
The “2020 Compliance Campaign of the Companies Act 2016” that commenced on 1 January 2020 was initiated by the CCM with several objectives, namely (i) encouraging compliance with the provisions of both the Companies Act 1965 (CA 1965) and CA 2016, (ii) to ensure that only active companies are registered in the CCM’s records, and (iii) to ensure that the information in CCM’s database is up to date and available upon request by the public and stakeholders.
 
The initial deadline for compliance of 30 April 2020 is extended to 30 June 2020.
 

7. Extension for company secretaries to fulfil CPE requirements

 
CCM will extend the compliance period for company secretaries to fulfil their Continuing Professional Education (CPE) requirements until 31 December 2020, subject to the terms and conditions as provided in the FAQs by the CCM on the Application of Practising Certificate under Section 241 of the Companies Act 2016.
 
 
If you would like to discuss any of the above, kindly contact the authors or your usual Herbert Smith Freehills contacts. 
 

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