Corporate Governance Structure under Companies Act 2016Change in Company Act Part 3 of 4

eKTP 27

Corporate Governance Structure of Malaysian Companies

The new Companies Act, 2016 tends to enhance the Corporate Governance Structure of Malaysian Companies.

a. Extending the definition of “Director” to include “Shadow Director”

The new Act provided that a person is to be regarded as a director of a company if “the majority of directors of a corporation are accustomed to act in accordance with the person’s instructions and directions.”

b. Director's Remuneration to be Approved by Shareholders

Shareholders holding at least 10% of the voting rights of a private company may request that a director’s remuneration be subject to shareholders’ approval instead if they view the remuneration determined by the board of directors as being unfair.

c. Increase in Sanctions on Directors

There is a general increase in the sanctions that directors will face for breaches under the Act. The more serious infractions can result in a 5-year imprisonment and RM3 million fine or both, if there is a criminal conviction.

Darren YapOctober 3, 2016