According impact on the private companies. The abolishment of

According
to the old Companies Act 1965, it is compulsory for incorporation to hold Annual
General Meeting (AGM) once in every calendar year (SSM, 2017). However, the requirement for AGM for
private companies has been abolished under the New Companies Act. This means
that when CA 2016 come into
force effective on 31 January 2017, all private
companies are no longer required to hold AGM in every calendar year, unless required
by its constitution or validly required by the necessary members (q3solutions, 2017).
However, public companies remains the same that are required to hold an AGM in
every calendar year (q3solutions,
2017).

The
rationale of the changes in the new CA is
to ensure that the duty and responsibilities of the directors are carried out and
to meet their fiduciary duties. Also, the changes made in the CA 2016 is to
promote the enhancing internal control, corporate governance and corporates
social responsibility (Nee. E, 2017). Before that,
shareholders have limited right, thus especially to encourage the shareholders
involved in the daily operational of the company (Nee.
E, 2017).
The purposes of New Act
is to provide all the process and provisions necessary for the smooth running
of a company. Consequently, AGM is removing the mandatory requirement for
private companies to hold AGMs. There is the different between the old act 1965
as all meetings of private companies are known as meeting
of members in the new act
2016. The decisions process for private
companies can be made done by the written resolutions. However, a resolution to
remove an auditor or a director before the expiration of his term of office cannot
be passed as a written resolution (Kensington,
2017).

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Under the new
CA, there are various policies that have impact on the private companies. The
abolishment of AGM in private company has impacted the business,
such as all
the necessary process and procedure has to distribute separately such as the selection
of auditors, lodgment of annual returns and the tabling of audited financial
statements as well as the selection and retirement of directors, but not tied
to the holding of an AGM for private companies (Zico law, 2015). Besides that, even though the members do
not have the benefit of the forum of a general meeting to discuss the board of
directors on such statements, but they still have a right to obtain audited
financial statements (Zico law, 2015). Furthermore, the requirement of
unanimous consent for members’ written resolutions for private companies has
been removed in the CA 2016. It is compulsory to pass a written resolution that
is signed by the required majority of eligible members (Zico law, 2015).

When the AGMs is removed from the new CA 2016, it allowed private companies to reduce cost of doing businesses. As it
is not necessary to pay to appoint a company secretary at the point of incorporation
(Nee. E, 2017).  As the private
companies do not need to set up AGM, then all the decision can be made by written resolution and the notice
for the meeting can be sent through electronically (Nee. E, 2017). This can be clarified as the cost- effective
measures. Moreover, the abolition of AGM for private companies that
drive the positive impact is to examine the entire process and simplify the rules
relating to meeting procedures as well as provides
flexibility in managing affairs of companies in order to have the efficiency
incorporation process and procedure (Isa.
A, 2017).

BACK TO TOP
x

Hi!
I'm Rhonda!

Would you like to get a custom essay? How about receiving a customized one?

Check it out