Shareholders' Meetings of Malaysian Companies
In Malaysia, shareholders' meetings are fundamental to corporate governance and the decision-making process of companies. Governed primarily by the Companies Act 2016 (CA 2016), these meetings provide a formal platform for shareholders to exercise their rights, actively participate in key decisions, and ensure transparency in corporate affairs. This article outlines the types, legal requirements, and procedural aspects of shareholders?meetings in Malaysian companies.
- Types of Shareholders' Meetings
Malaysian corporate law identifies three primary kinds of shareholders?meetings:
(1)
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Annual General Meeting (AGM)
An AGM is compulsory for public companies and must take place each year. Private companies are usually not required to hold one unless their constitution explicitly mandates it. This exemption reflects the more straightforward governance structure commonly seen in single-owner private companies. The AGM fulfils several key purposes, including:
(a) Reviewing and approving audited financial statements
(b) Appointing or re-appointing directors and auditors
(c) Declaring dividends (where applicable)
According to Section 340 of CA 2016, AGMs must occur within 6 months after the end of the financial year but should not be held more than 15 months after the previous AGM.
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(2)
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Extraordinary General Meeting (EGM)
An EGM is convened to address urgent or exceptional matters that cannot wait until the next Annual General Meeting (AGM). This includes:
(a) Approving major transactions or corporate restructurings
(b) Amending the company's constitution
(c) Changes in share capital or board composition
The board of directors can initiate EGMs, or, in specific situations, by shareholders who own a minimum of 10% of the issued share capital pursuant to Section 310(b) of the CA 2016.
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(3)
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Class Meeting of Shareholders
Class meetings involve shareholders of a particular class, such as ordinary or preference shareholders and focus on issues directly affecting their specific rights and interests. Attendance and voting at these meetings are restricted to shareholders of that class. |
- Legal Requirements and Governance Procedures
The CA 2016 and a company's constitution dictate the timing and conduct of shareholders?meetings:
(1)
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Notice of Meeting
Notices must be issued at least 14 days for meetings involving ordinary resolutions and 21 days for those involving special resolutions. Each notice must include the date, time, venue (or virtual access details), agenda, and explanatory notes for each special resolution.
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(2)
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Quorum Requirements
Quorum is the minimum attendance needed to hold a meeting properly. The CA 2016 usually requires at least 2 members to constitute a quorum, unless the company’s constitution specifies otherwise.
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(3)
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Resolutions and Voting
Resolutions passed at shareholders?meetings fall into two categories:
(a) Ordinary Resolutions (which need more than 50% approval)
(b) Special Resolutions (which need at least 75% approval)
Votes can be cast either by a show of hands or through a poll. Shareholders may appoint proxies to attend and vote on their behalf, as stipulated by Section 334 of CA 2016. |
- Virtual and Hybrid Meetings
The Companies Commission of Malaysia (SSM) has embraced virtual and hybrid meetings, especially following the COVID-19 pandemic. Supported by amendments to the law and regulatory guidance, these meetings allow shareholders to participate remotely via secure technology, maintaining full shareholder rights and effective interaction, as well as to ensure the company secretary accurately record discussions and decisions.
- Shareholder Activism and Rights
Under CA 2016, shareholders enjoy key rights that foster transparency, accountability and good corporate governance, such as right to attend meetings, receive timely notice, vote on resolutions, requisition meetings, access minutes and financial statements, and participate in the appointment or removal of directors. These rights are crucial for maintaining a constructive and balanced relationship between companies and their shareholders.
- Conclusion
Shareholders' meetings remain a cornerstone of corporate governance in Malaysia, providing a vital forum for dialogue and decision-making. Whether held physically or virtually, compliance with the legal framework and best practices is crucial to uphold shareholder rights and ensure corporate integrity. For foreign investors, understanding these meetings is key to engaging effectively with Malaysian companies and safeguarding their interests.
Kaizen, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professional accountants in Kaizen for further clarification. |
