State the legal provisions relating to buyback of shares

Buy-back of shares: impact of new Companies Bill - Newsletters - International Law Office

Among other major reforms, the new Act aims to strengthen corporate governance and promote accountability of directors when running companies. While the new Act will ease the doing of business and make Malaysian company law more competitive and flexible, this also means that directors will be held to higher expectations and will have to shoulder more responsibility to ensure that companies are managed properly.

The new Act imposes heavier fines and longer terms of imprisonment on directors for breaches under the new Act.

For example, the improper use of property and position by a director to gain a benefit for himself or to cause detriment to the company can result in up to a 5-year imprisonment or up to a RM3 million fine, or both upon conviction. The RM3 million fine is a fold increase from the fine of RM30, under the present Companies Act and this serves as a stronger deterrent against improper behavior and practices by directors.

Revisionary Video Of Buy Back Of shares

The power of the Registrar to compound any offence committed by any person as provided under the present Companies Act is also conspicuously absent from the new Act. The new Act provides a series of solvency tests that companies must take into account to undertake certain corporate exercises.

These include non-court capital reduction exercises, share buyback exercises, redemption of preference shares and financial assistance. State the legal provisions relating to buyback of shares are required to confirm the satisfaction of these solvency tests in a solvency declaration.

If a solvency statement is made without reasonable grounds, directors can be subject to up to 5 years imprisonment or a RM, fine or both upon conviction. Directors should be well advised not to make any solvency statement unless they can be state the legal provisions relating to buyback of shares certain that the solvency tests are satisfied.

state the legal provisions relating to buyback of shares

Under the new Act, the remuneration and benefits of directors of public companies, listed companies and subsidiaries of listed companies must be approved by shareholders at general meeting.

In the case of private companies, the remuneration of directors may be approved by the board of directors. These new requirements will promote greater transparency which in turn will raise the accountability of directors.

Legal Alert | Malaysia | The New Companies Act Raising the Bar for Directors - ZICO Law | CONNECT: People, Places and Ideas

Under the Companies Acta company may only indemnify its directors for the liability incurred from the proceedings of the court if the judgment is made in favour of the directors. The new Act now regulates review earnings for binary options magnets losses incurred by the directors are insurable and which are not.

What are the provisions of buy back of shares as per Companies Act, ?

Under the new regime, companies can only effect insurance for a director with the prior approval of the board of directors in specific instances. Such ig market forex review include civil liability for any act or omission in his capacity as director and costs incurred in defending a civil claim or criminal claim provided that the director is acquitted in the criminal claim, the director is granted relief under the new Act or where proceedings are discontinued.

Where insurance is effected without complying with the provisions, the director will be personally liable to the company for the cost of such insurance, unless the Court finds otherwise.

state the legal provisions relating to buyback of shares

Further, no indemnity can be given, and no insurance can be effected, by a company in favour of its directors in respect of any civil or criminal liability in respect of a breach of the general duty of directors to exercise their powers in accordance with the new Act for a proper purpose and in good faith and in the best interests of the company.

If you have any questions or require any additional information, you may contact Ahmad Zulkharnain Musa or the ZICO Law partner you usually deal with.

This alert is for general information only and is not a substitute for legal advice. Web Design by Sweetmag. Legal Alert Malaysia The New Companies Act Raising the Bar for Directors 12 October ZICO Law News ZICO Law Events.

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state the legal provisions relating to buyback of shares
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