Companies Act 2016 - A Preview of Things To Come

Malaysian Company Law will see some big changes in 2017, and there’s a new book to explain it all. Penned by experienced lawyer Lee Shih in collaboration with Chartered Company Secretary Kenneth Foo, ‘Companies Act 2016: The New Dynamics of Company Law in Malaysia’ is slated to be the first ‘comprehensive textbook’ on Malaysian Company Law on the market.

But far from being solely academic, the book, according to Lee Shih, is a guide to the new laws that would likely benefit anyone involved in advising or running a company - lawyers, company secretaries, accountants, directors and financial institutions alike.

Lee Shih is a Partner in one of Malaysia’s biggest and oldest law firms, Skrine, and specialises in Dispute Resolution, particularly in Corporate Litigation and Arbitration matters. He is also an avid writer and co-author of the dynamic Malaysian law blog, TheMalaysianLawyer. With a keen interest and decade’s worth of experience in Company Law, he tells us what’s it like to pen his first book and shares his views on the changing legal landscape for companies in the nation.

Writing The New Dynamics of Company Law in Malaysia

Lee Shih shares that he has always had a keen interest in Company Law.

“Over the years I had been toying with the idea of writing a book on some aspects of company law like insolvency or shareholder remedies. In 2013, the draft Companies Bill was released for public feedback. So at that time, I studied the draft Companies Bill and started to give talks on that area. The speaking engagements started to gather a lot of momentum, especially once the Companies Bill 2015 was eventually tabled in Parliament.”

It was during one of his speaking engagements with CLJ Law that he met his future co-author, Kenneth Foo, another active speaker and contributor to the topic.

Kenneth himself has been in practice as a Chartered Company Secretary since 1991. He also holds a LLB degree and CLP qualification, and actively contributes his wealth of experience in incorporating companies and ensuring companies adhere to corporate governance requirements.

“Kenneth and I hit it off, and we agreed with CLJ Law to start writing a book on the new Companies Act 2016,” says Lee Shih.

On penning his first book, Lee Shih found it both tiring but also rewarding and was challenged particularly by the need to juggle writing and work.

“It felt like there were not enough hours in the day to get everything done,” he says, though his experience with writing and extensive knowledge of the area, including interesting cases and legal developments that he had taken note of and filed throughout the years - greatly helped with the process.

On The Changes

To the layman, the changing business landscape brought in part by the Companies Law 2016 might seem abrupt, but has actually been “long overdue.” As Lee Shih explains, “the Companies Act 1965 had only seen some piecemeal changes over the decades. A complete overhaul and modernisation of our corporate framework was required.”

The tabling of the new Act involved a lengthy process, starting with a review of the existing Companies Act and recommendations made by the Corporate Law Reform Committee (CLRC), with feedback from stakeholders and leading up to the CLRC Final Report in 2008 that functioned as the underlying basis for the new law regime.

“The CLRC process took into account all of the modern developments from other jurisdictions and tried to incorporate the best practices to suit the Malaysian environment,” Lee Shih explains, adding that the new developments have kept on par with other seemingly more ‘modern’ company law regimes in the region. He cites the introduction of the no-par value regime only recently adopted in Hong Kong and Singapore.

Laws, are after all, dynamic: “I hope to continue to see constant refinement and reform to our laws. We have to continue to keep our laws up to date,” he opines.

The changes, according to Lee Shih, aims to simplify and ease ownership and the running of businesses through a company, but will likely bring its own challenges and complexity as to how company law is practiced in Malaysia. Lee Shih shares, “There will be some uncertainties in the application of the new laws and how the courts may interpret the provisions. I can already spot some possible lacunas or some areas which may offer differing interpretations.”

Keeping Up

Needless to say, practicing lawyers dealing with the changing business landscape would have to adapt. According to Lee Shih, counsels should be prepared for the following challenges:

"Review the existing memorandum and articles of association to ensure compliance with the new Act, and advising on any issues when moving into the no-par value regime.”

“That has been a tough adjustment for me to make. I still instinctively have to recall a specific section number under the Companies Act 1965 and then try to find the equivalent section in the Companies Act 2016.”

“There are some provisions which may not be clear enough and where we have to either wait for further guidance from the Companies Commission of Malaysia or by interpretation by the courts.”

But while seeming drastic, Lee Shih believes the majority of practising lawyers already have an understanding of the changes to come. While it’s difficult to be completely prepared, Lee Shih offers the following tips to get a good grasp of the new laws.

“Firstly, read all the CLRC documents which are the Consultative Documents and the Final Report. These documents are a treasure trove to understand the underlying principles and policy aims for the new laws. You will be able to see which jurisdictions we looked to, and how we wanted to tailor our new laws to fit the needs of Malaysia’s corporate environment.”

“Secondly, research the other jurisdictions which we sought inspiration from. I have read the statutes and materials from these other countries to understand the policies behind their laws. So for example, our Companies Act 2016 took into account the company voluntary arrangement provisions from the UK, the judicial management provisions from Singapore, and elements of winding up law from Australia and New Zealand.”

And of course, getting a copy of his book as a handy reference won’t hurt!

Tips For Fresh Lawyers

Seasoned lawyers can weather the overhaul and draw from their familiarity with the underlying principles under the Companies Act 1965. But how should young and fresh lawyers handle the changes? Lee Shih helpfully touches on 5 key changes between the current and incoming regime of company law that lawyers should know about:

With Challenge Comes Opportunity

“Company law cuts across a wide spectrum of practice areas. It is hard to say that you are solely a company law practitioner,” Lee Shih shares, “any corporate lawyer would have to understand different facets of company law and most litigators would also need some basic understanding of company law.”

“Right now, I see a big demand from companies to have very practical advice on how to prepare for the new Act. The clients do not need a regurgitation of the law or high-level legal advice. They want to see how the new Act impacts their business, how to adapt to the new changes and how to strategise for the future.”

Malaysia’s Companies Act 2016 will be implemented next year in stages, so if you want to get a head start, consider grabbing a copy of Lee Shish and Kenneth Foo’s ‘Companies Act 2016: The New Dynamics of Company Law in Malaysia’. The official launch will be on 24 January 2026 in conjunction with a one-day seminar featuring Kenneth and Lee Shih as speakers, along with the Deputy CEO of the Companies Commission of Malaysia.

“It will be an interesting seminar, especially hearing from the viewpoints of the practitioners and the regulator.” Lee Shih quips.

Don’t want to wait? The book is available for pre-purchase at a 10% discount from CLJ Law, so put in your order now.