It is due in these historical ties, that the English and Australian Law has some significance on Malaysian Company Law. This Is why you will see English and Australian judicial precedents being referred to, and applied in interpreting certain provisions of the Malaysian Companies Act. It must be stressed here that since this Act is a piece of legislation that has its provisions constantly amended to keep up with the times, there may be slight changes to company law from time to time. It would be very helpful for you to ensure that the Act you refer to is the latest amended version.
A company is a corporate body of a corporation. A corporation is an artificial legal person. The law sees it as separate and independent of the persons who are members of that corporate body. The legal recognition given to the company is revived by S. 1 6(5) of the Companies Act, 1965. It says: “On and from the date of corporation specified In the of Incorporation… The subscribers to the memorandum together with such other person as from time to time become members of the company shall be a body corporate by the name set out in the memorandum… In other words, after fulfilling all the requirement of the Act incorporate the company, and the Companies Commission of Malaysia (CM) issues a certificate of Incorporation, a new legal entity comes into existence. The company, an artificial person, is ‘born’ out of the process of law. This new entity is separate from its members. Like a natural person it has its own name and can own property. Not go through its members, and that the company’s assets do not belong to the members. The reason for creating the legal fiction of the separate legal personality has been said to be a matter of convenience.
The separate legal personality concept is useful in large companies where there are many shareholders, and these shareholders are frequently changing. If the company does not have a separate legal personality, it would mean that a change among the shareholders would require a transfer of the company’s assets. Liabilities and contract form the former group of shareholders to the present group. It would entail a lot of difficulties to deal with multiple transfers. On top of that it would be difficult to keep up with the frequent transaction of shares on the market.
This type of company does not have a share capital and so does not require the members is specified in the memorandum of association. If the company is wound up, then a person who has been its member may be required to contribute up to his amount of guarantee towards payment of debts incurred by the company while he was a member. This liability extends to those who has left the company but was a member within a year before the company wound up. Although this type of company does not have a share capital, it is a separate legal entity.