to the old Companies Act 1965, it is compulsory for incorporation to hold Annual
General Meeting (AGM) once in every 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 not
required to hold AGM in every year, except required by its constitution or
validly required by the necessary members (q3solutions, 2017).
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). On the other hand, public companies remains
the same that are compulsory to hold an AGM in every year (q3solutions, 2017).
changes in the new CA is important to ensure that the responsibilities of the boards
are carried out and to run into their fiduciary duties. Also, the changes made
in the CA 2016 is to enhance the internal control, corporate governance as well
(Nee. E, 2017). Formerly, shareholders have limited
right, thus it is 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.
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).