CRG 530 COMPANY SECRETARIAL PRACTICE

GROUP ASSIGNMENT PAST YEAR QUESTION

PREPARED BY :
MOHD SAZALI BIN MOHD SALLEH
2011473332
HAFIZI BIN AHMAD
2011215082
WAN MOHD TAUFIQ BIN MOKHTAR
2011840704
MOHD NASRUL BIN ZAKARIA
2009549697
PREPARED FOR :
MISS JULIANA BINTI MAT JUSOH

1. THE LEGAL FRAMEWORK

OF CORPORATE
SECRETARYSHIP
2. FORMS OF BUSINESS
OWNERSHIP
3. COMPANY SECRETARY

PART A
THE LEGAL
FRAMEWORK OF
CORPORATE
SECRETARYSHIP

State four (4) functions of the Securities Commission of Malaysia.

(Oct 2008 - Q3)
(4 marks)
Briefly explain four (4) regulatory functions of the Securities
Commission of Malaysia. (Jun 2012 - Q9)
(4 marks)
The Securities Commission Malaysia (SCM) is the financial
regulatory agency in Malaysia. State FOUR (4) main regulatory
functions of the SCM.
(Jun 2013 - Q7)
(4 marks)

Answer :The 4 main regulatory function of the SCM are:Regulating all matters relating to securities and futures contracts
Regulating all matters relating to unit trust schemes
Regulating the take-over and mergers of companies
Licensing and supervising all licensed persons

Differentiate between the functions of Bursa Malaysia and Securities

Commission.
(Apr 2011 - Q6)
(4 marks)

Role

Bursa Malaysia
Answer
: exchange
An

Securities Commission
Central authority responsible for the regulation and
development of the securities and futures industries in
Malaysia.
Established under the Securities Commission Act 1993
Statutory body entrusted with the responsibility of
regulating
and
systematically
developing
the
Malaysias capital markets.

holding
company
approved under S15 of the Capital
Market and Services Act 2007.
It operates a fully-integrated exchange,
offering the complete range of
exchange-related services including
trading, clearing, settlement and
depository services.
Objective Maintain an efficient, secure and active To promote and maintain fair, efficient, secure and
trading for investors
transparent securities and futures markets;
To facilitate the overall development of an innovative
and competitive capital market;
Functions Empowered
to
govern
the
stock 1. Registering authority for prospectuses of corporations
exchange,
brokers
and
companies
other than unlisted recreational clubs
participating in the Bursa Malaysia 2. Approving authority for corporate bond issues
through the Listing Requirements and 3. Regulating all matters relating to securities and
Practice Notes.
futures contracts
4. Regulating the take over and mergers of companies
5. Regulating all matters relating to unit trust schemes
6. Licensing and supervising all licensed persons
7. Supervising exchanges, clearing houses and central
depositories
8. Encouraging self-regulation
9. Ensuring proper conduct of market institutions and
licensed persons

PART A
FORMS OF
BUSINESS
OWNERSHIP

What is an exempt private company and what are the advantages of

being an exempt private company?
(Apr 2010 - Q4, Oct 2010 - Q1 & Jan 2013 - Q3)
(4 marks)

Briefly explain the meaning of an exempt private company and its

advantages over other private companies.
(Jun 2013 Q8)
(4
marks)

Answer:A private company be classified as an exempt private company if

fulfill the following characteristics namely:
It must not have more than 20 members
The shares must not owned directly or indirectly by a corporation

The advantages:

Exempted from submitting its FS with its annual return to CCM

FS still need to prepare
Exempted from complying with the restriction on loans to directors
and persons connected to directors under S133

Table A of the 4th Schedule of Companies Act 1965 stipulates the

restriction of a private limited company by shares pursuant to
Section 15 of the Companies Act 1965. Identify four restrictions
as stated in the Articles of Association.
(Jan 2012 Q2)
(4 marks)
Restricts the right to transfer shares in the company;
Limits the number of shareholders to 50 (joint holders are
counted as one person and employees and ex-employees
who became member while employed are not counted)
Prohibits any invitation to the public to subscribe for any
shares in, or debentures of, the company; and
Prohibits any invitations to the public to deposit any
money in the company.

PART A
COMPANY SECRETARY

How can a person be disqualified from acting as a company secretary?

(Oct 2008 Q7)
(3 marks)
Answer :
Section 139C of CA 1965 stated that a person be disqualified if he/she:
i. Undischarged bankrupt
ii.Convicted whether within or outside Malaysia,
. Any offence in connection with the promotion, formation or
management of a corporation
. Any offence involving fraud or dishonestly convicted with the
imprisonment of 3 months
. Any offence involving dishonestly or lack of reasonable diligence in the
discharge of duties
. Insider trading
. Any offences in which proper company accounts are not kept
iii.Ceased to be a holder of a valid license issued by SSM
iv.No longer a member of the professional body

How can a company secretary vacate his office when none of the directors of
the company can be communicated? (Apr 2007 Q3) (3 marks)
How would the company secretary vacate office when none of the directors
of the company can be communicated? (Apr 2009 Q8)
(3 marks)
How can a company secretary vacate his office when none of the directors of
the company can be communicated? (Jan 2013 Q8)
(4 marks)
Answer:A company secretary can vacate his office by: Lodge the FORM 48E ( Notice of intention to Vacate the Office of Secretary) if
that none of the directors of the company can be communicated with the
last known residential address
Filed it with Companies Commission of Malaysia (CCM)
After the expiry of 1 month from the date of notification the company
secretary cease to be secretary. However the company secretary should
responsible for any act or omission done before the secretary vacated the
office

Company secretary plays a vital role in the governance and

administration of a company's affairs. What are the objectives of the
Code of Ethics for a company secretary? (Apr 2008 Q7)
(3 marks)
The Company Secretarys Code of Ethics (CSCE) is formulated to
enhance the standard of corporate governance. Briefly explain the
aims of the CSCE.
(Jun 2013 Q5) (4 marks)
Answer:
Position of Company Secretary involved with internal affairs of the
company which demand ethical conduct among Company Secretary
To enhance the standard of corporate governance, and
To instill professionalism and effectiveness among Company
Secretary
To uphold the spirit of responsibility and social accountability in
management field
To enhance and upgrade the professional competency

Company secretary plays important role in the administration of a

company's affairs. Briefly explain any four (4) core duties of a
company secretary.
(Oct 2010 - Q10)
(5 marks)
Answer :
i. Board & general meetings
Managing Board and general meetings.

ii. Memorandum & Articles of Association

Ensuring that the company complies with its M&A of Association

iii. Statutory Registers

Maintaining statutory registers include registers regarding
members, company charges, directors and secretary, etc.

iv. Statutory Returns

Filing information with CCM to report certain changes regarding
the company.

(Jan 2012
Q5) are the qualifications of a company secretary pursuant to section
What
139 of the Companies Act 1965?
(4 marks)
Answer
Be of full age i.e. 18 years of age and above
Have his principal or only place of residence in Malaysia
Be a member of any of the prescribed professional bodies namely
MIA, MAICSA, MICPA, Malaysian Bar Council, Persatuan
Peguambela Sarawak, Persatuan Undang-undang Sabah and MACS
Or
Possess minimum following qualifications / experience: SPM / STP with 5 years of work experience, or
Holders of Certificate, Diploma or Degree (in the fields of law,
company secretarial practice, management, business
administration or accounting) need 3 years, 2 years and 1 year of
work experience respectively.

PART B
COMPANY SECRETARY

(Apr 2010 Q4)

You are a company secretary employed by KM Management
Consultancy Sdn. Bhd., a professional corporate secretarial firm
offering corporate secretarial services to small and medium sized
corporations. For the last few months, the firm has failed to
contact the directors of Kenanga Sdn. Bhd, one of your clients.
The firm tried all means of communication such as sending mail
to their business premises but it was returned, sending electronic
mail but no reply and neither were the directors answering their
phone or fax. You are now thinking of vacating the office of the
company secretary of Kenanga Sdn. Bhd.

(Apr 2010 Q4)

a) Discuss the relevant sections of the Companies Act 1965 that
allow you to vacate
the office of company secretary. State the
required documents to be lodged to
Companies Commission of
Malaysia.
oluntarily.

Answer :
Voluntary vacation is through resignation or cessation of contract.
Involuntary vacation of office may be through death, removal or
dismissal.
The office of the company secretary cannot be left vacant for more
than one month at any one time.
Lodge the FORM 48E Notice of intention to Vacate the Office
of Secretary if that none of the directors of the company can
be communicated with the last known residential address
Filed with CCM
After the expiry of 1 month from the date of notification
cease to be secretary
However should responsible for any act or omission done
before the secretary vacated the office

(Apr 2010 Q4)

b) If the directors of Kenanga Sdn Bhd are unhappy with the
secretarial services
provided by you, and would like to remove you as their company
secretary, discuss the necessary procedures for the removal of
company secretary.
Answer :
1.A company Secretary may resign by giving resignation letter to the
board.
2.The position of the vacant secretary must not be left unfilled for
more than one month.
3.Form 49 reflecting the resignation and appointment of new
secretary must be lodged with the Registrar of Companies.
4. In practice, the removal of secretary and appointment is done
simultaneously.

(Apr 2010 Q4)

c) Recently, there were a few university students undergoing their
practical training at the firm. Alya, one of them has expressed her
interest in pursuing a career as a
company secretary. She seeks your advice to explain the
necessary qualification to become a company secretary in Malaysia.
Answer :
i. Full age
ii. Residence in Malaysia
iii. A member of a professional body approved by the Minister of Domestic
Trade and Consumer Affairs;
The Malaysian Institute of Chartered Secretaries and Administrators
(MAICSA)
The Malaysian Association of Company Secretaries (MACS)
The Malaysian Institute of Accountants (MIA)
The Malaysian Institute of Certified Public Accountants (MICPA)
The Malaysian Bar
The Sabah Law Association
The Advocates Association of Sarawak
iv. licensed by the SSM pursuant to section 139B of the CA:
not bankrupt, not a criminal, resides in Malaysia, full age
the minimum qualification:
SPM + 5 years of work experience
Holders of certificate, Diploma, or degree + 3 yrs, 2 yrs & 1 yr
work of experience respectively

(Apr 2010 Q4)

d) Wafi, one of the firm's staff who is just newly appointed as an
assistant company
secretary would like to know the procedure for application and
renewal
Answer
: of company secretary's licence.
Section 139B. Licence to act as company secretary.
(1) For the purpose of section 139A(b), an application for a licence shall be made
to the Registrar in the prescribed form and manner.
(2)FORM48B - The Registrar may require an applicant to supply him with such
further information as he considers necessary in relation to the application.
(3) The Registrar shall only grant or renew the licence if (a) after consideration of the character, qualification and experience of the
applicant; and
(b)after consideration of the interest of the public,
he is of the opinion that the applicant is a fit and proper person to hold a licence.
(4)FORM48C - Every licence granted under this section, including a renewal of the
licence, shall be in force for a period of three years after the date of the issue
thereof, unless sooner revoked by the Registrar.
(5) An application for renewal of a licence shall be made not later than thirty days
before the expiry of the licence.
(6) Notwithstanding subsection (5), where an application for the renewal of a
licence is made less than thirty days but before the expiry date of the licence, the
Registrar may for any special reasons he deems fit accept such application for
consideration.
FORM 48D - CCM will reject the renewal if they are in opinion that the applicant

Company Secretary
Jan 2012 - Part
B
QUESTION 4
Mr. Shazly has been a practising company secretary for almost 10 years.
He is currently working with Excel Logistics Bhd, a public limited
company. As a professional trained in corporate matters, Mr. Shazly has
exercised his duties with due care and diligence.
However, in November 2011, Mr. Shazly who acted as a guarantor for
his friend's personal loan was declared a bankrupt by the Malaysia
Department of Insolvency due to a default in the payment of the loan.
The board of directors was aware of the current status of Mr. Shazly. The
board members agreed to retain him as a company secretary because
Mr. Shazly has shown his capability and ability while performing his
duties. In the meantime, a board meeting is convened to appoint an
additional company secretary.

Can Excel Logistics Bhd retain Mr.Shazy as a company secretary? Justify your answer
pursuant to the provision of section 139C of the Companies Act 1965. (6 marks)

Excel Logistics Bhd cannot retain Mr.Shazy as a company secretary as stated in the provision of section
139C of the Companies Act 1965 which is a person is disqualified to act as a secretary if:
he is an undischarged bankrupt;
he is convicted within or outside Malaysia of:
any offence in connection with the promotion, formation or management of a corporation
any offence involving fraud or dishonesty punishable on conviction with imprisonment for three months or more
any offence involving dishonesty and lack of reasonable diligence in the discharge of his duties
insider trading
any offence in which proper company accounts are not kept

he ceases to be a member of the professional body prescribed by the Minister under Section 139A of
the Act
he ceases to be a holder of a valid license issued under Section 139B of the Act
If a person continues to act as a secretary for the company after he is disqualified under Section 139C,
without leave of the Court, he and every director who knowingly permits him to act in the capacity, are
guilty of an offence.
Mr. Shazy would have been disqualified from being a Company Secretary upon him being adjudicated a
bankrupt person in November 2011. However, company can retain he as employees provided the
company should appoint another qualified secretary to be the first secretary

Company Secretary
Jan 2012 - Part
B
b) Explain the provisions of sections 139(6) and 139(3) of the
Companies Act 1965 regarding the procedure for the appointment of
a company secretary. (6 marks)

Section 139 (6) of the Act requires

a person before appointment as secretary to make a declaration
in the FORM 48F (Declaration by a person before appointment as
Secretary) that
he is not in contravention of Section 139A and 139C of the Act
and
he consents to act as a secretary of the company.
While in accordance to Section 139(3) of the Act,
the secretary shall be appointed by the director and one of those
secretaries shall be present at the registered office of the
company by himself or his agent or clerk on the days and the
hours which the registered office is to be accessible to the public.
The office of the secretary of company shall not be left vacant for
more than 1 month at any time.
If the office is vacant or for any other reason the secretary is not

Company Secretary
Jan 2012 - Part
B
c) If Mr. Shazly was a discharged bankrupt and later appointed as a
director, can he sign any documents on behalf of the company
either as a director or secretary of the company? (3 marks)

If a person is appointed as a secretary of the company and at the

same time is also appointed as a director of the company, he is not
authorized to sign any documents on behalf of the company in his
capacity as a director and the secretary of the company at the
same. For example, in attesting the use of the common seal of the
company, the same person shall not sign in his capacity as a
director and as secretary of the company

Company Secretary
Jan 2012 - Part
B
d) State five (5) legal restrictions imposed on the company secretary
as an officer of the company. (5 marks)
(Total: 20 marks)
Using the property of the company
Using the information acquired by virtue of his position as an
officer of the company
Using his position as such officer of the company
Using the opportunity of the company which he became aware of,
in the performance of his functions as an officer of the company;
or
Engaging in business which is in competition with the company.

Company Secretary
Jun 2012 - Part
B
QUESTION 1
Lina Suriani works as a file keeper in MZ Consultancy Sdn Bhd, a
secretarial and business management company. She assists the seniors
in filling up the business and company related forms. She graduated with
a Diploma in Accounting but due to financial constraints, she is not able
to further her studies. However, she is interested in becoming a
company secretary.
Required:
a) Advise Lina Suriani on how she may become a company secretary
without furthering her studies. (6 marks)
Lina Suriani may become a company secretary under S139B CA, which
stated the following minimum qualifications: She is not a bankrupt
Not a criminal as stated in S130(1) of CA
Resides in Malaysia and above 18 years of age
Minimum qualifications / experience of Sijil Pelajaran Malaysia / Sijil
Tinggi Pelajaran Malaysia with 5 years of work experience; or
Holder of a Certificate, Diploma or Degree (in the fields of law,
company secretarial practice, management, business

Company Secretary
Jun 2012 - Part
B
b) Outline the procedures that Lina Suriani should follow in order to
apply for a company secretary's license in Malaysia.
(6 marks)

Lina Suriani should do the followings: Submit the application form using Form 48B Application for
Company Secretarys Licence
CCM will call Lina Suriani for an interview. She will be assessed on
her knowledge in relation to company law and company
secretarial practices.
If successful, CCM will issue Form 48D Company Secretarys
Licence, which is valid for 3 years
30 days before expiry of the licence, Lina Suriani may submit
Form 48C Application for Renewal of Company Secretarys
Licence to CCM
Lina Suriani is required to attend continued professional education
courses before renewal of her licence.

Company Secretary
Jun 2012 - Part
B
c)

Yusof, a friend of Lina Suriani, is also a company secretary in MZ

Consultancy Sdn Bhd. His license will expire on 25 September 2012.
He seeks your advice on the following:
i)

The last acceptable date for him to renew his license.

ii)

Yusof should submit his application to renew the licence latest

by 27 August 2013, i.e. at least 30 days before the expiration
date. However, if the application is submitted less than 30 days
but before expiry, CCM may accept such application for
consideration.
The effect if Yusof failed to renew his company secretary's
license prior to the last acceptable date.
(4 marks)

Yusoff is disqualified to act at the material time when he ceased

to be a holder of valid license as he not renewed his license
within time limit. He and the director who knowingly permits him
to act in that capacity, are guilty of offence

Company Secretary
Jun 2012 - Part
B
d) Fazira, a new staff in MZ Consultancy Sdn Bhd does not understand
the vacation of office of company secretary pursuant to the
Companies Act 1965. Discuss the relevant provisions in the
Companies Act 1965 that allow a person to vacate the office of
company secretary. (4 marks)

Where the office of the secretary of a company shall not be left

vacant for more than a month at any one time, the secretary
may lodge form 48E Notice of Intention to Vacate the Office
of Secretary, on the grounds that none of the directors of
the company can be communicated with the last known
residential address.

The said Form must be filed with CCM. With this notification,
Fariza shall cease to be the Secretary of the company on the
expiry of one month from the date of the notice.

Section 139(1E) states that the secretary shall not be relieved

from liability for any act or omission done before the
secretary vacated the office.

QUESTION 5(Jun 2013) Part B

Jamal, Dave and Alan are the directors of TECO Sdn.Bhd. Maya
Karin is an experienced licensed company secretary who has
worked for TECO Sdn.Bhd. for the past five years. The board of
directors has found out that Maya has not renewed her license as
required by section 139B of the Companies Act 1965. At the same
time, she has also failed to file the companys annual returns for
the past two years.

Jamal and Dave who are also the two major shareholders of TECO
Sdn.Bhd. had requested Maya to issue share certificates to their
friend, Aaron without a proper resolution. In consideration for
Mayas assistance, Jamal and Dave promised not to make any
claim against her for not filing the annual returns on time for the
past two years. Alan has heard about this improper arrangement
and is concerned with the legality of the above transaction.

a) What are the provisions in section 139 of the Companies

Act 1965 pertaining to the qualification and
disqualification of a company secretary? Relate your
answer to the case above.
(8 marks)
Answer :According to section 139 of the Companies Act 1965, the
qualification to act a company secretary are :- must be full age i.e. 18 years and above thus the appointment of
body corporate or a firm as the secretary of the company is
prohibited
- must be residence in Malaysia
- A member of a professional body approved by the Minister of
Domestic Trade and Consumer Affairs;
The Malaysian Institute of Chartered Secretaries and
Administrators (MAICSA)
The Malaysian Association of Company Secretaries (MACS)
The Malaysian Institute of Accountants (MIA)
The Malaysian Institute of Certified Public Accountants (MICPA)
The Malaysian Bar
The Sabah Law Association

- licensed by the SSM pursuant to section 139B of the CA:

not bankrupt, not a criminal, resides in Malaysia, full age
the minimum qualification:
SPM with 5 years of work experience
Holders of Certificate, Diploma, or Degree with 3 years, 2 years
and 1 year work of experience respectively.
The disqualification to become a company secretary are :- Undischarged bankrupt
- Convicted whether within or outside Malaysia
Any offence in connection with the promotion, formation or
management of a corporation
Any offence involving fraud or dishonestly convicted with the
imprisonment of 3 months
Any offence involving dishonestly or lack of reasonable
diligence in the discharge of duties
Insider trading
Any offences in which proper company accounts are not kept
- Ceased to be a holder of a valid license issued by SSM
- No longer a member of the professional body

According to the case, it show that Maya has not renewed her license as
required
by section 139B of the Companies Act 1965 therefore she become
disqualified to become the company secretary.
b) If Alan is dissatisfied with Mayas professional conduct, how can
he remove her
from office?
(4 marks)
Answer:Yes, Alan can remove Maya from the office. He can pass the resolution to
remove the secretary and notify CCM by filing FORM 49 within one (1)
month from the effective date of removal and register of secretaries must
be updated accordingly.
Alan should disclose reasonable ground of such removal by disclose
improper professional conduct done by Maya such as not renew her
license as required by Act, failed to file the companys annual returns for
the past two years and improper arrangement with Jamal and Dave to
issue share certificates to their friend, Aaron without a proper resolution.


c)

Had you been appointed as the company secretary for

TECO, what would be your actions to rectify the following
situations:
i) Issue of share certificates without a proper resolution
check all the document related to issuance of share certificate
such as FORM32A Form Of Transfer Of Securities and Register of
Member that keep by the company and investigate the document
whether have a proper resolution or not
check the evidence that the shareholder is the member of the
company stated the number of share he holds with company
common seal
if certain share certificate have enough evidence that it acquire
not through proper resolution, the share should be transmission to
other member approved by board meeting in the act of law
The invalid share certificate will become paperless when the
transmission complete and the companys register of member
have to be update

ii)Failure to file annual returns for two consecutive years.

In order to rectify the problem , the following action will be take :check the financial statement of the company for the years involved and;
conduct the Extraordinary General Meeting (EGM) to discuss with
members about the problem and ask them to check whether the annual
return of the years involved prepared by previous company secretary are
true or not
after annual returns of both year have been rectify and approved through
the board meeting, the annual return report have to be signed by the
director, by the manager or by the company secretary of the company.
The duty of company secretary is to lodged it to the CCM immediately
after that.
TECO Sdn.Bhd. have to pay any fine and penalties that enforced by law
to the appropriate authority such as CCM and Tax authority because of
late submission of the 2 consecutive year of annual returns.
(8 marks)
(Total: 20 marks)

THANK YOU