Accordingto the old Companies Act 1965, it is compulsory for incorporation to hold AnnualGeneral Meeting (AGM) once in every year (SSM, 2017). However, the requirement for AGM for privatecompanies has been abolished under the New Companies Act. This means that when CA 2016 come into force effective on31 January 2017, all private companies are notrequired to hold AGM in every year, except required by its constitution orvalidly required by the necessary members (q3solutions, 2017).There is the different betweenthe old act 1965 as all meetings of private companies areknown as meeting of membersin the new act 2016.
The decisions process for privatecompanies can be made done by the written resolutions. However, a resolution toremove an auditor or a director before the expiration of his term of office cannotbe passed as a written resolution (Kensington,2017). On the other hand, public companies remainsthe same that are compulsory to hold an AGM in every year (q3solutions, 2017).Thechanges in the new CA is important to ensure that the responsibilities of the boardsare carried out and to run into their fiduciary duties.
Also, the changes madein the CA 2016 is to enhance the internal control, corporate governance as well(Nee. E, 2017). Formerly, shareholders have limitedright, thus it is to encourage the shareholders involved in the dailyoperational of the company (Nee. E, 2017). The purposes of New Act is to provide all the processand provisions necessary for the smooth running of a company.
Under the newCA, there are various policies that have impact on the private companies. Theabolishment of AGM in private company has impacted the business,such as allthe necessary process and procedure has to distribute separately such as the selectionof auditors, lodgment of annual returns and the tabling of audited financialstatements as well as the selection and retirement of directors, but not tiedto the holding of an AGM for private companies (Zico law, 2015). Besides that, even though the members donot have the benefit of the forum of a general meeting to discuss the board ofdirectors on such statements, but they still have a right to obtain auditedfinancial statements (Zico law, 2015). Furthermore, the requirement ofunanimous consent for members’ written resolutions for private companies hasbeen removed in the CA 2016.
It is compulsory to pass a written resolution thatis signed by the required majority of eligible members (Zico law, 2015). When the AGMs isremoved from the new CA 2016, it allowedprivate companies to reduce cost of doing businesses. As it is not necessary topay to appoint a company secretary at the point of incorporation (Nee.E, 2017). Asthe private companies do not need to set up AGM, then all the decision can be made by writtenresolution and the notice for the meeting can be sent through electronically (Nee. E, 2017).
This can be clarified as the cost- effectivemeasures. Moreover, the abolition of AGMfor private companies that drive the positive impact is to examine the entireprocess and simplify the rules relating to meetingprocedures as well as provides flexibility inmanaging affairs of companies in order to have the efficiency incorporationprocess and procedure (Isa. A, 2017).