Common Seal in Malaysia

Common Seal in Malaysia | Bestar

Malaysian Company Seal Regulations Explained

In Malaysia, the "common seal" (also known as a company seal or corporate seal) has undergone significant changes in its legal standing.

Is it mandatory? No, it is no longer mandatory for companies in Malaysia to have a common seal under the Companies Act 2016. This is a key change from the previous Companies Act 1965.

What is it used for? Despite no longer being mandatory, many companies still opt to use a common seal. It is an official embossing tool used to authenticate important company documents such as:

• Resolutions

• Contracts

• Deeds

• Share certificates

• Agreements

It provides a mark of authenticity and authority, adding a layer of formality and perceived credibility to documents.

Information on a common seal: A typical common seal includes:

• The company name

• Registration number

• The word "Malaysia" or "Sdn Bhd"

Execution of documents without a common seal: Under the Companies Act 2016, if a company does not have a common seal, documents can be validly executed by:

• The signatures of at least two authorized officers, one of whom must be a director.

• In the case of a sole director, the document is signed by that director in the presence of a witness who attests the signature.

An "authorized officer" can be a director, a company secretary, or any other person approved by the Board of Directors.

Important considerations:

• Other laws: While the Companies Act 2016 makes the common seal optional, some other specific laws or government authorities (e.g., the Land Authority for property transactions) may still require the use of a common seal. Therefore, companies might still need to adopt one to comply with such requirements.

• International transactions: For international transactions, Malaysian companies may use an "official seal," which is a version of the common seal augmented with information specifying the location where it is to be used.

• Constitution: If a company wishes to do away with its common seal, its constitution (if it has one) may need to be amended to remove any requirement for its use.

In essence, while the common seal is no longer a legal necessity for all company documents in Malaysia, its use remains prevalent due to its traditional role in formalizing and authenticating corporate actions. Companies have the flexibility to choose whether to use one or rely on authorized signatories.

How Bestar can Help

Here's how Bestar can help:

1. Ensuring Compliance with the Companies Act 2016 and Other Regulations:

• Understanding the Law: The Companies Act 2016 made the common seal optional, but Bestar is up-to-date on all legal requirements. We can advise whether your company still needs a common seal for specific purposes (e.g., land transactions, international dealings, or if your company's constitution still mandates it).

• Document Execution: We guide companies on the proper methods of executing documents, whether by affixing a common seal (if opted for) or by the required authorized officer signatures, ensuring legal validity.

• Avoiding Penalties: Non-compliance with company law can lead to fines and legal repercussions. Bestar ensures timely and accurate filings, board resolutions, and other statutory requirements are met, minimizing risks for the company and its directors.

2. Managing Corporate Governance:

• Advisory Role: Bestar provides expert advice on corporate governance best practices, helping companies establish robust frameworks for accountability and transparency.

• Meeting Management: We assist in preparing for and documenting board meetings, Annual General Meetings (AGMs), and Extraordinary General Meetings (EGMs), including drafting agendas, taking minutes, and ensuring resolutions are properly passed and recorded.

• Maintaining Records: We are responsible for maintaining accurate and up-to-date statutory registers and company books, which are crucial for compliance and can be audited at any time.

3. Handling Critical Documentation:

• Drafting and Reviewing: We prepare and review various legal documents, ensuring they are compliant with Malaysian laws and the company's constitution. This includes resolutions, share certificates, agreements, and other corporate instruments.

• Statutory Filings: We handle the timely submission of annual returns, financial statements, and all other necessary documents to the Companies Commission of Malaysia (SSM).

• Common Seal Management (if applicable): If a company chooses to use a common seal, Bestar can oversee its proper use, storage, and ensure it's affixed according to the company's internal rules.

4. Strategic Guidance and Support:

• Business Structuring: We can advise on the most suitable company structure and assist with company incorporation, including name reservation and document preparation.

• Changes in Company Details: We manage changes related to directorship, shareholding, company name, or registered address, ensuring all updates are filed correctly with the SSM.

• Restructuring and Expansion: For companies undergoing mergers, acquisitions, share transfers, or other corporate restructuring, Bestar provides crucial guidance on the legal and procedural aspects.

5. Cost-Effectiveness and Efficiency:

• Outsourcing Benefits: Many businesses, especially SMEs, outsource company secretarial services to Bestar. This is often more cost-effective than hiring a full-time in-house company secretary, as it eliminates salary, training, and administrative overheads.

• Focus on Core Business: By delegating these administrative and compliance tasks to Bestar, business owners and directors can free up valuable time and resources to focus on their core operations, growth strategies, and profitability.

• Access to Expertise: Bestar has a team of qualified and experienced professionals who stay updated on the latest regulatory changes, providing specialized knowledge and industry best practices.

In summary, engaging professional company secretarial services in Malaysia is crucial for ensuring legal compliance, mitigating risks, enhancing corporate governance, and allowing businesses to operate smoothly and focus on their strategic objectives. We act as a vital link between the company and regulatory bodies, providing peace of mind and safeguarding the company's legal standing.