This is a fundamental guide on the types of company shares in Malaysia.
When you become a shareholder, it is important you understand the different types of shares and other key topics related to company shares.
Let’s learn more.
Types of company shares
In a Malaysian company, there are two types of shares:
- Preference shares
- Ordinary shares
Holders of preference share are entitled to receive company assets before ordinary shareholders when the company is insolvent. Preference shareholders also receive dividends at a fixed and higher rate.
However, preference shareholders do not have voting rights.
On the other hand, ordinary shares grant the holder the right to vote on shareholder resolutions, the right to attend, participate and speak at the company’s meeting and receive dividends or profits after preference shareholders are paid.
Value of shares
Upon the commencement of the Companies Act 2016, all shares issued have no par or nominal value.
The monetary value of a share under the no-par share system is determined by the paid-in capital at the time of issuing the shares.
What is a share certificate?
A share certificate is proof of share ownership by a shareholder in a company. Since 31 January 2017, the share certificate requirement is no longer compulsory.
According to section 97 of the Companies Act, a company is not required to issue a share certificate unless an application by the shareholder for a certificate relating to the shareholder’s share has been received or provided by its constitution.
Application for issuance of share certificate
Within 60 days from receiving the receipt of an application, the company must send a share certificate of the shareholder, including the following information:
- The name of the company
the class of shares held by that person
- The number of shares held by that person
Loss or destruction of share certificate
If the share certificate is destroyed or lost, the company shall issue a duplicate certificate upon request and a fee of RM 50 from the shareholder.
Reduction of share capital
There are two methods a company can reduce its shares:
- Special resolution and confirmation by the court (section 116)
- Special resolution supported by a solvency statement (section 117 )
Ways that a company can reduce its share capital are:
- By exhausting or reducing the liability on any of the shares of the company in respect of unpaid share capital
- By cancelling any paid-up share capital which is lost or unrepresented by available assets
- By returning to the shareholders any paid-up share capital which is in excess of the needs of the company
Transfer of shares
Before shares can be transferred, the shareholder must inform the company director. Once the director acknowledges the transfer, the shareholder is required to complete Form 32A.
Information to include in the form are:
- Company name
- Details of the transferor(s) and transferee(s)
- Number of transferred shares
- Value of transferred shares
- Signature of shareholders and witness
At the request of the directors, the company secretary must prepare a board resolution for the directors to approve the transfer and sign Form 32A. Once completed, the shares may be transferred. The original share certificate is returned to the company secretary for cancellation.
The next step is submitting Form 32A to the Inland Revenue Board for assessment and paying stamp duty to validate the transfer. The company secretary must then enter the new shareholder’s name into the register book, and a new share certificate will be issued to the new shareholder to complete the share transfer process.
Call on shares
Pursuant to section 82, directors can make calls upon shareholders concerning any unpaid shares and not by the conditions of allotment of shares made payable at a fixed date.
The call should not exceed one-fourth of the issued price of the share or be payable at less than 30 days from the date fixed for the payment of the last preceding call.
Each member must pay the amount called on the shares at least 14 days from the specified date, time and place of payment.
If the shareholder does not pay the call or instalment of the call within the specified date, the directors may issue a notice to the shareholder requiring payment of the unpaid amount along with interest or compensation that may have increased.
The notice mentioned above shall specify the date on or before the payment is required to be made and state that in the event of non-payment on or before the specified date, the shares are subjected to be forfeited.
There are two types of company shares in Malaysia which are the preference shares and ordinary shares. Both shares give different rights and ownership to the holder. Do not hesitate to contact Acclime if you have any further enquiries.
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