The study on the separation of ownership and control of Malaysian companies

Kamaliah, Salleh and Asiah, Bidin and Noor ‘Ashikin, Hamid and Noraida, Harun and Zuhairah Ariff, Abd Ghadas (2019) The study on the separation of ownership and control of Malaysian companies. International Journal of Law, Government and Communication, 4 (15). pp. 36-44. ISSN 0128-1763

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Abstract

The members own the company by virtue of their shareholding and the directors manage and exercise control over the company’s affairs through the company’s board meeting. Despite of segregation of powers and roles between the members and directors, there has been inclination on the part of the members to participate to greater extent in the company’s affairs. This paper aims to establish the legal position as between the directors and members that reflect separation of control and ownership in the company under the common law and the Malaysian law. The method used in this study is content analysis of the reported Malaysian and international law cases as well as the statutory provisions in order to examine the legal position established under the common law, the previous Companies Act 1965 and the newly introduced Companies Act 2016. The study reveals that the separation between the two has long been recognised and upheld by the common law as well as the Malaysian Acts. The introduction of the section 195 of the Companies Act 2016 however allows members to raise their voice in relation to matters which are within the powers of directors, hence the separation becomes slightly vague. In the absence of the latest judicial decisions to test the application of section 195, further review on its application may be required in order to determine methods to measure if a members’ recommendation is truly made in the best interests of the company.

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