Company Secretary and Auditors PDF

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Company Secretary and Auditors.

Who is the company secretary? S235(1): A company shall have at least one secretary who shall be a, a natural person b, eighteen years of age and above c, a citizen or permanent resident of Malaysia S235(2): A secretary shall be (a) A m of body set out in the Fourth Schedule or (b) licensed by Companies Commision of Malaysia Act 2001. CS is a professional whose role in a company set up in that of an advisor for legal matters. He/she is a very important member of the company’s management to handle all paper’s work, statutory documents and procedural matters that running of the company involves. A cs has been recognized by co as one of the officers of the co. Status S2(1): Company Secretary is within the meaning of officer. (officer are liable including CS) CASE: Newlands v National Employers’ Accident Association(1885) 54 LJ (QBD) 428: the functions of a company secretary were described as “clerical and ministerial only”. ( Previously, CS does not represent the co, what they done will not bind the co, will be personally liable.)

WHAT IS THE AUTHORITY OF CS? (Now, cs can represent, act on behalf of the co and their act would bind the co, but only in administrative function) Case: Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711 A company secretary caused the company to receive a large bill for the use of a car for business purposes Facts: A company secretary caused the company to receive a large bill for the use of a car for business purposes ; Issue :Did the secretary have the required authority to enter into the transaction involving the car? DecisionYes Reasoning Apparent authority; the role of secretaries in companies has changed over time: they are no longer mere clerks and may sign contracts on a company’s behalf We can say that cs of today is a co officer who is endorsed with heavier responsibilities and greater power, duties which demand for ethical behaviour from cs at all time. He’s entitled to sign contracts connected with the administrative side of the co’s affairs such as employing staff and ordering cars.

NOT management functions- Re Maidstone Buildings Provision Ltd [1971] 1 WLR 1085 the court considered whether the Secretary of a company was liable for fraudulent trading .i.e. carrying on the business of the company whilst it was insolvent. The court held that: “So far as the position of the secretary is concerned, it is established beyond all question that a secretary, while performing the duties appropriate to the office of secretary, is not concerned in the management in the company.” Duties Cs is an important officer of the co, his duties are largely administrative in nature. The duties are not fixed by law but are usually assigned to him either by the articles of association or his contract of employment. The duties may vary from co to co depending on the size and operation of the co. Main duties: -Maintenance of co’s registered office -To prepare and lodge with the Registrar all returns required to be lodged inder companie act. -To carry out the functions of the chief admintrative officer of the co. -To maintain the different registers required by the CA to be maintained by the co, eg: register of members, register of substantial SHs, register of charges. -To organise and atted SHs and Directors meeting, including the preparation of the agendas, sending out of notices and the maintenance of minute books. -To be conversant with the relevant statutory reuirements under the CA, capital markets.. -Safekeeping of the co seal and legal documents. -Fiduciary duties: Re Morvah Consols Tin Mining Co (Mckay’s case) (1875) A secretary will be liable for misfeasance if he receives an improper commission [McKay's case (1876) 2 Ch D 1], or for wrongful acts done by him while he is an officer of the company, e.g., where he takes some of the fully paid shares given to the vendor of property. [Re Morvah Consols Tin Mining Co. (1875) 2 Ch D 1 (CA)], but he will not be personally liable for misapplication of the company's funds though he has been aware of it. AUDITORS Co auditors play a very important role and they are uniquely placed to review documents and financial data in a company. The companies Act impose various duties on auditors to review and highlights errors and discrepancies in company account. Appointment in Private Co. S267(3)(a) : The BOD shall appoint an A of the co at least 30 days before the end of the period for the submission of the first financial statements to the Registrar. S267(3)(b): also to fill a casual vacancy in the office of auditor.( either the A died) Otherwise, Sh will appoint at GM if the D fail to appoint, and SH will exercise the majority power- S267(4) S322: special notice (28days)

Otherwise, S268: The registrar may make the appointment of the auditor on the application in writing from any member of the company, if the co does not appoint the auditors as required by the section. OR, appoint a A by written resolution, which mean no meeting held S279(1) (pg285) S269: the co shall appoint the A at each AGM of the meeting to hold office until the end of the next AGM. (A are valid for one year, afterthat can be reaapoint) Breach of S269: Co and director will be liable. Public Co ( must have AGM, cannot be written resolution) S271(2)(a): the BOD shall appoint an auditor at any time before the first AGM of the co. Also S271(2)(b): To fill casual vacancy in the office of the a Otherwise, S271(4): Sh appoint A in GM to hold office until the end of the first AGM. Otherwise, S272: Registrar make the appointment of the A on the application in writing of any member of the co, if the co does not appoint the auditor as required by the section. Breach of S271, co and d liable. AUDITORS: an approved auditor a is a person who has been registered as a public accountant with the Malaysia institution of accountant – S14(2) Accountant Act 1967. Also, approved by Minister of Finances as a co A for the purpose of the act. MIA may approve an applicant as a company auditor id he is satisfied that the applicant is a person of good character and competent to perform the duties of an auditor under the Act upon payment of a prescribed fee. Co A are in a contractual relationship with the co and as such are liable to the co if the fail to honour the terms of the contract. Revoked- S263(3) – the approval of a license can be revoked. -263(4) – renewal of approval of a co auditor shall be in force for a period od 2 years after the date of issue unless sooner revoked by the Minister. 续期核准员的批准在发布之日起 2 年内生效，除非部长早日撤销。 S265(5)(a): Co shall not aapoint a person or a firm as an auditor unless that person have consented in writing to act as an auditor. Provison for an Auditor: he/she shall not provide non audit service. ; require a person to declare his/her independent. Qualification of an auditor. S264 A person maybe disqualified from being appointed, of frim acting as A of a co: (a) If he is not an approved co auditor. (b) If he is indepted to the co, or to a corporation that is deemed to be related to that co by virtue of section 7 om an amt exceeding RM25000. © If he is an officer of the company (d) If his partner, employee or employer is an officer of the company (e ) A partner or employee of an employee of an offcer of the co. (f) A sh or his spouse is a Sh of a corporation whose employee is an officer of the co. (G) If he is responsible for or if he is the partner employer of employee of a person responsible for the keeping of the register of the members or the register of holder of debentures of the co.

(H) He is an undischarged bankrupt with or outside Malaysia except with leave of the court. I) He has been convicted of any offence involving fraud or dishonesty punishable with imprisonment for three months or more. Case: Goh Joon Hai & Ors v Malaysia Association of Certified Public Accountants [1997]2 MLJ 314 S264(1)© - partner of an officer. S264(2) – former officer ( 12 months)

Auditors Resignation; An auditor can only resign if he is not the sole auditor of the co or at the GM of the co, but not otherwise. Therefore an A can only resign if another had been appointed. S284: They are also required to give a resignation statement ( reasons) to CCM and in the case of a listed company to the stock exchange ( Bursa Malaysia) Public co: S283(3)(4)(6) : Auditor shall make a written representation, require co to circulate , oral representation or read out written representation to explain why he want to resign. Director must call for GM within 28 days from the date of the receipt of the notice of resignation , otherwise A is liable. REMOVAL: Even is the appointment is valid, an auditor may be removed from office in accordance with the procedure prescribed in S276. In S276(1), an A of a co can be removed from office by resolution of the co at the GM of which special notice has been given but not otherwise. A special notice is noticeof not less that 28 days given to the co by those proposing to paasss the resolution. S277(3)(4)(5), where such SN is received by the co it must forthwith send a copy of the notice to the auditor concerned and to CCM. The a may, within 7 days after the receipt of such notice , make written representation of a reasonable length and request that copies of it be sent by the co to the memebbers. The a may request that the representation be read out at the meeting. He is also allowed to make oral representation at the meeting itself. S276(2): Auditor can sue BOC as if the co depriving the person removed of the compensation or damages payable to him in respect of the termination of his appointment as an A.

COMMON LAW --Re Kingston Cotton Mill Co (No2) (1986) --- A are watchdogs, not bloodhounds. A not required to enforce breaches. But, merely required to detect and report on irregularitied in co. accounts etc: A myst be independent of the co, key factor for non bias ( aloof of and divorced from the aims, objects and activities of the co) – Re Transplanters (holding co) Ltd ; LMW Electronics pte Ltd v Ang Chuang Juay & Ors

Duties : S266(1): an a has the duty to report to the M on the accounts, which are required to be laid before the co in GM and also on the co’s accouting and other record. In the case of a holding co, the auditor is also required to report on the consolidated accounts. S266(2) : the a is required to state his report whether, in his opinion, the accounts and consolidated accounts, if any have been properly drawn up: - So as to give a true and fair view of the matters required to be dealt with in the accounts and consolidated account, - in accordance with the provisions of the Act as ans to give a true and fair view of the co’s affairs and - in accordance with the applicable accounting standard. Detect whether they are any material errors, omission or fraud. S266(8): A have to report to CCM if there are any breach/ non observance of CA S266(9): A of a public co is in the opinion of a serious offence involving fraud and dishonesty is being or has been commited by the officers of the com, he must immediately report the matter in writing to the Registrar. IF A BREACH S266(8)(9) , A is liable for 5 YRS and RM3M FINE. S266(6): A’s report shall be attached to accounts and given to SH at any reasonable time. Auditors RIGHTS S266(7) : A of a co or his agent authorized by him in writing is entitled to attend any GM of the co and to receive all notices and communication relating to any GM which a member is entitled to received, and to be heard at any GM which he attends on any part of the business of the meeting which concerns the A in his capacity as auditor. ( attend and speak at the GM) IN PUBLIC CO S285(1): A shall attend every AGM where the financial statementsof the com for the financial yeat are to be laid, so as to respnd according to his knowledge and ability to any question relevant to the audit of the financial statements. IN PRIVATE CO S285(2) : if due notice is given to an A of the intention to move a resolution requiring the presence of the a at a GM of the co where financial statement of the co for any financial year are to be laid, the a shall attend that meeting so as to respond according to his knowledge and ability to any question releveant to the audit of the financial statement. S285(3) : A who fails to attend a meeting as required under (1)(2) are liable. UNLESS (DEFENCE): (a) the a is prevented by circumstances beyond his control, b) A arrange for the another a with knowledge of the audit to attend and carry out duties of the a at the meeting, c) if the auditor is a partner of a firm, the person attending the meeting in place of the designated a is a partner of that firm, d) A arranges an AGENT authorized by writing to attend and carry out duties of the a at the meeting.

POWER OF AUDITORS. S266(4) : A of a co have right to access at all reasonable times to the accounting and other records, including registers of the com, and is entitled to require from any officer of the co and any auditor of a related com such informations and explanation as he desires for the purposes of audit. S266(5): An auditor of a H co, has right to access at all reasonable times to the accouting record and other information, including registers of any S, if necessary. IF an officer of a company, who refuse and fails without lawful explanation to allow A of the com, or an auditor or a comp refuse or fails without lawful explanation to allow an auditor of its holding company to have access to any accounting and other records…commits an offence and shall be liable to imprisonment for 3 years or RM500,000 FINE.

PRIVILEGES Not liable for defamation unless malice (not good intention)- S286(1) :an auditor shall not in the absence of malice on his part, be liable to any action of defamation at the siot pf any person in respect of any statement which he makes in the course of his duties as an auditor, whether the statement is made orally or in writing. (2) : A person shall nt, in the absence of malice on his part be liable any any action for defamation at the suit of any person in respect of the publication of any doc prepared by an auditor in the course of this duties and required under this Act to be lodged with Registrar. 任 何人不得因任何人的诉讼而对任何人发出任何诽谤行为负责，就发布由审核员在本职 责范围内所规定的任何文件，并根据本法令规定 提交给注册服务商。

EXCLUSION OF LIABILITY S288(1) : Any provision, whether contained in the constitution or in any contract with a co of otherwise, for exempting any officer or auditor of the co from, or indemnifying him against, any liability which by law would otherwise attach to him in respect of any negligence, default ,breach of duty or breach of trust, of which he may be guilty in relation to com, shall be void. 任何规定，无论是包含在宪法中还是与任何其他合同的任何合同，豁免公司的任何高 级人员或审计师免除或赔偿他根据法律对任何对任何疏忽造成的任何责任， 违约，违 反责任或违反信托，对于 com 可能有罪，均为无效。 。...