MUST SHARE TRANSFERS BE IN A SPECIFIC PRESCRIBED FORM?
- The Companies Act 1965
The previous Companies Act 1965 (‘‘CA 1965’’) served as the governing legislation for companies in Malaysia prior to the current Companies Act 2016. According to Section 103(1) of the CA 1965, a company could not register a transfer of shares or debentures unless a proper instrument of transfer in the prescribed form had been delivered to the company. As per the Company Regulations 1966, a reference to a proper instrument of transfer in the prescribed form of shares or debentures in section 103(1) of the Act is a reference to an instrument that is duly completed in accordance with “or to the effect of Form 32A” set out in the Second Schedule therein.
The regulations therefore would suggest that a strict compliance with the format or language of Form 32A is not required as long as the transfer form has the same effect as Form 32A. Nonetheless this has created much controversy and in the past, standard company secretarial practice insisted that the format of Form 32A had to be adopted.
- The Companies Act 2016
The uncertain use of Form 32A under the CA 1965 was clarified and removed under Section 105(1) of the new Companies Act 2016 which stipulates that a shareholder or debenture holder may transfer all or any of his shares or debentures in the company by a duly executed and stamped instrument of transfer and shall lodge the transfer with the company. There is no longer a reference to a prescribed form and it is evident that Section 105(1) no longer requires an instrument of transfer to be in any particular form.
Whilst the Companies Commission of Malaysia (‘‘CCM’’) provides a standard form of transfer that is available on their official website this should be regarded as a helpful resource only. Therefore, as long as the instrument of transfer substantially sets out the pertinent information concerning the transfer and is acceptable to the relevant company secretary which has been duly executed and stamped, it should adequately fulfil the requirements of Section 105(1).
- Transmission of shares by operation of law under Section 105(4) of the Companies Act 2016
In the recent High Court case of United Renewable Energy Co Ltd v TS Solartech Sdn Bhd  7 MLJ 141, the High Court made clear that where interest in shares are transmitted by operation of law a separate share transfer is not necessary. This decision was based on reading Section 105(1) together with Section 105(4) . Where a transmission by operation of law has occurred a transferee of shares is entitled to be registered as a shareholder if it is able to demonstrate the transmission and a written request for transfer is made to the share registrar.
RASLAN LOONG, SHEN & EOW