The Impact of COVID-19 on Corporations and Corporate Law in Malaysia

Foreword
Preface
Contents
About the Editors
1 The Pandemic, Businesses and the Companies
	The Companies Act
	Background
	COVID Act 2020
	Directors’ Duties to Act in Good Faith
	Directors’ Duty to Exercise Due Care, Skill and Diligence
	Auditors’ Duties and Obligations
	Board Meetings, Company Meetings and Shareholder Activism
	Compliance with Statutory Requirements
	The COVID-19 Diffusion and Criminal Liability Risks for Corporations
	Effect on Capital Markets
	Corporate Restructuring and Insolvency
	Concluding Remarks
	References
2 Directors’ Fiduciary Duties
	Introduction
	Director as a Fiduciary
	Who are Directors?
		Directors Owe Their Fiduciary Duties
	Creditors
		When the Company is Insolvent
		When There is An Adverse Change in the Financial Position of the Company
		Treating Creditors Equally
		May Creditors Take Action Against Directors?
	Employees
	Communities
	Reinventing the Company
	Conclusion
	References
3 Directors’ Duty to Exercise Due Care, Skill and Diligence
	Introduction
	The Malaysian Scenario
	Statutes and Incentives
	Temporary Measures for Government Financing (Coronavirus Disease 2019 (COVID-19)) Act 2020
	Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020
	Securities Commission Malaysia (SC)
	Relief Measures on Fundraising by Securities Commission Malaysia
	Companies Commission Malaysia (CCM)
	Duty of the Directors Under the Companies Act 2016
	Good Faith and Proper Purpose
	Combined Test
	Statutory Defence and Discharge of Duties for Directors
	Reliance on Information Provided by Others
	Delegation of Power to Act Under S. 216 Companies Act 2016
	Director’s Responsibilities with Regard to Financial Statements and Reports Under the Companies Act 2016
	Special Considerations for Duty of Care in Light of the Pandemic
	Corporate Rescue Schemes
	What Should Directors Be Doing?
	Wrongful and Fraudulent Trading
	Director’s Duty to Act in the Interest of Employees
	Conclusion
	References
4 Auditors’ Duties and Obligations in Light of COVID-19 Pandemic
	Introduction
	Background of Study
	Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) Regulations 2020
	Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020
	Auditors’ Duties and Obligations
		Common Law Position
		The Position Under the Companies Act 2016
	Challenges Faced by Auditors Due to COVID-19
		Appointment at Annual General Meetings
		Remote Auditing
		Digital Transformative Process
		Evidence
		Going Concern
		Security Issues
		Regulatory Datelines
		Wrıtten Resolutions
		High Quality Audit
		Presumptıon of Insolvency
		Attendance at General Meetings
	Conclusion
	References
5 Board Meetings, General Meetings and Shareholder Activism
	Introduction
	Board Meetings
		Bolts and Nuts of Virtual Meetings
		Statutory Reporting Woes
		Keeping up with Technology
		Meeting Bites for Properly Constituted Meetings
	General Meetings
		Pay Notice to the Days
		Notice Goes Electronic
		To Attend or Not to Attend
		The Chairman who Chairs the Meeting
		The New Normal for Meetings
		Polling Day
		Adjournment of Meeting
		Virtual Meetings
	Shareholder Activism
		Malaysian Code for Institutional Investors
	Conclusion
	References
6 Compliance with Statutory Requirements During the COVID-19 Pandemic
	Introduction
	Lodgement of Documents With CCM
		Application for Extension of Time
		Movement Control Order
	Members’ Meetings
		Venue
		Quorum
		Right to Speak
		Right to Vote
	Financial Statements
		Automatic Extension of Time of 90 Days Upon Application
	A Walkthrough
		Annual Return
		Financial Statements
		Preparation
		Audit
		Signing
		Circulation of Financial Statements and Reports
		Annual General Meeting
	Moving Forward
	Conclusion
	References
7 State Intervention to Oblige Corporations’ Measures to Prevent COVID-19 Diffusion: A Truly Justified Matter?
	Introduction
	Impact of COVID on Workplace
	Background of Study
	Conceptual Framework Governing Criminal Law and Public Health
	Can State Intervention Be Justified?
	Conclusion and Recommendations
	References
8 The Effect of COVID-19 on the Capital Market
	Introduction
	Efforts Taken to Mitigate the Impact of the Pandemic on Households and Businesses
	COVID-19 and the Capital Market
	Margin Trading
	Access to Capital
	Insolvency Protection
	Takeovers
	Regulated Short Selling
	The Pervasive Effect of the Pandemic on Companies
	SME’s
	Digitisation
	Financial Fraud
	Moving Forward
	Conclusion
	References
9 Impact of COVID-19 on Corporations in Malaysia from a Corporate Restructuring and Insolvency Law Perspective
	Introduction
	The Economic Impact of COVID-19 and Official Policy Reactions
	Salient Legislative and Policy Changes
	Insolvency and Winding-Up Proceeding
	The Threat of Insolvency and The Shifting of Directors’ Duty
	Insights Into Corporate Manoeuvre During The Uncertain Times
	Malaysian Corporate Restructuring Mechanisms
	COVID-19 and Judicial Attitude on the Debtors’ Obligation to Pay and Restructuring
	Conclusion
	References
10 The Way Forward
	Introduction
	Directors’ Duties
		Directors’ Fiduciary Duty
		Director’s Duty of Skill and Care
	Auditors
	Meetings and Shareholder Activism
	Compliance of Regulatory Requirements
	Liability for Non-compliance with Measures to Curb the Spread of COVID-19
	Effects on Capital Markets
	Corporate Restructuring
	Corporate Social Responsibility
	Epilogue
	References