237 Enforcement by CCM

Enforcement by CCM

CCM is not a corporate entity without powers and responsibility to the state. Therefore, enforcement carried out by CCM is dealt separately in a manner of due diligence, due process and subequently exercising its enforcement function shown under the Acts mentioned earlier i.e., Companies Act 1965 (Act 125); Registration of Businesses Act 1956 (Act 197); Trust Companies Act 1949 (Act 100); Kootu Funds (Prohibition) Act 1971 (Act 28); and any subsidiary legislation made under these Acts such as Companies Regulations 1966; and Registration of Businesses Rules 1957.

In performing the function of enforcement, CCM is supported by three divisions, namely:

1. Compliance Division.

2. Investigation Division.

3. Legal Services Division.

Compliance division

This division is divided into three departments, namely:

1. Surveillance Section.

2. Corporate Account Monitoring Section.

3. Intermediaries Supervision Section.

The inspection unit of the Surveillance Section conducts inspections on businesses and companies to ensure that the Registration of Businesses Act 1956 and Companies Act 1965 as well as their accompanying Rules and Regulations are complied. In achieving this task, the inspection unit conducts system monitoring on companies that fail to lodge statutory documents under the Companies Act 1965. Subsequently, it issues compound notices to business owners, companies and company officers for offences under the relevant Acts. This is also the unit that recommends dormant companies to the Insolvency Division for action under Section 308 of the Companies Act 1965. Cases that result in offences committed under the Companies Act 1965 and Registration of Businesses Act 1956 shall be referred to another division i.e., the Investigation Division for investigation and Prosecution Division for prosecution.

A corporation which receives queries on its lodged financial statements or compliance of approved accounting standards or being investigated on problematic financial statements should address its concern with the Corporate Report Monitoring Unit.

Trust Company and Interest Scheme Monitoring Unit is a special unit under this division that conducts inspection on golf clubs, recreation clubs and timesharing schemes under the Companies Act 1965.

Although the licence of an auditor is issued by the Ministry of Finance Malaysia, the Auditor Monitoring Unit under this division is responsible for registering new audit firms and the subsequent monitoring of audit firms throughout Malaysia that are registered at the CCM. It also enforces offences commited by auditors under the Companies Act 1965.

In accordance with Section 139A of the Companies Act 1965, only members of accredited professional bodies as prescribed by the Minister can act as company secretaries. Seven (7) professional bodies have been prescribed which are as follows:

a. Malaysian Institute of Accountants (MIA).

b. Malaysian Institute of Chartered Secretaries and Administrators (MAICSA).

c. Malaysian Institute of Certified Public Accountants (MICPA).

d. Malaysian Bar Council.

e. “Persatuan Peguambela Sarawak.”

f. “Persatuan Undang-Undang Sabah.”

g. Malaysian Association of Company Secretaries (MACS).

However, there are licensed secretaries whose license are issued by the ROC under Section 139B. They should have held a position as secretary for three years prior to 10 September 1992 or have at least five years experience in a relevant field with the knowledge and ability to provide corporate secretarial services. Therefore, the Compliance Division has to have a Corporate Intermediary Section to process the application and renew secretary licences besides carrying out surveillance as well as storage or enhancement of the database of company secretaries. Besides, the Secretary Licensing Unit would interview new applicants, issue company secretary licenses and issue renewal of company secretary licenses.

Since a company secretary must be qualified under Section 139A(a) or Section 139A(b) and is regulated under the Companies Act 1965, CCM has created a Secretary Surveillance Unit to carry out enforcement under Sections 139A, 139C(3) and 364(2) towards licensed secretaries and secretaries who are members of accredited professional bodies. This unit is also the unit under the Compliance Division that carries out enforcement towards company directors, specifically under Section 139C(3), which allows company secretaries to continue to practice despite an expired license. This unit also enforces the regulations on a corporation without a company secretary for more than one month under Section 139(1B). This unit also monitors training of company secretary.


Investigation division

This division is divided into three departments, namely:

1. Financial and Fraud Section.

2. Corporate Governance Section.

3. Special Projects Section.

The Financial and Fraud Section handles cases in relation to financial management irregularities and fraudulent transaction by officers of a corporation. It is also responsible in investigating issues that relate to protection of minority shareholders, consumer protection, forensic accounting, insolvent trading, MASB cases, share hawking and fraudulent Investment.

Its Corporate Governance Section is responsible for handling cases which involve corporate irregularities and breach of company law among officers of corporate bodies under the Companies Act 1965.

This is the section that covers cases on due diligence, breach of fiduciary duties, corporate fraud, false and misleading Information, cases on interest schemes, insolvency, foreign companies, related party transaction and non disclosure cases.

Investigation of special or priority cases such as cases of public interest and national security, ministerial decree, intelligence and Anti-Money Laundering Act is under the Special Projects Section.

Investigation of a corporation on its annual returns, statutory records, non-tabling of accounts, AGM offences, referred cases, ROB cases and Trust companies is undertaken by the General Offences Section under this division.

In any prosecution, evidential evidence is important. Thus an Exhibit Unit exists in this division to play a supporting role to manage the exhibit or documents of the Investigation Division. Its responsibilities are to develop and implement guidelines and policies for exhibit management, to catalogue, manage and ensure security of any exhibits to legal cases. This unit is also entrusted to ensure the safe return of exhibits and to ensure that specific documents are destroyed as directed by the court upon completion of case.


Legal services division

This division is responsible for conducting prosecutions; rendering quality legal advice; preparing and reviewing contracts and handling litigation matters; antimoney laundering work with the Central Bank of Malaysia and participating in outreach programmes.

It has three departments/sections, namely:

1. Prosecution Section.

2. Litigation Section.

3. Legal Section to support its functions.

Register of cases in Court for offences committed under the Companies Act 1965 and Registration of Businesses Act 1956 can be located at the Prosecution Section.

Information and queries on all matters pertaining to civil suits and documents to be filed in Court is handled by the Litigation Section. Thus, all legal documents or cause papers relating to the Companies Commission of Malaysia is delivered to this section under this division. Its Legal Section provides legal services to CCM which includes issuing legal advice, preparing and reviewing contracts for CCM, interpreting the laws administered by CCM and participating in outreach programmes as part of the balanced enforcement approach strategy to educate the public.

Complaints department

In line with its business friendly and market approach in a market economy, CCM has established a Complaints Department. It is responsible to accept, record and act on complaints concerning both businesses and companies from company officers, shareholders, business owners, business partners or the public regarding any breaches under the following statutory provisions:

1. Companies Act 1965 (Act 125)

2. Registration of Businesses Act 1956 (Act 197)

3. Trust Companies Act 1949 (Act 100)

4. Kootu Funds (Prohibition) Act 1971 (Act 28)

or any subsidiary legislation made under the Acts specified above as:

5. Companies Regulations 1966; and

6. Registration of Businesses Rules 1957.

Any complaints can be forwarded directly through e-complaint or to the address below:

Complaints Section
Companies Commission of Malaysia
Level 28, Menara SSM@Sentral
No. 7 Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur.
Tel: 603 – 2299 4400
Fax: 603 – 2299 5461
Email: enquiry@ssm.com.my


BCS 202/05 Corporate Compliance Management Copyright © 2011 by Wawasan Open University. All Rights Reserved.


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