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A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC AND COMMON LAW COUNTRY IN COMPARISON WITH THE COMPANY

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Title: A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC AND COMMON LAW COUNTRY IN COMPARISON WITH THE COMPANY


1
A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC
AND COMMON LAW COUNTRY IN COMPARISON WITH THE
COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA. Dr. (Mrs) Ashraf U. Kazi
Sophia FurtadoSchool of Business, Monash
University,  Churchill, Victoria, Australia 3842.
2
A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC
AND COMMON LAW COUNTRY IN COMPARISON WITH THE
COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA.
  • Malaysia is an Islamic country with a strong
    economic development and established companies.
  • China and Malaysia are two important countries of
    Asia, which have made significant contribution
    towards the development of companies and the
    world economy.
  • China has seen the economic boom and it is
    considered as the fastest growing economy of
    Asia.

3
A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC
AND COMMON LAW COUNTRY IN COMPARISON WITH THE
COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA.
  • The Chinese legal system is based upon the civil
    law.
  • Malaysian legal system is greatly influenced by
    common law, teachings of Quran and Islamic law.
  • Companies in China are regulated by the Company
    Law 1993, which recognises a distinct legal
    personality of a company.

4
COMPANY LAW IN MALAYSIA
  • Company law in Malaysia is based upon English
    company law and it is also influenced by the
    Australian companies law.
  • Companies in Malaysia are regulated by the
    Companies Act 1965, which also recognises a
    distinct legal personality of a company.

5
COMPANY LAW IN MALAYSIA AND IN CHINA
  • The main forms of companies recognised in
    Malaysia are limited company, public company and
    private company.
  • The main forms of companies recognised in China
    are limited liability companies and the joint
    stock companies.

6
COMPANY LAW IN MALAYSIA AND IN CHINA
  • Company law in China, as well as Malaysia
    recognises directors' duties, corporate
    governance, insider trading, protection of
    shareholders interests and accountability with
    varying degrees of responsibility.

7
COMPANY LAW IN MALAYSIA AND IN CHINA
  • The economic boom of the twenty first century has
    made China, the fastest growing economy in Asia.

  • China is influenced by traditions and civil law
    and it seeks to establish modern company system
    and supports a socialist market economy.
  • Company law in Malaysia is greatly influenced by
    common law, though Islamic law is recognised and
    the teachings of Quran have major impact on
    Malaysia. Malaysia seeks to maintain investor
    confidence and protect market integrity.

8
A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC
AND COMMON LAW COUNTRY IN COMPARISON WITH THE
COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA.
  • The aim of this research is to understand the
    diverse nature of company law in two Asian
    countries, one from a civil law jurisdiction like
    China and the other from a common law
    jurisdiction, influenced by Islam, like
    Malaysia.
  • It also compares and contrasts the Chinese
    Company Law and the Malaysian Companies Act 1965
    in order to identify a better model. Further, the
    research identifies the merits and demerits of
    company law in China and in Malaysia.

9
A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC
AND COMMON LAW COUNTRY IN COMPARISON WITH THE
COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA.
  • The research looks into the development of
    company law, corporate forms and the concept of
    legal personality in China and in Malaysia.
  • It critically analyses the duties of directors
    and corporate governance in both China as well as
    in Malaysia. Further, the research makes a
    comparative analysis of the position of
    shareholders and accountability in a company in
    both the countries.

10
A STUDY OF COMPANY LAW IN MALAYSIA, AN ISLAMIC
AND COMMON LAW COUNTRY IN COMPARISON WITH THE
COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA.
  • The research also looks into the effect of
    insider trading in China and in Malaysia.
  • Finally, a comparative analysis of the Chinese
    Company Law and the Malaysian Companies Act 1965
    is made, with a view to identify the advantages
    and disadvantages and to find a better model.

11
THE COMPANY LAW IN CHINA, THE FASTEST GROWING
ECONOMY OF ASIA.
  • Two main types of private corporation authorised
    under the Chinese Company Law 1993 are
  • Limited liability company and
  • Joint stock company.

12
A STUDY OF COMPANY LAW IN MALAYSIA
  • In Malaysia, main forms of corporation formed
    under the Companies Act 1965 are as follows
  • Limited company,
  • Public company and
  • Private company.

13
A STUDY OF COMPANY LAW IN MALAYSIA
  • The Companies Act 1965 facilitates formation of
    other types of companies which are as follows
  • Guarantee company and
  • Unlimited company

14
A STUDY OF COMPANY LAW IN MALAYSIA
  • The Labuan Offshore Companies Act 1990 (LOCA)
    regulates offshore companies and foreign offshore
    companies in Labuan.
  • The Companies Act 1965 does not apply to the
    companies formed under Labuan Offshore Companies
    Act 1990.

15
CHINESE COMPANY LAW
  • The reforms in the Chinese Company Law may
    be addressed as follows
  • Safeguards, checks and balances between the
    shareholders and the board of directors need
    improvement.
  • Shareholders must be given a right of derivative
    action, wherein, they may bring an action on
    behalf of the company to prevent any misuse of
    power by the directors.
  • Checks and balances between the board of
    directors and the supervisory committees need
    improvement,
  • Minority shareholders should be adequately
    protected and
  • Shareholders should be able to transfer their
    shares freely.

16
Conclusion
  • Malaysia has exhibited high standards of
    corporate governance and corporate discipline.
  • It has strong principles of disclosure, financial
    reporting and insider trading.
  • The Companies Act 1965 exhibits strong accounting
    standards, better protection of the rights of
    shareholders and effective regulation of
    financial reporting.
  • A comparative study of company law in China and
    Malaysia proves that the company law in Malaysia
    is a better model.
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