Selective Capital Reduction Under the Malaysian Companies Act 2016

Section 115 of Companies Act 2016 (the “Act”) deals with the reduction of share capital, whereby a company may, unless otherwise provided in its constitution, undertake a selective capital reduction (“SCR”) exercise by:

a) a special resolution and confirmation by the High Court in accordance with Section 116 of the Act (“Court Order Procedure”); or

b) a special resolution supported by a solvency statement in accordance with Section 117 of the Act (“Solvency Statement Procedure”).

In light of the above, it is therefore vital for the company to ensure that the constitution of the company authorizes the reduction of share capital. In the event where the constitution does not authorize the reduction of capital, then the procedure for amending the constitution shall first be carried out.

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