Initiatives Towards Improving Indicators in The Doing

SAB as Reported in DB 2013 12 3 6 15.1 0.00695 54 Reduce incorporation fee from RM 3,000 to RM 1,000 for companies with up to RM 400,000 in paid in ca...

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Initiatives Towards Improving Indicators in The Doing Business Report: Starting a Business By: COMPANIES COMMISSION OF MALAYSIA

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OVERVIEW

World Bank Ease of Doing Business Report 2013 on Starting a Business Indicator

Short- term Initiatives

Long-term initiatives

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Starting A Business Methodology 3

1

4

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WORLD BANK’S DOING BUSINESS METHODOLOGY (Assumption) 

Standard, small to medium-size company that needs to start operations legally – –

obtain all permits/ licenses and complete all inscriptions/verifications/notifications



Procedures are recorded where interaction is required with an external party



Limited liability company conducting general commercial activities



Located in the largest business city



100% domestically owned



Start-up capital of 10 times income per capita



Turnover at least 100 times per capita



Possess between 10 and 50 employees



Does not qualify for special benefits



Does not own real estate 4

SHORT TERM INITIATIVE

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SUMMARY OF MALAYSIA’S PERFORMANCE UNDER THE STARTING A BUSINESS INDICATOR Under the DB2013 Report, starting a business in Malaysia has been ranked at position number 54 out of 185 economies. Starting a business in Malaysia is reported as having 3 procedures which will take 6 days, costs RM4,350 and requires minimum capital of RM2 MALAYSIA’S STARTING A BUSINESS INDICATOR FOR DB 2013 REPORT Items

Cost (RM)

1.

Score

Rank

3

10

6

17

15.1

96

0.00695

98

Procedures:

(i) Application to SSM on the prescribed form (13A) to ensure the

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availability of the proposed company's name (1 day) (ii) Appointment of Company Secretary and preparation of company incorporation documents (3 days)

1,000

(iii) File necessary documents with the Companies Commission of Malaysia, obtain stamps and purchase of post-incorporation items including registration with 3 other agencies (EPF, IRB & SOCSO) (1-

3,320

2 days) 2.

Time (Days)

3.

Cost

(% of income per capita) 1,279 (USD) X 100 = 15.1%

8420 4.

Paid-In minimum capital (RM2) Overall ranking

4,350

54

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SUMMARY OF THE NEW INITIATIVES Reforms/ Initiatives

SAB as Reported in DB 2013 Reduce incorporation fee from RM 3,000 to RM 1,000 for companies with up to RM 400,000 in paid in capital Introduce the “incorporation guaranteed process” by merging name search and incorporation in one procedure Mandatory online incorporation process via MyCoID in KL

To appeal to WB on interpretation of minimum capital requirement and to issue a Practice Note to clarify the law and practice on this matter Combined Impact of All Reforms and if appeal on Minimum Capital Requirement is successful

DB Overall Procedures Time Rank (number) (days)

Cost (% of income per capita)

Paid-in Min. Capital (% of income per capita)

SAB Ranking After Reform

12

3

6

15.1

0.00695

54

12

3

6

8.2

0.00695

43

12

2

3

15.1

0.006951

44

12

1

1

8.2

0.006951

44

12

1

1

8.2

0.000000

9

10

1

1

8.2

0.006951

30

9

1

1

8.2

0.000000

9 7

EXISTING INCORPORATION FEE STRUCTURE UNDER SECOND SCHEDULE COMPANIES ACT 1965 AUTHORISED SHARE CAPITAL

INCORPORATION FEE

MYR 0 – MYR 100,000

MYR 1,000.00

MYR 100,001 – MYR 500,000

MYR 3,000.00

MYR 500,001 - MYR 1 million

MYR 5,000.00

MYR 1 million - MYR 5 million

MYR 8,000.00

MYR 5 million - MYR 10 million

MYR 10,000.00

MYR 10 million - MYR 25 million

MYR 20,000.00

MYR 25 million - MYR 50 million

MYR 40,000.00

MYR50 million - MYR 100 million

MYR 50,000.00

Over MYR 100 million

MYR 70,000.00

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NEW INCORPORATION FEE STRUCTURE UNDER SECOND SCHEDULE COMPANIES ACT 1965 AUTHORISED SHARE CAPITAL

INCORPORATION FEE

MYR 0 – MYR 400,000

MYR 1,000.00

MYR 400,001 – MYR 500,000

MYR 3,000.00

MYR 500,001 - MYR 1 million

MYR 5,000.00

MYR 1 million - MYR 5 million

MYR 8,000.00

MYR 5 million - MYR 10 million

MYR 10,000.00

MYR 10 million - MYR 25 million

MYR 20,000.00

MYR 25 million - MYR 50 million

MYR 40,000.00

MYR50 million - MYR 100 million

MYR 50,000.00

Over MYR 100 million

MYR 70,000.00

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SUMMARY OF THE NEW INITIATIVES ON PROCEDURES, NUMBER OF DAYS AND COSTS No. of Procedures

No. of days

Procedures recorded to start a business in Malaysia

New cost

Application to the Companies Commission of Malaysia (CCM) on the prescribed form (13A) to ensure the availability of the proposed company's name. NEW: TO COMBINE NAME APPROVAL PROCESS WITH INCORPORATION PROCESS (INTRODUCE THE “INCORPORATION GURANTEED PROCESS”) Company Secretary prepares company incorporation documents NEW: INTRODUCTION OF SUPERFORM WITH READY MA&A

-

-

30

1

2

1

1

File necessary documents with the Companies Commission of Malaysia, obtain stamps and purchase of post-incorporation items including registration with 3 other agencies (EPF, IRB & SOCSO). NEW: TO REDUCE FEE FROM RM3000 TO RM1,000 AND TO MANDATE MyCoID FOR INCORPORATION APPLICATIONS IN KL

1320

2

3

Total

2350

USD (rate at 3.4)

691

1000

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THE CALCULATION ON COST: Total costs to start a business (US$) X (gross national income) GNI per capita (US$)

100

1279 X 100 = 15.1% 8420

691 X 100 = 8.2% 8420 11

COMPARISON OF MALAYSIA’S RANKINGS FOR STARTING A BUSINESS Starting a Business Ease of Doing Business Rank

Year

Rank

Procedures (number)

Time (days)

Cost (% of income per capita)

Min. capital (% of income per capita)

DB2004

..

..

10

37

33.1

0

DB2005

..

..

10

37

32

0

DB2006

..

..

10

37

26.6

0

DB2007

..

..

10

37

25.1

0

DB2008

..

..

10

31

23.1

0

DB2009

..

..

10

20

18.9

0

DB2010

23

116

10

18

15.6

0

DB2011

21

113

9

17

17.5

0

DB2012

18

50

4

6

16.7

0

DB2013

12

54

3

6

15.3

0 12

LONG TERM INITIATIVE

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MODERNISING THE COMPANIES ACT

Introduce a new legal framework applicable to all companies: 1. Simplify laws & procedures for companies based on private/public distinction and facilitating the growth of private companies; and 2. Remove obstacles & facilitating the growth of private companies.

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KEY PROVISIONS IN FACILITATING & MODERNIZING ENTRANCE INTO 2: Facilitating & Modernizing THEPSCORPORATE SECTOREntrance into the Corporate Sector LESS PROCEDURE

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KEY PROVISIONS IN FACILITATING & MODERNIZING ENTRANCE INTO 2: Facilitating & Modernizing THEPSCORPORATE SECTOREntrance into the Corporate Sector LESS COST & EASY ACCESS

Easy Access to Incorporation:

Fixed incorporation

fees:

Fee to incorporate a company will be based on the type of companies

Single Member/

Director Company:

Company can be incorporated by only one member and that member can also be the director.

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Migration Par ValuetoRegime PS to 3: No Migration No Par(NPV) Value Regime LESS COST & PRCEDURES

Companies will no longer be required to state its authorised share capital

The NPV regime will bring about simplification of accounts where share premium accounts and reserves will no longer be applicable (a transitional period will be given to utilise the amount standing in credit in the company’s share premium accounts).

SSM Copyrights Reserved

Companies will no longer be subjected to lengthy and costly procedures to increase share capital.

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KEY PROVISIONS IN FACILITATING & MODERNIZING ENTRANCE INTO 2: Facilitating & Modernizing THEPSCORPORATE SECTOREntrance into the Corporate Sector Removal of Obstacles to Incorporation Process:

LESS PROCEDURE

Introduction of guaranteed name approval concept:

Requirement for M & A at the point of incorporation will NOT be required:

Name reservation is optional. If name requested is unavailable, Registrar may assign any such expression followed by the number assigned by the Registrar

Company may adopt AA after incorporation; and

Some provision of current Table A will become substantive law.

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KEY PROVISIONS IN FACILITATING & MODERNIZING ENTRANCE INTO PS 2: Facilitating & Modernizing Entrance into the Corporate Sector THE CORPORATE SECTOR LESS PROCEDURE Introduce a single interface incorporation template (via a Super Form).

 No more multiple forms [Form 6, Form 13A, Form 48A], no more M&A and AA at the point of incorporation.

 M&A will be part of Super Form & Table A will become substantive law.  Promoter/shareholder /director may incorporate a company.

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KEY PROVISIONS IN FACILITATING & MODERNIZING ENTRANCE INTO PS 2: Facilitating & Modernizing Entrance into the THE CORPORATE SECTOR Corporate Sector LESS PROCEDURE  Leveraging on the advent of ICT - by making mandatory for incorporation documents to be lodged electronically.  Making the requirements for certificates of incorporation and company seals optional.

 No more over the counter transactions Mandatory electronic incorporation via MyCoID.  Replace the requirement for statutory declaration with statement of compliance for incorporation purposes.  the requirements for certificate of incorporation, Notice of incorporation is conclusive evidence.  Company seals will become optional. contracts or transactions will be executed by two directors. (For single director, company secretary must countersigned).

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THANK YOU

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