MALAYSIA – Power Of Registrar To Strike Off A Business Entity For A Particular Reason

On 10 July 2017, the Registrar of the Companies Commission of Malaysia (SSM) issued a Circular to clarify their power to strike off a business entity regulated by SSM which had been found to be misusing the business by employing foreigners without the relevant permit or allowing its registered business to be conducted by foreigners.

In general, the policy relating to the employment of foreigners in Malaysia was aimed to fill the labour shortage in certain sectors corresponding with the government intention. However, there were few business entities that took the opportunity to reap profits by employing workers who do not have a permit or not a permit that is allowed for the sector. Unfortunately, there are business entities which allow foreigners to do business with a registration certificate legally registered at SSM.

Even though local authorities such as Kuala Lumpur City Hall (DBKL) and the Immigration Department are often assertive in their enforcement action in order to control the influx of foreigners in business but this issue has now been deemed a threat to national security, especially on the economic aspect.

SSM as a body that regulate business entities in Malaysia has a role to ensure that the provisions of the law are complied with by business entities.

Therefore, a business entity that does not comply with the provisions of the law under the purview of the SSM may be taken legal action against it, especially if it appears that business entity has employed foreigners without the relevant permit or has allowed its registered to be conducted by foreigners.

Business entity may refer to a company, sole proprietorship, partnership, limited liability partnership or foreigner limited liability partnership.

Therefore, SSM will take firm action to strike off or cancel the registration of a business entity, whichever is applicable, if SSM is satisfied that the business entity is being used for the purposes which is prejudicial and inappropriate to the economic security and national interest.