CCM says empowered to conduct physical checks on companies without prior notice

KUALA LUMPUR, Oct 26 — The Companies Commission of Malaysia (CCM) has said that it has powers under the law to carry out physical checks on companies without giving notice.

CCM said its physical inspections on companies is a “common approach” to ensure that companies comply with regulations, citing Section 7B (1) of the Companies Act 1965 as granting it authority as the Registrar of Companies to carry out such checks

“Section 7B (1) of the Companies Act 1965 states: ‘For the purposes of determining whether a corporation or any officer of the corporation complies with this Act, the Registrar may have access to any place or building and may inspect and make copies of or take extracts from any book, minutes, lists or documents kept by the corporation required by or under this Act.’

“By virtue of the provisions of the above and to ensure regulatory compliance, CCM has the power to enter any place or premises to inspect any relevant documents without having to submit prior notice to any company,” it said in a statement dated October 18 and released today.

“However, if any company fails to submit documents requested during the examination process, CCM may issue a notice under section 7B (2) of the Companies Act 1965 to obtain copies of the documents related to the company within 14 days,” the regulatory body added.

According to CCM, it had examined 9,340 companies on various provisions under the Companies Act 1965 during the period from 2014 to October 2016.

It said it had also audited 281 firms for compliance under Section 167 of the same law during the same period, where these companies provided CCM with their recordkeeping practices.

“Regulatory and enforcement activities continue to be CCM’s main agenda in addition to efforts to educate business owners of the legal implications of compliance and the need for best corporate governance practices,” it said, adding that such efforts to educate the business community are being done through the CCM Training Academy and will continue to be carried out.

“This is to create a conducive business environment, improve the level of compliance within the corporate community, and to make Malaysia as the internationally preferred business destination,” it said.

On October 14, National Oversight and Whistleblowers Centre’s (NOW) chief Rafizi Ramli said the CCM had raided the organisation’s office and demanded access to its financial records despite not having any formal written notice to do so.

Rafizi said that such an action was against the law, claiming that the CCM does not have the powers to come and inspect documents without any written notice.

While noting that CCM officers had said that the inspection was to ensure NOW’s compliance with Section 167 which requires officials and directors to keep complete financial records for up to seven years, Rafizi said he had since sought legal advice and instructed NOW’s staff not to release any information to CCM unless a written notice is given.

Rafizi also said he will seek legal advice on how to mount a challenge if the notice by CCM to NOW does not comply with the Companies Act’s requirements.

The CCM’s statement to the media today however did not make any references to NOW or any companies.