CHAPTER 46:03
COMPANIES

ARRANGEMENT OF SECTIONS

   SECTION

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

PART II
THE OFFICE OF THE REGISTRAR OF COMPANIES

   3.   Establishment of the office of the Registrar of Companies

   4.   Functions of the Registrar

   5.   Fees payable to the Registrar

   6.   Registration of documents

   7.   Power to require delivery by electronic means

PART III
REGISTERS

   8.   The Registers

   9.   Allocation of unique identifiers

   10.   Preservation of original documents and reconstitution of lost documents

   11.   Records relating to dissolved companies

   12.   Searches and evidence of a register

   13.   Material not available for public search

   14.   Form of application for search

   15.   Certification of copies as accurate

   16.   Registrar’s powers of inspection

   17.   Power to require compliance

   18.   Power to extend time for doing any required act

   19.   Removal of material from the register

   20.   Rectification of the register

   21.   Application to foreign companies

   22.   Arrangements with other agencies

PART IV
CORE COMPANY REQUIREMENTS

Division I—Types of Companies

   23.   Private limited liability company

   24.   Public limited liability company

   25.   Company limited by guarantee

   26.   State owned companies

Division II—Company Formation

   27.   Forming a company

   28.   Requirements for incorporation

   29.   Incorporation

   30.   Statement of capital

   31.   Certificate of incorporation

   32.   Legal effects of incorporation

Division III—The Constitution of the Company

   33.   A company’s constitution and its effect

   34.   Power to adopt model constitution and default application of model constitution

   35.   Adoption, alteration and revocation of constitution

   36.   Constitutional documents to be provided to members

   37.   Right to participate in profits otherwise than as member is void

Division IV—Capacity, Powers and Validity of Acts

   38.   A company’s capacity and power of directors to bind the company

   39.   Validity of company actions

   40.   Dealings between a company and any other person

   41.   No constructive notice

   42.   Common seal

   43.   Official seal for share certificates of public companies

   44.   Ratification of pre-incorporation contracts

Division V—Company Names and Registered Office

   45.   Application for reservation of a name

   46.   Availability of name

   47.   Prohibited names and power of the Registrar to refuse a company name

   48.   Public limited company’s requirement to use plc

   49.   Private limited company’s requirement to use limited

   50.   Company limited by guarantee requirement to use limited

   51.   Provision of misleading information as to activities

   52.   Change of name

   53.   Direction to change name

   54.   Requirement to use company name

   55.   Requirement for company to have a current registered office in Malawi

Division VI—Alteration of Company Status by Re-Registration

   56.   Re-registration of public company as private company

   57.   Objection to resolution for a public company to be re-registered as a private company

   58.   Certificate of re-registration from a public to a private company

   59.   Re-registration of private company as a public company

   60.   Consideration for shares recently allotted to be valued

   61.   Certificate of re-registration from a private to a public company

   62.   Single member company changing status

Division VII—Core Requirements for Private Companies

   63.   Number of shareholders

   64.   Private company not permitted to make a public offer of securities

   65.   Exemption of a private company from the requirement to keep a register of shareholders

   66.   Exemption of a private company from the requirement to hold shareholders’ meetings

   67.   Exemption of a private company from the requirement to have a company seal

   68.   Exemption of a private company from the requirement to have a company secretary

   69.   Permitted transactions

   70.   Directors of private companies to comply with applicable corporate governance standards

 

PART V
SHAREHOLDERS AND THEIR RIGHTS

   71.   Meaning of "shareholder"

   72.   Liability of shareholders

   73.   Code of conduct for shareholders of private companies

   74.   Code of conduct for shareholders of all public companies

   75.   Subsidiary may not hold shares in holding company

   76.   Prohibition in section 75 not to apply where a subsidiary is acting as personal representative or trustee

   77.   Residual interest under pension scheme or employees’ share scheme to be disregarded for purposes of section 75

   78.   Employer’s rights of recovery under pension scheme or employees’ share scheme to be disregarded for purposes of section 75

   79.   Subsidiary acting as authorized intermediary in securities

   80.   Application of provisions to companies limited by guarantee

   81.   Application of this part to nominees acting on behalf of a subsidiary

PART VI
THE SHARES OF A COMPANY

Division I—Legal Nature, Types of Shares and Related Particulars

   82.   Legal nature of shares

   83.   Classification of shares

   84.   Preferences, rights and limitations in respect of shares

   85.   Statement of rights to be given to shareholders

   86.   Transferability of shares

   87.   No par or nominal value shares

   88.   Numbering of shares

   89.   Issue of shares

   90.   Alteration in number of shares

   91.   Fractional shares

   92.   Pre-emptive rights to new issues

   93.   Consideration for issue of shares

   94.   Shares not paid in cash

   95.   Calls on shares

   96.   Consent to issue shares

   97.   Time of issue of shares

   98.   Board may authorize distribution

   99.   Net asset restriction on distribution by public companies

   100.   Reduction of stated capital

   101.   Application of premiums received on issue of shares

   102.   Power to issue shares at a discount

   103.   Return as to allotment

Division II—Dividends and Distributions

   104.   Dividends

   105.   Shares in lieu of dividends

   106.   Shareholder discounts

   107.   Recovery of distributions

   108.   Reduction of shareholder liability treated as distribution

 

Division III—Acquisition and Redemption of Company’s Own Shares

   109.   Company may acquire its own shares

   110.   Purchase of own shares

   111.   Disclosure document

   112.   Meaning of "redeemable"

   113.   Application of this act to redemption of shares

   114.   Redemption of redeemable preference shares

   115.   Redemption at option of company

   116.   Redemption at option of shareholder

   117.   Redemption on fixed date

   118.   Cancellation of shares repurchased

   119.   Rights of holders of special classes of shares

Division IV—Treasury Shares

   120.   Company may hold its own shares

   121.   Rights and obligations of shares that company holds in itself suspended

   122.   Re-issue of shares that company holds in itself

   123.   Enforceability of contract to repurchase shares

 

Division V—Financial Assistance in Connexion with Purchase of Shares

   124.   Restrictions on giving financial assistance

   125.   Transactions not prohibited by section 124

Divisions VI—Debentures

   126.   Issue of debentures

   127.   Specific performance

   128.   Perpetual debentures

   129.   Register of debenture holders

   130.   Reissue of redeemed debentures

PART VII
REGISTERED VALUERS

   131.   Valuation by registered valuers

   132.   Registration of valuers

   133.   Practice as a registered valuer

   134.   Removal and restoration of names of valuers from the register

PART VIII
SHARE CERTIFICATION AND TRANSFER

Division I—Securities by Written Instrument

   135.   Share certificate as evidence of title

   136.   Rights to a lien on shares

   137.   Requirement for instrument of transfer

   138.   Procedure on lodging of transfer

   139.   Request of transfer or for entry in the register

   140.   Transfer by personal representatives or on the grant of probate

   141.   Certification of transfers

   142.   Duties of company with respect to certificates

   143.   Transfer of shares in a single member company

   144.   Private companies

   145.   Company to maintain share register

   146.   Treasury shares to be entered on the register of shares

   147.   Share register to be kept available for search

   148.   Place where register kept

   149.   Right to search and require copies

   150.   Public company’s secretary’s duty to keep, maintain and supervise share register

   151.   Power of Registrar to rectify share register

   152.   Trusts not to be entered on register

   153.   Share certificates

   154.   Replacement of lost or destroyed certificates

   155.   Share register as evidence of legal title

 

Division II—Securities Without Written Instrument

   156.   Meaning of securities

   157.   Power to issue directives

PART IX
THE OFFICERS OF A COMPANY

Division I—Directors and The Board of Directors

   158.   Meaning of "director"

   159.   Powers of directors as to the management of the company

   160.   Substantial transactions

   161.   Delegation of powers

Division II—Appointment and Removal of Directors

   162.   Number of directors

   163.   Direction for a company to make an appointment

   164.   Qualification and minimum age for appointment as director

   165.   Director’s consent required

   166.   Appointment of first and subsequent directors

   167.   Court may appoint directors

   168.   Appointment of directors of public company to be voted on individually

   169.   Removal of directors

   170.   Director ceasing to hold office

   171.   Resignation or death of last remaining director

   172.   Notice of change of directors and secretaries

   173.   Validity of acts of directors

   174.   Register of directors

Division III—Core Duties of Directors

   175.   Scope and nature of general duties

   176.   Duty to act within powers

   177.   Duty to promote the success of the company

   178.   Duty to exercise independent judgment

   179.   Duty to exercise reasonable care, skill and diligence

   180.   Duty to avoid conflict of interest

   181.   Duty not to accept benefits from third parties

   182.   Duty to declare interest in proposed transaction or arrangement

   183.   Consent, approval or authorization by members

   184.   Duty to comply with the prescribed code of corporate governance in Malawi

   185.   Civil consequences for breach of general duties

 

Division IV—Core Disclosure Obligations in Transactions Involving Self-Interest

   186.   Meaning of "interested"

   187.   Declaration of interest

   188.   Voidability of transactions where no declaration has been made

   189.   Effect on third parties

   190.   Application of sections 188 and 189 in certain cases

   191.   Interested director may vote

   192.   Relevant interests to be disregarded in certain cases

   193.   Disclosure of share dealing by directors

   194.   Restrictions on share dealing by directors

 

Division V—Transactions Involving Self - Interest Which Require the Disclosure and Approval of Shareholders

   195.   Directors’ long-term service contracts

   196.   Substantial property transactions

   197.   Meaning of "substantial"

   198.   Exception for transactions with shareholders or other group companies

   199.   Exception in case of company in winding-up or administration

   200.   Exception for transaction on a licensed stock exchange

   201.   Loans and quasi-loans to directors or connected persons

   202.   Meaning of "quasi-loan" and related expressions

   203.   Credit transactions

   204.   Meaning of "credit transactions"

   205.   Exceptions for expenditure on company business, etc.

   206.   Other relevant transactions or arrangements

   207.   The value of transactions and arrangements

   208.   Payments for loss of office

   209.   Amounts taken to be payments for loss of office

   210.   Payments by company

   211.   Payment in connexion with transfer of undertaking, etc.

   212.   Payment in connexion with share transfer

   213.   Exceptions for payments in discharge of legal obligations

   214.   Exception for small payments

   215.   Payments made without approval

Division VI—Directors’ Service Contracts for Public Companies

   216.   Directors’ service contracts

   217.   Copy of contract or memorandum of terms to be available for inspection

   218.   Right of shareholder to inspect and request copy

   219.   Application to shadow directors

Division VII—Directors’ Liabilities

   220.   Standard of care and civil liability of directors and officers

   221.   Indemnity and insurance

   222.   Duty of directors as to the company’s solvency

Division VIII—Company Secretaries

   223.   Public company required to have secretary

   224.   Direction requiring public company to appoint secretary

   225.   Qualifications of secretaries of public companies

   226.   Discharge of functions where office vacant or secretary unable to act

   227.   Duty to keep register of secretaries

   228.   Duty to notify Registrar of changes

PART X
ACCOUNTING REQUIREMENTS

Division I—General Obligations for All Companies Except Private Companies

   229.   Requirement to keep accurate and complete accounting records

   230.   Place where accounting records shall be kept

   231.   Appointment of auditor

   232.   Auditor’s fees and expenses

   233.   Appointment of a partnership as auditor

   234.   Qualifications of auditor

   235.   Approval of auditor

   236.   Automatic reappointment of auditor

   237.   Appointment of first auditor

   238.   Replacement of auditor

   239.   Auditor not seeking reappointment or giving notice of resignation

   240.   Auditor to avoid conflict of interest

   241.   Auditor’s report

   242.   Access to information

   243.   Auditor’s attendance at shareholders' meeting

Division II—General Obligations for Private Companies

   244.   General obligations for private companies

Division III—Financial Statements

   245.   Obligation to prepare financial statements

   246.   Content and form of financial statements

   247.   Financial statements to be prepared in Malawi currency

   248.   Presentation of group financial statements

   249.   Content and form of group financial statements

   250.   Right of member or debenture holder of a public company to copies of financial statements and reports

 

Division IV—Filing of Annual Reports and Accounts for Companies other than Private Companies

   251.   Obligation to prepare an annual report and accounts

   252.   Content of directors’ report

   253.   Sending annual report and accounts to shareholders

   254.   Failure to send an annual report and accounts

   255.   Filing of annual report and accounts

Division V—Annual Return

   256.   Annual return

PART XI
PUBLIC OFFERINGS OF SECURITIES

   257.   Public offers of securities in Malawi

   258.   Meaning of a "public offer"

   259.   Meaning of a "private offer"

   260.   General duty of disclosure in a prospectus

PART XII
ARRANGEMENTS, COMPROMISES AND RECONSTRUCTIONS;
MERGERS AND TAKEOVERS

Division I—Arrangements, Compromises and Reconstructions

   261.   Interpretation in this Division

   262.   Power to refer any compromise to the Court

   263.   Information as to compromises with creditors and members

   264.   Provisions for reconstructions

Division II—Mergers and Divisions

   265.   Application of this Division

   266.   Mergers and merging companies

   267.   Draft terms of a merger

   268.   Publication of draft terms of a merger

   269.   Approval of members of a merging company

   270.   Directors’ report of a merging company

   271.   Expert’s report on a merger

   272.   Supplementary accounting statement for a merger

   273.   Inspection of documents on a merger

   274.   Approval of constitution of a new transferee company on a merger

   275.   Protection of holders of securities to which special rights are attached in a merger

   276.   No allotment of shares to transferor company or its nominee in a merger

   277.   Circumstances in which certain particulars and reports are not required in a merger

   278.   Circumstances in which a meeting of members of the transferee company is not required in a merger

   279.   Circumstances in which no members’ meetings are required in a merger

   280.   Other circumstances in which meetings of members of transferee company are not required in a merger

 

Division III—Mergers and Divisions for Public and Private Companies

   281.   Divisions and companies involved in a division

   282.   Draft terms of a division

   283.   Publication of draft terms of a division

   284.   Approval of members of companies involved in the division

   285.   Directors’ explanatory report for a division

   286.   Expert’s report in a division

   287.   Supplementary accounting statement in a division

   288.   Inspection of documents in a division

   289.   Report on material changes of assets of transferor company in a division

   290.   Approval of constitution of new transferee company in a division

   291.   Protection of holders of securities to which special rights attach in a division

   292.   No allotment of shares to a transferor company or its nominee in a division

   293.   Circumstances in which a meeting of members of a transferor company are not required in a division

   294.   Circumstances in which a meeting of members of a transferee company are not required in a division

   295.   Agreement to dispense with reports in a division

   296.   Power of Court to exclude certain requirements in a division

 

Division IV—The Takeover Panel

   297.   The takeover Panel

   298.   Panel rules

   299.   Panel rulings

   300.   Directions

   301.   Power to require documents and information

   302.   Restrictions on disclosure of information

   303.   Contravention of the restrictions on disclosure of information

   304.   Panel’s duty of cooperation

   305.   Appeals

   306.   Failure to comply with rules about bid documentation

   307.   Panel as party to proceedings

   308.   Enforcement by the Court

   309.   Exemption from liability in damages

   310.   Privilege against self-incrimination

Division V—Takeover Offers

   311.   Meaning of "takeover offer"

   312.   Shares already held by the offeror

   313.   Cases where the offer is treated as being in the same terms

   314.   Shares to which an offer relates

   315.   Effect of impossibility of communicating or accepting an offer

"Squeeze-Out"

   316.   Right of offeror to buy out minority shareholder

   317.   Further provisions about notices given under section 316

   318.   Effect of notice under section 316

   319.   Further provisions about consideration held on trust

"Sell-Out"

   320.   Right of minority shareholder to be bought out by offeror

   321.   Further provision about rights to be bought out by offeror

   322.   Effect of right to be bought out

   323.   Applications to the Court

   324.   Joint offers

   325.   Associates

   326.   Convertible securities

   327.   Debentures carrying voting rights

   328.   Interpretation in this Part

PART XIII
WINDING-UP AND LIQUIDATION

   329.   Application of the Insolvency Act

   330.   Winding-up

PART XIV
REMEDIES AND ENFORCEMENT

Division I—Company Investigations

   331.   Power to appoint inspectors

   332.   Power to make regulations for the investigation of companies

   333.   Cost of investigations

   334.   Report of inspector

   335.   Duty to cooperate with inspectors

   336.   Power to terminate or suspend any investigation in relation to a company

Division II—Proceedings by Shareholders and Directors

   337.   Derivative actions

   338.   Cost of derivative action to be met by company

   339.   Powers of Court where leave granted

   340.   Compromise, settlement or withdrawal of derivative action

   341.   Personal actions by shareholders against directors

   342.   Personal actions by shareholders against company

   343.   Unfairly prejudicial conduct

   344.   Remedies

Division III—Penalties

   345.   False or misleading statements provided under this Act

   346.   Fraudulent trading

   347.   Director’s disqualification

Division IV—Removal from the Register of Companies

   348.   Grounds for removal from the register of companies

   349.   Requirement for the Registrar to give the company notice of intention

   350.   Objection to removal from the register

   351.   Duties of Registrar where objection received

   352.   Circumstances where property of the company removed from the register vests in the state

   353.   General power to restore to the register

Division V—Dormant Companies

   354.   Meaning of dormant company

   355.   Company may be recorded in the register as dormant company

   356.   Exemption available to dormant companies

PART XV
FOREIGN COMPANIES

   357.   Application of this Part

   358.   Meaning of carrying on business

   359.   Availability of name before carrying on business

   360.   Registration of foreign companies

   361.   Registered office and authorized agents

   362.   Return of alterations

   363.   Registrar’s certificate

   364.   Validity of transactions not affected

   365.   Financial statements

   366.   Notice by foreign company of particulars of its business in Malawi

   367.   Name and country of incorporation

   368.   Branch registers

   369.   Cessation of business in Malawi

   370.   Interpretation in this Part

   371.   Prospectus

PART XVI
SERVICE OF DOCUMENTS

   372.   Service of documents on company in legal proceedings

   373.   Service of other documents on company

   374.   Service of documents on foreign company in legal proceedings

   375.   Service of other documents on foreign company

   376.   Service of documents on shareholders and creditors

   377.   Additional provisions relating to service

PART XVII
MISCELLANEOUS

   378.   Prohibition of large partnerships

   379.   Jurisdiction

   380.   Periodic information to the Minister of Lands on status of shareholding of companies in Malawi

   381.   General penalty

   382.   Regulations, rules, etc.

   383.   Repeal and savings

 

15 of 2013
G.N. 17/2016

An Act to consolidate the law relating to the incorporation, administration and regulation of companies, and to provide for matters incidental thereto and connected therewith

[20TH MAY 2016]

PART I
PRELIMINARY

 

1.   Short title

   This Act may be cited as the Companies Act.

 

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

   "accounting period" means, in relation to a company or any other body corporate, the period in respect of which the financial statements of the company or any other body corporate are made up, whether that period is a year or not;

   "articles" means the articles of association of a company as originally framed or as altered by special resolution, including, so far as they apply to the company, the provisions contained in regulations made by the Minister;

   "beneficial interest", when used in relation to a company’s securities, means the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person to—

   (a)   receive or participate in any distribution in respect of the company’s securities;

   (b)   exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or

   (c)   dispose or direct the disposition of the company’s securities, or any part of a distribution in respect of the securities,

   but does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Securities Act.

   "board" in relation to a company, means—

   (a)   the directors of the company where the number is not less than the required quorum acting together as a board of directors; or

   (b)   where the company has only one director, that director;

   "company" means a body corporate, including a foreign company or any other body corporate incorporated outside Malawi;

   "constitution" means the memorandum and articles of association of a company;

   "contributory" means a person liable to contribute to the assets of a company in the event of its being wound up, and includes the holder of fully paid shares in the company;

   "convertible securities" means any securities of a company that may, by their terms, be converted into other securities of the company, including—

   (a)   any non-voting securities issued by a company and which will become voting securities—

      (i)   on the occurrence of a designated event; or

      (ii)   if the holder of those securities so elects at some time after acquiring them; and

   (b)   options to acquire securities to be issued by the company, irrespective of whether or not those securities may be voting securities or non-voting securities contemplated in paragraph (a);

   "court" used in relation to a company, means the High Court;

   "debenture" means a written acknowledgement of indebtedness issued by a company in respect of a loan made or to be made to it or to any other person or of money deposited or to be deposited with the company or any other person or of the existing indebtedness of the company or any other person whether constituting a charge on any of the assets of the company or not; and—

   (a)   includes—

      (i)   debenture stock;

      (ii)   convertible debenture;

      (iii)   a bond or an obligation;

      (iv)   loan stock;

      (v)   an unsecured note; or

      (vi)   any other instrument executed, authenticated, issued or created in consideration of such a loan or existing indebtedness; and

   (b)   does not include—

      (i)   a bill of exchange;

      (ii)   a promissory note;

      (iii)   a letter of credit;

      (iv)   an acknowledgement of indebtedness issued in the ordinary course of business for goods or services supplied;

      (v)   a policy of insurance; or

      (vi)   a deposit certificate, pass book or other similar document issued in connexion with a deposit or current account at a banking company;

   "debenture holders’ representative" means a person designated as such in an agency deed;

   "debenture stock"

   (a)   means a debenture by which a company or a debenture holder’s representative acknowledges that the holder of the stock is entitled to participate in the debt owing by the company under the agency deed; and

   (b)   includes loan stock;

   "distribution", in relation to a distribution by a company to a shareholder, means—

   (a)   the direct or indirect transfer of money or property, other than the company’s own shares, to or for the benefit of the shareholder; or

   (b)   the incurring of a debt to or for the benefit of the shareholder, in relation to shares held by that shareholder, and whether by means of a purchase of property, the redemption or other acquisition of shares, a distribution of indebtedness, or by some other means;

   "dividend" has the meaning set out in section 104;

   "dormant company" means that a company is "dormant" during any period in which it has no significant accounting transaction;

   "employees’ share scheme" means a scheme for encouraging or facilitating the holding of shares in or debentures of a company by or for the benefit of—

   (a)   the bona fide employees or former employees of—

      (i)   the company;

      (ii)   any subsidiary of the company; or

      (iii)   the company’s holding company or any subsidiary of the company’s holding company; or

   (b)   the spouses, civil partners, surviving spouses, surviving civil partners, or minor children or step-children of such employees or former employees;

   "International Financial Reporting Standards" or "IFRS", or such subsequent standards howsoever called, means Standards and Interpretations issued by the International Accounting Standards Board ("IASB") or its successor bodies and comprise—

   (a)   International Financial Reporting Standards ("IFRS");

   (b)   International Accounting Standards;

   (c)   IFRIC Interpretations; and

   (d)   SIC Interpretations;

   "International Standards on Auditing" means the International Standards on Auditing issued by the International Auditing and Assurance Board;

   "liquidator" includes the Official Receiver acting as the liquidator;

   "member" means—

   (a)   a shareholder within the meaning of section 71; and

   (b)   in the case of a company limited by guarantee, a person whose name is entered in or who is entitled to have his name entered in the register of members;

   "memorandum" means the memorandum of association of a company;

   "nominee" means a person who, in exercising a right in relation to a share, debenture or other property, is entitled to exercise that right only in accordance with instructions given by some other person either directly or through the agency of one or more persons, and a person is the nominee of another person where he is entitled to exercise such a right only in accordance with instructions given by that other person;

   "non-executive director" means a director who is not involved in the day to day management of the company;

   "offer" includes an invitation to make an offer;

   "offeree" means a holder of shares which are included in a takeover offer;

   "officer", in relation to a company means a director, manager or a secretary or where the affairs of the company are managed by its members, a member;

   "one person company"

   (a)   means a private company in which the only shareholder is also the sole director of the company; and

   (b)   does not include a company in which the only shareholder is a company;

   "ordinary resolution" means a resolution passed by a simple majority of votes cast by such shareholders of the company as are entitled to vote, voting in person or by proxy at a general meeting;

   "par or nominal value" means the stated or face value;

   "parent", in relation to another company, means that the other company is its subsidiary;

   "pre-emptive rights" means the rights conferred on shareholders under section 92;

   "pre-incorporation contract" means—

   (a)   a contract purporting to be made by a company before its incorporation; or

   (b)   a contract made by a person on behalf of a company before and in contemplation of its incorporation;

   "public notice" means, in respect of any notice that is required to be given of any matter affecting a company, that notice shall be given by publishing a notice of the matter—

   (a)   in the Gazette; and

   (b)   in two daily newspapers in wide circulation in Malawi;

   "Registrar" means the Registrar of Companies appointed pursuant to section 3;

   "share" means a share in the share capital of a company;

   "special resolution" means a resolution approved by a majority of not less than seventy-five per cent or, if a higher majority is required by the company constitution, that higher majority, of the votes cast of those shareholders as are entitled to vote and voting in person or by proxy;

   "stated capital"

   (a)   means subject to section 100, in relation to a class or classes of shares issued by a company including such no par value or nominal shares as may have been issued by the company before the commencement of this Act, means the total of all amounts received by the company or due and payable to the company in respect of—

      (i)   the issue of the shares; and

      (ii)   calls on the shares;

   (b)   subject to section 100, in relation to a class or classes of shares issued by a company including such par value or nominal shares as may have been issued by the company before the commencement of this Act, means the total of all amounts received by the company or due and payable to the company in respect of—

      (i)   the nominal paid-up value of the shares where applicable; and

      (ii)   the share premiums paid to the company in relation to those shares and required to be transferred to the share premium account under section 101;

   "subsidiary" means—

   (a)   in relation to another company where—

      (i)   that other company, referred to as the parent—

         (aa)   controls the composition of the Board of the company;

         (bb)   is in a position to exercise, or control the exercise of, more than one-half of the maximum number of votes that can be exercised at a meeting of the company;

         (cc)   holds more than one-half of the issued shares of the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

         (dd)   is entitled to receive more than one-half of every dividend paid on shares issued by the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

      (ii)   the company is a subsidiary of a company that is the parent’s subsidiary.

   (b)   in determining whether a company is a subsidiary of another company—

      (i)   shares held or a power exercisable by that other company only as a trustee not be treated as held or exercisable by it;

      (ii)   subject to paragraphs (iii) and (iv), shares held or a power exercisable—

         (aa)   by a person as a nominee for that other company, except where that other company is concerned only as a trustee; or

         (bb)   by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only as a trustee, shall be treated as held or exercisable by that other company;

      (iii)   shares held or a power exercisable by a person under the provisions of debentures of the company or of an agency deed for securing an issue of debentures shall be disregarded;

      (iv)   shares held or a power exercisable by, or by a nominee for, that other company or its subsidiary, not being held or exercisable in the manner described in paragraph (iii) shall not be treated as held or exercisable by that other company where—

         (aa)   the ordinary business of that other company or its subsidiary, as the case may be, includes the lending of money; and

         (bb)   the shares are held or the power is exercisable by way of security only for the purposes of a transaction entered into in the ordinary course of that business;

   "substantial shareholder" means a person in Malawi or elsewhere, who holds by himself or his nominee, a share or an interest in a share which entitles him to exercise not less than five per cent of the aggregate voting power exercisable at the meeting of shareholders;

   "unanimous resolution" means a resolution which has the assent of every shareholder entitled to vote on the matter which is the subject of the resolution, and either—

   (a)   given by voting at a meeting to which notice to propose the resolution has been duly given and of which the minutes of the meeting here duly recorded that the resolution was carried unanimously; or

   (b)   where the resolution is signed by every shareholder or his agent duly appointed in writing signed by him, one or more documents in similar form, including electronic communications, each signed by the shareholder concerned, or his agent;

   "winding-up resolution" means a resolution passed for the winding up of a company;

   "year" means a calendar year.

   (2) For the purposes of this Act, a person controls a body corporate, or its business, if—

   (a)   in the case of a body corporate that is a company—

      (i)   that body corporate is a subsidiary of that first person; or

      (ii)   that first person together with any related or inter-related person, is—

         (aa)   directly or indirectly able to exercise or control the exercise of a majority of the voting rights associated with securities of that company, whether pursuant to a shareholder agreement or otherwise; or

         (bb)   has the right to appoint or elect, or control the appointment or election of, directors of that company who control a majority of the votes at a meeting of the board; or

   (b)   that first person has the ability to materially influence the policy of the body corporate in a manner comparable to a person who, in ordinary commercial practice, would be able to exercise control.

   (3) For the purposes of this Act—

   (a)   an individual is related to another individual if they—

      (i)   are married, or live together in a relationship similar to a marriage; or

      (ii)   are separated by no more than two degrees of natural or adopted family relationship;

   (b)   an individual is related to a legal person if the individual directly or indirectly controls the legal person, as determined in accordance with subsection (2); and

   (c)   a body corporate is related to another body corporate if—

      (i)   either of them directly or indirectly controls the other, or the business of the other, as determined in accordance with subsection (2);

      (ii)   either is a subsidiary of the other; or

      (iii)   a person directly or indirectly controls each of them, or the business of each of them, as determined in accordance with subsection (2).

   (4) For the purposes of this Act—

   "hard copy" or "electronic form" and related expressions means—

   (a)   a document or information is sent or supplied in hard copy form if it is sent or supplied in a paper copy or similar form capable of being read, and, references to hard copy have a corresponding meaning;

   (b)   a document or information is sent or supplied in electronic form if it is sent or supplied—

      (i)   by electronic means (for example, by e-mail or fax); or

      (ii)   by any other means while in an electronic form (for example, sending a disk by post) and references to electronic copy have a corresponding meaning;

   (c)   a document or information is sent or supplied by electronic means if it is—

      (i)   sent initially and received at its destination by means of electronic equipment for the processing (which expression includes digital compression) or storage of data; and

      (ii)   entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means and references to electronic means have a corresponding meaning;

   (d)   document or information authorized or required to be sent or supplied in electronic form shall be sent or supplied in a form, and by a means, that the sender or supplier reasonably considers will enable the recipient—

      (i)   to read it; and

      (ii)   to retain a copy of it;

   (e)   for the purposes of this subsection, a document or information can be read only if—

      (i)   it can be read with the naked eye; or

      (ii)   to the extent that it consists of images (for example photographs, pictures, maps, plans or drawings), it can be seen with the naked eye; and

   (f)   this interpretation applies whether the provision of this Act uses the words "sent" or "supplied", or uses other words such as "deliver", "provide", "produce" or, in the case of a notice, "give", to refer to the sending or supplying of a document or information.

   (5) For the purposes of this Act—

   "solvency test" means—

   (a)   the company is able to pay its debts as they become due in the normal course of business; and

   (b)   the value of the company’s assets is greater than the sum of—

      (i)   the value of its liabilities; and

      (ii)   the company’s stated capital;

   (b)   other than in relation to compromises, reconstructions and takeovers in determining whether the value of a company’s assets is greater than the value of its liabilities, the board may take into account—

      (i)   in the case of a public company or a private company, the most recent financial statements of the company prepared in accordance with IFRS; and

      (ii)   a valuation of assets or estimates of liabilities that are reasonable in the circumstances;

   (c)   for the purposes of determining whether the value of the compromise, reconstruction or takeover company’s assets is greater than the sum of the value of its liabilities and its stated capital, the directors of each compromise, reconstruction or take over company—

      (i)   shall have regard to—

         (aa)   financial statements that are prepared in accordance with IFRS and that are prepared as if the compromise, reconstruction or take over had become effective; and

         (bb)   all other circumstances that the directors know or ought to know would affect, or may affect, the value of the compromise, reconstruction or take over company’s assets and the value of its liabilities;

      (ii)   may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.

PART II
THE OFFICE OF THE REGISTRAR OF COMPANIES

 

3.   Establishment of the office of the Registrar of Companies

   (1)—(a) There shall be a Registrar of Companies who shall have legal qualifications and be an officer in the public service.

   (b)   shall be such Deputy Registrars of Companies and Assistant Registrars of Companies who shall have legal qualifications and be officers in the public service.

   (2) Anything in this Act authorized or required to be done by the Registrar or to be signed by the Registrar, may be done by or signed by the Deputy Registrar or Assistant Registrar and shall be valid and effective as if done by or signed by the Registrar.

   (3) The Registrar shall be supported by adequate structures and employees with appropriate skills to enable him to perform the duties of the Registrar.

   (4) The Registrar shall have a seal and such seal shall bear the words "Registrar of Companies, Malawi."

 

4.   Functions of the Registrar

   (1) The functions of the Registrar shall be to—

   (a)   administer this Act including the regulations made under it and the supervision of the incorporation and registration of companies under this Act;

   (b)   establish and maintain a company’s registry in the Malawi Business Registration Database established under the Business Registration Act;

   (c)   perform such other functions as may be specified by this Act or any other written law; and

   (d)   undertake such other activities as may be necessary or expedient to give full effect to this Act.

 

5.   Fees payable to the Registrar

   (1) The Minister, on the recommendation of the Registrar, shall have powers to require the payment of fees to the office of the Registrar in respect of the performance of any of the Registrar’s functions or the provision of any services or facilities incidental to, or otherwise connected with, the performance of the Registrar’s functions under this Act.

   (2) The Minister may, on the recommendation of the Registrar, by order published in the Gazette, prescribe a schedule of penalties for non-compliance with the provisions of this Act.

 

6.   Registration of documents

   (1) On receipt of a document for registration under this Act, the Registrar shall—

   (a)   subject to subsection (2), register the document; and

   (b)   issue to the person, from whom the document was received, a written acknowledgement of receipt of the document.

   (2) The Registrar may refuse to register a document submitted to him for registration under this Act where the document—

   (a)   is not in the approved form;

   (b)   is not in accordance with this Act or any regulations made under this Act;

   (c)   is not in a form that enables particulars to be entered directly by electronic or other means in the device or facility where the register is kept wholly or partly by means of a device or facility referred to in section 7;

   (d)   has not been properly completed;

   (e)   contains matter contrary to law;

   (f)   contains any error, alteration or erasure;

   (g)   contains material that is not clearly legible; or

   (h)   is not in accordance with any directive or notice issued by the Registrar.

   (3) Where the Registrar refuses to register a document under subsection (2), the Registrar shall, within fourteen days of the day on which the document was submitted for registration, in that behalf, in writing or by using such means of communication as may be determined by him, notify the person who submitted the document and may require—

   (a)   that the document be appropriately amended or completed and submitted for registration again; or

   (b)   that a fresh document be submitted in its place, on payment of the prescribed fee and within such time limit as may be determined by the Registrar.

   (4) A document submitted under subsection (3) within the time limit provided there under shall, in all circumstances, be deemed to have been filed on the day the document was first submitted under subsection (1).

   (5) Where a document is not collected for the purposes of subsection (3) (a), or is not resubmitted within the time limit specified in a notice under subsection (3) (b), the document shall—

   (a)   be deemed not to have been filed; and

   (b)   in the case of a document not collected for the purposes of subsection (3) (a), be disposed of by the Registrar in such manner as he may determine.

   (6) The Registrar may, for the purposes of this section, issue such directions or guidelines as he considers necessary.

   (7) For the purposes of this Act, a document shall be registered when—

   (a)   the document is filed in a register kept by the Registrar;

   (b)   particulars of the document are entered in any device or facility referred to in section 7 (2).

   (8) The registration of a document or the refusal of registration of a document by the Registrar shall not—

   (a)   affect the validity of the document;

   (b)   create a presumption as to the correctness of the information contained therein.

   (9) The Registrar may from time to time, by notice published in the Gazette, prescribe—

   (a)   the form of notices required to be given to the Registrar under this Act; or

   (b)   the procedure to be followed in registering documents or performing any act or thing required to be done under this Act.

 

7.   Power to require delivery by electronic means

   (1) Notwithstanding anything to the contrary, the Registrar may authorize to be made, submitted or done electronically in such manner and through such computer system as may be approved by the Registrar—

   (a)   the incorporation or registration of a company;

   (b)   the payment of any fees;

   (c)   the undertaking of such other activities as may be necessary or expedient to give full effect to this Act;

   (d)   the performance of any act or thing which is required to be done in relation to paragraphs (a) to (c).

   (2) For the purposes of this section, the Minister may make regulations—

   (a)   providing that any document reproduced electronically or by other means by the Registrar shall for all purposes be treated as if it were the original document, notwithstanding any law to the contrary;

   (b)   authorizing the destruction of any documents which have been recorded or stored electronically or by other means; and

   (c)   giving full effect to, and ensuring the efficient operation of, any device or facility of the kind referred to in subsection (1).

PART III
REGISTERS

 

8.   The Register

   (1) The Registrar shall keep such registers as he considers necessary in such form and in such manner as he thinks fit.

   (2) The registers referred to in subsection (1) may be kept in such manner as the Registrar thinks fit including, either wholly or partly, by means of a device or facility—

   (a)   that records or stores information electronically or by other means; and

   (b)   that permits the information so recorded or stored to be readily inspected or reproduced in usable form.

 

9.   Allocation of unique identifiers

   The Registrar shall assign unique identifiers to all registered companies.

 

10.   Preservation of original documents and reconstitution of lost documents

   (1) The originals of documents delivered to the Registrar in hard copy shall be kept for seven years after they are received by the Registrar, after which they may be destroyed provided the information contained in them has been recorded.

   (2) The Registrar is under no obligation to keep the originals of documents delivered in electronic form, provided the information contained in them has been recorded.

   (3) Where the memorandum, articles, or any other document relating to a company required to be filed, has been lost or destroyed—

   (a)   the company may, with the approval of the Registrar, file a copy of the document;

   (b)   the Registrar may require the company to submit certified copies of the document within such time as the Registrar may decide.

   (4) Where the Registrar gives his approval under subsection (3) (a), the Registrar may direct that a notice to that effect be given to such person and in such manner as the Registrar may decide.

   (5) The Registrar may, on being satisfied—

   (a)   that the original document has been lost or destroyed;

   (b)   of the date of the filing of the original document; and

   (c)   that the copy of the document produced to him is a correct copy,

certify on that copy that the Registrar is so satisfied and direct that the copy be filed in the same manner as the original document.

   (6) The copy shall, on being filed, from such date as is mentioned in the certificate as the date of the filing of the original, have the same force and effect as the original.

 

11.   Records relating to dissolved companies

   (1) This section applies where—

   (a)   a company is dissolved;

   (b)   a foreign company ceases to have any connexion with Malawi by virtue of which it is required to register under this Act.

   (2) The Registrar may direct that records relating to the company or institution may be removed from the register at any time after two years from the date on which it appears to the Registrar that—

   (a)   the company has been dissolved;

   (b)   the foreign company has ceased to have any connexion with Malawi by virtue of which it is required to register under this Act.

   (3) Records in respect of which a direction is given shall be disposed of under the enactments relating to the institution or office under which the directive is made.

 

12.   Searches and evidence of a register

   (1) Subject to the other provisions of this section, a person may, on payment of the prescribed fees and during such time as the Registrar may decide, search—

   (a)   any document in a register kept by the Registrar;

   (b)   the particulars of any registered document that have been entered on any device or facility referred to in section 7 (2);

   (c)   any registered document the particulars of which have been entered in any such device or facility.

   (2) A person may, subject to the other provisions of this section, apply to the Registrar for—

   (a)   a certificate of incorporation of a company;

   (b)   a copy of, or extract from, a document in a register kept by the Registrar;

   (c)   the particulars of any registered document that have been entered in any device or facility referred to in section 7 (2) of this Act; or

   (d)   a copy of, or extract from, a registered document the particulars of which have been entered in any such device or facility.

   (3) On an application under subsection (2), the Registrar shall, on payment by the applicant of the prescribed fee, issue the document, particulars or copy or certified copy applied for.

   (4) Unless otherwise ordered by the Court, the Registrar shall not be required by any process of the Court to produce—

   (a)   a registered document kept by the Registrar; or

   (b)   evidence of the entry of particulars or a registered document in any device or facility referred to in section 7 (2), and the Court shall not issue such an order where it is not satisfied that the evidence is necessary for the purposes of the proceedings.

   (5) The payment of the prescribed fees under subsections (1) and (3) shall not apply to the Government.

 

13.   Material not available for public search

   (1) The following material shall not be made available by the Registrar for public inspection—

   (a)   the contents of any document sent to the Registrar containing views expressed pursuant to a proposal by company to use certain words or expressions in a company name;

   (b)   confidential or protected information relating to particulars of directors such as residential addresses;

   (c)   any applications for administrative action including correction of documents, rectification of the register, to the Registrar that have not yet been determined or were not successful;

   (d)   any material directed to be removed from the register by Court order;

   (e)   any e-mail address, identification code or password deriving from a document delivered for the purpose of authorizing or facilitating electronic filing procedures or providing information by telephone;

   (f)   any other material excluded from, public inspection by or under any other law.

 

14.   Form of application for search

   The Registrar may by order published in the Gazette, prescribe the format of the application for search of the register.

 

15.   Certification of copies as accurate

   A copy of, or extract from, a registered document—

   (a)   that constitutes part of a register kept by the Registrar; or

   (b)   particulars of which have been entered in any device or facility referred to in section 9 (2), certified to be a true copy or extract by the Registrar, is admissible in evidence in legal proceedings to the same extent as the original document.

 

16.   Registrar’s powers of inspection

   (1) For the purpose of ascertaining whether a company or an officer is complying with this Act or any regulations made under this Act, the Registrar may, on giving 72 hours’ written notice to the company, call for the production of or inspect any book required to be kept by the company.

   (2) Any person who—

   (a)   fails to produce any document under subsection (1); or

   (b)   obstructs or hinders the Registrar, or any person authorized by the Registrar, in the exercise of any powers under subsection (1), shall be liable to a fine in accordance with the prevailing schedule of penalties.

 

17.   Power to require compliance

   (1) Where a person fails to comply with any requirement of this Act, the Registrar may require the person to make good the default within fourteen days of the service on the person of a notice requiring him to do so.

   (2) Where, for any reason, it is not practicable for the Registrar to send individual notices under subsection (1) above, the Registrar may publish such failure to comply in relation to any persons in any newspaper of national circulation and in the Gazette.

   (3) Any person who fails to comply with subsection (1) shall be liable to a fine in accordance with the prevailing schedule of penalties.

 

18.   Power to extend time for doing any required act

   Where a person is required by this Act to do any act within a specified time, the Registrar may, on good cause being shown, extend the time within which the act is required to be done.

 

19.   Removal of material from the register

   (1) The Registrar may remove from the register—

   (a)   any unnecessary material; or

   (b)   any material derived from a document that has been replaced.

   (2) Notwithstanding subsection (1), the Registrar shall not remove from the register any material whose registration has legal consequences in relation to the company as regards formation, registration, re-registration, change of name, change of status, reduction of capital, change of registered office, registration of a charge, or dissolution.

   (3) On or before removing material from the Register, the Registrar shall give notice of particulars of the material to be removed to—

   (a)   the person who filed the material; and

   (b)   the company to which the material relates.

 

20.   Rectification of the register

   (1) The Registrar may rectify the register by removing material that is or has been declared by Court to be—

   (a)   invalid; or

   (b)   factually inaccurate, or derived from something that is factually inaccurate or forged.

   (2) On or before removing material from the register, the Registrar shall give notice of particulars of the material to be removed to—

   (a)   the person who filed the material; and

   (b)   the company to which the material relates.

   (3) Notwithstanding subsection (1), no material shall be removed from the register whose registration has legal consequences in relation to the company as regards formation, registration, re-registration, change of name, change of status, reduction of capital, change of registered office, registration of a charge, or dissolution.

 

21.   Application to foreign companies

      The provisions in this Act, shall, unless the context otherwise requires, apply to foreign companies registered in Malawi.

 

22.   Arrangements with other agencies

   (1) In carrying out his functions, the Registrar shall consult, and may enter into arrangements with other agencies of the Government.

   (2) Notwithstanding subsection (1), the Registrar may enter into arrangements with other Government agencies with respect to—

   (a)   the exchange of information between the Registrar and other agencies, with due regard for the need to protect appropriately personal information about individuals;

   (b)   consultation between the Registrar and the other agencies;

   (c)   enforcement of this Act and assistance with enforcement of other laws; and

   (d)   the conduct of investigations.

   (3) The Registrar may enter into similar arrangements with agencies outside Malawi that have responsibilities under the law for the enforcement of companies legislation, or exercise similar functions to those of the Registrar.

PART IV
CORE COMPANY REQUIREMENTS

Division I—Types of Companies

 

23.   Private limited liability company

   (1) A company shall be a private limited liability company if—

   (a)   its membership consists of a minimum of one person and a maximum of fifty persons;

   (b)   its memorandum prohibits it from offering any of its securities to the public.

   (2) Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this section, be treated as a single member.

   (3) For the purposes of this section a single member company shall be taken to be a private company.

 

24.   Public limited liability company

   A company shall be a public limited liability company if—

   (a)   its membership consists of a minimum of three members;

   (b)   its memorandum permits offering its securities to the public; and

   (c)   its memorandum permits the transferability of its securities.

 

25.   Company limited by guarantee

   A company shall be limited by guarantee if—

   (a)   it is formed on the principle of having the liability of its members limited by its constitution to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up;

   (b)   it is formed for the sole purpose of operating as a charity or not for profit organization.

 

26.   State owned companies

   (1) A company shall be a State Owned Company if it is controlled within the meaning of this Act by the Government.

   (2) The provisions in this Act pertaining to public companies shall apply to all State Owned Companies.

   (3) The Minister may, where appropriate, and by notice published in the Gazette, exempt State Owned Companies from the provisions of this Act.

Division II—Company Formation

 

27.   Forming a company

   A person may, subject to the provisions of this Act, apply to incorporate a company in any one of the categories provided for in sections 23 to 26 of this Act.

 

28.   Requirements for incorporation

   (1) An application for incorporation of a company under this Act shall be sent or delivered to the Registrar, and shall be—

   (a)   in the prescribed form;

   (b)   signed by each applicant;

   (c)   accompanied by—

      (i)   a document in a form approved by the Registrar, signed by every person named as a director or secretary, containing his consent to be a director or secretary;

      (ii)   a declaration that the person is not disqualified from being appointed or holding office as a director or secretary of a company;

      (iii)   in the case of a company having a share capital, a document in a form approved by the Registrar, signed by every person named as a shareholder, or by an agent of that person authorized in writing, containing that person’s consent to being a shareholder and to taking the class and number of shares specified in the document and stating the consideration to be provided by that shareholder for the issue of those shares;

      (iv)   in the case of a company limited by guarantee, a document signed by each person named as a member, or by an agent of that person authorized in writing, containing the matters set out in subsection (3);

      (v)   where the document has been signed by an agent, the instrument authorizing the agent to sign it;

      (vi)   a notice reserving a name for the proposed company if any; and

      (vii)   where the proposed company is to have a memorandum, a document certified by at least one applicant that the document is the company’s memorandum.

   (2) Without prejudice to subsection (1), the application shall state—

   (a)   the full name and address of each applicant;

   (b)   the present full name, any former name and the usual residential address of every director and of any secretary of the proposed company;

   (c)   particulars of any business occupation and directorships of any public company or subsidiary of a public company held by each director;

   (d)   the full name and residential address of every shareholder of the proposed company, and the number of shares to be issued to every shareholder and the amount to be paid or other consideration to be provided by that shareholder for the issue of those same shares;

   (e)   the type of company that is being formed;

   (f)   the registered office of the proposed company;

   (g)   such other information as may be prescribed;

   (h)   in the case of a one person company, the full name and residential address and occupation of the person nominated by the proposed director to be the secretary of the company pursuant to section 171 in the event of the death or incapacity of the sole shareholder and director; and

   (i)   a declaration made by the applicant that the information provided in the application is true and correct.

   (3) A document submitted under subsection (1) (c) (iv) shall contain the consent of the person referred to therein to be a member and shall state a specified amount up to which the member undertakes to contribute to the assets of the company, in the event of its being wound up while that person is a member, or within one year after ceasing to be a member, for payment of the debts and liabilities of the company contracted before that person ceases to be a member, and of the costs, charges and expenses of the winding up, and for the adjustments of the rights among themselves of the other members who are similarly required to contribute.

   (4) Where a person is a director of one or more subsidiaries of the same parent company it shall be sufficient for the purposes of subsection (2) (c) to state that the person is the holder of one or more directorships in that group of companies and the group may be described by the name of the parent company with addition of the word "Group".

 

29.   Incorporation

   Where the Registrar is satisfied that the application for incorporation of a company complies with this Act, the Registrar shall upon payment of the prescribed fee—

   (a)   enter the particulars of the company on the register;

   (b)   assign a unique number to the company as its company number; and

   (c)   issue a certificate of incorporation in the prescribed form.

 

30.   Statement of capital

   A company’s statement of capital shall consist of—

   (a)   the total number of shares of the company;

   (b)   the aggregate par or nominal values of those shares, issued before the commencement of this Act;

   (c)   for each class of shares—

      (i)   prescribed particulars of the rights attached to the shares;

      (ii)   the total number of shares of that class;

      (iii)   the aggregate par or nominal value of those shares where applicable; and

   (d)   the amount paid up and the amount, if any, unpaid on each share, whether on account of the par or nominal value of the shares, as applicable or by way of premium.

 

31.   Certificate of incorporation

   A certificate of incorporation of a company issued under section 29 is conclusive evidence that—

   (a)   all the requirements of this Act as to incorporation have been complied with; and

   (b)   on and from the date of incorporation stated in the certificate, the company is incorporated under this Act.

 

32.   Legal effects of incorporation

   A company incorporated under this Act shall be a body corporate with the name by which it is registered and continues in existence until it is removed from the register of companies.

Division III—The Constitution of the Company

 

33.   A company’s constitution and its effect

   (1) The Memorandum and Articles of a company shall constitute the constitution of the Company.

   (2) The constitution of a company shall be void to the extent that it contravenes, or is inconsistent with, this Act or any other written law.

   (3) Subject to this Act, the constitution of a company shall have the effect of a contract—

   (a)   as between the company and each member or shareholder; and

   (b)   as between the members or shareholders themselves.

   (4) The rights, powers, duties, and obligations of the company, the Board, each director, and each shareholder of the company shall be those set out in this Act except to the extent that they are restricted, limited or modified by the constitution of the company in accordance with this Act.

   (5) The shareholders of a company may enter into any agreement with one another concerning any matter relating to the company, but any such agreement must be consistent with this Act and the company’s constitution, and any provision of such an agreement that is inconsistent with this Act or the company’s constitution is void to the extent of the inconsistency, and the provision shall, to the extent required, be severed from the agreement and rendered ineffective.

 

34.   Power to adopt model constitution and default application of model constitution

   (1) A company may adopt as its constitution the model memorandum and articles of association applicable to it as prescribed in the regulations to this Act.

   (2) Where a company does not file a memorandum and articles of association it shall be deemed to have adopted the provisions of the model memorandum and articles of association.

 

35.   Adoption, alteration and revocation of constitution

   (1) Any company which was in existence as of the date of the coming into effect of this Act or a company incorporated under this Act may—

   (a)   by special resolution, adopt the model constitution as prescribed by the regulations to this Act;

   (b)   by special resolution and subject to sections 108 and 117 alter or revoke the provisions of its constitution.

   (2) Within fourteen days of the adoption of a constitution by a company, or the alteration or revocation of the constitution of a company, as the case may be, the Board shall cause a notice in a form approved by the Registrar to be delivered to the Registrar for registration.

 

36.   Constitutional documents to be provided to members

   (1) A company shall, on request by a member, provide the following documents in electronic or hard form—

   (a)   an up-to-date copy of the company’s constitution;

   (b)   copies of any resolutions or agreements relating to the company’s constitution that are for the time being in force;

   (c)   copies of any Court order sanctioning a compromise agreement or facilitating a reconstruction or take over;

   (d)   copies of the certificate of incorporation;

   (e)   copies of the statement of capital;

   (f)   in the case of a company limited by guarantee, a copy of the guarantee statement.

   (2) Where a company fails to comply with this section, the company and every officer of the company who is in default shall be liable to a fine in accordance with the prevailing schedule of penalties.

 

37.   Right to participate in profits otherwise than as member is void

   In the case of a company limited by guarantee and not having share capital, any provision in the articles or in any resolution of the company, purporting to give a person a right to participate in the distributable profits of the company is void.

Division IV—Capacity, Powers and Validity of Acts

 

38.   A company’s capacity and power of directors to bind the company

   (1) Subject to this Act and to any other enactment, a company shall have, both within and outside Malawi—

   (a)   full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and

   (b)   for the purposes of paragraph (a), full rights, powers, and privileges.

   (2) The constitution of a company may contain a provision relating to the capacity, rights, powers, or privileges of the company only where such provision restricts the capacity of the company or those rights, powers, and privileges.

 

39.   Validity of company actions

   Where the constitution of a company sets out the objects of the company, there is deemed to be a restriction in the constitution on carrying on any business or activity that is not within those objects, unless the constitution expressly provides otherwise.

 

40.   Dealings between a company and any other person

   (1) A company or a guarantor of an obligation of a company shall not assert against a person dealing with the company or with a person who has acquired property, rights, or interests from the company that—

   (a)   this Act, in so far as it provides for matters of company meetings and internal procedure, or the constitution of the company, has not been complied with;

   (b)   a person named as a director or secretary of the company in the most recent notice received by the Registrar—

      (i)   is not a director or secretary of a company;

      (ii)   has not been duly appointed; or

      (iii)   does not have authority to exercise a power which a director of or secretary of a company carrying on business of the kind carried on by the company customarily has authority to exercise;

   (c)   a person held out by the company as a director, secretary, employee, or agent of the company—

      (i)   has not been duly appointed; or

      (ii)   does not have authority to exercise a power which a director, secretary, employee, or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise;

   (d)   a person held out by the company as a director, secretary, employee, or agent of the company with authority to exercise a power which a director, secretary, employee, or agent of a company carrying on business of the kind carried on by the company does not customarily have authority to exercise, does not have authority to exercise that power;

   (e)   a document issued on behalf of a company by a director, secretary, employee, or agent of the company with actual or usual authority to issue the document is not valid or not genuine, unless the person has, or ought to have, by virtue of his position with or relationship to the company, knowledge of the matters referred to in paragraph (a), (b), (c), or (d), as the case may be.

   (2) Subsection (1) shall apply even though a person of the kind referred to in paragraphs (b) to (e) of that subsection acts fraudulently or forges a document that appears to have been signed on behalf of the company, unless the person dealing with the company or with a person who has acquired property, rights, or interests from the company has actual knowledge of the fraud or forgery.

 

41.   No constructive notice

   A person shall not be affected by, or deemed to have notice or knowledge of, the contents of, the constitution of, or any other document relating to, a company merely because—

   (a)   the constitution or document is registered in a register kept by the Registrar; or

   (b)   the constitution or document is available for inspection at an office of the company.

 

42.   Common seal

   (1) A company may have a common seal but is not obliged to have one.

   (2) A company which has a common seal shall have its name engraved in legible characters on the seal.

   (3) Where a company, or an officer of a company or any person acting on behalf of the company uses or authorizes the use of a seal purporting to be a seal of the company on which its name is not engraved as required by subsection (2) the company or the officer or person shall be liable to a fine in accordance with the prevailing schedule of penalties.

 

43.   Official seal for share certificates of public companies

   (1) A public company shall have an official seal for—

   (a)   sealing securities issued by the company; or

   (b)   sealing documents created or evidencing paper securities where so issued.

   (2) The official seal—

   (a)   must have on its face the words "Common Seal"; and

   (b)   when duly affixed to the document has the same effect as the company’s Common Seal.

 

44.   Ratification of pre-incorporation contracts

   (1) Notwithstanding any enactment or rule of law, a pre-incorporation contract may be ratified within such period as may be specified in the contract, or if no period is specified, then within a reasonable time after the incorporation of the company in the name of which, or on behalf of which, it has been made.

   (2) A contract that is ratified is as valid and enforceable as if the company had been a party to the contract when it was made.

   (3) A pre-incorporation contract may be ratified by a company in the same manner as a contract may be entered into on behalf of a company under this Act.

   (4) For the avoidance of doubt, if a pre-incorporation contract has not been ratified by a company, or validated by the Court, the company may not enforce it or take the benefit of it.

Division V—Company Names and Registered Office

 

45.   Application for reservation of a name

   (1) Notwithstanding any enactment or rule of law, a pre-incorporation contract may be ratified within such period as may be specified in the contract, or if no period is specified, then within a reasonable time after the incorporation of the company in the name of which, or on behalf of which, it has been made.

   (2) The Registrar shall not reserve a name—

   (a)   which, or the use of which, would contravene this Act or any other law;

   (b)   that is identical or almost identical to a name that the Registrar has already reserved under this Act; or

   (c)   that, in the opinion of the Registrar, is offensive.

   (3) The Registrar shall inform the applicant by notice in writing—

   (a)   whether or not the Registrar has reserved the name; and

   (b)   if the name has been reserved, that unless the reservation is sooner revoked by the Registrar, the name is available for incorporation of a company with that name or registration of a change of name, whichever be the case, for two months after the date stated in the notice.

   (4) The reservation of a name under subsection (3) shall not by itself entitle the proposed company, the company or foreign company to be registered under that name, either originally or on a change of name.

 

46.   Availability of name

   The Registrar shall not register a company under a name or register a change of the name of a company, unless the name is available.

 

47.   Prohibited names and power of the Registrar to refuse a company name

   (1) No company including a foreign company shall be registered under a name which is identical with that of an existing company, or any statutory body or so nearly resembles that name as to be likely to mislead, except where the existing company or statutory company is in the course of being dissolved and signifies its consent in such manner as the Registrar requires.

   (2) Except with the Minister’s written consent, no company including a foreign company shall be registered under a name which includes—

   (a)   the word "Authority", "Company", "Corporation", "Government", "Malawi", ‘ "National", "President", "Presidential", "Regional", "Republic", "State", or any other name protected under the Protected Flag, Emblems and Names Act, or any other word which in the Registrar’s opinion suggests, or is likely to suggest, that it enjoys the patronage of the Government or of a statutory company, or of the Government of any other State;

Cap. 18:03

   (b)   the word "Municipal" or "Chartered" or any other word which in the Registrar’s opinion suggests, or is likely to suggest, connexion with a local authority in Malawi or elsewhere;

   (c)   the word "cooperative";

   (d)   the words "Chamber of Commerce".

   (3) Except with the consent of the Registrar, no company including a foreign company shall be registered by a name which in the opinion of the Registrar is undesirable or misleading.

 

48.   Public limited company’s requirement to use plc

   The name of a public limited liability company shall end with the words "public limited liability" or "plc".

 

49.   Private limited company’s requirement to use limited

   (1) Unless expressly exempted by application to the Registrar under this Act or any other law, the name of a private limited company shall end with the word "limited" or "ltd".

   (2) A private company may be granted exemption from this section if—

   (a)   it is a charity; or

   (b)   it is exempted from the requirement of subsection (1) by regulations.

   (3) The Registrar may refuse to register a private limited company by a name that does not include the word "limited" unless a statement has been delivered to him that the company meets the conditions for exemption.

   (4) The Registrar may accept the statement as sufficient evidence of the matters stated in it.

 

50.   Company limited by guarantee requirement to use limited

   (1) Unless expressly exempted by application to the Registrar under this Act or any other written law, the name of a company limited by guarantee shall end with the word "limited" or "ltd".

   (2) A private company limited by guarantee may be granted exemption from this section if—

   (a)   it is a charity; or

   (b)   it is exempted from the requirement of subsection (1) by regulations.

   (3) The Registrar may refuse to register a private company limited by guarantee by a name that does not include the word "limited" unless a statement has been delivered to him that the company meets the conditions for exemption.

   (4) The Registrar may accept the statement as sufficient evidence of the matters stated in it.

 

51.   Provision of misleading information as to activities

   (1) If it appears to the Registrar—

   (a)   that misleading information has been given for the purpose of a company’s registration by a particular name; or

   (b)   that an undertaking or assurance has been given for that purpose and has not been fulfilled, the Registrar may direct that the company change its name.

   (2) Any such direction—

   (a)   must be given within five years of the company’s registration of that name; and

   (b)   must specify the period within which the company is to change its name.

   (3) The Registrar may by further direction extend the period within which the company is to change its name.

   (4) Where a company fails to comply with a direction under this section, the company and every officer of the company who is in default shall be liable to a fine in accordance with the prevailing schedule of penalties as issued by the Registrar.

 

52.   Change of name

   (1) An application to change the name of a company shall—

   (a)   be in the form duly prescribed by the Registrar;

   (b)   be accompanied by a notice reserving the name if any; and

   (c)   subject to the constitution of the company, be made by passing a special resolution to that effect and filing a copy of the resolution.

   (2) Where the Registrar is satisfied that a company has complied with subsection (1), the Registrar shall—

   (a)   record the new name of the company;

   (b)   record the change of name of the company on its certificate of incorporation;

   (c)   require the company to cause a notice to that effect to be published in such manner as the Registrar may direct.

   (3) A change of name of a company shall—

   (a)   take effect from the date of the certificate issued under subsection (2); and

   (b)   not affect the rights or obligations of the company, or legal proceedings by or against the company, and legal proceedings that might have been continued or commenced against the company under its former name may be continued or commenced against it under its new name.

 

53.   Direction to change name

   (1) Where the Registrar is satisfied that a company should not have been registered under a name, the Registrar may serve written notice on the company to change its name by a date specified in the notice, being a date not less than twenty-eight days after the date on which the notice is served.

   (2) Where the company does not change its name within the period specified in the notice, the Registrar may register the company under a new name chosen by the Registrar, being a name under which the company may be registered under this Part.

   (3) Where the Registrar registers a new name under subsection (2), he shall record the new name on the certificate of incorporation of the company and section 52 (3) shall apply in relation to the registration of the new name as if the name of the company had been changed under that section.

 

54.   Requirement to use company name

   (1) A company shall ensure that its name is clearly stated—

   (a)   in every written communication sent by, or on behalf of, the company; and

   (b)   on every document issued or signed by, or on behalf of, the company and which evidences or creates a legal obligation of the company.

   (2) Where the name of a company is incorrectly stated in a document which evidences or creates a legal obligation of the company and the document is issued or signed by or on behalf of the company, every person who issued or signed the document is liable to the same extent as the company unless—

   (a)   the person who issued or signed the document proves that the person in whose favour the obligation was incurred was aware at the time the document was issued or signed that the obligation was incurred by the company; or

   (b)   the Court before which the document is produced is satisfied that it would not be just and equitable for the person who issued or signed the document to be so liable.

   (3) For the purposes of subsections (1) and (2) and section 51 a company may use a generally recognized abbreviation of a word or words in its name if it is not misleading to do so.

   (4) Where, within the period of twelve months immediately preceding the giving by a company of any public notice, the name of the company was changed, the company shall ensure that the notice states—

   (a)   that the name of the company was changed in that period; and

   (b)   the former name or names of the company.

 

55.   Requirement for company to have a current registered office in Malawi

   (1) Every company registered or incorporated under this Act or any other written law prior to the enactment of this Act shall continuously maintain at least one office in Malawi.

   (2) Particulars of the registered office shall be provided in incorporation or registration documents of the company.

   (3) A change in the particulars of the registered office shall be effected by filing a notice with the Registrar, together with payment of the prescribed fee.

Division VI—Alteration of Company Status by Re-registration

 

56.   Re-registration of public company as private company

   (1) A public company may be re-registered as a private company if—

   (a)   a special resolution complying with subsection (2) that it should be so re-registered is passed and has not been cancelled by the Court;

   (b)   an application for the purpose in the prescribed form and signed by a director or the secretary of the company is delivered to the Registrar, together with a copy of the memorandum and articles of the company as altered by the resolution;

   (c)   the period during which an application for the cancellation of the resolution under this Act may be made has expired without any such application having been made; or

   (d)   where an application under this section is made and the application is withdrawn or an order is made following objection proceedings confirming the resolution and a copy of that order is delivered to the Registrar.

   (2) The special resolution must alter the constitution so that it no longer states that the company is to be a public company and must make such other alterations in the company’s constitution as are required in the circumstances.

   (3) A company shall not under this section be re-registered otherwise than as a company limited by shares or by guarantee.

   (4) The re-registration of a public company as a private company shall not affect the rights or liabilities of the company in respect of any debt or obligation incurred or any contract entered into, by, with or on behalf of the company before the re-registration.

 

57.   Objection to resolution for a public company to be re-registered as a private company

   (1) Where a special resolution by a public company to be re-registered as a private company has been passed, an application may be made to the Registrar for the cancellation of that resolution,

   (2) The application under subsection (1) may be made—

   (a)   by the holders of not less in aggregate than five per cent in nominal value of the company’s stated capital or issued capital as applicable for companies formed prior to this Act or any class of shares in the company;

   (b)   if the company is not limited by shares, by not less than five per cent of its members; or

   (c)   by not less than fifty of the company’s members, but not by a person who has consented to or voted in favour of the resolution.

   (3) The application must be made within twenty-eight days after the passing of the resolution and may be made on behalf of the persons entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

   (4) Where such an application is made, the company shall give notice in the form prescribed by the Registrar of that fact to the Registrar.

   (5) In determining the application, the Registrar shall make an order cancelling or confirming the resolution and—

   (a)   may make that order on such terms and conditions as he thinks fit and may adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Registrar for the purchase of the interests of dissenting members; and

   (b)   may give such directions and make such orders as he thinks expedient for facilitating or carrying into effect the arrangement.

   (6) The order of the Registrar may provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital and may make such alterations in the company’s constitution as may be required in consequence of that provision.

   (7) Where the order of the Registrar requires the company not to make any or any specified alteration in its constitution, the company shall not without the leave of the Registrar make any such alteration.

   (8) An alteration in the constitution made by virtue of an order under this section, if not made by resolution of the company, shall be of the same effect as if duly made by resolution and this Act shall apply accordingly to the constitution as so altered.

   (9) A company which fails to comply with subsections (4) or (7) and any officer of the company who is in default is liable to a fine in accordance with the prevailing schedule of penalties.

   (10) A person aggrieved by a decision of the Registrar made under this section may appeal to the Court.

 

58.   Certificate of re-registration from a public to a private company

   (1) If the Registrar is satisfied that a public company may be re-registered as a private company, he shall—

   (a)   retain the application and other documents delivered to him under that section; and

   (b)   issue the company with a certificate of incorporation appropriate to a private company.

   (2) On the issue of the certificate—

   (a)   the company by virtue of the issue becomes a private company; and

   (b)   the alterations in the constitution set out in the resolution under section 56 take effect accordingly.

   (3) The certificate is conclusive evidence that—

   (a)   the requirements of section 56 in respect of re-registration and of matters precedent and incidental to it have been complied with; and

   (b)   the company is a private company.

 

59.   Re-registration of private company as a public company

   (1) Subject to this section, a private company, other than a company limited by guarantee or a State Owned Company, may be re-registered as a public company if—

   (a)   a special resolution that it should be so re-registered is passed; and

   (b)   an application for re-registration is delivered to the Registrar, together with the documents specified in subsection (4).

   (2) The special resolution under subsection (1) shall—

   (a)   alter the company’s constitution so that it states that the company is to be a public company;

   (b)   make such other alterations in the constitution as are necessary to bring it, in substance and in form, into conformity with the requirements of this Act with respect to the constitution of a public company.

   (3) The application shall be in the form prescribed by the Registrar and be signed by a director or secretary of the company and the documents to be delivered with it shall be—

   (a)   a copy of the constitution as altered in accordance with the resolution;

   (b)   a copy of a written statement by the company’s auditors that in their opinion the relevant balance sheet shows that at the balance sheet date the amount of the company’s net assets was not less than the aggregate of its stated capital and undistributable reserves;

   (c)   a copy of the relevant balance sheet, together with a copy of an unqualified report by the company’s auditors in relation to that balance sheet; and

   (d)   a statutory declaration in the prescribed form by a director or secretary of the company stating—

      (i)   that the special resolution required by this section has been passed and that the conditions specified in sections 60 and 61 so far as applicable, have been satisfied; and

      (ii)   that between the date of the balance sheet and that of the application for re-registration, there has been no change in the company’s financial position that has resulted in the amount of its net assets becoming less than the aggregate of its stated capital and undistributable reserves.

   (4) In this section "relevant balance sheet" means a balance sheet prepared as at a date not exceeding seven months before the company’s application under this section.

   (5) A resolution that a company be re-registered as a public company may change the company name by deleting the word "company" or the words "and company" including any abbreviations of them.

   (6) A private company not being a single member company which has two or more members at the commencement of this Act, shall not become a single member company.

 

60.   Consideration for shares recently allotted to be valued

   (1) This section applies if shares have been allotted by a private company between the date as at which the relevant balance sheet was prepared and the passing of the special resolution to re-register as a public company and those shares were allotted as fully or partly paid up as to their par or nominal value if issued before the commencement of this Act or any premium on them otherwise than in cash.

   (2) Subject to this section the Registrar shall not entertain an application by a private company to re-register as a public company unless—

   (a)   the consideration for the allotment has been valued in accordance with the valuation procedures in Part VII; and

   (b)   a report with respect to the value of the consideration has been made to the company in accordance with that section during the six months immediately preceding the allotment of the shares.

   (3) Where an amount standing to the credit of any of the company’s reserve accounts or of its profit and loss account has been applied in paying up to any extent any of the shares allotted or any premium on those shares, the amount applied does not count as consideration for the allotment and accordingly subsection (2) does not apply to it.

   (4) Subsection (2) does not apply if the allotment is in connexion with an arrangement providing for it to be on terms that the whole or part of the consideration for the shares allotted is to be provided by the transfer to the company or the cancellation of all or some of the shares or of all or some of the shares of a particular class in another company.

   (5) Subsection (4) does not exclude the application of subsection (2), unless under the arrangement it is open to all the holders of the shares of the other company in question or, where the arrangement applies only to shares of a particular class, all the holders of the other company’s shares of that class take part in the arrangement.

   (6) In determining whether subsection (2) is excluded under subsection (5), shares held by a company or by a nominee of the company allotting shares in connexion with the arrangement by a company or by a nominee of the company which is that company’s parent company or subsidiary or a company which is a subsidiary of its parent company shall be disregarded.

   (7) Subsection (2) does not preclude an application by a private company to be re-registered as a public company if the allotment of the company’s shares is in connexion with its proposed merger with another company where one of the companies concerned proposes to acquire all the assets and liabilities of the other in exchange for the issue of shares or other securities of that one to shareholders of the other, with or without any cash payment to shareholders.

 

61.   Certificate of re-registration from a private to a public company

   (1) Where the Registrar is satisfied on application by a private company to re-register as a public company, that a company may be re-registered under that section as a public company, the Registrar shall—

   (a)   retain the application and other documents delivered to him under that section; and

   (b)   issue the company with a certificate of incorporation stating that the company is a public company.

   (2) The Registrar may accept a statutory declaration as sufficient evidence that the special resolution required by that provision has been passed and the other conditions of re-registration have been satisfied.

   (3) Upon the issue to a company of a certificate of incorporation under this section—

   (a)   the company by virtue of the issue of that certificate becomes a public company; and

   (b)   any alterations in its constitution as set out in the resolution take effect accordingly.

   (4) The certificate shall be conclusive evidence—

   (a)   that the requirements of this Act in respect of re-registration, and of matters precedent and incidental thereto, have been complied with; and

   (b)   that the company is a public company.

 

62.   Single member company changing status

   (1) A single member company may increase from a single member to two or more members if the single member has passed a resolution to that effect.

   (2) Where the membership of a single member company increases from one to two or more there shall be entered in the company’s register of members, the name and address of the person who was formerly the single member, a statement that the company has ceased to have only a single member and the date on which the event occurred.

   (3) Where the Registrar is satisfied that a single member company has satisfied the requirements of this Act the Registrar may re-register the company as a company with more than one member and shall issue a certificate of re-registration.

Division VII—Core Requirements for Private Companies

 

63.   Number of shareholders

   (1) A private company shall not have more than fifty shareholders.

   (2) Where two or more of the shareholders in a private company hold one or more shares jointly, they shall be deemed to be one shareholder.

 

64.   Private company not permitted to make a public offer of securities

   A private company shall not make any offer to the public to subscribe for its shares or debentures.

 

65.   Exemption of a private company from the requirement to keep a register of shareholders

   A private company shall be exempt from the requirement to keep a register of shareholders under section 145.

 

66.   Exemption of a private company from the requirement to hold shareholders’ meetings

   A private company may dispense with the holding of shareholders’ meetings provided the company’s constitution permits resolutions which would otherwise require the holding of a meeting to be passed by not less than seventy-five per cent of the members.

 

67.   Exemption of a private company from the requirement to have a company seal

   A private company shall not, pursuant to section 42, be required to have a company seal.

 

68.   Exemption of a private company from the requirement to have a company secretary

   (1) A private company shall not be required to have a secretary.

   (2) Anything authorized or required to be given or sent to, or served on, the company by being sent to its secretary—

   (a)   may be given or sent to, or served on, the company itself; and

   (b)   if addressed to the secretary shall be treated as addressed to the company.

   (3) Anything else required or authorized to be done by or to the secretary of the company may be done by or to—

   (a)   a director; or

   (b)   a person authorized generally or specifically in that behalf by the directors.

 

69.   Permitted transactions

   A private company may—

   (a)   issue shares;

   (b)   distribute dividends;

   (c)   repurchase shares;

   (d)   give financial assistance for the purchase of shares in the company;

   (e)   authorize a payment, loan or other benefit to a director, or enter into any transaction; provided—

      (i)   it is authorized to do so by a resolution of seventy-five per cent of the members; and

      (ii)   is able to satisfy the solvency test.

 

70.   Directors of private companies to comply with applicable corporate governance standards

   The directors of private companies shall be required to comply with corporate governance standards in force in Malawi that apply to private companies as directed by the Registrar.

PART V
SHAREHOLDERS AND THEIR RIGHTS

 

71.   Meaning of "shareholder"

   (1) For the purposes of this Act, "shareholder" means—

   (a)   a person whose name is entered in the share register, where applicable, as the holder for the time being of one or more shares in the company;

   (b)   until the person’s name is entered in the share register, a person named as a shareholder in an application for the registration of a company at the time of incorporation of the company.

   (2) Until the person’s name is entered in the share register (where applicable), a person who is entitled to have his name entered in the share register, under a registered amalgamation proposal, as a shareholder in an amalgamated company.

 

72.   Liability of shareholders

   (1) Subject to the constitution of a company, the liability of a shareholder to the company shall be limited to—

   (a)   any amount unpaid on a share held by the shareholder;

   (b)   any liability to repay a distribution received by the shareholder to the extent that the distribution is recoverable under section 107;

   (c)   any liability expressly provided for in the constitution of the company;

   (d)   any liability for calls on shares.

   (2) Subject to the constitution of a company, a shareholder shall not be liable for an obligation of the company by reason only of being a shareholder.

 

73.   Code of conduct for shareholders of private companies

   (1) The Minister may, by order published in the Gazette, publish a code of conduct for shareholders of private companies.

   (2) The code of conduct shall regulate all the affairs of shareholders of a private company.

   (3) Where a company or an officer of the company fails to comply with the code of conduct, the Court may, in certain circumstances, direct compliance with a provision of the code conduct and the Court or the Registrar may impose a fine in accordance with the prevailing schedule of penalties.

 

74.   Code of conduct for shareholders of all public companies

   (1) The Minister may by order published in the Gazette, published for a code of conduct for shareholders of public companies.

   (2) The code of conduct, shall regulate all the affairs of shareholders of a public company.

   (3) Where a company or an officer of the company fails to comply with the code the Court may in certain circumstances direct compliance with a provision of the code of conduct and the Court or the Registrar may impose a fine in accordance with the prevailing schedule of penalties.

 

75.   Subsidiary may not hold shares in holding company

   (1) Subject to this section, a subsidiary shall not hold shares in its holding company.

   (2) An issue of shares by a parent company to its subsidiary shall be void.

   (3) A transfer of shares from a parent company to its subsidiary shall be void.

   (4) Where a company that holds shares in another company becomes a subsidiary of that other company, the company may, notwithstanding subsection (1), continue to hold those shares, but the exercise of any voting rights attaching to those shares shall be of no effect.

   (5) This section applies to a nominee for a subsidiary in the same way as it applies to the subsidiary.

 

76.   Prohibition in section 75 not to apply where a subsidiary is acting as personal representative or trustee

   Notwithstanding section 75, nothing shall prevent a subsidiary from holding shares in its parent company in its capacity as a personal representative or a trustee unless the parent company or another subsidiary has a beneficial interest under the trust other than—

   (a)   any interest that arises by way of security for the purposes of a transaction made in the ordinary course of the business of lending money;

   (b)   any residual interest under a pension scheme or employees’ share scheme or employer’s rights of recovery under a pension scheme or employees’ share scheme;

   (c)   any rights that the company or subsidiary has in its capacity as trustee, including in particular—

      (i)   any right to recover its expenses or be remunerated out of the trust property; and

      (ii)   any right to be indemnified out of the trust property for any liability incurred by reason of any act or omission in the performance of its duties as trustee.

 

77.   Residual interest under pension scheme or employees’ share scheme to be disregarded for purposes of section 75

   (1) Where shares in a company are held on trust for the purposes of a pension scheme or employees’ share scheme, there shall be disregarded for the purposes of section 75 any residual interest that has not vested in possession.

   (2) A "residual interest" means a right of the company or subsidiary ("the residual beneficiary") to receive any of the trust property in the event of—

   (a)   all the liabilities arising under the scheme having been satisfied or provided for; or

   (b)   the residual beneficiary ceasing to participate in the scheme; or

   (c)   the trust property at any time exceeding what is necessary for satisfying the liabilities arising or expected to arise under the scheme.

 

78.   Employer’s rights of recovery under pension scheme or employees’ share scheme to be disregarded for purposes of section 75

   (1) Where shares in a company are held on trust for the purposes of a pension scheme or employees’ share scheme, there shall be disregarded for the purposes of section 75 any charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the purpose of enabling the employer or former employer of a member of the scheme to obtain the discharge of a monetary obligation due to him from the member.

   (2) In the case of a trust for the purposes of a pension scheme there shall also be disregarded any right to receive from the trustee of the scheme, or as trustee of the scheme to retain, an amount that can be recovered or retained, under the pension schemes law in force in Malawi.

 

79.   Subsidiary acting as authorized intermediary in securities

   (1) The prohibition in section 75 does not apply where the shares are held by the subsidiary in the ordinary course of its business as an intermediary.

   (2) For this purpose a person is an intermediary if he—

   (a)   carries on a bona fide business of dealing in securities;

   (b)   is a member of or has access to a regulated market; and

   (c)   does not carry on an excluded business.

   (3) The following are excluded businesses—

   (a)   a business that consists wholly or mainly in the making or managing of investments;

   (b)   a business that consists wholly or mainly in, or is carried on wholly or mainly for the purposes of, providing services to persons who are connected with the person carrying on the business;

   (c)   a business that consists in insurance business;

   (d)   a business that consists in managing or acting as trustee in relation to a pension scheme, or that is carried on by the manager or trustee of such a scheme in connexion with or for the purposes of the scheme;

   (e)   a business that consists in operating or acting as trustee in relation to a collective investment scheme, or that is carried on by the operator or trustee of such a scheme in connexion with and for the purposes of the scheme.

 

80.   Application of provisions to companies limited by guarantee

   In relation to a company limited by guarantee, the references in this part to shares shall be read as references to the interest of its members as such, whatever the form of that interest.

 

81.   Application of this part to nominees acting on behalf of a subsidiary

   The provisions of this part shall apply to a nominee acting on behalf of a subsidiary as to the subsidiary itself.

PART VI
THE SHARES OF A COMPANY

Division I—Legal Nature, Types of Shares and Related Particulars

 

82.   Legal nature of shares

   The shares or other interest of a member in a company shall be personal property.

 

83.   Classification of shares

   (1) Subject to any limitation in the constitution of a company with respect to the number of shares which may be issued and any pre-emptive rights, a company shall have the power at such times, and for such consideration as it shall determine, to issue shares.

   (2) A company may, where so permitted by its constitution, issue classes of shares.

 

84.   Preferences, rights and limitations in respect of shares

   (1) Subject to subsection (2), a share in a company shall confer on the holder—

   (a)   the right to one vote on a poll at a meeting of the company on any resolution;

   (b)   the right to an equal share in dividends authorized by the Board;

   (c)   the right to an equal share in the distribution of the surplus assets of the company.

   (2) Subject to section 96, the rights specified in subsection (1) may be restricted, limited, altered, or added to by the constitution of the company or in accordance with the terms on which the shares are issued.

   (3) Without limiting subsection (1), shares in a company may—

   (a)   be redeemable in accordance with section 112;

   (b)   confer preferential rights to distributions of capital or income;

   (c)   confer special, limited, or conditional voting rights; or

   (d)   not confer voting rights.

 

85.   Statement of rights to be given to shareholders

   (1) Every company shall issue to a shareholder, on request, a statement that sets out—

   (a)   the class of shares held by the shareholder, the total number of shares of that class issued by the company, and the number of shares of that class held by the shareholder;

   (b)   the rights, privileges, conditions and limitations, including restrictions on transfer, attaching to the shares held by the shareholder; and

   (c)   the rights, privileges, conditions and limitations attaching to the classes of shares other than those held by the shareholder.

   (2) The company shall not be under any obligation to provide a shareholder with a statement if—

   (a)   a statement has been provided within the previous six months;

   (b)   the shareholder has not acquired or disposed of shares since the previous statement was provided;

   (c)   the rights attached to shares of the company have not been altered since the previous statement was provided; and

   (d)   there are no special circumstances which would make it unreasonable for the company to refuse the request.

   (3) The statement shall not be evidence of title to the shares or of any of the matters set out in it and the statement shall state in a prominent place that fact.

 

86.   Transferability of shares

   The shares or any interest of a member in a company are transferable according to its constitution.

 

87.   No par or nominal value shares

   (1) Any shares created or issued after the commencement of this Act shall be shares which have no par or nominal value.

   (2) Subject to subsection (3), the par or nominal value shares of a company incorporated prior to the commencement of this Act shall continue to be shares having a par or nominal value with that value, denominated in Malawi currency, or with the approval of the Registrar, in a foreign currency attached to those shares being the value carried by those shares immediately before the commencement of this Act.

   (3) Any company incorporated prior to the commencement of this Act, with par or nominal value shares, may at any time, convert any class of shares of the company into shares of no par or nominal value provided that—

   (a)   all the shares of any one class of shares of the company consist of either par or nominal value shares or no par or nominal value shares; and

   (b)   where all the shares of the company—

      (i)   are of the one class, the conversion of the shares is approved by special resolution or by consent in writing of seventy-five per cent of the shareholders; or

      (ii)   comprise more than one class, the conversion of the shares is approved by the holders of each class to be converted by special resolution or by consent in writing of seventy-five per cent of the holders of that class; and

   (c)   notice of the terms of the conversion is given to the Registrar for registration within fourteen days of the approval of the conversion under paragraph (b).

   (4) Notwithstanding subsection (1), a company incorporated prior to the commencement of this Act, may issue shares or a class or classes of shares having a par or nominal value.

   (5) Upon registration of the notice under subsection (3) (c), the shares in question shall, subject to subsection (6), be deemed to have been converted into shares of no par or nominal value.

   (6) The shares converted under subsection (3) shall not affect the rights and liabilities attached to such shares and in particular, without prejudice to the generality of this section, such conversion shall not affect—

   (a)   any unpaid liability on such shares; or

   (b)   the rights of the holders thereof in respect of dividends, voting or repayment on winding up or a reduction of capital.

   (7) Where the share capital of a company is denominated in a foreign currency, it shall not, without the prior approval of the Registrar, change the denomination into another currency.

 

88.   Numbering of shares

   (1) Each share in a company having share capital shall be distinguished by its appropriate number.

   (2) If at any time all the issued shares in a company or all the issued shares in a company of a particular class are fully paid up and rank pari passu for all purposes, none of the shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.

 

89.   Issue of shares

   (1) Upon incorporation of the company, any person named in the application for incorporation as a shareholder shall be deemed to have been issued with the number of shares specified in the application.

   (2) A company shall have powers to issue shares subject to section 83.

   (3) Shares shall not be treated as being of the same class unless they rank equally for all purposes.

 

90.   Alteration in number of shares

   (1) A company may by ordinary resolution—

   (a)   divide or subdivide its shares into shares of a smaller amount if the proportion between the amount paid, and the amount, if any, unpaid on each reduced share remains the same as it was in the case of the share from which the reduced share is derived;

   (b)   consolidate into shares of a larger amount than its existing shares.

   (2) Where shares are consolidated, the amount paid and any unpaid liability thereon, any fixed sum by way of dividend or repayment to which such shares are entitled, shall also be consolidated.

   (3) Where a company has altered its share capital in a manner specified in subsection (1), it shall within fourteen days of the date of the alteration file a notice to that effect with the Registrar.

   (4) A notice under subsection (3) shall include particulars with respect to the classes of shares affected.

 

91.   Fractional shares

   A public company may, where its constitution so provides, issue fractions of shares which shall have corresponding fractional liabilities, limitations, preferences, privileges, qualifications, restrictions, rights and other attributes as those which relate to the whole share of the same class or series of shares.

 

92.   Pre-emptive rights to new issues

   (1) Subject to its constitution, where a company issues shares which rank equally with, or in priority to existing shares as to voting or distribution rights, those shares shall be offered to the holders of existing shares in a manner which would, if the offer were accepted, maintain the relative voting and distribution rights of those shareholders.

   (2) An offer under subsection (1) shall remain open for acceptance for a reasonable time, which shall not be less than fourteen days.

 

93.   Consideration for issue of shares

   (1) Before it issues any shares, the Board shall determine the amount of the consideration for which the shares shall be issued and shall ensure that such consideration is fair and reasonable to the company and to all existing shareholders.

   (2) The consideration for which a share is issued may take any form including payment in cash, promissory notes, contracts for future services, real or personal property, or other securities of the company.

 

94.   Shares not paid in cash

   (1) Shares shall be deemed not to have been paid for in cash except to the extent that the company has actually received cash in payment of the shares at the time of or subsequently to the agreement to issue the shares.

   (2) Before shares that have already been issued are credited as fully or partly paid up other than for cash, the Board shall determine the reasonable present cash value of the consideration and shall ensure that the present cash value of the consideration is—

   (a)   fair and reasonable to the company and to all existing shareholders; and

   (b)   not less than the amount to be credited in respect of the shares.

   (3) A certificate shall be signed by one of the directors or his agent authorized in writing describing the consideration in sufficient detail to identify it and state—

   (a)   the present cash value of the consideration and the basis for assessing it;

   (b)   that the present cash value of the consideration is fair and reasonable to the company and to all existing shareholders; and

   (c)   that the present cash value of the consideration is not less than the amount to be credited in respect of the shares.

   (4) The Board shall deliver a copy of a certificate issued under subsection (3) to the Registrar for registration within fourteen days of its signature.

   (5) Nothing in this section shall apply to the issue of shares in a company on—

   (a)   the conversion of any convertible securities; or

   (b)   the exercise of any option to acquire shares in the company.

   (6) Where a shareholder of a company is dissatisfied with the value in subsection (2) he may apply to the Registrar for an assessment of the value in accordance with the provisions of Part VII.

   (7) An officer who fails to comply with subsection (3) shall be liable to a fine in accordance with the prevailing schedule of penalties.

   (8) Where the Board fails to comply with subsection (4), every officer of the company shall, be liable to a fine in accordance with the prevailing schedule of penalties.

 

95.   Calls on shares

   Where a call is made on a share or any other obligation attached to a share is performed by the shareholder, the company shall within fourteen days give notice to the Registrar in a form approved by him of—

   (a)   the amount of the call or its value as determined by the Board under section 94 (2); and

   (b)   the amount of the stated capital of the company following the making of the call.

 

96.   Consent to issue shares

   The issue by a company of a share that—

   (a)   increases a liability of a person to the company; or

   (b)   imposes a new liability on a person to the company, shall be void where that person, or his agent who is authorized in writing, does not consent in writing to becoming the holder of the share before it is issued.

 

97.   Time of issue of shares

   A share is issued when the name of the holder is entered on the share register where a register is required to be kept.

 

98.   Board may authorize distribution

   (1) A company shall not make any distribution to any shareholder unless that distribution—

   (a)   has been authorized by the Board under subsection (2); and

   (b)   subject to the constitution, has been approved by the shareholders by ordinary resolution; and

   (c)   is made out of profits available for that purpose.

   (2) The Board may authorize a distribution at such time and of such amount as it thinks fit, provided it is of the opinion that the company shall, upon the distribution being made, satisfy the solvency test.

   (3) The directors who vote in favour of a distribution shall sign a certificate stating that, in their opinion, the company shall, upon the distribution being made, satisfy the solvency test.

   (4) Where, after a distribution is authorized and before it is made, the Board ceases to be satisfied that the company shall, upon the distribution being made, satisfy the solvency test, any distribution made by the company shall be deemed not to have been authorized.

 

99.   Net asset restriction on distribution by public companies

   (1) A public company may only make a distribution—

   (a)   if the amount of its net assets is not less than the aggregate of its called up share capital and undistributable reserves, and

   (b)   if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.

   (2) For this purpose a company’s "net assets" means the aggregate of the company’s assets less the aggregate of its liabilities.

   (3) A company’s undistributable reserves are—

   (a)   its share premium account;

   (b)   its capital redemption reserve;

   (c)   the amount by which its accumulated, unrealized profits, so far as not previously utilized by capitalization, exceed its accumulated, unrealized losses, so far as not previously written off in a reduction or reorganization of capital duly made;

   (d)   any other reserve that the company is prohibited from distributing by any enactment or by its articles.

   The reference in paragraph (c) to capitalization shall not include a transfer of profits of the company to its capital redemption reserve.

   (4) A public company shall not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.

 

100.   Reduction of stated capital

   (1) Subject to subsection (3), a company may by special resolution reduce its stated capital to such amount as it thinks fit.

   (2) Public notice of a proposed reduction of a company’s stated capital shall be given not less than thirty days before the resolution to reduce its stated capital is passed.

   (3) A company may agree in writing with a creditor of the company that it shall not reduce its stated capital—

   (a)   below a specified amount without the prior consent of the creditor; or

   (b)   unless specified conditions are satisfied at the time of the reduction.

   (4) A resolution to reduce the stated capital passed in breach of any agreement referred to in subsection (3) shall be invalid and of no effect.

   (5) A company shall not take any action—

   (a)   to extinguish or reduce a liability in respect of an amount unpaid on a share; or

   (b)   to reduce its stated capital for any purpose other than the purpose of declaring that its stated capital is reduced by an amount that is not represented by the value of its assets, unless there are reasonable grounds on which the directors may determine that, immediately after the taking of such action, the company will be able to satisfy the solvency test.

   (6) Where—

   (a)   a share is redeemed at the option of the shareholder under section 116 or on a fixed date under section 117; or

   (b)   the company purchases a share under section 109, and the board is satisfied that as a consequence of the redemption or purchase, the company would, but for this subsection, fail to satisfy the solvency test—

      (i)   the board shall resolve that the stated capital of the company shall be reduced by the amount by which the company would so fail to satisfy the solvency test; and

      (ii)   the resolution of the board shall have effect notwithstanding subsections (1) to (3).

   (7) A company which has reduced its stated capital shall within fourteen days of the reduction give notice of the reduction to the Registrar, specifying the amount of the reduction and the reduced amount of its stated capital.

 

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