Short answer. Under section 74 of the Companies Act 2016, shares have no par or nominal value, so a company’s share capital is the amount it has received for the shares it has issued. On commencement (31 January 2017), balances in share premium and capital redemption reserve accounts became part of share capital under section 618, and the authorised-capital ceiling fell away.
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In this article
- What section 74 says
- Why Malaysia made the change
- What happened on commencement: section 618
- How rights work without par value
- Pricing and issuing shares without a par value
- Share capital, distributions and solvency
- Checking your documents: a modernisation checklist
- Common mistakes
- What it means for different owners
- How Axecta helps
- Next steps
- Frequently asked questions
What section 74 says
The Companies Act 2016.pdf) came into operation on 31 January 2017 (the Act’s commencement note, with a few provisions starting later). Section 74, headed “No par value shares”, provides in the version we read that all shares issued before or upon the commencement of the Act shall have no par or nominal value. Read with the rest of Part III, this puts Malaysia on a no-par regime: a share is a bundle of rights in the company (to attend and vote, to share in surplus assets and dividends) rather than a slice with a printed value.
Three consequences follow:
- No face value to track. A share issued today is not “RM1 shares” in the legal sense. It is simply a share, and the price paid is a commercial matter.
- One share capital figure. A company’s share capital is what it has received for the shares issued.
- No authorised-capital ceiling. The old step of raising authorised capital before an issue disappears. See paid-up vs authorised capital.
Why Malaysia made the change
SSM’s FAQ on the no par value regime (Part N) gives the reasoning in four points:
- Nominal or par value only matters at the point the share is issued.
- The issue price should reflect the company’s current value, factors affecting the business and the capital it wants to raise.
- A nominal value does not itself protect shareholders; their protection lies in the rights attached to the shares.
- Those rights depend on the number of shares held, not on what was paid when the shares were first bought.
SSM’s materials on the Act add the aim of simplifying accounts, since share premium accounts stop being needed.
What happened on commencement: section 618
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Section 618 of the Act handled the transition for companies that existed before the change.
| Item | Treatment under section 618 |
|---|---|
| Amount paid on an old share | The sum of all amounts paid for the share, excluding any premium |
| Amount unpaid on an old share | Issue price (excluding premium) less amount paid |
| Share premium account and capital redemption reserve | Became part of the company’s share capital on commencement |
| Use of share premium credit | For 24 months from commencement, a company could use it for listed purposes, such as providing for premium on redemption of older debentures or redeemable preference shares, writing off preliminary expenses, paying up bonus shares, paying up unpaid balances or satisfying declared dividends by shares |
| Capital redemption reserve | Within the same 24 months, could be used to pay up bonus shares |
| Contracts referring to par value | Read by reference to the par value immediately before commencement (or a value fixed by directors for new classes), and “share premium” read as residual share capital |
That 24-month window ended in early 2019. Today the questions are practical rather than transitional: do your registers, accounts, constitution and agreements still reflect the old structure?
Illustrative example: converting an old balance sheet
The numbers are invented; the rule is section 618(2).
Before 2017, a company had 100,000 shares of RM1.00 par, fully paid (RM100,000), and a share premium account of RM50,000. On commencement, the premium balance became part of share capital, so share capital became RM150,000 for the same 100,000 shares. Anything the company did not use from the premium balance for a permitted purpose within the 24 months simply remained inside share capital. An accountant reading a current balance sheet should see one share capital line, not separate lines for par value and premium.
How rights work without par value
Because shares have no par value, rights are what distinguish them.
| Concept | Section | Plain meaning |
|---|---|---|
| Types of shares | 69 | Subject to the constitution, shares may be issued in different classes, be redeemable, carry preferential rights, special or limited voting rights, or no voting rights |
| Rights of an ordinary share | 71 | Right to attend and speak, vote on a show of hands, one vote per share on a poll, equal share in surplus assets and in dividends authorised by the Board, which the constitution or terms of issue can alter |
| Preference shares | 72 and 2(1) | Defined as shares without a right to vote on a resolution or to participate beyond a specified amount in distributions; redeemable only if authorised by the constitution, fully paid, and from profits, a fresh issue or capital (with a solvency statement) |
| Class | 89 | Shares are in the same class if their rights are identical |
| Describing classes | 90 | If there are different classes, the constitution must say so and state the voting rights of each; non-voting shares must carry the words “non-voting” |
SSM’s FAQ makes two practical points. First, a preference share may still carry limited voting rights on matters affecting its own class if the constitution provides. Second, ordinary shares can be converted to preference shares only if that was provided when they were issued and the constitution allows it, and a company cannot convert all its issued ordinary shares because a company must keep at least one issued ordinary share.
Pricing and issuing shares without a par value
With no nominal value to anchor to, the board must justify the price. SSM’s FAQ notes that valuation methods vary: a board can analyse the financial statements to arrive at a proportionate price and consider qualitative factors, such as prospects, risks and control. The board must consider all relevant issues and act in the company’s best interest.
The process around the price is unchanged:
- Directors need the company’s prior approval by resolution to allot (section 75), save for listed exceptions.
- Existing members must usually be offered equal-ranking new shares first, subject to the constitution (section 85).
- The allotment is entered in the register within 14 days (section 77) and a return of allotment is lodged within 14 days (section 78).
- Commissions or discounts on subscriptions are prohibited by section 79; section 80 deals with permitted commissions.
Full process: how to increase paid-up capital.
Share capital, distributions and solvency
Under a no-par regime, share capital is not a protective “cushion” fixed by par value. The Act instead relies on solvency-based tests when value leaves the company.
- A company can pay a distribution to shareholders only out of available profits and only if solvent (section 131). Directors must authorise the distribution and be satisfied the company will be able to pay its debts as they fall due within twelve months after the distribution (section 132).
- Redeeming preference shares out of capital, reducing share capital and certain other transactions require a directors’ solvency statement (sections 72(6) and 117).
- SSM’s FAQ notes that directors forming a solvency opinion must take contingent liabilities into account (section 113(4)).
For a small private company, dividends and capital reductions need current accounts and director sign-off.
Checking your documents: a modernisation checklist
| Document | What to look for | Action |
|---|---|---|
| Constitution | References to authorised capital, par value, share premium | Ask your secretary whether to amend; also check class-of-share wording (section 90) |
| Share certificates | Wording that states a nominal value | New certificates on request show the company name, class and number of shares (section 98) |
| Shareholders’ agreement | Rights keyed to par value or premium | Section 618(7) reads old references in light of the transition, but redraft at the next amendment |
| Register of members | Number of shares, class and amount paid for each member | Reconcile to the SSM record; see the 2026 directive below |
| Financial statements | Separate premium or capital redemption reserve lines | Accountant to confirm the single share capital presentation |
| Bank, tender and customer forms | “Authorised capital” fields | Answer with issued and paid-up capital |
SSM’s 2026 share information directive
SSM’s Practice Directive 11/2026 (14 July 2026, revised 5 August 2026) states its aim as making sure the Registry holds current information that accurately reflects issued and paid-up capital. It applies to local companies whose members hold more than one type of share, and to all foreign companies; such companies must lodge a notice updating their shares and shareholders information (with a statement of share capital showing the capital structure and a breakdown by shareholder) before they can use share-related services. The directive gives a window from 14 July 2026 to 14 January 2027, subject to extension, and says no fee is imposed. Companies with a single type of share are outside its scope, but a register check is still good practice.
Common mistakes
- Describing shares as “RM1 each” in new documents. The price paid is not a par value. Describe the number, class and amount paid.
- Issuing at a price with no support. Without a par value, the board needs a documented basis for price, especially when issuing to a related party.
- Leaving legacy reserve lines in the accounts. Share premium and capital redemption reserve balances became share capital on commencement.
- Assuming no authorised capital means no approvals. The section 75 approval, section 85 pre-emption and the 14-day filings still apply.
- Treating share capital as freely withdrawable. Returning capital needs the section 117 process.
What it means for different owners
- Newly incorporated Sdn Bhd. You will specify the class and number of shares in the application; there is no par value to choose. Plan the amount using how much capital a Sdn Bhd needs.
- Older company incorporated before 2017. Check that the accounts and constitution have been tidied after the transition.
- Foreign-owned company or foreign shareholder. Foreign companies registered in Malaysia are within PD 11/2026, and foreign holders matter for the tax test in share capital and the small company tax rate.
How Axecta helps
Axecta’s company secretarial team reviews registers, share certificates and the constitution against the Act, prepares the notice required under SSM’s directive where relevant, and coordinates with your accountant so that the share capital line in the accounts matches the register. We can also redraft shareholder agreements that still refer to par value.
Next steps
- Compare your register of members with the SSM record and the audited accounts.
- Check whether you have more than one class of share, and whether PD 11/2026 applies.
- Replace par-value language in new share certificates, bank forms and agreements.
- Ask your secretary whether the constitution needs a refresh when you next amend it.
- Read directors’ vs shareholders’ resolutions](/guides/shareholder-meetings/directors-resolution-vs-shareholders-resolution/) before your next share issue, and note the tax tests in LHDN’s [PR 8/2025 and rate page.
- Check the share-related services listed on SSM’s updating page.
Frequently asked questions
Which section covers no-par shares in the Companies Act 2016?
Section 74 of the Companies Act 2016, headed “No par value shares”. It provides that shares have no par or nominal value, and sits in Part III alongside the provisions on types of shares (section 69), rights (section 71), allotment (sections 75 to 78) and pre-emptive rights (section 85).
What happened to share premium after the Act came into force?
Under section 618, the balance in the share premium account and capital redemption reserve became part of share capital on commencement. For 24 months companies could use the share premium balance for listed purposes, such as writing off preliminary expenses. That window has closed, so legacy reserve lines should no longer appear.
How is the amount of share capital recorded now?
By the amount received for the shares issued, with the number and class of shares recorded in the register of members. There is no separate nominal and premium split. Banks and regulators read the issued and paid-up figures from your register, accounts and SSM record.
Can a company still issue shares at different prices?
Yes. With no par value, the board can set the price for each issue by reference to the company’s value and prospects, as SSM’s FAQ explains. The directors must act in the company’s best interest, keep a basis for the price, and obtain the section 75 approval to allot.
Can a Sdn Bhd have different classes of shares?
Yes, subject to its constitution. Section 69 allows classes with different dividend, capital or voting rights, or none, and section 90 requires the constitution to describe the classes and voting rights. Non-voting shares must be labelled “non-voting” on the title and certificates.
Do I need to change my old share certificates?
Not automatically. Section 618(7) provides for reading older references to par value. If a member applies, the company issues a certificate stating its name, the class and the number of shares (section 98). Ask your secretary whether re-issuing would reduce confusion.
Does no-par mean there is no minimum capital?
They are separate questions. Section 9 requires a company limited by shares to have one or more shares, and we found no general minimum sum in the Act. Sector regulators can set their own capital conditions, which is covered in our minimum-capital guide.
Can ordinary shares be converted into preference shares?
SSM’s FAQ says they can if that possibility was set when the shares were issued and the constitution allows it. A company cannot convert all its issued ordinary shares, because it must keep at least one issued ordinary share. Ask your secretary to check the constitution first.
Have older share documents to modernise?
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Keep reading
- Paid-Up Capital vs Authorised Capital in Malaysia: What Changed Under the Companies Act 2016
- How to Increase Paid-Up Capital of a Sdn Bhd: Steps, Approvals and SSM Filing
- How Much Capital Does a Sdn Bhd Need? Minimum Paid-Up Capital in Malaysia
- Directors’ Resolution vs Shareholders’ Resolution in Malaysia
- Share Capital and the Small Company Tax Rate: LHDN PR 8/2025 Conditions Explained
- Registered Capital Requirements: the full guide
Official sources to check
- Companies Act 2016 (ss 69-90, 618)
- SSM FAQs on the Companies Act 2016, Part N
- SSM Practice Directive 11/2026
- LHDN public ruling PR 8/2025
This article is general information and not legal, tax or accounting advice for your company. Rates, thresholds, deadlines and procedures change, so confirm current requirements with the sources above or with Axecta.