Companies Act

This section gives the Act’s short title: it may be cited as the Companies Act.

This section defines many terms used in the Act, such as company, director, registrar, officer, and several company document and meeting terms.

The Minister must encourage local participation in company capital structures when satisfied it is economically necessary for Malawi, and may negotiate with companies to set up and carry out a scheme for that participation.

Two or more persons associated for a lawful purpose may form an incorporated company if they sign a memorandum of association and comply with the Act’s registration requirements.

This section says what kinds of companies exist, how private companies are defined, and that a company limited by guarantee cannot have shares.

Companies must have a memorandum that follows the required form and states the listed details.

Each subscriber must sign the memorandum in front of a witness, the witness must attest the signature, and each subscriber must write the number of shares subscribed next to their name in the specified cases.

A company may alter its memorandum by special resolution, but only within the section’s stated limits and subject to court or other section-specific restrictions.

For companies incorporated before this Act began, objects stated in the memorandum are treated as limiting the business the company may carry on to those objects; the memorandum must not be read more narrowly than it would have been without this Act.

A company may change its memorandum by special resolution, but court challenge can stop the change unless the court confirms it.

Articles of association may be registered with the memorandum if they set regulations for the company’s affairs.

Companies must use the required article forms, may adopt listed regulations, and articles must be dated, signed by each subscriber in a witness’s presence, and attested by the witness.

A company may alter or add to its articles by special resolution, if this Act and its memorandum conditions are satisfied.

The memorandum and any articles must be delivered to the registrar for registration, and the required statement must be signed and include consent from the named directors and secretary.

When a company’s memorandum is registered, the registrar must issue a certificate of incorporation in the prescribed form.

A certificate of incorporation issued by the registrar is conclusive evidence that the Act’s registration requirements were met and that the association is a duly registered company authorized to be registered.

When registered, the memorandum and articles operate as a contract between the company and its members, and the company and members must follow them as altered from time to time.

A company must give a member a copy of its memorandum and articles when required, usually for ten Kwacha or less if the company sets a lower amount.

Sets company-name rules, including use of “Limited,” name-change approvals, registrar powers, and penalties for failing to follow a ministerial direction.

Rules for contracts made before a company exists: the acting person is personally bound, the company may later adopt the contract, and the other party can ask the court to fix liability.

A company has the capacity of a natural person, subject to limits inherent in its corporate nature, and may carry on business and exercise its powers outside Malawi where the other jurisdiction’s law allows.

A company must not act outside the limits set by its memorandum or articles, and the court can restrain breaches by injunction.

A company limited by guarantee must not be incorporated to carry on business for profit, and if it does so, aware officers and members can be jointly liable and fined daily.

A company limited by shares may convert into a company limited by guarantee if specified conditions are met, and the registrar must then issue a new certificate and update the register.

A limited company may convert to an unlimited company if all members agree in writing and a new memorandum and articles are adopted.

An unlimited company may convert to a limited company if all members agree in writing, a new memorandum and articles are adopted, and required documents are delivered to the registrar.

A public company may convert to a private company by special resolution if the Act’s requirements are met.

A private company may convert to a public company by special resolution if the section’s requirements are met.

If a company that is supposed to qualify as a private company fails to comply with the required conditions, it loses the privileges and exemptions for private companies. The court may relieve the company from that result in suitable cases.

The Minister may allow certain charitable or other guaranteed companies to register without “Limited” in their name, subject to conditions, and may later revoke or vary the licence.

Company subscribers become members, and in certain companies each member must be a shareholder and hold at least one share.

Companies must keep a register of members with specified details, keep it at the registered office unless an allowed exception applies, notify the registrar where it is kept and changes to that place, and add an index if they have more than 50 members.

The company’s members register and index must be available for inspection by any member of the company or other person, except when the register of members is closed under section 34.

A company may close its members’ register, but only after notice by newspaper advertisement, and only up to 30 days in total each year.

The court may rectify a company register, and it must notify the registrar when it makes a rectification order.

A company generally does not have to recognize or act on notice of a trust over its shares, and it is not bound to ensure how trust money is used.

The register of members is prima facie evidence of matters this Act directs or authorizes to be entered in it.

Certain companies may keep a branch register outside Malawi, but they must notify the registrar where it is kept and any change or discontinuance within 21 days.

Companies must keep branch registers, allow inspection, send copies to the registered office, keep a duplicate at the principal register place, and pay a daily fine for default.

Transfers of shares registered in a branch register are treated as property outside Malawi and are exempt from Malawi stamp duty unless executed anywhere in Malawi.

The Minister may, by Gazette order, make sections 33 and 35 apply to certain branch registers kept in Malawi, and may later cancel or modify that order.

If a company goes below two members and keeps trading for more than six months, certain informed members or directors become jointly liable for the company’s debts from that period. The court may reduce or remove that liability.

Shares in a company can be transferred by written transfer, and fully-paid shares in a company limited by shares may be transferred using the prescribed form or another duly authorized instrument.

Issued shares in a company must be given a definitive number, unless all the issued shares of the company or of a class are fully paid.

A company must not issue any share warrants to bearer after this Act starts.

A company must not convert its shares into stock after commencement, but a company that already converted shares into stock before commencement may reconvert that stock into shares under section 64.

A company may create different classes of shares by attaching special rights or restrictions to some shares.

Class rights may be varied only in the ways set out here, and affected shareholders can ask the court to cancel a variation.

A company may not register a share transfer unless it has received a proper stamped transfer instrument, and it must notify the parties in writing if it refuses registration.

Shares are generally transferable, but restrictions can only be imposed in limited cases, and a company may refuse transfers to infants or persons found of unsound mind.

A shareholder transferring only part of shares represented by certificates may deliver the transfer instrument and certificates to the company and ask for certification; if the company gives a false certification, it must compensate resulting loss.

Companies must issue share certificates within two months after allotment or transfer registration, and must replace a defaced, lost, or destroyed certificate on request, subject to a fee and conditions.

When a shareholder dies or share ownership passes by law, the company must recognize the relevant successor as shareholder, and that person may register the share or transfer it.

A company must accept qualifying proof of probate, letters of administration, or executor confirmation as sufficient evidence of the grant.

A company cannot claim a lien on shares with no unpaid liability, and any lien cannot extend beyond the unpaid liability on the shares.

A body corporate generally cannot be a member of its holding company, and share allotments or transfers to a subsidiary are void, subject to stated exceptions.

A company may issue share rights or options to directors, officers, employees, or a trustee for them, but only subject to the section’s approval, disclosure, and payment rules.

When a company allots shares, it must file a return with the registrar within one month and include specified details; extra documents are required for non-cash paid-up allotments, unless the issue is fully-paid bonus shares.

A company may pay commission for share subscriptions only if its articles allow it and disclosure and registration conditions are met; otherwise it must not use shares or capital money for such payments, except for reasonable brokerage and section 72 cases.

If a company issues shares at a premium, it must move the premium amount into a share premium account. The company may use that account only for the listed purposes.

A company may issue and redeem redeemable preference shares, but only subject to stated conditions.

A company with share capital may not publish or issue a statement of its authorized or issued share capital unless the same document also clearly states its paid-up share capital.

A company with share capital may alter its capital in specified ways, if its memorandum and articles allow it, and the power must be exercised in general meeting.

A company must notify the registrar within 21 days after certain share-capital changes.

A company that increases its share capital beyond registered capital must file notice with the registrar within 21 days.

A company with share capital may reduce its share capital by special resolution, subject to the Act, its memorandum, and its articles; it also may alter its memorandum if needed.

A company that passes a resolution to reduce share capital must apply to court for confirmation, and the resolution is not effective until the court confirms it.

If the court is satisfied about each creditor who may object, it may make an order confirming the reduction.

The registrar must register and certify the order and minute for a share capital reduction once the required court order and approved minute are delivered.

An officer of the company who conceals or misstates a creditor’s details in a reduction process can be personally liable to pay the creditor and can also face six months’ imprisonment and a fine of 1,000 Kwacha.

A company must not give financial assistance for buying or subscribing for its own shares, or its holding company’s shares if it is a subsidiary, subject to stated exceptions.

A company with share capital must not acquire or hold an interest in its own shares, except that certain interests must be sold within 12 months.

A company must not approve a dividend above the unappropriated profits in its latest audited accounts, must not use unrealized capital profits in the profit and loss account, and must provide for foreseeable future losses there, unless the Act says otherwise.

A company limited by guarantee must not pay dividends or distribute or return its assets to members, but it may pay reasonable remuneration, interest on loans, and certain bona fide gifts or awards tied to its lawful objects.

A company may raise loans by issuing debentures or debenture stock, and debenture stock must be created by deed under the company’s common seal in favour of trustees.

A company must give the registered holder the debentures or a debenture stock certificate within two months after allotment or transfer registration.

A trust deed or related contract cannot validly exempt or indemnify a debenture trustee from liability for breach of trust or lack of required care, subject to a narrow release exception; the court may also remove and replace a trustee on a debenture holder’s application.

This section limits who may act as trustee for debenture holders and restricts public invitations to buy debentures unless the trust deed and trustee are approved. Breaches can make appointments void and lead to fines or imprisonment.

A company must give a debenture holder a copy of the trust deed on request, after payment of 5 Kwacha or a lower company-prescribed amount.

A company must not issue unsecured debentures, debenture stock certificates, or related prospectuses unless the term is marked as “unsecured.”

Companies that issue debentures in a series must keep a register of debenture holders.

Debenture terms or a trust deed may allow meetings of debenture holders, and the court may order such meetings and give directions.

A company must not re-issue a redeemed debenture, and must not issue a new debenture to replace a redeemed one on the same priority terms.

A charge securing an uncertain or fluctuating amount is not treated as redeemed just because the current account is no longer in debit or no money is currently due.

Companies must register certain charges with the registrar within 21 days and can be fined for failing to do so.

A company that acquires property subject to a registrable charge must file the prescribed charge particulars with the registrar within 21 days, with a limited alternative filing rule if the instrument is already registered elsewhere.

The registrar must issue a certificate for a registered charge.

Registered charges generally rank by the time they are registered, subject to consent and certain exceptions.

If a proper statement about satisfaction or release of a charge is delivered and signed as required, the registrar must enter it in the register.

If a registered charge is varied, particulars must be delivered to the registrar within 21 days, unless section 90 applies.

Certain people must notify the registrar when a receiver or manager is appointed or stops acting, or when a mortgagee leaves possession; late default can trigger a daily fine.

The company must endorse certain debentures and debenture stock certificates with registration details, unless they were issued before the charge was created or before this Act started.

The court may appoint a receiver, or a receiver and manager, over assets subject to a charge, and in some floating-charge cases may do so even before the charge is enforceable if the debenture holder’s security is in jeopardy.

If a receiver is appointed, or possession is taken, for a debenture secured by a floating charge, certain preferential debts must be paid from the assets before the debenture principal or interest.

Certain people cannot act as a company receiver, and a liquidator cannot be appointed receiver when the company is being wound up.

A court-appointed receiver is an officer of the court, not of the company, and must follow the court’s directions and instructions.

An out-of-court receiver must follow the appointing instrument and any court directions, may ask the court for directions, and the court can set or change the receiver’s remuneration.

A receiver is personally liable on contracts they enter into, unless the contract says otherwise, and may be entitled to indemnities in specified cases.

If a receiver is appointed for a company’s property or undertaking, notice must be given to the registrar and certain company documents must state that a receiver has been appointed.

If a receiver takes over all or substantially all of a company’s undertaking for debenture holders under a floating charge, the receiver must submit a statement of affairs and periodic accounts.

Receivers of company property must file abstracts of receipts and payments with the registrar, unless section 101 applies.

This Part applies to Government charges that it is entitled to and that are created or acquired by or for Government after the Act starts.

Companies must hold an annual general meeting each year, keep it within 15 months of the previous one, and state it as such in the notice.

Directors may convene extraordinary general meetings whenever they think fit; the articles may also allow another person to convene them under those provisions.

Directors must call an extraordinary general meeting when qualifying members requisition one, and the requisition must identify the business and be properly signed and delivered.

Certain people are entitled to receive notice of general meetings, even if the company’s articles say otherwise.

This section sets minimum written notice periods for calling company meetings and limits shorter notice in the company’s articles.

If a company meeting cannot practically be called or conducted as required, the court may order the meeting to be called, held, and run in a way it thinks fit.

General meetings must be held in Malawi unless the company’s articles provide otherwise; they may be held outside Malawi if all voting shareholders agree.

Certain company insiders and voting members may attend and speak at a general meeting; other people may attend only with the chairman’s permission.

This provision sets default rules for company meetings and voting unless the company’s articles provide otherwise.

Members entitled to attend and vote may appoint proxies to act and vote for them, and proxies may speak at the meeting.

Members who can vote at a meeting have a right to demand a poll, except on electing the chairman or adjourning the meeting. A proxy is also treated as having authority to demand or join in demanding a poll.

A member with more than one vote may choose how to use those votes on a poll and does not have to cast them all the same way.

Bodies corporate and unincorporated associations may appoint a representative to act for them at certain company meetings.

A company must include certain member-requested resolutions and a short supporting statement in a general meeting notice, if the request and documents are submitted in time.

A company must circulate a written member’s statement about business for a general meeting when requested in writing by an eligible member, subject to timing and deposit conditions.

A company does not have to circulate a resolution or statement under sections 117 or 118 if the court finds the right is being abused to spread defamatory material; the court may also order costs against the requesting member, and defaulting officers can be fined.

This section defines when a resolution is ordinary or special, and sets the voting and notice conditions for special resolutions.

A written resolution signed by all members entitled to attend and vote is valid like one passed at a general meeting, but not for removing an auditor or director.

Companies must file certified copies of certain special resolutions with the registrar within 21 days, and later copies of the memorandum or articles must include those resolutions or their amendment effect.

A resolution passed at an adjourned meeting is treated as passed on the day it was actually passed; if passed on a poll, it is treated as passed when the poll result is declared.

Sections 107 to 121 apply to class meetings, and this section sets quorum rules for them.

Companies must keep minutes of meetings of members and directors in books kept for that purpose.

A company must keep its minute books at its registered office or another place in Malawi it tells the registrar, and those books must be open to inspection under section 129 by specified company insiders and the registrar.

A company must have a registered office and registered postal address in Malawi, and must notify the registrar of changes within 21 days.

Companies may keep required records in bound, loose-leaf, mechanical, or electronic form, but they must take precautions to protect them and make them intelligible for lawful inspection.

Companies must let members inspect certain records during business hours, and other persons may inspect on payment. Copies can be requested for a fee, and the company must send them within 10 days.

Companies must display their name at the registered office and in business documents, and they can be fined if they do not.

A company may make a contract by using its common seal, and someone acting with the company’s express or implied authority may make a contract on its behalf.

A company may execute a document by using its common seal or by signing it under this section.

A company may use a common seal, but if it chooses to have one, the company name must be engraved on it.

A company with a common seal may have an official seal for use outside Malawi, but the seal must match the common seal and show the places where it will be used.

A company with a common seal may also have an official seal to seal its securities or documents creating or evidencing those securities.

A company’s document is validly executed as a deed if the company duly executes it and delivers it as a deed.

A company may appoint an attorney by deed to sign deeds or other documents for it.

A bill of exchange or promissory note is treated as made, accepted, or endorsed on behalf of a company if it is done in the company’s name, by or on behalf of the company, or on its account, by a person acting under the company’s authority.

This section says how documents may be served on a company, including service at the registered office, by post, or in some cases on a director, secretary, or member.

A company may serve documents on specified people by hand, post, or by leaving them with an adult at the address.

A company remains liable for acts of its officer or agent even if the officer or agent acted fraudulently or forged a document.

This section defines “directors” and says non-directors who hold themselves out as directors can be treated like directors for duties, liabilities, and fines.

Every company must have at least three directors.

Some people cannot be appointed or act as company directors, and a director must give written consent before appointment.

Most directors of every company must be resident in Malawi, with at least one managing director resident if there are managing directors, and there must never be fewer than three resident directors.

A director may serve without shares unless the company’s articles require a share qualification, but then the director must obtain it within the set time or lose office.

A director’s office ends if the director becomes disqualified under section 142, stops holding office under section 144, or resigns in writing to the company.

A company may remove directors by ordinary resolution, but only if proper notice is given and the director gets notice and a chance to respond.

A director may appoint an alternate director, but the appointment is restricted by the articles and must be put in writing and lodged with the company.

A written resolution signed by all doctors entitled to vote can count as valid like one passed at a meeting, unless the Act or articles expressly require a meeting. A copy of that resolution must be kept with the minutes.

Directors of a company must get an ordinary resolution before selling major assets or undertaking, issuing new shares, or granting rights to acquire shares.

Directors may contract with the company if allowed by the articles and this section, but interested directors must disclose their interest and generally must not vote on the matter.

Companies must not make loans, guarantees, or security arrangements for directors in the stated cases, subject to specific exceptions.

Directors who have special information affecting the value of company shares or debentures must disclose it before buying or selling; otherwise the transaction may be voided by the seller or purchaser within 12 months.

A company cannot make certain payments to a director or former director unless the proposal is disclosed to members and approved by ordinary resolution.

In some takeover bid offers, a director must take reasonable steps to disclose any director-payment details to shareholders, and certain non-compliance can lead to a fine.

This section defines “payment” broadly and sets interpretation rules for when certain director-related payments and service agreements are treated as connected to a transfer or offer.

Every company must have a secretary, and the secretary must live in Malawi.

Companies must keep a register of directors and secretaries at their registered office, include specified details, allow inspection as provided by section 129, and directors/secretaries must give written notice of needed personal particulars.

Companies must file director and secretary particulars with the registrar, update changes within 21 days, and state written consent when a person becomes a director or secretary.

A legal requirement for a director and secretary is not met if the same person acts in both roles.

The court may bar certain people from managing companies for up to five years, and related notices and Gazette publication are required.

A company article or agreement cannot validly let a director or other officer assign their office to someone else.

A director’s or secretary’s acts remain valid even if a defect is later found in the person’s appointment or qualification.

A company’s memorandum, articles, or contracts cannot exempt or indemnify directors or other officers from liability for negligence, default, breach of duty, or breach of trust.

A person must not invite the public to buy company shares or debentures, or to place money with a company, unless the company is public and the Act’s required provisions are complied with.

This section explains when an invitation counts as being made to the public, and when it does not.

A company’s share or debenture invitation can be treated as made by the company itself, and a buyer in response can be treated as an allottee from the company.

A public invitation to buy shares or debentures is only lawful if a qualifying prospectus was registered within the prior six months, each recipient gets a true copy when first approached, and each copy shows registration and the registration date.

Most prospectuses must include the matters and reports listed in the Fifth Schedule. An exception applies for prospectuses issued to existing members or debentureholders, but those prospectuses must not contain untrue or misleading statements and must be approved by the registrar before issue.

A prospectus that includes an expert statement cannot be delivered for registration unless the expert has given written consent, has not withdrawn it, and the prospectus says so.

Prospectus copies delivered for registration must be signed and include required attachments and statements.

A waiting period of 10 days after first publication of a registered prospectus applies, and no binding contract or enforceable obligation may be entered into for public invitations to buy shares or debentures until it ends.

After a public invitation for shares or debentures, the application cannot be withdrawn for 7 days after the waiting period ends, unless a responsible person gives the required public notice under section 173 before that 7-day period ends.

If a prospectus contains an untrue or misleading statement, or leaves out required information, certain listed people may have to pay compensation to investors who bought shares or debentures relying on it.

Public invitations to deposit money with a company are allowed only in the stated cases; the Minister can control consent and advertising; false or misleading ads can create compensation and repayment obligations.

A condition that makes someone waive compliance with this Part, or treats them as having notice of unspecified matters not mentioned in a prospectus, advertisement, or circular, is void.

A person who authorizes publication of a prospectus, advertisement, or circular with false statements or required omissions can face imprisonment and a fine, unless the error was immaterial or they reasonably and honestly believed the statement was true.

It is an offence to use misleading or deceptive statements, conceal material facts, or reckless statements to induce investment-related agreements, and to go from house to house inviting the public into those agreements.

A prospectus for equity shares cannot be issued, circulated, or distributed unless the shares have unrestricted voting rights as described in the section.

Companies must keep proper accounting records, let certain people inspect them, notify the registrar if records are kept elsewhere, and keep the records for seven years.

Companies must file an annual return with the registrar each year, unless a stated incorporation-related exception applies.

Directors must prepare and send specified company accounts and reports to members and debentureholders on a set timetable; some recipients can demand a free copy if their address is unknown to the company.

The profit and loss account must be prepared for the right period, show a true and fair view, and comply with specified schedule requirements. The registrar can extend the nine-month timing limit and can modify Third Schedule requirements in some cases.

A company’s balance sheet must give a true and fair view of the company’s state of affairs at the end of the financial year and comply with sections 185 to 188 and the Third Schedule.

If a company has subsidiaries at year-end, it must prepare and send group accounts with its own accounts, unless an exception applies.

This section defines how certain accounting terms are read and sets duties for officers, directors, former directors, and companies, with fines and possible imprisonment for non-compliance.

A company may not issue, publish, or circulate a profit and loss account or balance sheet copy unless it attaches the required accompanying documents and the accounts have board approval and two-director signatures.

A company must disclose specified directors’ emoluments, pensions, and compensation for loss of office in a note to its accounts, subject to the information being available or obtainable under the section.

Directors’ reports must cover the company’s affairs and certain group details, be approved and signed by the board, and include specified disclosures unless the Minister directs otherwise.

Auditors must prepare a report for the company’s members covering the specified accounts and, where applicable, the directors’ report.

This section sets rules for appointing, replacing, notifying, and paying company auditors, and imposes a fine for breaches.

A person may only be appointed or act as a company auditor if eligible and entitled under the Public Accountants and Auditors Act; acting in contravention of this rule carries a fine of two thousand Kwacha.

A resolution to remove an auditor is only effective if the meeting, notice, and any required approvals are handled as specified, and the auditor has hearing and statement rights.

Auditors must act carefully and diligently, cannot be exempted from that duty, and may access company records, attend general meetings, and apply to court for directions.

Auditors and holding companies must exchange information about subsidiaries, and failures can result in a fine of two hundred Kwacha.

A public company’s annual return must include certified copies of specified accounts and reports; an unlimited company can be exempt if it files a signed certificate saying it is not a group company.

Private companies and companies limited by guarantee must file specified certificates or copies with the registrar together with the annual return.

The court may call meetings and approve a compromise or arrangement between a company and its creditors or members; affected members or creditors may object, and noncompliance with the registration step can trigger a fine.

When a compromise or arrangement meeting is called, the company must send or make available an explanatory statement with the notice, provide free copies on request in some cases, and directors/trustees must give the company needed information. Breaches can lead to fines.

The court may approve reconstruction or amalgamation arrangements and make related transfer orders, and companies covered by such an order must file a copy with the registrar within 21 days.