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Corporate Compliance Requirement in Malaysia

Engage a professional firm like 3E Accounting to be your tax agent and secretary to assist you in meeting the compliance requirements.

For more details on Corporate Compliance Requirement in Malaysia, please refer to:
Malaysia Financial Reporting Standards

Qualifying Criteria for Audit Exemption for Malaysia Private Limited Companies

Annual Return Form Submission to SSM Malaysia

Roles and Responsibilities of a Company Secretary in Malaysia

 

Corporate Compliance Requirement

No Description Time Reference
1.0 Obligations under Companies Act 2016
1.1 Publication of Name & Registration No

(a) Registered Office;

(b) Place of Business;

(c) Place where its books (Accounting Records) are kept; and

(d) all business letters, statements of account, invoices, official notices, official publications, websites, bills of exchange, promissory notes, endorsements, cheques, order forms, invoices, receipts and letters of credit of or purporting to be issued or signed by or on behalf of, the company, and all other forms of its business correspondences and documentation should have the Company name (whether or not it is carrying on business under a business name) & company registration number

Immediately S.30 of Companies Act
1.2 Appointment of First Secretary Within 30 days from the date of incorporation S.236 of Companies Act
1.3 Documents to be kept at Registered Office

a) notice of registration issued under section 15;
b) the constitution of the company, if any;
c) certificates given under this Act or corresponding previous written law, if any
d) all registers, books, records and documents as required under this Act;
e) minutes of all meetings of members and resolutions of members;
f) minutes of all meetings and resolutions of the board and committees of the Board;
g) copies of all written communications to all members or all holders of the same class of shares;
h) copies of all financial statements and group financial statement;
i) the accounting records of the company required under section 245;
j) copies of all instruments creating or evidencing charges as required under section 357; and
k) such other documents required to be kept by the Registrar.

All the documents above are usually kept at the Registered Office as we are handling the Corporate Secretarial Services, except for item (i) the accounting records of the company which is not under our custody. Hence, a Notification to that effect has to be lodged with SSM.

Immediately and within 14 days from the date of change S.47 of Companies Act
1.4 Proper Accounting Records

Keeping proper accounting and other records which sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets.

All appropriate entries are to be made in such accounting and other records within 60 days of completion of the transactions to which they relate the accounting and other records are to be retained for 7 years.

In accordance to the Inland Revenue Board of Malaysia (IRBM) guidelines of record keeping, it is obliged that all accounting documents should be kept in its original form (hardcopies) although they could be converted to an electronic form (scanned copies) to be conveniently retrievable. The accounting record should be made available if IRBM officer requests for its original.

Within 60 days of completion of transactions S.245 of Companies Act
1.5 Lodging of Annual Return, for each calendar year not later than 30 days from the anniversary of its incorporation date. Within 30 days from the anniversary of incorporation date S.68 of Companies Act
1.6 Preparation of Financial Statements

Directors of every company shall prepare financial statements within 18 months of date of incorporation and subsequently, 6 months of financial year-end.

Within 18 months of incorporation and subsequently 6 months of financial year-end S.248 of Companies Act
1.7 Duty to circulate copies of Financial Statements (FS)

Every company shall send copy of FS for each financial year to every member of company, every person entitled to receive notice of general meetings, every auditor of company and every debenture holder of company on request being made, to the last known address provided to the company.

Within 6 months of financial year-end for private company S.257 & S.258 of the Companies Act
1.8 Duty to lodge financial statements and reports with the Registrar

The financial statements and reports in the case of private company, has to be lodged with SSM within 30 days from the date the financial statements and reports are circulated to its members.

Within 30 days from the date of circulation of financial statements and reports S.259 of the Companies Act
1.9 Audited Financial Statements

Every company is required to circulate its audited financial statements to shareholders and auditors unless the companies are exempted based on the Practice Directive entitled “Qualifying Criteria for Audit Exemption for Certain Categories of Private Companies” issued by SSM.

The following companies are eligible for audit exemption:-

(a) dormant companies
(b) zero-revenue companies
(c) threshold-qualified companies

S. 267(2) of the Companies Act & SSM Practice Directive 3/2017
2.0 Directors’ duties and prohibition under the Companies Act 2016
2.1 Disclosure of interest in contracts, property, offices, etc

Any director (including person connected with that director) who is directly or indirectly interested in a contract or proposed contract with the company shall as soon as possible as practicable, declare the nature of his interest at the meeeting of the Board of Directors. The interested director must refrain from voting at the contract or proposed contract.

Immediate S.221 of Companies Act
2.2 Loans to director & prohibition of loans to persons connected with directors

A company (other than an exempt private company) shall not make a loan to a director of the company or a related company or person connected with a director.

Note : An exempt private company (“EPC”) means a private company in shares of which no beneficial interest is held directly or indirectly by any corporation and which has not more than twenty members none of whom is a corporation.

 

Immediate S.224 & S. 225 of Companies Act
2.3 General duty to make disclosure

A director shall give notice in writing to the company in respect of particulars of any change relating to shares, debentures, participatory interest, rights, options and contracts in the company or in related corporation

Within 14 days from occurrence of event S.219 of Companies Act
2.4 Any changes of particulars of director, manager and secretary

Any changes in the name, nationality, residential address, service address, business occupation, particulars of other directorships of public companies or its subsidiaries, IC/Passport number of directors including date of resignation, removal, retirement, not re-elected and death. In case of death, to provide death certificate.

Within 14 days from the date of change S.58 of Companies Act
2.5 Any changes to the Business Address and/or Nature of Business

Where a company has resolved to change its business address or its nature of business, the company is required to notify SSM within 14 days form the date of such change.

Within 14 days form the date of such change. SSM Practice Directive 2/2017
3.0 Responsibilities As Employers
3.1 Register with the Employees Provident Fund (EPF) Board Within 7 days of employment of first employee www.kwsp.gov.my
3.2 Register with the Social Security Organisation (SOCSO) Within 30 days of the date on which the Employees Social Security Act (ESSA) becomes applicable to the company www.perkeso.gov.my
3.3 Register Employer Tax File (E number) with Inland Revenue Board (IRB) Anytime before payment of salaries to employees www.hasil.gov.my
3.4 Register with the Human Resources Development Corporation (Applicable to companies listed under Part 1, Schedule 1 of PSMBA)

With effect from 1 April 2017, Registration with HRDF is compulsory if the employer hire ten (10) or more local employees in 63 sub-sectors.

See What is HRDF for more information.

Within 30 days of incorporation www.hrdf.com.my
4.0 Obligations under Income Tax Act
4.1 Notification to Inland Revenue Board (IRB) to obtain Company Tax Registration Number (C number) Anytime before filing of first tax return www.hasil.gov.my
4.2 Estimate of Tax Payable

Every Small and Medium Enterprise (SME) must furnish an estimate of its tax payable

With effect from Y/A 2014, where the SME which commences operations has no basis period for that year of assessment and for the immediate following year of assessment, the SME is not required to furnish an estimate of tax payable for that year and for the immediate 2 following years of assessment.

First 2 years of assessment (YA) from the date of commencement of operations exempted. Nevertheless, it is advisable to submit the Form CP204 notifying the IRB of its SME status without having to state the amount of ETP to avoid any penalty for under-estimation of tax or penalty for non-submission being wrongly imposed by the IRB.

Third year of assessment onwards: 30 days before the beginning of the basis period

4.3 For companies (except SME) which first commence operations

Generally, SME refer to resident companies that has a paid-up capital in respect of ordinary shares of RM2.5mil and less

Within 3 months from date of commencement of operations only if the basis period for that year is not less than 6 months
4.4 Submission of revised estimate of tax payable You can submit the CP 204A to revise the estimate of tax payable in the sixth or/and ninth month of the basis period
4.5 Submission of income tax return

(must be prepared based on audited accounts w.e.f YA 2014)

You must submit Form e-C within 7 months from the date following the close of its accounting period
5.0 Obligations under Goods and Services Tax (GST) Act
5.1 Registering for GST

Compulsory if annual sales turnover exceeding RM500,000 which can be determined based on either

  • The total value of taxable supplies of the current month and the previous 11 months, or
  • The total value of taxable supplies of the current month and the next 11 months

Voluntary Registration is allowable but must remain in the system for at least 2 years.

Who must register
An individual, sole proprietor, partnership, company, trust, estate, society, union, club, association or any other organization including a government department or a local authority which is involved in the business of making taxable supplies in Malaysia.

Within 28 days from the end of the month where the taxable turnover exceed or expect to exceed RM500,000
5.2 Main Responsibilities of A GST Registered Person

A registered person must comply with the requirements under GST legislation as follows:
a) account for GST on taxable supplies made and received, i.e. output tax and input tax respectively;
b) submit GST return (GST-03) and pay tax not later than the last day of the following month after the taxable period;
c) issue tax invoice on any supply unless as allowed by Customs;
d) inform Customs of the cessation of business within thirty days from the date of business cessation;
e) inform Customs on any changes of address, taxable activity, accounting basis and taxable period; and
f) keep adequate records of all business transactions relating to GST in the National or English language for seven years.

5.3 Main Responsibilities of A Non-GST Registered Person

Reverse Charge for importation of services

A supplier who does not belong in Malaysia and supplies services to a customer in Malaysia does not have to charge GST. However, the customer who receives the services for the purpose of any business carried on by him is required to account for GST by a reverse charge mechanism.

When services are imported from outside Malaysia and supplied to a recipient in Malaysia, being taxable supplies if made in Malaysia, the recipient of the supply shall account and pay GST if such imported services are for the business purposes and consumed in Malaysia. He shall account for output tax on the portion of the services consumed in Malaysia. If the recipient is a taxable person, he is entitled to claim input tax on the services if the imported services are used for making taxable supplies.

If the recipient is not a taxable person, he is still required to account the GST as output tax and declare the tax in a prescribed form (Form GST-04). The tax has to be paid not later than the last day of the subsequent month from the month in which the payment of supply is made.

The time of supply of imported services is due when payment is made by the recipient of that service to the extent covered by the payment made.

A recipient does not need to issue any tax invoice when he receives an imported service. But for audit purpose, the recipient should keep the invoice he receives from the overseas supplier.

Declare the tax in Form GST-04 and the tax has to be paid not later than the last day of the subsequent month from the month in which the payment of supply is made.

There will be an audit exemption for certain companies under the new Companies Act 2016. The Companies Commission of Malaysia had recently issued the CONSULTATION PAPERS IN RELATION TO SUBSIDIARY LEGISLATIONS (COMPANIES ACT 2016 [Act 777]) for public consultation. We will update you once the Malaysian Company Audit Exemption is confirmed and in use.

If your company is exempted from audit, we, at 3E Accounting, will be able to support you fully on the compliance requirement. Should you need any audit services later, we can assist you to source for the affordable yet of good quality auditor so that you can devote your full energy to your business.

Disclaimer

This Guide includes information obtained or derived from a variety of publicly available source. 3E Accounting has not sought to establish the reliability of these sources or verified such information. All such information is provided “as is” and 3E Accounting does not give any representation or warranty of any kind (whether expressed or implied) about the suitability, reliability, timeliness, completeness and accuracy of this publication. This publication is for general guidance only and shot not be construed as professional advice. Accordingly, it is not intended to form the basis of any decision and you are advised to seek specific professional advice on any transaction or matter that may be affected by this publication before making any decision or taking an actions.

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