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ANNUAL CORPORATE COMPLIANCE REQUIREMENTS
Once you have incorporated a Malaysia company, it is extremely important to be aware of all the upcoming deadlines as the Malaysian authorities impose fines and penalties for non-compliance.
Determining And Setting The Financial Year in Malaysia
A Malaysian company must set its first financial year within 18 months of the company incorporation date.
For example, if your company is incorporated on 1st January 2022, the first financial year end can be any date from the incorporation date up till 30 June 2023. In practice, most of the companies will choose a December financial year end as it coincides with the tax assessment period.
Annual Return Filing in Malaysia
Companies commission Malaysia requires all Malaysia-incorporated Sdn Bhd to file their annual return annually. The Annual Return is due 15 days before the anniversary of the company. The annual return provides an overview of the company’s basic details, such as share capital, shareholding, and names of shareholders.
Accounting and Auditing in Malaysia
The Malaysian companies act mandates all Malaysian Incorporated companies. Irrespective of whether the company is audited, the management must maintain a set of good books.
Companies are no longer required to hold AGM (Annual General Meeting) as stipulated by the act. However, the company must seek an audit unless it meets the following threshold for audit exemption.
A Malaysian company can choose to be audit exempted. If it meets the following criteria.
The company is dormant since incorporation.
(i.e no accounting transactions nor business occurring throughout the financial year)
Zero Revenue Companies
Companies without revenue for the current year and past two financial years.
Threshold qualified companies
Companies with revenue that does not exceed RM100,000 in the current year and prior two financial years and the company has to not have more than 5 employees for the current financial year and past two financial year.
Penalties for non-compliance
All Sdn Bhd which do not comply with the act in relation to the submission of financial statements could lead to a fine of up to RM 2,000 while the non-submission of audited financial statements could lead to a RM 30,000 fine or imprisonment of up to five years.
Tax Filing in Malaysia
All Malaysian companies are required to submit the corporate tax filing before the deadline which is the last day of the 7th month from the financial year-end.
Why do we submit annual returns in Malaysia?
The annual return is a summary of the Malaysia company’s profile. The annual return will consist of all the company information, including the registered and business operations address, directors and shareholder details, and the business activity.
The primary objective of submitting an annual return in Malaysia is to notify the companies commission of Malaysia of any changes in the company information. It is a compulsory requirement in Malaysia for all companies to file an annual return.
When do we submit annual returns in Malaysia?
As per the Malaysian Companies Act 2016, all Malaysian incorporated companies must file annual returns within 30 days of the anniversary of the company. The anniversary of the company will be determined based on the incorporation date.
For example, if a company was incorporated on 4th December 2022, the company must submit its annual return within 30 days from 4th December 2023. Weekends and public holidays are not excluded from the computation.
Is there any penalty if we fail to lodge an annual return in Malaysia?
Yes, as per the companies act in Malaysia, a company that fails to lodge an annual return on time will face penalties and fines up to RM50,000.
What is regulatory compliance in Malaysia?
Regulatory compliance in Malaysia ensures companies strictly comply with the relevant laws, rules, and regulations in the relevant legislation. Certain companies operating in higher-risk industries will usually have additional compliance requirements. As regulatory compliance requirements vary depending on your business activities, securing a professional firm is highly recommended.
Is the annual report mandatory in Malaysia?
Yes, it is a mandatory requirement for all Sdn Bhd to prepare an annual report for statutory submission purposes. An Sdn Bhd company can be exempted from preparing an annual audited report but it must still prepare a set of annual accounts to meet statutory requirements and tax purposes.