Annual Compliance

Annual Compliance Checklist in Malaysia

The Companies Commission of Malaysia sets mandatory guidelines for maintaining the annual compliance checklist in Malaysia. A series of legal businesses in Malaysia must maintain and file the necessary returns, financial statements, and tax returns, ensuring the successful filing of annual reports and maintaining the annual compliance checklist in Malaysia.

Choose our services to ensure post-registration compliances in Malaysia if you are looking forward to company formation in Malaysia.

Mandatory Checklist for Business Compliance in Malaysia

The Companies Act of 2016 authorizes filing annual reports under the guidance of the Companies Commission of Malaysia, i.e., SSM. The annual compliance checklist in Malaysia must be mandatorily prepared by both foreign and domestic limited liability partnership firms and private limited companies incorporating their business activities in Malaysia. Also, the Malaysian companies registered must comply with other necessary post-registration and other statutory legal mandates for the appointment of an auditor and the financial year, registration with the Inland Revenue Board and the Social Security Organization, and the payment of employment payroll tax.

Our handy guide is designated to simplify and maintain your annual compliance checklist in Malaysia, which provides for filing and conducting the following legal mandates:

1. Annual Financial Statement
2. Annual Returns (AR)
3. Annual Tax Return
4. Annual General Meeting

1. Annual Financial Statement

The annual compliance checklist in Malaysia rules filing the annual financial statement for a company registered in Malaysia. The annual financial statement prepared by the Malaysian company must be accompanied by the auditor’s and the directors’ report containing relevant information regarding the directors and the company’s shareholdings. The annual financial statement is filed to evaluate the company’s financial health and potential.

A new company incorporating its business in Malaysia must file the following financial reports signed by the Commissioner of Oaths.

• The financial statement that contains accounting standards as provided under the provisions of the Malaysian Companies Act of 2016;
• The key financial indicators contain the essential finances available for financial reporting in the XBRL format for the companies registered in Malaysia;
• The income declaration, balance sheet, cash flow statement, and the notes.

1.1 Timeline for Filing Annual Financial Statement

Section 248 of the Malaysian Companies Act of 2016 mandates that private limited companies registered in Malaysia file their annual financial statement within 18 months from the date of incorporation and 30 days from the financial statement’s circulation date and other reports to its members and shareholders. The annual compliance checklist in Malaysia mandatorily necessitates that Malaysian companies circulate their financial statement to their shareholders within six months after the end of the financial year.

1.2 Particulars for Annual Financial Statement

Filing an annual financial statement requires business compliance in Malaysia. Section 249 of the Malaysian Companies Act of 2016 allows for reporting the following information for the timely and fair calculation of the financial position of the business enterprise registered in Malaysia.

• The remuneration of the director;
• The retirement benefit of the director;
• Any loans or quasi-loans made in favour of the director;
• The fees or charges of appointing auditors.

2. Annual Return

The annual compliance checklist in Malaysia includes filing a annual return designed to summarize the essential information and business activities during the financial year. This return must be mandatorily filed to add to the checklist. Section 68 of the Malaysian Companies Act of 2016 enables all types of companies to file their annual return under the aegis of the Companies Commission of Malaysia. The company secretary is the authority responsible for signing the necessary documents for the successful submission of the annual report through the Malaysian business reporting system portal.

The annual return is designed to contain necessary information about the company. The annual compliance checklist in Malaysia regards the elaborative list of legal know-how containing the information filed with the annual return:

• The particulars of the directors;
• The information of the company secretaries;
• The details of other members and their shareholdings in the company;
• The location of the registered office;
• The business activities associated with the Malaysian company;
• The company’s liabilities;
• The list of shareholders employed in the company;
• The nature of the business;
• Information regarding any branch office setup, etc.

2.1 Timeframe for Filing Annual Return

Section 68 of the Malaysian Companies Act of 2016 ensures that the annual report is filed within 30 days after the completion of 1 year of business registration. Malaysian companies must adhere to the annual compliance checklist in Malaysia to avoid legal penalties that could tarnish their reputation, credibility, and business prospects.

3. Annual Tax Return

The annual compliance checklist in Malaysia allows Malaysian companies to file annual tax returns to get a refund of any difference between the estimated tax payable and the actual tax liability. An annual tax return is filed through the e-filing portal. Generally, two ways exist to settle the balance tax amount, which applies for a refund or tax deposit. The annual tax return requires filing of the following tax return at the office of the Inland Revenue Board:

• Filing of Form C or PT for the corporate tax return within eight months from the end of the financial year;
• Filing of an employer tax return by 30^th of every April for recording the remuneration paid to the employees in the previous calendar year;
• The EA Form must be filed before the last day of February to record the yearly remuneration statement of private employees.

The Inland Revenue Board is responsible for penalizing failure or delay in filing annual tax returns, payments, or any misunderstanding regarding tax estimates or taxable income, which ultimately contravenes the annual compliance checklist in Malaysia.

3.1 Deadline for Filing Annual Tax Return

The annual tax return must be filed within seven months from the end of the assessment year, which also implies the settlement of the income tax payment. The Malaysian companies must file an estimate of income tax payable within 30 days from the beginning of the basis period. A newly established Malaysian company holding RM 2.5 million of paid-up capital is exempted from providing tax estimates for at least two assessment years.

4. Annual General Meeting

The annual compliance checklist in Malaysia mandates that every private and public limited company conduct an annual general meeting promptly before the end of the assessment year. An annual general meeting, sometimes known as an annual shareholder’s meeting, is generally held for the shareholders to have an elaborative discussion on business affairs and further interaction with the directors of the companies. The AGM is called by at least or more members who hold 10% of the company’s share and voting rights.

The AGM must be conducted at a subsidiary location as enumerated in the Articles of Association, along with a written notice published at least 21 days before. The main motive for conducting an AGM is to simplify the ordinary business matters concerned with the following:

• Regarding the appointment of new directors of the company,
• Concerning the director’s election;
• For filing a declaration of the dividend,
• Regarding deciding the remuneration of the directors,
• For an audited financial statement,
• For adopting the best practices for corporate governance;
• For timely risk management and internal audit;
• For the appointment, re-appointment and fixing the auditor’s remuneration.

4.1 Timeframe for Conducting Annual General Meeting

Business compliance in Malaysia ensures holding the following AGM:

• The first AGM within 18 months immediately after the date of incorporation;
• The succeeding AGM within every six months after the end of the financial year;
• This must be conducted within 15 months of the AGM’s proceeding.

Annual Compliance Obligations in Malaysia: A Distinct Approach

Maintaining the annual compliance checklist in Malaysia typically regulates business compliance in Malaysia with specific legal and regulatory requirements for conducting an annual audit, complying with employment, environmental, and data protection laws, renewing the required business permits and licenses, ruling corporate government in the company, ensuring the renewal and review of insurance coverage, etc.

1. Annual Audit

Every company incorporated in Malaysia is required to meet the annual compliance checklist in Malaysia by auditing the books of accounts unless exempted. The annual audit is conducted by appointing an auditor capable of performing the audit and submitting an auditor’s report to the Companies Commission of Malaysia (SSM) office.

Annual financial reports can be admitted in both audited and unaudited formats. Malaysian companies authorized to comply with the annual filing requirements in Malaysia must be dormant, zero-revenue, and threshold-qualified.

2. Annual Declaration

The annual declaration is filed within 18 months from business registration in Malaysia or 90 days from the end of the financial year. The Chemical Weapons Convention Act of 2005 mandates that the Companies Commission of Malaysia be the authority responsible for admitting the annual declaration for the Malaysian companies involved in business activities lying above the declaration threshold.

3. Estimate Taxation Submission

Every Malaysian company is mandated to file its estimated tax, which is calculated based on the estimated annual income during the assessment year. The company itself or the appointed tax agent must submit the estimated taxation to maintain the annual compliance checklist in Malaysia. The submission of the estimated tax is followed within three months and 30 days before the end of the assessment year.

4. Annual Payment of Employee Payroll Taxation

Every Malaysian company must duly file Form E to the Inland Board of Revenue to pay employment payroll tax calculated for the assessment year. The annual payment of employee payroll taxation and a statement of remuneration must be made by March 31^st.

5. Annual Business License Renewal

Renewing a business license is not mandatory for all business entities registered in Malaysia. Annual or yearly license renewal is necessitated only according to the industry’s demand issued under the Malaysian government rules and regulations.

Extension For Annual Compliance in Malaysia

According to the guidelines issued by the Registrar of the Malaysian Companies, both private and public companies who cannot file, circulate, or submit their annual reports, financial statements, and holding of AGM within a stipulated time, an extension period for filling compliance requirements is granted accordingly.

Penalties for Non-Compliance

Failure to meet the annual compliance checklist in Malaysia, which provides for timely preparation of financial statements, conducting of AGM, and filing of annual reports and annual tax returns under the provisions of the Companies Act of 2016, attracts legal and economic implications born by the directors of the company.

Malaysian companies could face inevitable consequences or penalties for non-compliance with the annual filing requirements in Malaysia, which are explained below:

• A penalty of RM 2,000 is charged for any delay or failure in filing the unaudited yearly reports;
• A penalty of RM 30,000 fine and imprisonment of up to 5 years is charged for delayed preparation of the annual financial statements;
• A penalty of RM 5,000 is charged for any delay or failure to conduct the annual general meeting.

Conclusion

The companies registered under the Malaysian Companies Act of 2016 find maintaining the annual compliance checklist in Malaysia to be a herculean task that requires mandatory adherence to the statutory obligations. The annual filing requirements in Malaysia above-listed ensure the preparation and filing of the annual reports, financial statements, annual tax returns, annual declaration, estimated tax returns, and conducting the annual general meeting under the authoritative guidance of the Companies Commission of Malaysia, i.e., SSM.

Avoid attracting penalties due to delays in filing and maintaining the annual compliance checklist in Malaysia with Enterslice’s detailed accounting services, which duly ensures business compliance in Malaysia.

FAQ’s