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This is a guide to the common compliance mistakes for businesses operating in Malaysia.
Running a company requires you to follow and comply with the statutory requirements set out by the Companies Act, and failing to do so may result in a fine or imprisonment. We have listed four mistakes companies may make:
- Not notifying the Registrar of any business changes
- Failing to lodge annual returns the required timeline
- Not keeping company documents
- Directors do not carry out their duties and responsibilities
1. Notifying the Registrar of business changes
When companies change their business particulars, they must notify the Registrar of any changes within 30 days from the date of the change.
Changes of business particulates that can be registered include the following:
- Changes of business address
- Changes of business type
- Changes of particulars on branches
- Changes of information of owners or partners
The following documents must also be attached with the form:
- Photocopy of the owners and/or partners’ identity card
- Original business registration certificate of the change of business, type of business and branches
- Supporting documents or approval letters from relevant agencies for certain types of businesses, if required by the Registrar
The registration fees are as follows:
- Change of business particular – RM 20.00
- Change of branch address – RM 5.00 for each branch
- Business information print out – RM 10.00
In the case that a company changes its particulars and fails to notify the Registrar within the specified time, the company will be liable to a fine of RM 20,000. If the company still does not register with the Registrar after the fine is imposed, an additional fine of RM 500 per day will be charged.
2. Lodging annual returns
The annual return consists of basic information about a company, which include:
- Business activities
- Company directors
- Company secretary
- Authorised capital registered
- Paid-up capital
- Charges registered with the SSM, such as company assets
- Registered office address
- Business office address
- Branch office address, if any
Annual returns must be submitted within 30 days from the anniversary of the company’s incorporation date.
Submitting the company’s annual return is a legal requirement by the SSM; therefore, failure to submit the annual return within 30 days, the company directors will be liable to a fine of RM 50,000.
If a company fails to lodge the annual return for three or more consecutive years, the Registrar may strike off the company.
3. Keeping of company documents
According to section 47 of the Companies Act, documents that must be kept at the company’s registered office include:
- The notice of registration issued under section 15
- The constitution of the company (if any)
- Certificates given under the Companies Act or corresponding with the previous law
- All registers, books, records and documents as required by the Companies Act
- Minutes of all meetings of members and resolution of members
- Minutes of all meetings and resolutions of the board and committees of the board
- Copies of all written communication to members or holders of the same class of shares
- The accounting records of the company required under section 245 of the Companies Act
- Copies of all instruments creating or evidencing charges as required under section 357
- Other documents required to be kept by the Registrar
The company must notify the Registrar within 14 days if there is a change to the address that the documents are kept.
Failure to keep documents at the company’s registered office address may result in a fine of RM 10,000. An additional fine of RM 500 per day will be charged if the offence continues after conviction.
4. Directors’ duties and responsibilities
Company directors must comply with the Companies Act’s requirements and fulfil both statutory and fiduciary duties.
Fiduciary duties of a director include:
- Act in good interest for the company
- Avoid conflict of interest between personal and company matters
- Refrain from any secret profit out of the director position
Statutory duties include:
- Act in good faith and use power for proper purposes
- Disclose interest in any contract or proposed contract made by the company
- Get company approval in general meetings before executing any transactions
- Give notice to the company disclosing his shareholdings and any changes made
- Make sure registers and statutory books are updated
Pursuant to section 213(2) of the Companies Act, directors shall exercise reasonable care, skill and diligence with –
- the knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities
- any additional knowledge, skill and experience which the director, in fact has
Any director who fails to comply with his duties and responsibilities and commits an offence shall be liable to imprisonment for a term not exceeding five years or a fine of not exceeding RM 3 million or both.
The Companies Act specifies all the provisions that apply to companies in Malaysia, and it is crucial to meet the requirements of the Act. If you need any assistance with business compliance, do not hesitate to contact Acclime.
Acclime is Asia’s premier tech-enabled professional services firm. We provide formation, accounting, tax, HR and advisory services, focusing on delivering high-quality outsourcing and consulting services to our local and international clients in Malaysia and beyond.