Key Statutory Reporting Updates

Malaysian companies must report various changes to SSM within specific timelines to avoid penalties and maintain corporate governance standards. Below are some of the most critical updates:

1. Reporting Changes in Directors and Officers

Any changes to a company’s board of directors, company secretary, or other key officers must be promptly reported to SSM.

What to Report:

• Appointment of new directors or secretaries
• Resignation or removal of directors or secretaries
• Changes in directors’ personal details (e.g., residential address, contact information)
• Disqualification of a director due to legal or regulatory reasons

Deadline:

• Companies must file the changes using Section 58 (Change in Directors or Officers) within 14 days of the change.

2. Changes in Company Name

Companies that wish to rebrand or change their corporate identity must notify SSM and obtain approval.

Steps for Company Name Change:

1. Submit a name reservation application via MBRS 2.0.
2. Once approved, file Section28 (Application for Change of Name) within 30 days.
3. Upon receiving SSM’s approval, update company letterheads, business documents, and regulatory filings.

Key Considerations:

• The new name must comply with SSM’s naming guidelines.
• All legal contracts and agreements must be updated to reflect the new name.

3. Changes in Share Structure and Capital

Companies must report modifications in their shareholding structure, share capital, or issuance of new shares to SSM.

What to Report:

• Increase or Reduction in Share Capital: Companies must obtain approval from shareholders and file the necessary resolutions.
• Issuance of New Shares: Companies must file an allotment return within 14 days of issuance.
• Transfer of Shares: Any share transfers must be recorded and submitted to SSM.
• Changes in Beneficial Ownership: Companies must disclose the ultimate beneficial owners (UBOs) under recent amendments.

Relevant Forms:

• Section 78 (Return of Allotment of Shares)
• Section 105 (Share Transfer)

How to Stay Compliant

To ensure timely and accurate statutory reporting, businesses should adopt the following best practices:

1. Monitor Changes Regularly

• Maintain an internal compliance calendar to track deadlines for filing updates with SSM.

2. Use MBRS 2.0 for Digital Submissions

• SSM’s Malaysian Business Reporting System (MBRS 2.0) allows companies to file statutory documents electronically, reducing processing time and errors.

3. Engage a Licensed Company Secretary

• A company secretary plays a crucial role in ensuring compliance and managing corporate filings with SSM.

4. Review Company Records Annually

• Conduct an internal audit of corporate records to confirm that all changes have been accurately reported.

Consequences of Non-Compliance

Failing to report statutory changes on time can result in legal and financial consequences, including:

• Fines and Penalties: Companies may be fined up to RM50,000 per offence for failing to notify SSM within the prescribed deadlines.
• Director Disqualification: Persistent non-compliance can result in directors being disqualified from holding office.
• Business Disruptions: Non-compliance may affect the company’s ability to conduct transactions, secure financing, or expand operations.

Conclusion

Staying compliant with statutory reporting requirements is essential for business continuity and regulatory adherence. By keeping track of changes in directors, company name, and share structure, businesses can avoid penalties and maintain corporate integrity. Companies should leverage digital filing systems such as MBRS 2.0 and engage professional company secretarial services to ensure compliance with SSM’s evolving requirements.

Contact us for compliance assistance.

Starting from December 1, 2024, all companies must attach an annexure of BO information when submitting their annual returns. This requirement applies to both:

• Local companies filing under Section 68 of the Companies Act 2016.
• Foreign companies filing under Section 576 of the Companies Act 2016.

Where and How to Lodge BO Information

To facilitate compliance, BO information must be lodged digitally using one of two systems:

1. For annual returns – Companies must submit their returns and the accompanying BO annexure through the Malaysian Business Reporting System (MBRS) Portal.
2. For updates or changes to BO information before annual return lodgment – Any changes to BO details must be submitted through the Electronic Beneficial Ownership System (e-BOS) before filing the annual return.

This means companies cannot simply update BO information when submitting their annual return; any updates must be lodged separately via e-BOS first.

Why Is This Important?

The new requirement ensures that BO records remain current and accurate, preventing discrepancies in corporate ownership structures. It also strengthens corporate governance by aligning with the Guidelines for the Reporting Framework for Beneficial Ownership of Companies, which took effect on April 1, 2024.

Additionally, companies that fail to comply with the directive may face regulatory scrutiny or penalties, particularly if ownership transparency is compromised.

To avoid potential issues, companies should:

• Review their BO information regularly.
• Lodge any updates via e-BOS before submitting their annual return.
• Ensure all required documents are filed correctly through MBRS 2.0.

Read the official Practice Note (PN8/2024) from SSM here.

Legal Provisions on Membership in a Company

Under Section 2 of the Companies Act 2016, a “member” is defined as:

• For a company limited by shares – A person whose name appears in the register of members as the holder of shares.
• For a company limited by guarantee – A person whose name is entered in the register of members.

Since a society is not an individual, the question arises whether it qualifies as a “person” under this definition.

How the Law Defines a Society as a Legal Entity

The answer lies in how the law defines “persons” and “societies” in Malaysia:

• Interpretation Act 1948 – Defines “person” as including both corporate and unincorporated bodies, which means societies can be considered persons under Malaysian law.
• Societies Act 1966 (SA 1966) – Defines a society broadly, covering clubs, companies, partnerships, and associations of seven or more persons, regardless of their nature or objectives.

By these definitions, a society qualifies as a legal “person” and, therefore, can become a member of a company.

How a Society Holds Shares in a Company

Under Section 9(a) of the Societies Act 1966, societies are allowed to own movable property, which includes company shares. However, if these shares are not vested in trustees, they are automatically vested in the governing body of the society.

Additionally, Section 9(c) of the SA 1966 allows a society to sue or be sued in the name of:

• A registered public officer appointed for this purpose, or
• An office bearer (if no public officer is registered).

This means that while a society can own company shares, it must act through an agent, such as its public officer or an office bearer.

How Should a Society’s Name Appear in the Register of Members?

When a society becomes a member of a company by purchasing or acquiring shares, it must be represented by an individual in the company’s register of members. The proper format should be:

Example:
“Persatuan Penternak Ikan Air Tawar, Perak (represented by Ali bin Ahmad, President)”

Updating Existing Company Records

For companies that have already registered societies as members without naming a representative, SSM requires them to update their records to include the name of a registered public officer or office bearer in compliance with Section 51 of CA 2016.

Read the official Practice Note (PN8/2024) from SSM here.

1. Why was the audit exemption framework introduced?

The audit exemption framework, which took effect on August 4, 2017, was introduced to:

• Reduce financial and regulatory burdens on micro and small companies.
• Allow auditors to focus on high-risk businesses, improving audit quality.
• Improve Malaysia’s auditor-to-company ratio, as there is a limited number of approved auditors compared to the growing number of companies.

A World Bank report in 2012 highlighted that the demand for audits in Malaysia was significantly high compared to the number of licensed auditors. As of December 31, 2024, there were 691,960 active companies but only 1,955 registered auditors, meaning each auditor was responsible for auditing an average of 354 companies.

By exempting non-public interest companies, audit firms can focus on high-risk audits, enhancing corporate governance and compliance quality.

2. Do audit-exempt companies still need to prepare financial statements?

Yes. Audit exemption does NOT mean exemption from financial reporting. Companies that qualify for audit exemption must still prepare and submit:

• Unaudited financial statements.
• Directors’ report.
• Certificate confirming compliance with the audit exemption criteria.

These documents must be lodged with the Companies Commission of Malaysia (SSM) within 30 days of circulation and must comply with applicable accounting standards (MPERS/MFRS).

3. What happens if a company loses its eligibility for audit exemption?

If a company exceeds the qualifying thresholds in a financial year, it must appoint an auditor for future financial years. However, it remains exempt for the financial years in which it met the criteria.

Additionally, even if a company qualifies for audit exemption, an audit will be required if:

• Members holding at least 5% of issued shares submit a written request at least one month before the financial year-end.
• At least 5% of voting members request an audit.
• The Registrar of Companies (SSM) mandates an audit.

4. Does audit exemption apply to private companies with corporate shareholders?

Yes, a private company with corporate shareholders can qualify for audit exemption, provided it meets the required revenue, assets, and employee thresholds.

However, companies that are subsidiaries of public companies DO NOT qualify for audit exemption.

5. Can a private exempt company (EPC) opt for audit exemption?

No, not if the company chooses to lodge an EPC certificate with SSM instead of financial statements. However, if an EPC does not lodge an EPC certificate and meets the audit exemption criteria, it can qualify for audit exemption.

6. How does audit exemption affect tax filing obligations?

While the Companies Act 2016 allows audit exemption, companies must still comply with tax laws. The Inland Revenue Board of Malaysia (LHDN) has stated that companies not required to submit audited accounts to SSM are also not required to submit audited accounts for tax purposes under Section 77A(4) of the Income Tax Act 1967.

However, tax authorities may still require additional documentation to verify financial statements.

For more details, refer to LHDN’s official announcement:
LHDN Audit Requirement Announcement

7. How do companies determine the number of employees for audit exemption?

For audit exemption eligibility, “employees” are counted based on:

• Full-time workers working at least six (6) hours per day for 20 days a month or 120 hours per month.
• Includes local, foreign, and contract workers, as well as probationary employees.
• Excludes directors, shareholders, and unpaid workers (such as family members working without wages).

8. How does a company elect for audit exemption under the new PD 10/2024 framework?

Companies do not need to apply for audit exemption. If they meet the qualifying criteria, they can elect for audit exemption by:

1. Ensuring compliance with the revenue, asset, and employee thresholds.
2. Preparing unaudited financial statements instead of audited reports.
3. Lodging the required documents with SSM via the MBRS Portal.

A company can still choose to appoint an auditor even if it qualifies for exemption.

9. What if government agencies, banks, or regulators still require audited financial statements?

Even if a company qualifies for audit exemption, certain financial institutions, government agencies, and licensing authorities may still require audited accounts for:

• Loan applications.
• Government grants or tenders.
• Regulatory compliance in specific industries.

These agencies prioritize financial reliability and governance, so companies should check with relevant authorities before opting out of audits.

10. Does the new audit exemption framework apply to companies that have not submitted audited financial statements since 2017?

Yes. Companies that have not submitted financial statements since 2017 must still comply with PD 3/2017 for financial years before 2025. However, for financial years commencing on or after January 1, 2025, they must follow PD 10/2024.

Read our full guide on audit exemption here.

Refer to the original Audit Exemption FAQ document by SSM here.

1. Annual Return Filing Requirements

Filing annual returns is a statutory obligation for all companies incorporated in Malaysia. The Companies Act 2016 mandates that these returns include up-to-date information about a company’s structure, directors, shareholders, and registered address.

What’s New for 2025?
Under Phase 1 (effective 1 December 2024), annual returns must be submitted digitally via the MBRS 2.0 system, ensuring accuracy and compliance with the latest reporting standards. Companies failing to meet this obligation risk penalties and may face delays in obtaining approvals for other filings. To avoid penalties, companies should ensure their records are accurate and begin preparing their submissions early.

2. Unaudited Financial Statements and Reports

For exempt private companies (EPCs) and other qualifying entities, unaudited financial statements provide a simplified way to fulfill compliance requirements.

Implementation Timeline:

• Phase 1 (effective 1 December 2024): Companies must submit unaudited financial statements and reports for EPCs through MBRS 2.0.
• Phase 2 (effective 1 March 2025): The requirement is extended to include financial statements for companies limited by guarantee and those regulated by Bank Negara Malaysia.

3. Rectification Applications and Court Order Filings

Errors in statutory submissions, such as annual returns or financial statements, can lead to complications for companies. Rectification applications and court order filings allow businesses to correct errors while maintaining compliance.

• Key Scenarios for Rectification:
  • Incorrect details in annual returns or unaudited financial statements.
  • Filing discrepancies in financial reports regulated under the Companies Act 2016.
• Process Updates for 2025:
  • Phase 1 (effective 1 December 2024): Companies may submit rectification applications via MBRS 2.0 for annual returns and unaudited financial statements.
  • Phase 2 (effective 1 March 2025): Similar provisions are available for audited financial statements and companies regulated by Bank Negara Malaysia.

4. Applications for Extensions of Time

Unforeseen circumstances may prevent timely submission of financial statements or annual returns. The Companies Act 2016 allows companies to apply for an extension of time, but this must be done in compliance with SSM’s guidelines.

• What’s Changing?
  • From Phase 1, companies can apply for an extension of time for:
    • Financial statements of exempt private companies.
    • Unaudited financial statements and annual returns.
  • By Phase 3 (effective 1 June 2025), this provision will also cover audited financial statements and related exemption applications.
• Common Reasons for Extensions:
  • Delays in compiling financial data.
  • Unavailability of directors or auditors to complete required approvals.
• How to Apply: Applications must be submitted digitally via MBRS 2.0 with a valid justification and supporting documents.

Conclusion

The phased implementation of these compliance requirements highlights Malaysia’s commitment to modernizing its regulatory framework. By aligning with the updates under the Companies Act, businesses can ensure seamless operations, avoid penalties, and build trust with stakeholders. 

Who Can Appoint and Remove Directors?

The power to appoint and remove directors generally lies with the members (shareholders) of the company. However, in certain situations, such as filling a casual vacancy or adding an additional director, the Board of Directors is also authorized to make appointments. Regardless of who appoints or removes a director, the company is required to notify the Registrar (SSM) within 14 days of any such changes. Failure to do so will result in late lodgment fees and potential compliance issues.

The Notification Process and Required Documents

When a company appoints a new director, it must submit an official notification to SSM. If the appointment occurs at a general meeting, this notification must be accompanied by an extract of the resolution passed at the meeting. This document must be signed by at least one existing director (not the newly appointed one) as well as the company secretary.

In cases where a new director is appointed to fill a casual vacancy or as an additional director, an extract of the board resolution will suffice. This extract must also be signed by at least one existing director and the company secretary before submission to SSM.

The process for removing a director follows a similar structure. If a director is removed through a general meeting resolution, the company must notify SSM and provide an extract of the resolution, which must be signed by a director at the time of removal and the company secretary. However, if the entire board of directors is removed, the notification must include an extract of the resolution signed by either one of the removed directors, the secretary at the time, a newly appointed director, or a newly appointed secretary.

Special Considerations for Director Removal

The removal of a director is not always straightforward. Under Section 206(3) of CA 2016, a company must issue a special notice if it intends to remove a director and appoint another in their place at the same meeting. Additionally, a director’s removal will only take effect once a replacement has been appointed, ensuring that the company maintains the required minimum number of directors as mandated by Section 196 of CA 2016.

There are also situations where a company may struggle to comply with this requirement, such as when the directors cannot be contacted or the company secretary has resigned. In such cases, the procedure outlined in Practice Note No. 9/2024 provides clarity on how to proceed with the necessary documentation.

Read the official Practice Note (PN9/2024) from SSM here. 

Qualifying Criteria 

To qualify for an audit exemption, a private company must meet at least two out of the following three conditions:

• Annual revenue does not exceed RM3,000,000 for the current and past two financial years.
• Total assets do not exceed RM3,000,000 for the current and past two financial years.
• The company employs no more than 30 full-time employees at the end of each financial year.

Definitions

Understanding the key financial and employment metrics used in the exemption criteria is crucial for companies considering their eligibility:

• Annual Revenue: Includes all revenue except non-operational entries, tax adjustments, and asset disposals.
• Total Assets: Includes all current and non-current assets as per accounting standards.
• Employees: Includes full-time local, foreign, and probationary staff but excludes directors, shareholders, and unpaid workers.

Implementation Timeline 

The implementation of the audit exemption framework will be carried out in phases, allowing companies to progressively adapt to the changes. The threshold limits will be gradually increased over three years:

Exemptions and Non-Eligibility

Certain companies are automatically exempt from audit requirements, while others do not qualify for exemption based on their corporate structure.

Companies that are automatically exempt include dormant companies that have not carried out business activities since incorporation or during the current and past financial years.

However, some companies do not qualify for exemption, including:

• Public companies or their subsidiaries.
• Private companies that are subsidiaries of public companies.
• Companies registered as exempt private companies.

Additional Considerations

While companies may qualify for audit exemption, specific situations may still require an audit to be conducted. If members holding at least 5% of the total issued shares or 5% of the total voting members submit a written request at least one month before the end of the financial year, the company must conduct an audit.

Companies that elect for audit exemption must still fulfill regulatory submission requirements. They are required to file unaudited financial statements along with a directors’ report and a certificate confirming compliance with the CA 2016.

Preparing for Compliance

To ensure smooth compliance with audit exemption regulations, companies should:

• Ensure financial records are maintained according to Malaysian Private Entities Reporting Standard (MPERS) or Malaysian Financial Reporting Standards (MFRS).
• Verify eligibility for exemption annually.

For more details on audit exemptions and compliance, feel free to contact us at Spektra Management or consult the SSM guidelines.

Read the official Practice Note (PN10/2024) from SSM here. 

Whether you are a local entrepreneur, foreign investor, or SME owner, incorporating an Sdn Bhd in Malaysia offers benefits such as better business credibility, tax advantages, and easier access to funding. However, the registration process involves several legal and regulatory steps, which must be carefully followed.

This guide outlines the step-by-step process to register an Sdn Bhd company in Malaysia, key requirements, costs involved, and how Spektra Management can assist you in incorporating your business efficiently and hassle-free.

Why Choose an Sdn Bhd in Malaysia?

– Limited Liability Protection – Shareholders are only liable for the amount they invest in the company.
– Better Business Credibility – A registered Sdn Bhd is recognized as a legitimate and stable entity, making it easier to gain trust from customers, investors, and banks.
– Tax Benefits – Enjoy corporate tax incentives and lower tax rates, especially for SMEs with profits under RM600,000.
– Easier Business Expansion – You can bring in investors, secure bank loans, and expand operations more easily than with a sole proprietorship or partnership.
– Separate Legal Entity – The company can own assets, enter contracts, and sue or be sued independently of its owners.

Step-by-Step Process to Set Up an Sdn Bhd in Malaysia

Step 1: Meet the Basic Requirements

To register an Sdn Bhd, your company must meet the following requirements:

Minimum 1 director – The director must be at least 18 years old, a Malaysian resident, and not declared bankrupt.
Minimum 1 shareholder – Can be the same person as the director or a different individual/company.
A company secretary – Must be a licensed company secretary registered with SSM (Suruhanjaya Syarikat Malaysia).
A registered business address – The company must have a local registered office address in Malaysia.
Minimum paid-up capital of RM1 – Although there is no fixed minimum capital, many companies start with RM1,000 to RM10,000.

Step 2: Name Search & Reservation

– Choose a unique company name following SSM guidelines.
– Conduct a name search using SSM’s MyCoID portal to check for name availability.
– If approved, the name will be reserved for 30 days (can be extended for an additional 30 days).

Step 3: Prepare Incorporation Documents

Once the company name is approved, you need to prepare and submit the following documents:

– Super Form (Section 14 of Companies Act 2016) – Includes company name, business activities, directors, and shareholder details.
– Declaration by Directors & Shareholders (Section 201 of Companies Act 2016) – Confirms that all parties agree to the incorporation.
– Constitution (optional) – A legal document outlining how the company is governed (not mandatory but recommended for businesses with multiple shareholders).

Step 4: Receive Certificate of Incorporation (Section 17)

Once SSM approves your registration, they will issue a Certificate of Incorporation (Section 17), which serves as proof that your company is legally established.

– Your Sdn Bhd is now officially registered and ready to operate!

Step 5: Register for Corporate Tax, Licenses & Business Bank Account

After incorporation, the company must fulfill these post-registration requirements:

– Apply for a Corporate Tax File with LHDN – All Sdn Bhd companies must register with Lembaga Hasil Dalam Negeri (LHDN) for corporate tax compliance.
– Open a Business Bank Account – Most banks require your Certificate of Incorporation (Form 9), corporate profile, and directors’ NRIC/passport.
– Apply for Business Licenses (if required) – Some industries (e.g., food, retail, construction) may require additional business permits.
– Register for EPF, SOCSO & EIS – If hiring employees, register with the Employees Provident Fund (EPF), Social Security Organisation (SOCSO), and Employment Insurance Scheme (EIS).
– Register for SST (if applicable) – Companies with taxable revenue over RM500,000 must register for Sales & Service Tax (SST) with Royal Malaysian Customs (JKDM).

Common Mistakes to Avoid When Registering an Sdn Bhd

Choosing a Name That Violates SSM Rules – Avoid using prohibited words or names too similar to existing companies.
Not Appointing a Licensed Company Secretary – A company secretary must be appointed within 30 days of incorporation.
Ignoring Tax & Business License Requirements – Failure to register for taxes, SST, or required licenses can lead to penalties and business closure.
Using a Personal Bank Account for Business Transactions – Always open a corporate bank account to separate business finances.

Why Choose Spektra Management for Your Sdn Bhd Registration?

Setting up an Sdn Bhd requires legal, tax, and compliance expertise to ensure smooth registration and avoid costly mistakes. Spektra Management provides end-to-end corporate incorporation services, handling all paperwork, licensing, and compliance requirements for you.

Our Services Include:

– Company Name Search & Reservation
– SSM Registration & Incorporation Filing
– Company Secretary Appointment
– Business Licenses & Tax Registration (LHDN, EPF, SOCSO, EIS, SST)
– Corporate Bank Account Setup Assistance