On 4 August 2017, the Companies Commission of Malaysia, or SSM (its Malay acronym), has brought into force audit exemption for certain categories of private companies. SSM has issued Practice Directive No. 3/2017 to set out the qualifying criteria for private companies to be exempted from appointing an auditor for a financial year. SSM’s FAQ document has also been updated as at 4 August 2017 to address questions regarding audit exemption.
The following types of private companies can decide to opt for audit exemption:
Zero-revenue companies; and
Threshold-qualified companies – annual revenue of RM100,000 or less, total assets of RM300,000 or less, and 5 employees or less.
[this article will be published in an upcoming issue of SKRINE’s Legal Insights]
By Lee Shih and Khong Siong Sie
The Companies Act 2016 (“Act”) has come into force on 31 January 2017, except for the provisions on registration of company secretaries and corporate rescue. This article will highlight five tax implications on companies as a result of the Act.
(1) SME OR NON-SME
The Act’s introduction of no-par value shares may have an impact on the preferential tax rates enjoyed by certain small and medium enterprises (“SMEs”).
Resident SMEs with a paid-up capital in respect of ordinary shares of RM2.5 million and below at the beginning of the basis period for a year of assessment are taxed at a preferential tax rate of 18% (instead of the normal rate of 24%) for the first RM500,000 of its chargeable income. Such SMEs must not be part of a group of companies where any of their related companies have a paid-up capital of more than RM2.5 million.
With the introduction of no-par value shares, the moneys in the share premium account and capital redemption reserve become part of the company’s share capital, subject to a transitional period of 24 months. This merging of share premium and capital redemption reserve may result in some SMEs losing the preferential tax rate once their merged share capital in respect of ordinary shares exceeds RM2.5 million.
Losing such preferential tax rate may translate into liability for an additional tax of up to RM30,000.00. Further, there may be a loss of other benefits such as the unlimited claim on special allowances for small value assets and exemption from having to provide an estimate of tax payable for the first two years of operations. Continue reading →
On 9 June 2017, True Fitness Malaysia announced that it would close its True Fitness and True Spa centers in Malaysia on 10 June 2017. It cited that its businesses were no longer financially viable due to evolving market conditions.
It was reportedthat the True Fitness Malaysia gym members were left in the lurch and with uncertainty on their long-term memberships. The reports suggested that there may have even been new members being recruited for the gym very shortly before the announcement on the closure.
I address 5 key legal issues that arise from the closing down of the True Fitness business in Malaysia. I touch on the corporate restructuring of the True Fitness group, the impact of any winding up proceedings against True Fitness, and who may be liable for any claims by the gym members or creditors.Continue reading →
As at early May 2017, it was reported that there are around 292,000 Malaysians declared bankrupt. How will the new bankruptcy law affect these existing individuals and will it make it easier for them to achieve a discharge of bankruptcy? I analyse the new law and explain why the amendments may have limited effect on existing bankruptcy cases.
Guest writer Pang Jo Fan—Head of Marketing & Communications at legaltech lawyer-discovery service CanLaw—presents his views on why Malaysia’s Bar Council should be encouraging the development and introduction of legaltech to ensure access to justice.
Of late, there has been a spike in legal technology startups in the Malaysian market providing innovative tech solutions to assist both the public and lawyers in their day-to-day legal needs. Other than the more veteran players such as eLawyer and OfficeParrots who have been tirelessly serving Malaysian law firms with their human resource needs, there are also recent players such as Lesys Tenancy (tenancy agreements), BurgieLaw (legal directory), Dragon Law (document drafting), EasyLaw (calculators for lawyers), Locum Legalis (MOB app) and, of course, CanLaw (lawyer-discovery).
Much has been said about the Bar Council’s denial of Dragon Law’s entry to the Malaysian market and the infamous lawsuit against Answers-In-Law. The Malaysian Lawyer also provided an insightful update on the said matters based on the report by the Legal Profession Committee dated 1 December 2016 contained in the 2016/17 Annual Report of the Malaysian Bar. As it stands, it appears that the legal industry remains rather cautious of any form of tech innovations that are being introduced into the profession, mostly due to the general misconception that technological innovations pose a threat to the livelihoods of law practitioners in the country.