Audit Exemption Comes into Effect in Malaysia

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.

Credit: Nick Youngson – http://nyphotographic.com/

 

The following types of private companies can decide to opt for audit exemption:

  1. Dormant companies;
  2. Zero-revenue companies; and
  3. Threshold-qualified companies – annual revenue of RM100,000 or less, total assets of RM300,000 or less, and 5 employees or less.

I expand on this further below and also set out four observations. Continue reading

Tax Implications Arising from the Companies Act 2016

[this article will be published in an upcoming issue of SKRINE’s Legal Insights]

By Lee Shih and Khong Siong Sie

INTRODUCTION

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.

tax

(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

10 Common Issues Arising from the Companies Act 2016

With the coming into force of the Companies Act 2016, a number of practical issues and questions have since cropped up. The Companies Commission of Malaysia (SSM) did release its helpful FAQ document. This document has been updated from time to time (presently, it has been updated up until 3 April 2017) and helps to answer the most frequently asked questions.

Nonetheless, there are still other common issues arising from the Companies Act 2016. I come across these queries in my practice or at the talks that I give. I set out below 10 of these key issues. Companies can consider seeking further clarification or advice. These issues range from the constitution, dividends, director-related issues, and transitional matters.

Continue reading

Kota Kinabalu Companies Act 2016 Talk

On Wednesday 26 April 2017, I will be speaking at a Companies Act 2016 seminar in Kota Kinabalu. This is organised by CLJ Law in collaboration with the Sabah Law Association. Click on the image below for the registration form.

This is the final leg of my book tour as well. You will be able to purchase a copy of my book ‘Companies Act 2016: The New Dynamics of Company Law in Malaysia‘ at a special price at this seminar. We will be there to sign the books as well. Looking forward to seeing you there.

Bankruptcy Amendment Bill Passed by Malaysia’s Lower House of Parliament

On 29 March 2017, it has been reported (see Bernama and the New Straits Times) that the Bankruptcy (Amendment) Bill 2016 has been passed by the Dewan Rakyat, being the lower house of Parliament of Malaysia. The changes to the law will not be in force just yet. The Bill will now be sent to the Dewan Negara and then subsequently receive Royal Assent. The coming into force of the new law will then be on a gazetted date.

Continue reading

The Malaysian Lawyer and Legal Logic Asia: Companies Act 2016 Talk

As earlier posted, TheMalaysianLawyer.com is partnering up with Legal Logic Asia for this upcoming Companies Act 2016 talk. It will be on 4 April 2017 at Pullman Hotel Bangsar. Click on the image below for the registration form.

Set out below is a preview of some of the topics that will be covered at the talk. I highlight below 6 common areas I come across frequently in practice.

Continue reading

Speaking at the MIA Audit Committee Conference 2017

I have been invited to speak at the MIA Audit Committee Conference 2017 on 5 April 2017. The conference will be held at the Connexion Conference & Event Centre. The registration form can be downloaded over here.

I will be speaking at the panel session on the Companies Act 2016 and its impact on the audit committee’s responsibilities. We will be covering the new management requirements, the utilisation of share premium and the capital redemption reserve and the new business review section. It is a good combination of speakers drawn from across the various industries. I am very much looking forward to this.