Digital Company Secretary

Business & Compliance Terms Glossary

Navigating the many different business terms flying about in Malaysia can be somewhat intimidating, especially if your background is not in business or law. To help you get to grips with the basics, we have put together the following list to explain the most common business compliance terms and help minimise the headaches:

AGM (Annual General Meeting)

The AGM is the annual ordinary meeting held with shareholders in attendance. It is mandatory for Malaysian listed (Berhad) and private limited (Sdn Bhd) companies to hold a minimum of one AGM per year.

At the AGM, the Board of Directors (BOD) presents key highlights from the company’s Annual Report and the shareholders vote on resolutions that are put to the meeting, such as re-election of particular Directors, approval of Directors’ Fees etc. Shareholders can also raise questions to the Board. 

A newly incorporated company in Malaysia must hold an AGM within 18 months from the date of incorporation. 

A growing trend is for companies to conduct their AGM in a fully virtual setting using a digital platform that enables shareholders to cast their votes electronically.

Annual Report

All public listed companies (Berhad( are required to publish an Annual Report that contains information about the financial performance of the company and the outlook by the Board of Directors and Auditors. The Annual Report is published before the AGM and it allows shareholders and other stakeholders to obtain a deeper understanding of the company performance. 

Annual Return

The Annual Return – not to be confused with the Annual Report – is an overview of the basic details of a company. The Annual Return must be lodged with SSM every year by the registered Company Secretary using the MBRS platform. The Annual Return contains the following information:

  • Registered office address
  • Business office address
  • Branch office address(es) (if applicable)
  • Business activities
  • Total authorised capital registered
  • Total paid-up capital
  • Charges registered with SSM
  • Details of the company directors
  • Details of the appointed company secretary
  • Details of the shareholders 

Audit

Sdn Bhd and Berhad companies in Malaysia must  perform a yearly audit of their Year End Accounts. The audit must be completed by an accredited firm that is authorised to provide audit services. In Malaysia, the accreditation body is the Malaysian Institute of Accountants (MIA). If you are unsure if your audit firm is registered with MIA you can contact MIA directly.

Note: Some companies are exempted from audit provided they meet certain criteria. 

Quadrant Biz Solutions offers audit and finance services through our extensive network of partners. Contact us today to learn how we can assist you with your compliance.

Berhad

Berhad or (BHD) is used to identify a public listed company in Malaysia. Berhad also means the company is public limited (PLC). Berhad companies are usually listed on a stock exchange, but can also choose not to list on a stock exchange.

Board Meeting

A board meeting is a formal meeting between the Board of Directors of a company. The meeting agendas cover company performance, policy issues, and other legal matters.
In Malaysia, public listed companies (Berhad) are required to hold a minimum of one board meeting per quarter. 

Bookkeeping

Bookkeeping is a record of the company’s financial transactions and activities and forms  part of the company’s accounting process. Accounting software such as Quickbooks, SQL Account, MYOB and spreadsheets can be used as part of bookkeeping activities.

Business Address/Office

The business address is the address where your business operations and activities are handled. It is the official location of a company’s establishment. The business address can be your office’s location and also a residential address (if you conduct your business at your home). 

Company Secretary

The role of a company secretary is a position in a private/public company to assist companies by managing and ensuring that all compliance requirements are met in accordance with the law and the Companies Act 2016. In Malaysia, a company secretary is required to be accredited under one of the official bodies:

  1. Chartered Secretary registered under the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) 
  2. Chartered Accountant registered under Malaysian Institute of Accountants (MIA) 
  3. Licensed Company Secretary licensed by Companies Commission of Malaysia (SSM) to be a company secretary 
  4. Lawyer registered with Malaysian Bar

Constitution

A constitution is a formal document that sets out the principal activities and the rules and regulations applicable to governing a particular company. A company’s constitution is also known as the Articles and Memorandum of Association and defines the relationship between the company, directors, shareholders and other institutions of the company. When the owner registers a company, he/she is required to create a company constitution. 

CTC (Certified True Copy)

A certified true copy is a copy of an original official document that has been endorsed that it is a true copy of the original document. In Malaysia, Certified True Copies must be endorsed by a solicitor, commissioner for oaths, government official, or public notary.

Director

A director is an individual who is involved in strategic decisions about the company direction and overseeing the operations of the company. One of the main responsibilities of a director is also to authorise and sign official documents on behalf of the company. Every Sdn Bhd company is required to have at  least one director who is resident within Malaysia. 

Dormant Company

A dormant company is a company that is not currently conducting any kind of business activities in the given period of time. A company is treated as a dormant company when there are no financial transactions within the company. 

Enterprise

Enterprise is one of the types of business entities in Malaysia other than Sdn Bhd. There are two types of enterprise, namely Sole Proprietorship and Partnership. Enterprise is the simplest business type and enables one person to conduct their business activities but is personally responsible for future debts, unlike a Sdn Bhd entity where limited liability applies..

Financial Statement

Financial statements are written records showing the company’s activities and financial performance. Financial statements include a balance sheet and income statement.

LHDN (Lembaga Hasil Dalam Negeri)

LHDN (Inland Revenue Board of Malaysia) is the government agency in charge of tax collection of individuals and companies.

LLP

LLP stands for limited liability partnership (LLP) where each of the partners’ liabilities is limited to the capital they put into their company. LLP provides liability protection for the business owners, along with other advantages. LLP is different from a general partnership due to the protection for the partners. 

MBRS (Malaysian Business Reporting System)

MBRS, or the Malaysian Business Reporting System, was implemented in 2018 by SSM to assist with the online submission of Annual Returns and Financial Statements in the XBRL (eXtensible Business Reporting Language) format.

Once your Annual Return and Financial Statements are ready, they will need to be prepared in the MBRS format before you can submit them to SSM. This preparation is carried out using the mTool, a software programme from SSM. Our team can assist with the preparation of your documents in the MBRS format.

MSIC Code

The Malaysia Standard Industrial Classification codes describe the types of business a company is conducting and allowed to carry out. The codes consist of 5 digits representing the business nature.

Making sense of all the many business terms can be a daunting prospect. If you have any questions on how to get started with company incorporation or your business compliance matters, please get in contact with Quadrant Biz Solutions for the best assistance.

MyCoID

MyCoID (Malaysia Corporate Identity) is an online incorporation platform and service managed by SSM. It allows company incorporation and other services to be performed online.

The MyCoID also serves as a single reference number for Malaysian Companies to transact or register with government agencies.

Name Search & Reservation

When you decide to incorporate a company in Malaysia, the first step is to search and reserve your desired name with SSM. SSM has requirements for the name format and you will not be able to choose a name that is already taken by or similar to that of another company.

Learn how to find a good name for your company with our guide here. At Quadrant Biz Solutions we can also assist you with your name search and reservation.

Nominee Director

A nominee director is a person acting as director for the company appointed by a shareholder or a group of shareholders. Appointing a nominee director can be useful if the shareholders or other directors are not residing in Malaysia, which is a requirement by SSM.

Ordinary Share

Ordinary shares offer equity ownership for the holders. By virtue of their shareholding, ordinary shareholding can also vote on company resolutions such as appointing or removing the directors and auditors. 

Ordinary shareholders are entitled to receive a part of the profit if the company decides to pay its shareholders dividends.

Paid-Up Share Capital

Paid-up capital is the amount of money that shareholders put into the company in exchange for shares of stock of the company. The minimum capital to set up a Sdn Bhd is RM1 in Malaysia. The paid-up capital can be increased subsequently, following the company registration.

Preference Share

Preference shares offer entitled dividends and capital gains for the holders. Shareholders of preference shares are first in line for receiving a fixed rate of dividend payments. However, preference shareholders come with no voting rights on company resolutions. Their main advantage over ordinary shareholders is their entitlement to dividend payments.

Registered Address/Office

The registered address, sometimes referred to as the registered office address, is the address of the company secretary of a company. All regulatory documents and records are kept at the registered address and SSM will send any compliance documents to the registered office address.

The registered address is most often different from the business address. This is the address where the company carries out its main business activities such as meetings with its customers and other stakeholders.

Resolution

A company resolution is the formal decision of a company usually created in meetings such as the annual general or other meetings. A resolution is a written statement that provides specific information on the company’s action. For example, the action can relate to the appointment or resignation of the directors of the company.

Sdn Bhd (Sendirian Berhad)

A Sdn Bhd company is a limited liability company in Malaysia. This essentially means that the company only has limited liability, compared to a Sole Proprietorship where the owners are personally liable in the event of any legal or debt matters.

Shareholder

Company shareholders are the ultimate owners of the company. This does not necessarily mean they are involved in the daily operations of the company. Shareholders are generally defined as ordinary or preference shareholders in Malaysia. 

Read more about different types of shares and shareholders in our article.

SME

SME is an abbreviation of Small and Medium-sized Enterprise. In Malaysia, the definition of an SME is determined by the two criteria: total sales (revenue) and the number of full-time employees.

A company is defined as SME as follows:

  • For the manufacturing sector, SMEs are defined as firms with sales turnover not exceeding RM50 million OR number of full-time employees not exceeding 200.
  • For the services and other sectors, SMEs are defined as firms with sales turnover not exceeding RM20 million OR number of full-time employees not exceeding 75.

    Source: SME Corp Malaysia

Sole Proprietorship

Sole proprietorship is one of the simplest forms of business entity in Malaysia. The term refers to one single person who owns the company and is personally responsible for the company’s financial affairs including any debts. This form of business entity is popular with small businesses due to its ease of establishment. However, sole proprietors are subject to unlimited liability and the associated financial and legal risks.

SSM (Suruhanjaya Syarikat Malaysia)

SSM is the company and business registrar in Malaysia. SSM is headquartered in Kuala Lumpur near KL Sentral and has offices throughout Malaysia. 

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