As a business owner, there are many aspects of an active company to take care of : strategy, financial planning, sales, marketing, operations, networking, as well as employee management. With all this going on, there is a risk of overlooking the annual statutory compliance requirements. Not fulfilling a statutory compliance requirement set by the Registrar of Companies (SSM) often results in penalties and fines being imposed, something that all of us want to avoid.
For your easy reference, sparing you the pain from intentionally flipping through Companies Act 2016 we have put together a summary of the likely penalties for violation of the annual statutory compliance requirements.
| Type Of Breach | Consequence |
| Appointment of Company Auditor | |
| Section 267 (Appointment of auditors of private company) – A private company is required to appoint a company auditor for every financial year. – The board of the company appoints one when the company is newly incorporated, or to fill a vacancy. – Failure of appointment of the company auditor by the board will result in members of the company appointing one by ordinary resolution. | Penalty: commit an offence. – If the company fails to appoint one, the Registrar may appoint one or more auditors upon application in writing from any member of the company. |
| Type Of Breach | Consequence |
| Lodgement of Financial Statements and Annual Returns | |
| Section 68 (Duty to lodge annual return) – Annual Return of a company within the financial year must be lodged not later than 30 days from the anniversary of its incorporation date. | Penalty: be liable to fine of <RM50,000 – Continuing offence: Further fine of <RM1,000 per day during which the offence continues after conviction. – The Registrar may strike a company off the register as provided in section 549, if the company fails to lodge an annual return for three or more consecutive years (Re: section 68). |
| Section 248 (Directors shall prepare financial statements) – The directors of every company shall prepare financial statements, with approved accounting standards, within 18 months from the date of its incorporation and subsequently, within six months of its financial year end. | Penalty: be liable to fine of <RM500,000 fine or imprisonment for a term not exceeding one year or both |
| Section 252 (Directors shall prepare directors’ report) – The directors of a company shall prepare for each financial year a report and such report shall be attached to the financial statements. | Penalty: be liable to fine of <RM20,000 |
| Section 257 (Duty to circulate copies of financial statements and reports) – Every company shall send a copy of its financial statements and reports for each financial year to all members of the company, every person who is entitled to receive notice of general meetings, auditors and debenture holders. | Penalty: be liable to fine of <RM50,000 |
| Section 259 (Duty to lodge financial statements and reports with the Registrar) – A company shall lodge with the Registrar for each financial year the financial statements and reports within 30 days from the anniversary of its incorporation date. | Penalty: be liable to fine <RM50,000 – Continuing offence: Further fine of <RM1,000 per day during which the offence continues after conviction. |
| Section 260 (Duty to lodge certificate relating to exempt private company) – An exempt private company may lodge with the Registrar for each financial year a certificate relating to its status as an exempt private company within 30 days from the circulation of the financial statements and reports. | Penalty: be liable to fine of <RM20,000 – Continuing offence: Further fine of <RM1,000 per day during which the offence continues after conviction. |
| Type Of Breach | Consequence |
| Keeping Accounting Books in Order | |
| Section 245 (Accounts to be kept) – A company, the directors and managers of a company shall cause appropriate entries to be made in the accounting and other records within 60 days of and retain the records for seven years of the completion after the transactions to which the entries relate. | Penalty: be liable to a fine of <RM500,000 or to imprisonment for a term not exceeding three years or to both. |
| Type Of Breach | Consequence |
| Not updating the company’s particulars with the Registrar | |
| Section 28 (Change of company name) – In the event that a company changes its name by a special resolution, the company is required to notify the Registrar regarding the change not more than 30 days after the special resolution is passed. | Penalty: be liable to a fine of <RM50,000. |
| Section 32 (Company may adopt a constitution) – A company may adopt a constitution by a special resolution, which is binding on the company, its directors and members. The company shall lodge the constitution with the Registrar within 30 days from the adoption of a constitution. | Penalty: be liable to a fine of <RM50,000 – Continuing offence: Further fine of <RM500 per day during which the offence continues after conviction. |
| Section 46: Registered office and documents – A company shall at all times have a registered office in Malaysia to which all communications and notices may be addressed. The Registrar shall be notified of any change in the address of the registered office within 14 days of such change. | Penalty: be liable to a fine of <RM50,000 |
| Section 47: Documents to be kept at registered office – List of documents are to be kept in the registered office, including but not limited to the notice of registration issued under section 15, all registers, books, records and documents as listed under section 47 of Companies Act 2016. | Penalty: be liable to a fine of <RM10,000 – Continuing offence: Further fine of <RM500 per day during which the offence continues after conviction. |
| Section 79 (Forms of documents and other means for recording of documents) – These documents and records are also to be kept in either written form or in any other form or manner, electronic or otherwise, that allows the documents and information to be easily accessible and reproduced into written form. | Penalty: be liable to a fine of <RM500,000 or to imprisonment for a term not exceeding 5 years or to both. |
| Section 50 (Register of members) – A company is to keep a register of its members and its details including names, number of identity cards and residential addresses. | Penalty: be liable to a fine of <RM10,000 – Continuing offence: Further fine of <RM500 per day during which the offence continues after conviction. |
| Section 51: Duty to notify of particulars and changes in the register of members – A company shall notify the Registrar of the changes in the particulars in the register within 14 days from the date of change, such as a change of shareholder. | Penalty: be liable to a fine of <RM20,000 – Continuing offence: Further fine of <RM500 per day during which the offence continues after conviction |
| Information on directors, managers and secretaries – A company shall keep at its registered office a register of its directors, managers and secretaries containing, but not limited to particulars such as name, residential address etc. If there is any change in the particulars of a director, manager or secretary the company shall effect the change in the register within 14 days from the change. | Penalty: be liable to a fine of <RM10,000 – Continuing offence: Further fine of <RM500 per day during which the offence continues after conviction |
Let us help You
Should you miss a deadline in meeting any statutory compliance, the risk of paying a fine or even conviction to prison may have a serious impact on your business. Maintaining a business is challenging and there are always business affairs to attend to. At Quadrant Biz Solutions, we can lend you a helping hand in company secretarial matters. Contact us today to begin!