In Malaysia, businesses are required to comply with strict legal requirements, particularly when it comes to annual returns and financial reporting. At the center of this process is the company secretary, a key player who ensures that companies fulfill their legal obligations under the Companies Act 2016. Let’s delve into the role a company secretary plays in these crucial aspects of corporate compliance and why having a knowledgeable secretary is essential for your business.
1. Understanding Annual Returns
An **annual return** is a summary of the most important information about a company. It includes the company's registered office address, principal activities, shareholders, directors, and company secretary details, as well as any changes that occurred throughout the financial year.
mFiling Annual Returns:
- 3yo m.£3All companies in Malaysia are required to file annual returns with the **Companies Commission of Malaysia (SSM)** once every calendar year.
The company secretary is responsible for preparing, verifying, and submitting the annual return within 30 days of the anniversary of the company’s incorporation.
Missing this deadline can lead to hefty penalties or even winding up of the company. Therefore, a diligent company secretary ensures timely submission and proper record-keeping.
2. The Role of the Company Secretary in Financial Reporting
Financial reporting is another area where the company secretary plays a significant role, ensuring compliance with statutory requirements and transparency in business operations. Financial statements must accurately reflect the company’s financial position and performance. This process involves multiple steps that the company secretary oversees:
Liaison with Auditors: The company secretary facilitates communication between the company and its appointed auditors to ensure the financial statements are properly audited before submission.
Board Meeting Preparations: The secretary schedules board meetings where directors review and approve the financial statements. Their responsibility includes preparing minutes and ensuring directors' resolutions regarding the financial statements are properly documented.
Submission to SSM**: After the board has approved the audited financial statements, the company secretary submits these to SSM within the prescribed deadline of six months after the financial year-end.
### 3. Ensuring Compliance with Malaysian Law
In addition to the tasks of filing annual returns and financial statements, the company secretary must stay up-to-date on the latest legal requirements set by **SSM, LHDN (Inland Revenue Board), SOCSO (Social Security Organization),** and other relevant authorities. These regulations are subject to updates, and the company secretary ensures the company is always in compliance, avoiding potential legal issues and penalties.
For example:
- The company secretary ensures that the financial statements comply with the **Malaysian Financial Reporting Standards (MFRS)**.
- They also keep track of the latest filing dates, updates in taxation requirements, and social security contributions that must be reflected in the annual returns or financial reports. 4. Strategic Guidance and Record-Keeping
In addition to regulatory compliance, company secretaries offer strategic value by advising the board on corporate governance matters. They ensure that the company follows best practices, safeguarding the interests of shareholders, and enhancing the company’s reputation.
Key record-keeping responsibilities include:
- Maintaining and updating the company’s statutory books.
- Safeguarding corporate records, including minutes of meetings, resolutions, and other significant documents.
- Tracking any changes to company structures, such as share transfers or director appointments.
5. The Cost of Non-Compliance
Failing to file annual returns or financial statements accurately and on time can result in:
- Fines and penalties imposed by SSM.
- Being struck off the SSM registry.
- Legal challenges that could jeopardize the company’s standing.
With such high stakes, businesses cannot afford to overlook their compliance duties. A company secretary's expertise is invaluable in navigating these obligations smoothly.
In Malaysia, the company secretary is not just a record-keeper but a vital compliance partner. They ensure that annual returns and financial reports are accurate, timely, and in line with legal requirements, preventing the risk of penalties. By leveraging the expertise of a qualified company secretary, businesses can focus on growth and success while staying compliant with the law.
If your business needs professional company secretarial services, our team at Ashton is here to help. We specialize in guiding companies through every step of their compliance journey, from annual return filings to financial reporting, ensuring that your business runs smoothly and stays ahead of regulatory changes. Give us a call at 016 324 0990 or WhatsApp us today
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