Annual Financial Compliance Checklist in Malaysia in 2024

Navigating the regulatory landscape of Malaysia requires a thorough understanding of compliance requirements. This guide provides an overview of the essential steps and documentation required for businesses operating within Malaysian jurisdiction, ensuring legal obligations are met efficiently. 

Understanding the Legal Requirements 

The Malaysian government, through the Companies Commission of Malaysia (SSM), mandates stringent compliance protocols to ensure that businesses operate transparently and are accountable. Compliance is not just a legal requirement but a crucial element of corporate governance. 

The 2016 Companies Act and Compliance Mandates 

The 2016 Companies Act is the cornerstone of corporate regulation in Malaysia. It stipulates that both domestic and foreign businesses, including limited liability partnerships and private limited companies, must adhere to several statutory requirements. These businesses must maintain accurate records, file annual reports, and submit various regulatory documents to stay compliant. 

Navigating Your Compliance Obligations 

To remain in good standing, businesses must understand and manage their compliance obligations meticulously. This involves regular submissions and adherence to a set of ongoing legal mandates. 

Registration and Statutory Obligations 

Upon registration, businesses are required to register with the Inland Revenue Board of Malaysia for tax purposes and the Social Security Organization (SOCSO) for social security contributions. Additionally, the appointment of an auditor is necessary for financial oversight, and businesses must establish a financial year-end. 

Essential Compliance Documents 

Key documents that must be prepared and filed annually include: 

  • Annual Financial Statements: These detailed reports provide insights into the financial health of the business. 
  • Annual Returns (AR): A summary of essential company information updated yearly for the Companies Commission. 
  • Annual Tax Returns: Filed with the Inland Revenue Board, these returns are crucial for tax assessment. 
  • Annual General Meeting (AGM): Legally required to be held once a year, the AGM allows shareholders to discuss the company’s affairs. 

Practical Guide to Annual Compliance in Malaysia 

For many businesses, keeping up with compliance needs can be daunting. To assist, here is a practical, step-by-step guide designed to simplify this process. 

Step-by-Step Compliance Checklist 

  • January: Schedule and plan for the Annual General Meeting. 
  • February: Prepare draft of the Annual Financial Statements. 
  • March: Conduct the Annual General Meeting; finalize and submit the Annual Financial Statements. 
  • April: Prepare and file the Annual Returns with SSM. 
  • May: Review and update registration details with the Inland Revenue Board and SOCSO. 
  • June to December: Maintain regular checks on compliance requirements and prepare for the end of the financial year filings. 

By following this guide, businesses can ensure they meet all legal requirements, thereby avoiding penalties and fostering a culture of compliance and transparency in their operations. This proactive approach not only ensures compliance but also supports sustainable business growth in Malaysia’s dynamic market environment. 

Annual Financial Statement 

In Malaysia, the annual financial statement is a critical component of the compliance checklist for companies registered under the Malaysian Companies Act of 2016. This document, which must include the auditor’s report and the directors’ report, provides a comprehensive overview of the company’s financial health and potential. It details the directors’ roles and the company’s shareholdings, offering insight into its operational standing. 

Newly incorporated companies in Malaysia are required to submit their financial statements, which must adhere to the accounting standards outlined in the Companies Act. These reports, authenticated by the Commissioner of Oaths, include: 

  • The financial statement that complies with specific accounting standards. 
  • Key financial indicators, crucial for financial reporting in XBRL format, applicable to registered Malaysian companies. 
  • Complete financial documentation such as the income declaration, balance sheet, cash flow statement, and explanatory notes. 

Understanding XBRL and Its Importance for Malaysian Businesses 

The Significance of XBRL in Financial Reporting for Annual Financial Statements 

The Significance of XBRL in Financial Reporting for Annual Financial StatementsXBRL (eXtensible Business Reporting Language) is a digital language for the electronic communication of business and financial data which is revolutionizing business reporting around the world. It offers major improvements in the speed, accuracy, and usability of financial information. Being a flexible and open standard, XBRL is now a global framework for the exchange of business information, with its application increasing rapidly across different regulatory environments. 

Why Malaysian Businesses Need to Prepare for XBRL 

For Malaysian companies, particularly those registered under the Malaysian Companies Act of 2016, adapting to XBRL is becoming increasingly essential. The Malaysian Business Reporting System (MBRS) mandates the submission of financial statements, annual returns, and exemption applications in XBRL format. This requirement underscores the need for businesses to ensure their financial data is not only accurate but also XBRL compliant. 

The shift to XBRL offers several advantages: 

  • Enhanced Accuracy and Reliability: XBRL reduces the risk of errors and the need for data re-entry by encapsulating data in a standardized format. 
  • Improved Efficiency: Data in XBRL format can be automatically extracted and analyzed, significantly speeding up the process of financial reporting and analysis. 
  • Better Regulatory Compliance: With XBRL, companies can more easily meet regulatory demands with greater transparency and adherence to standards. 
  • Increased Transparency and Comparability: Financial information in XBRL format is more easily comparable across different companies and industries, facilitating better decision-making by stakeholders. 

Timeline for Filing Annual Financial Statement 

According to Section 248 of the Malaysian Companies Act of 2016, private limited companies must file their annual financial statements within 18 months of incorporation. Furthermore, these documents should be circulated to members and shareholders within 30 days from the date of distribution, and no later than six months after the fiscal year-end, ensuring timely access to financial information for all stakeholders. 

Particulars for Annual Financial Statement 

The annual financial statement’s filing is more than a formality; it is integral to transparent business practices in Malaysia. As stipulated in Section 249 of the Companies Act, the report must include: 

  • Directors’ remuneration and retirement benefits. 
  • Details of any loans or quasi-loans to directors. 
  • Fees or other charges related to the appointment of auditors. 

These elements are essential for an accurate and fair evaluation of the company’s financial position. 

Annual Return 

Filing the annual return is a mandated element of the compliance checklist in Malaysia. As per Section 68 of the Malaysian Companies Act of 2016, this document summarizes key business activities and essential information over the financial year. It is the company secretary’s responsibility to ensure that these documents are accurately prepared and submitted through the Malaysian business reporting system portal. The annual return serves as a critical tool for maintaining transparency and accountability within the corporate framework of Malaysia. 

The annual return is a comprehensive document that contains vital information about a company’s governance and operations as mandated by the annual compliance checklist in Malaysia. This document includes: 

  • Particulars of the Directors: Names, positions, and periods of service. 
  • Information of the Company Secretaries: Their qualifications and tenure. 
  • Details of Members and Shareholdings: The distribution and ownership percentages of shares. 
  • Registered Office Location: The official address of the company. 
  • Business Activities: A summary of the company’s primary operations. 
  • Company’s Liabilities: Current liabilities and obligations. 
  • List of Shareholders Employed by the Company: Names and details of shareholders with active employment roles within the company. 
  • Nature of the Business: Detailed description of the industry and specific activities. 
  • Branch Office Information: Locations and functions of any branch offices. 

Timeframe for Filing Annual Return 

Under Section 68 of the Malaysian Companies Act of 2016, companies must file their annual returns within 30 days following the anniversary of their registration. Adherence to this timeframe is crucial as failure to comply can result in legal penalties, affecting the company’s reputation and future business prospects. 

Annual Tax Return 

The annual tax return is a critical financial document that reconciles the estimated taxes paid with actual tax liabilities, allowing companies to claim refunds or make additional tax payments as necessary. This process is facilitated through Malaysia’s e-filing portal. The primary documents involved include: 

  • Form C or PT (Corporate Tax Return): To be filed within eight months from the fiscal year-end. 
  • Employer Tax Return: Due by April 30th each year, documenting remuneration paid to employees during the previous calendar year. 
  • EA Form (Employee’s Annual Remuneration Statement): Must be submitted by the last day of February each year. 

The Inland Revenue Board enforces strict penalties for any discrepancies, delays, or failures in filing these tax documents, which could lead to violations of the annual compliance checklist. 

Deadline for Filing Annual Tax Return 

  • Filing Annual Tax Returns: Companies are required to file their annual tax returns within seven months from the end of the assessment year. This timing coincides with the final settlement of the income tax payment. 
  • Estimate of Income Tax Payable: Malaysian companies must submit an estimate of their income tax payable within 30 days from the start of the tax year. 
  • Exemption for New Companies: New companies with paid-up capital exceeding RM 2.5 million are exempt from submitting tax estimates for their first two assessment years. 

Purpose of Annual General Meetings 

Annual General Meetings allow shareholders to discuss business affairs and interact with company directors. They address several key aspects: 

  • Appointment of new directors. 
  • Election of directors. 
  • Declaration of dividends. 
  • Deciding on directors’ remuneration. 
  • Reviewing audited financial statements. 
  • Adopting best practices for corporate governance. 
  • Managing risks and conducting internal audits. 
  • Appointing or reappointing auditors and setting their remuneration. 

Who Can Call an AGM? 

The AGM can be called by members who collectively hold at least 10% of the company’s shares and voting rights. 

  • Location: The AGM must be conducted at a location specified in the Articles of Association. 
  • Notice Requirement: A written notice of at least 21 days is required before holding an AGM. 

Timeframe for Conducting AGM 

  • First AGM: Must be held within 18 months from the date of incorporation. 
  • Subsequent AGMs: Must occur within six months after the end of the financial year and within 15 months of the previous AGM. 

Annual Compliance Obligations in Malaysia: A Distinct Approach 

In Malaysia, adhering to the annual compliance checklist is essential for businesses to ensure they meet specific legal and regulatory requirements. This comprehensive approach includes conducting annual audits, complying with employment, environmental, and data protection laws, renewing required business permits and licenses, enforcing corporate governance, and regularly reviewing and renewing insurance coverage. 

Annual Audit 

Every company in Malaysia must audit its books of accounts annually, as per the regulation by the Companies Commission of Malaysia (SSM). 

  • Auditor’s Role: A qualified auditor is appointed to perform the audit and submit the resulting auditor’s report to the SSM office. 
  • Report Submission Formats: Companies have the option to submit their financial reports in either audited or unaudited formats. 


Audit requirements typically exempt: 

  • Dormant companies 
  • Companies with zero revenue 
  • Companies meeting specific financial criteria (e.g., annual turnover less than RM 300,000) 


2024 New Proposal for Annual Audit Exemptions for the companies in Malaysia:

1. Dormant Companies: No changes are proposed.

2. Zero-Revenue Companies:
Turnover: Remains at RM 0.
Total Assets: Increase in the threshold for total assets from RM300,000 to RM500,000 for the current and the immediate past two financial years.

3. Threshold-Qualified Companies:
Turnover: The annual revenue threshold is proposed to increase from RM100,000 to RM1,000,000 for the current financial year and the immediate past two financial years.
Total Assets: An increase from RM300,000 to RM1,000,000 in total assets for the current and the immediate past two financial years.
Employees: The employee count threshold is proposed to increase from no more than five employees to no more than thirty employees at the end of the current financial year and the immediate past two financial years.

These changes aim to update the existing criteria to reflect current economic conditions and reduce the regulatory burden on smaller companies, facilitating growth while ensuring accountability.

For more information – Refer: Audit Exemption in Malaysia

  • Purpose of Exemptions: These exemptions aim to lessen the regulatory load on small businesses and startups, enabling better resource allocation during key growth phases. 
  • Annual Declaration : Companies must file an annual declaration either within 18 months of business registration or within 90 days following the end of the financial year. 
  • Regulatory Authority: The Companies Commission of Malaysia (SSM) is the designated authority responsible for processing these declarations. 
  • Applicability:  This requirement applies specifically to companies whose business activities exceed certain thresholds defined under the Chemical Weapons Convention Act of 2005. 

Estimated Taxation Submission 

Malaysian companies must file their estimated taxes annually. 

Taxes are calculated based on the projected annual income for the assessment year. 

  • Filing Agent: The tax estimate can be filed either by the company itself or through an appointed tax agent. 
  • Submission Deadline: The tax estimate must be submitted within three months and no later than 30 days before the end of the assessment year. 
  • Purpose of Compliance: This submission is crucial for maintaining compliance with Malaysian tax regulations. 

Annual Payment of Employee Payroll Taxation 

All Malaysian companies must file Form E with the Inland Revenue Board to fulfill their employment payroll tax obligations for the assessment year. This includes filing a statement of remuneration, which is due by March 31st each year. 

Annual Business License Renewal 

Not all businesses in Malaysia are required to renew their licenses annually. The necessity for license renewal depends on the specific industry and is governed by Malaysian regulations. Businesses must stay informed about their particular industry requirements to ensure compliance. 

Extension for Annual Compliance in Malaysia  

The Registrar of the Malaysian Companies offers extensions for compliance filings, including annual reports, financial statements, and the holding of the Annual General Meeting (AGM). Extensions are granted to both private and public companies that face difficulties meeting the stipulated timelines. 

This structured approach ensures that businesses operating in Malaysia can manage their compliance responsibilities effectively, minimizing legal risks and maintaining operational integrity. 

Penalties for Non-Compliance with Filing Requirements in Malaysia 

Malaysian companies face significant penalties for failing to adhere to annual filing requirements. Here are the specific consequences for non-compliance: 

  • Delayed or Unfiled Unaudited Reports: A penalty of RM 2,000 is imposed for any delay or failure in filing unaudited yearly reports. 
  • Late Preparation of Annual Financial Statements: Companies can incur a hefty penalty of RM 30,000 and may also face imprisonment for up to five years for delayed preparation of their annual financial statements. 
  • Failure to Conduct Annual General Meeting: A penalty of RM 5,000 is charged for any delay or failure to conduct the required annual general meeting. 

How DataTracks Can Assist with Annual Compliance and MBRS XBRL Preparation for SSM Filings 

Streamlining Annual Compliance through Expert XBRL Conversion and Tagging Services 

At DataTracks, we specialize in providing comprehensive MBRS XBRL preparation services, crucial for SSM filings in Malaysia. Our expertise includes converting your Annual Financial Statements (AFS) from common formats such as Word, PDF, or Excel documents into XBRL format. This conversion and tagging process is essential for ensuring compliance with the Malaysian Business Reporting System (MBRS), facilitating more accurate and efficient regulatory filings. 

Proven Expertise and Global Experience 

With 19 years of industry experience and operations across 26 countries, DataTracks has served over 28,000 clients and prepared more than 400,000 reports. Our global presence and extensive client base reflect our expertise and commitment to quality, making us a reliable partner for businesses aiming to meet their annual compliance needs through accurate and timely MBRS XBRL submissions. 

By choosing DataTracks, companies can significantly reduce the complexity of their compliance processes, ensuring that they meet the MBRS SSM’s requirements without fail and avoid potential penalties for non-compliance. 

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