Companies Act 2016 Director Employer Income Tax GST

Companies Act 2016

Publication of Name & Registration No.

(Timeline : Immediately)

All business letters, statements of account, invoices, official notices, official publications, websites, bills of exchange, promissory notes, endorsements, cheques, order forms, invoices, receipts and letters of credit of or purporting to be issued or signed by or on behalf of, the company, and all other forms of its business correspondences and documentation should have the Company name (whether or not it is carrying on business under a business name) & company registration number.

Documents to be kept at Registered Office

(Timeline : Immediately and within 14 days from the date of change)

a) notice of registration issued under section 15;
b) the constitution of the company, if any;
c) certificates given under this Act or corresponding previous written law, if any
d) all registers, books, records and documents as required under this Act;
e) minutes of all meetings of members and resolutions of members;
f) minutes of all meetings and resolutions of the board and committees of the Board;
g) copies of all written communications to all members or all holders of the same class of shares;
h) copies of all financial statements and group financial statement;
i) the accounting records of the company required under section 245;
j) copies of all instruments creating or evidencing charges as required under section 357; and
k) such other documents required to be kept by the Registrar.

All the documents above are usually kept at the Registered Office as we are handling the Corporate Secretarial Services, except for item (i) the accounting records of the company which is not under our custody. Hence, a Notification to that effect has to be lodged with SSM.

Proper Accounting Record Kept

(Timeline : Within 60 days of completion of transactions)

Keeping proper accounting and other records which sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets.

All appropriate entries are to be made in such accounting and other records within 60 days of completion of the transactions to which they relate the accounting and other records are to be retained for 7 years.

In accordance to the Inland Revenue Board of Malaysia (IRBM) guidelines of record keeping, it is obliged that all accounting documents should be kept in its original form (hardcopies) although they could be converted to an electronic form (scanned copies) to be conveniently retrievable. The accounting record should be made available if IRBM officer requests for its original.

Annual Return

(Timeline : Within 30 days from the anniversary of incorporation date)

Lodging of Annual Return, for each calendar year not later than 30 days from the anniversary of its incorporation date.

Preparation of Financial Statements

(Timeline : Within 18 months of incorporation and subsequently 6 months of financial year-end)

Directors of every company shall prepare financial statements within 18 months of date of incorporation and subsequently, 6 months of financial year-end.

Duty to circulate copies of Financial Statements (FS)

(Timeline : Within 6 months of financial year-end for private company)

Every company shall send copy of FS for each financial year to every member of company, every person entitled to receive notice of general meetings, every auditor of company and every debenture holder of company on request being made, to the last known address provided to the company.

Duty to lodge financial statements and reports with the Registrar

(Timeline : Within 30 days from the date of circulation of financial statements and reports)

The financial statements and reports in the case of private company, has to be lodged with SSM within 30 days from the date the financial statements and reports are circulated to its members.

Pre-incorporation contracts

A contract or transaction that purports to be made by or on behalf of the Company at a time before incorporation, the person purporting to act for the Company or as agent for it, and he is personally liable on the contract or transaction accordingly.

A contract or transaction may be ratified by the Company after its incorporation and the Company shall be bound by the contract or transaction as if the Company had been in existence at the date of the contract or transaction and had been a party to the contract or transaction.

Execution of documents

Section 66 should be read in totality to which the scope is intended to cover the execution of documents which are required under any written law / regulations or agreement to be executed under common seal.

This means that where there is a requirement under any written law / regulations or agreement requiring the documents to be executed by affixing the common seal, the company the following option:

  1. by affixing the common seal in accordance with the conditions or limitations in the constitution; OR
  2. by signature in accordance with section 66 i.e. signed by two authorized officers, one of whom must be a director or in the case of a single director, by that director in the presence of a witness.

Any document which is executed without a common seal but in accordance with section 66 would have the same effect as if it was executed under the common seal.

Directors' remunerations

The Companies Act, 2016 is silent on the approval of director remuneration. However, the exsiting M&A is require the director remuneration shall from time to time be seek for approval by the Company in a general meeting.  

Directors’ fee

For the private company, their director fees shall be approved in the minutes of the directors' meeting and notify the shareholder of the same within 14 days. Shareholders with atleast 10% of the voting rights with right to request the director fees to be subject to shareholders' approval if they view the fees as being unfair.


Disclosure of interest in contracts, property, offices, etc

(Timeline: Immediate)

Any director (including person connected with that director) who is directly or indirectly interested in a contract or proposed contract with the company shall as soon as possible as practicable, declare the nature of his interest at the meeting of the Board of Directors. The interested director must refrain from voting at the contract or proposed contract.

Loans to director & prohibition of loans to persons connected with directors

(Timeline: Immediate)

A company (other than an exempt private company) shall not make a loan to a director of the company or a related company or person connected with a director.

Note : An exempt private company (“EPC”) means a private company in shares of which no beneficial interest is held directly or indirectly by any corporation and which has not more than twenty members none of whom is a corporation.

General duty to make disclosure

(Timeline: Within 14 days from occurrence of event)

A director shall give notice in writing to the company in respect of particulars of any change relating to shares, debentures, participatory interest, rights, options and contracts in the company or in related corporation

Any changes of particulars of director, manager and secretary

(Timeline: Within 14 days from the date of change)

Any changes in the name, nationality, residential address, service address, business occupation, particulars of other directorships of public companies or its subsidiaries, IC/Passport number of directors including date of resignation, removal, retirement, not re-elected and death. In case of death, to provide death certificate.

Act in good faith and best interest of the Company

Exercise reasonable care, skill and diligence in managing company, makes business judgement, decision in good faith, no conflict of interest and best interest of the Company.

Rely on information from professional / expect advice, opinions, report /  statements, financial data in exercising his duties.

Independently  assess   the information, advice, opinions, reports or statements and data with his knowledge of the company and complexity of the structure and  operation of the Company.

Responsible for exercise of the power of delegate, unless:

believe on reasonable grounds that delegate would exercise power in conformity with the duties imposed on director.

believe on reasonable ground, in good faith that delegate  is reliable  and competent

Nominee director

  • by virtue of his position as an employee
  • as a representative of a member / employer / debenture holder

 shall act in the best interest of company, not the nominator

Director shall not use

  • property
  • information by  virtue  of  his position
  • position as director / officer
  • opportunity of company improperly
  • engage in business in competition with company

to gain benefit for himself or any other person directly / indirectly and cause detriment to the company

Acquire and dispose substantial company's undertaking or property with the  approval of company through resolution

Undertaking or property is considered as substantial if:

Highest of the following:

  • 25% of total assets; or
  • 25% of net profit; or
  • 25% of issued share capital of the company.


Register with the Employees Provident Fund (EPF) Board

(Timeline: Within 7 days of employment of first employee)

Register with the Social Security Organisation (SOCSO)

(Timeline: Within 30 days of the date on which the Employees Social Security Act (ESSA) becomes applicable to the company)

Register Employer Tax File (E number) with Inland Revenue Board (IRB)

(Timeline: Anytime before payment of salaries to employees)

Register with the Human Resources Development Corporation (Only applicable to companies listed under Part 1, Schedule 1 of PSMBA)

(Timeline: Within 30 days of incorporation)


Income Tax

Notification to Inland Revenue Board (IRB) to obtain Company Tax Registration Number (C number)

(Timeline: Anytime before filing of first tax return)

Estimate of Tax Payable

Every Small and Medium Enterprise (SME) must furnish an estimate of its tax payable.

With effect from Y/A 2014, where the SME which commences operations has no basis period for that year of assessment and for the immediate following year of assessment, the SME is not required to furnish an estimate of tax payable for that year and for the immediate 2 following years of assessment.

First 2 years of assessment (YA) from the date of commencement of operations exempted. Nevertheless, it is advisable to submit the Form CP204 notifying the IRB of its SME status without having to state the amount of ETP to avoid any penalty for under-estimation of tax or penalty for non-submission being wrongly imposed by the IRB.

Third year of assessment onwards: 30 days before the beginning of the basis period.

For companies (except SME) which first commence operations.

Generally, SME refer to resident companies that has a paid-up capital in respect of ordinary shares of RM2.5mil and less.

Within 3 months from date of commencement of operations only if the basis period for that year is not less than 6 months.

Submission of revised estimate of tax payable

(Timeline: You can submit the CP 204A to revise the estimate of tax payable in the sixth or / and ninth month of the basis period)

Submission of income tax return

(Timeline: You must submit Form e-C within 7 months from the date following the close of its accounting period)

(must be prepared based on audited accounts w.e.f YA 2014)



Registering GST

(Timeline: Within 28 days from the end of the month where the taxable turnover exceed or expect to exceed RM500,000)

Compulsory if annual sales turnover exceeding RM500,000 which can be determined based on either

The total value of taxable supplies of the current month and the previous 11 months, or

The total value of taxable supplies of the current month and the next 11 months

Voluntary Registration is allowable but must remain in the system for at least 2 years.

Who must register

An individual, sole proprietor, partnership, company, trust, estate, society, union, club, association or any other organization including a government department or a local authority which is involved in the business of making taxable supplies in Malaysia.

Main Responsibilities of A GST Registered Person

A registered person must comply with the requirements under GST legislation as follows:

  1. account for GST on taxable supplies made and received, e. output tax and input tax respectively;
  2. submit GST return (GST-03) and pay tax not later than the last day of the following month after the taxable period;
  3. issue tax invoice on any supply unless as allowed by Customs;
  4. inform Customs of the cessation of business within thirty days from the date of business cessation;
  5. inform Customs on any changes of address, taxable activity, accounting basis and taxable period; and
  6. keep adequate records of all business transactions relating to GST in the National or English language for seven.

Main Responsibilities of A Non-GST Registered Person

Reverse Charge for importation of services

A supplier who does not belong in Malaysia and supplies services to a customer in Malaysia does not have to charge GST. However, the customer who receives the services for the purpose of any business carried on by him is required to account for GST by a reverse charge mechanism.

When services are imported from outside Malaysia and supplied to a recipient in Malaysia, being taxable supplies if made in Malaysia, the recipient of the supply shall account and pay GST if such imported services are for the business purposes and consumed in Malaysia. He shall account for output tax on the portion of the services consumed in Malaysia. If the recipient is a taxable person, he is entitled to claim input tax on the services if the imported services are used for making taxable supplies.

If the recipient is not a taxable person, he is still required to account the GST as output tax and declare the tax in a prescribed form (Form GST- 04). The tax has to be paid not later than the last day of the subsequent month from the month in which the payment of supply is made.

The time of supply of imported services is due when payment is made by the recipient of that service to the extent covered by the payment made.

A recipient does not need to issue any tax invoice when he receives an imported service. But for audit purpose, the recipient should keep the invoice he receives from the overseas supplier.