Corporate Secretarial – Statutory Compliance
While it is fairly easy to incorporate a company in Johor Bahru (See How to incorporate your business in Malaysia), whether limited by shares or guarantee or unlimited company, the same cannot be say with regards to the task of maintaining the company. Maintaining a company is not limited to just managing the company’s business and administration, it also includes to ensure statutory compliance with the national laws.
What Is Corporate Statutory Compliance?
Corporate statutory compliance is basically means the fulfilment of obligations and/or duties imposed by the national laws onto the company. Failure to ensure the company’s compliance with such duties and obligations will often invite various penalties and in an extreme cases, criminal offence to the officer of the company.
Malaysia’s legal system subscribe to the principle of ignorantia juris non excusat which basically means ignorance of the law is not an excuse for the failure to comply with the laws.
While it is true that it is not realistic to expect anyone to know everything about the law, a person is at least expected to know or made an effort to know about the legal regime governing the area he is involved in.
For example, a bank officer is supposed to know about the law governing the financial laws. Similarly, officers of a company are expected to know about the laws governing corporate body in Malaysia.
Furthermore, most judges are less sympathetic to individuals and business entities that did not make any effort to know about the law that they are reasonably supposed to know.
Common Statutory Compliance
Below is a list of statutory compliance that every corporate officer, especially the directors should be aware of:-
Under the Companies Act 1965, a company is required to do, among others, the following:-
- to keep a register of its directors, managers and secretaries together with their particulars and the directors’ consent in writing to their appointment as directors by virtue of Section 141.
- to hold Annual General Meeting (“AGM”) every year. A company that has yet to have its first AGM must have it within 18 months from the date of its incorporation by virtue of Section 143.
- to keep a register of its shareholders together with the particulars of the shareholders and information regarding shareholding by the shareholders by virtue of Section 158.
- to keep accounting records and other documents which sufficiently explain the transactions and financial position of the company by virtue of Section 167.
- to appoint the company’s auditor during its AGM for the period until the next AGM. If the company has yet to hold its first AGM, the company must appoint an auditor at any time before the first AGM by virtue of Section 172.
The above are just few examples of statutory duties which the laws expect the company to fulfil despite there are some advance techniques like using a Front Company As Risk Management Tool, widely used by seasoned investors. There are actually dozens of statutory obligations imposed by various laws on companies such as taxation law and employment law which must be fulfilled.
Therefore, in order to ensure compliance with all the laws, it is highly important for the company to employ a person with sufficient expertise or alternatively, procure the services of qualified company secretary in Johor Bahru to act on its behalf in the matters regarding statutory compliance.
Otherwise, the directors will be burdened by the arduous task of ensuring statutory compliance when they could use such time and energy to focus on the company’s business.