Never underestimate the importance of employee engagement in a hybrid world

Stock photo of laptop on a wooden table. The screen is split into four with employees engaging in work discussions remotely

Never underestimate the importance of employee engagement in a hybrid world

Microsoft’s 2022 Work Trend Index shows 41% of the global workforce is likely to consider leaving their current employer within the next year. Dubbed globally as “The Great Resignation”, workers are looking for better conditions, more engaged teams and a greater sense of purpose.

At the same time, the cost of hiring is rising. The latest research has found the average cost of recruiting has doubled in some parts of the world. And it takes at least a week longer to recruit someone than it did 12 months ago.

In many cases, it has become harder – and more expensive – to find and hire new people than it is to retain your current employees.

With these figures in mind, the importance of employee engagement simply can’t be underestimated.

The hybrid engagement juggle

Remote and hybrid work has become the preferred way of working in Malaysia, with 77% of workers indicating they want flexible remote work options to stay. In response, 62% of business leaders are considering restructuring their office to suit a hybrid team.

Employers are under pressure to provide an exceptional experience for their people, wherever they may be: in the office, at home or working from the local cafe. Achieving this is becoming increasingly hard when people are not physically together or even working the same 9 to 5 schedule.

Photo taken from above a sitting woman who has a laptop in her lap. She is talking to a split screen of four other employees about encouraging employee participation.

3 ways to encourage employee participation in the hybrid world of work

When we’re not physically together, many leaders are left wondering how to encourage employee participation.

Here are three key ways to keep employees connected and engaged, wherever they may be.

1. Bridge the physical and digital worlds with technology

Having reliable technology in place to enable collaboration and efficient work processes is fundamental to creating an efficient and frictionless employee experience. The last thing you want is for your people to be dealing with frustrating technology issues when they could be making progress on real work.

Automating repetitive tasks and introducing self-service portals empower people to take control of simple tasks, like booking their own leave, accessing payslips and updating contact details. By optimising the user experience with easy-to-use applications, simplified central logins and cloud-based systems, your employees will be able to immediately access and update their data from anywhere, at any time.

Consider streamlining your core functions like payroll, finance and HR to free up your people to focus on collaboration and engagement-boosting activities.

And, of course, having platforms in place to enable collaboration is crucial. Make sure you are set up for what Google refers to as “collaboration equity“. That is, ensuring everyone can contribute and communicate equally, regardless of location, role, experience level, language or device preference.

2. Prioritise wellness

Photo taken from behind a man sitting at table with his laptop. The screen is black with white bold writing that states perks and bonuses

While hybrid working undoubtedly has its benefits, it also comes with some downsides.

We’re seeing a blurring of boundaries between work and life, a weakening of social bonds with colleagues and a greater push for productivity from employers. And this is causing high levels of burnout, which has an impact on not only employees but businesses as well.

Analyst firm Gallup estimates employee burnout costs USD $322 billion in turnover and lost productivity globally.

The good news is that companies that prioritise employee wellbeing are being rewarded with more productive and engaged employees.

Companies that adopted key wellness initiatives such as stress management initiatives, adapted workplace design and financial education saw employee loyalty improve by 79%.

3. Reward your team

Being paid on time is vital. And people’s experience with pay directly impacts how they feel about working with an organisation.

If people have continual issues with your current systems — for example, difficulty accessing payslips or being unable to update important details — you might want to look into how to fix this problem. Having a system in place to make sure your people get paid accurately and on time will ensure they are motivated and engaged. And that’s whether you choose to implement a payroll solution or outsource your payroll to professionals.

Optimising your software applications to benefit your employees and simplify their day-to-day operations, will ultimately give them more control and empowerment in their role.

Mechanics aside, how much you pay people also matters.

The cost of living is rising steadily, and employers need to keep pace with rising costs of food, petrol and living expenses to make sure their people are taken care of.

If you have limited funds to pay bonuses or increase salaries, an alternative is offering employees a stake in the company in the form of shares or stock options.

Offering equity in the company means employees start seeing the business in a different light. Rather than simply clocking in and out and completing tasks, they begin to think of how to move the business forward in a meaningful way and increase revenue.

Equity can come in many forms, but leading companies in Malaysia are adopting employee stock option plans (ESOP).

What is an employee stock option plan?

An employee stock option plan (ESOP) gives employees the opportunity to purchase company shares at a future date for an agreed price. An ESOP differs from an employee share award plan in that it gives employees the option to buy shares instead of simply enabling them to purchase those shares outright.

Because ESOPs give employees financial benefits when the company performs well, they are more likely to be invested in the long-term success of the company.

There are many benefits of offering an ESOP for both employees and business leaders.

ESOPs help employees:

  • feel valued and rewarded because they are being compensated for their efforts
  • improve their financial position through dividend payments and profit from selling shares
  • gain a sense of part ownership in the company they work for, which means they are more likely to be satisfied and less likely to join their peers in “The Great Resignation”.

And for companies, ESOPs enable them to:

  • reward high-performing employees without impacting cash flow
  • attract higher-quality talent
  • enhance retention and loyalty
  • enjoy sustained growth and increased company performance.
Illustrated image of small blue figurines positioned in a circle on a white background. In the middle of the circle in the word share. A digital finger is also pointing to the word.

How ESOPs work

Setting up an ESOP can be a complex procedure. In Malaysia, there are specific rules and regulations as well as tax implications, so it’s important to get help from experienced professionals who understand the local landscape.

There are several administrative processes required to effectively implement and maintain an ESOP, including:

  • offer management
  • vesting management
  • participant information record-keeping
  • participant liaison regarding plan mechanisms
  • leave management
  • regulatory reporting.

Other important considerations to think about are:

  • How long it takes for an individual’s share to be supplied to them over the course of their employment.
  • How long an employee needs to stay before the ESOP ‘kicks in’. Also known as the “cliff” or “lock-in” time, it’s important to consider how much equity to give early employees in case they leave with your shares in hand without adding significant value to your organisation.

Of course, an ESOP is not the only option for offering employees equity in your company.

Other options include:

  • performance share plan (PSP)
  • restricted share plan (RSP)
  • share appreciation rights plan (SARP)
  • phantom share plan.

To figure out which is right for your company, you’ll need the help of trusted professionals to examine different setups and scenarios before going ahead.

Cut the complexity with a global strategy

Incentivising your employees with ESOPs is an effective way to boost engagement and productivity. But it is not without its complexities, especially if your presence stretches across the Asia-Pacific or globally.

And with the trend of remote and hybrid working looking set to continue, who knows how far and wide your people could reach?

Each country will have different regulations and options for offering ESOPs, so it’s important to partner with someone who understands the intricacies of local regulations to ensure you are compliant.

Just as there are many benefits of consolidating multinational taxes with one agency, there are benefits to consolidating your employee stock options across multiple jurisdictions.

These include:

  • Mitigating risk: having a team of professionals that understands not only Malaysia’s laws but those across the entire Asia-Pacific region can help your business mitigate risk when it comes to offering equity.
  • Improving employee experience: streamline your correspondence with a share management platform that provides timely and clear communication, in multiple currencies and languages, across the region. This ensures everyone on the team, globally, has the same level of access, understanding and experience of the information at hand.
  • Reducing administrative burden: implement efficient, automated processes and a single point of contact to ensure you receive clear and consistent communication across your locations.

At BoardRoom, we use leading technologies and a panel of experts to guide you through implementing and administering your ESOP. Our team of experienced professionals have in-depth knowledge of the local Malaysia regulations, as well as regional and international experience.

Wherever your employees work, we’ll be able to support in the implementation and on-going administration of your employee stock option plan to ensure they remain engaged and loyal for the long term.

Speak to our team of experts today to get started on implementing an ESOP in your company.

The advantages of consolidating multi-country taxes with one provider

The advantages of consolidating multi-country taxes with one provider

The advantages of consolidating multi-country taxes with one provider

Handling tax and accounting in-house is not easy for any business. Errors in these processes can have severe consequences, so they need to be executed with exceptional accuracy and skill. Multinational companies in the Asia-Pacific region face the additional challenge of navigating the complex rules and regulations of each jurisdiction they operate in.

Deloitte’s 2021 Asia Pacific Tax Complexity Survey revealed 80% of respondents felt the region’s tax regimes have become more complicated since 2018.

If given the choice, many tax and accounting executives would engage an international company taxation and tax planning advisor in Malaysia, Singapore, Hong Kong or China to handle all their accounts locally. But this gold standard isn’t the reality for most businesses, especially when they are new to expansion.

Often, businesses will engage an additional tax firm to handle local regulatory requirements each time they expand to a new region. It is an understandable approach – specialist firms are able to offer in-depth knowledge of local tax laws. The issue is that collaborating with multiple firms can present its own challenges.

Many tax executives in multi-country companies end up struggling with:

  • Tax treaties and implications: difficulty understanding statutory and regulatory compliance resulting in penalty and delay.
  • Communication issues: language and cultural variations can make fostering collaboration between separate tax service providers challenging.
  • Staff retention: the great resignation is happening, so there are more new hires to onboard and train.
  • Technology issues: technological systems and communication modes vary from country to country, which can cause issues during cross-border dealings.

Do these challenges sound familiar? If so, the solution may lie in consolidating your taxes with an international business tax advisory service in Malaysia, Singapore, Hong Kong or China. Wherever your business is centralised, a third-party advisor will be able to help administer your tax functions across the Asia-Pacific region via a single point of contact.

This article explores the advantages of consolidating your taxes with one firm and provides tips on selecting a suitable provider for your company.

The value of local knowledge

Governments across the Asia-Pacific region frequently set new laws and regulations, which means businesses must keep up with local tax environments as they evolve. This is particularly important when it comes to cross-border tax implications and treaties.

Outsourcing your taxes to a highly trained team will make it easier to navigate local requirements and manage your cross-border dealings successfully.

Malaysia’s tax system is particularly complex. Consider the Sales and Service Tax (SST), for example, which has replaced Malaysia’s GST. The SST has a fixed rate of 6% for service tax, and a variable rate between 5-10% for sales tax. Understanding your company’s requirements and having an expert advisor at hand can make all the difference when maintaining tax compliance.

When reporting season arrives, you can expect to leverage any and all tax benefits and incentives available to you when you have outsourced your accounting and compliance services to the same team that is handling your taxes. It can be easy to overlook tax breaks and exemptions if you do not have local expertise.

If your organisation operates in Malaysia only, you may be able to manage your taxes internally. But, for peace of mind that your multi-country business is operating with efficiency and integrity, you need to select a knowledgeable tax partner in Malaysia that has strong relationships in neighbouring countries.

Simplify communication

Before engaging a tax advisor, ask them whether you will be assigned a dedicated contact person or need to interact with people in different countries. The second scenario should be avoided, as you would face all the same challenges that in-house tax management brings and gain little benefit.

An ideal arrangement would have you communicating with a connected network of tax professionals via one point of contact. In this situation, you benefit from a wealth of tax experience without the difficulties of coordinating internal personnel.

The benefits of partnering and consolidating with a premium service provider can also offer great financial rewards.


Tax incentives and benefits will be optimised across your company while mistakes, miscommunication and delays are reduced. Implementing a single point of contact also makes it easier to keep consistency across your business and align your company goals.

When managing tax in multiple jurisdictions, it is also important to be aware of subtle differences in culture. A wide variety of cultures, customs, religions and languages exists throughout the Asia-Pacific region. To do business successfully and ensure productivity, it is crucial to work with a local contact who is part of a global team rather than spending time and effort on competing international opinions.

For help with tailoring your business approach for individual countries, seek a specialist international tax advisor in Malaysia, Singapore, Hong Kong or China.

Tax compliance is crucial

Tax operations are drawing increased scrutiny from authorities as regulations become more stringent. No business wants to be targeted for a tax compliance audit. And as budgets and staff numbers reduce, finance and accounting personnel are forced to accomplish more with less.

A global workforce transition poses another challenge for companies. Employees are increasingly looking for new positions that offer better pay or work-life balance – meaning teams and resources are often overstretched.

That said, legal requirements cannot go unmet. Your business must make every effort to comply with Malaysia’s stringent tax laws by making accurate and timely tax payments. Businesses that fail to do so may face serious legal repercussions.

Non-compliance can be due to something minor, such as missing a detail in legislation or incorrectly calculating money owed.

If you are a multi-country firm with international business partners, ensuring compliance with evolving legislation can be particularly tricky.


By engaging a specialist firm that understands the tax laws in Malaysia, Singapore, Hong Kong, China and across the Asia-Pacific region, your teams will have more time to concentrate on business growth and profitability. You will have the support you need to comply with tax legislation as it evolves and ensure accurate tax reporting.

And should compliance problems occur, your advisor will be able to attend to them promptly.

The most reliable business tax advisory services perform a thorough analysis of company structure before providing advice on long-term tax management. This empowers your staff to be able to identify and apply for tax benefits into the future.

Choosing the right tax partner

Cost and time savings are two of the main advantages of outsourcing your tax management. Your efficiency will go up, which in turn boosts profitability.

While cost considerations are important, avoid opting for the cheapest service when it comes to business tax advisory. Reputation is key to ensuring a reliable service.

Ask your potential tax partner these questions:

    How many clients do you service?
    How many years have you been in business?
    What is your business history?
    Do you have past accomplishments and results you can share?
    How many countries do you operate in?
    Can you service my company as it expands?
    What has your staff turnover rate been like?
    Do employees stay for a long time?

    A high-quality business tax advisory service provider will be able to answer these questions with confidence and pride. By partnering with them, you can rest assured your tax functions are managed in a professional, correct and timely manner.

    Top-tier firms like BoardRoom also guarantee:

    • Minimal errors: BoardRoom has been servicing Asia-Pacific businesses for over 50 years and is known for precision.
    • Attentive service: our low staff turnover rates mean we always have professionals on hand to meet your needs quickly and accurately.
    • Highly trained personnel: BoardRoom’s specialist team stays across local legislation as it evolves.

    Aim high, look beyond

    Organising today’s tax management is vital, but any executive knows that future planning is just as crucial for business success.

    If you are already a multi-country organisation with offices within the Asia-Pacific region, you may be thinking about further expansion. As you grow, you will have more legislative and cultural challenges to deal with.

    This is why global capabilities are a must when it comes to choosing a skilled tax advisory firm.

    For instance, BoardRoom partners with Andersen Global, a network of legal and tax experts based in 315 locations around the world. This means we possess outstanding knowledge of cross-border business taxation matters.

    Essentially, outsourcing your taxes to a global firm ensures you have all the specialist legal advice you need to expand into new countries and find success within them.

    Consider all outsourcing possibilities

    When selecting a tax partner, it is a good idea to ask whether they can provide additional corporate advisory and management services.

    Successful business growth requires the proficient handling of business functions related to tax compliance, such as company incorporation and corporate secretarial services.

    Engaging an advisory firm that provides a full suite of company services will support a simpler expansion process. You will save money and time, meaning you can direct more resources into your business’s primary objectives.

    Efficiency tends to become more crucial the larger your company becomes.


    When you find a reliable tax services partner, you might wonder what further business functions they can manage, such as:

    It makes sense to outsource multiple functions to a full-service provider because they will already have intimate knowledge of your business’s operations, structure and working methods. They will be able to support your company in a range of areas with minimal fuss.

    Streamline your processes through consolidation

    The advantages of consolidating multiple functions with one tax services provider are significant – especially when you take into account the cost and time involved in coordinating separate firms across the region. And if your partner is well-versed in the local tax breaks and incentives to which your business is entitled, you will enjoy substantial annual savings.

    But beyond cost savings, quality tax outsourcing will help streamline your operations on a company-wide scale.

    The complexity of tax management continues to grow. The solution may lie in engaging a reliable tax partner who can support your expansion throughout the Asia-Pacific region and ensure compliance with evolving rules and regulations.

    If you want to find out more about consolidating your business’s tax administration with one firm, chat with our tax specialists today.

    How is planning a Virtual AGM different from Physical AGM?

    Virtual AGM

    How is planning a Virtual AGM different from Physical AGM?

    Planning a Virtual AGM in Malaysia?

    Virtual Annual General Meetings (AGMs) provide greater flexibility and engagement opportunities for all of your company’s shareholders regardless of their location.

    However, there are many practical elements to consider when planning a virtual AGM. These include your company’s readiness to go digital, how to do a live Q&A, how polling will occur, which virtual meeting platform to use and more.

    But, before you even get to the detailed planning stage, it is essential to review your company’s constitution to check if virtual AGMs are permitted and the AGM regulatory requirements to ensure that your company can meet its statutory obligations.

    Below is a guide to everything you need to know about running a virtual AGM in Malaysia.

    01 An overview of the current AGM requirements in Malaysia

    Virtual, fully virtual and hybrid AGM limitations

    Companies can only run virtual, fully virtual or hybrid AGMs if their constitution or trust deed allows them to.

    AGM meeting inclusions

    As per section 340 of the Companies Act 2016 (“CA”), publicly listed companies must discuss the following at their AGM:

    • audited financial statements and the reports of the directors and auditors;
    • the election of directors in place of those retiring;
    • the appointment and the fixing of the fee of directors; and
    • any resolution or any other business included on the meeting notice or as per the company’s constitution.

    Timing of AGMs

    The Guidance and FAQs on the Conduct of General Meetings for Listed Issuers (“Guidance Note”) issued by the Securities Commission Malaysia (SC) on 18 April 2020 and revised 16 July 2021 states:

    Under section 340(2) of Companies Act 2016, a company shall conduct its annual general meeting (AGM)–

    (a) within six months of the company’s financial year; and
    (b) not more than 15 months after the last preceding annual general meeting.

    In relation to listed real estate investment trusts (REITs), paragraph 13.18(a) of the Guidelines on Listed Real Estate Investment Trusts (Guidelines on Listed REITs) requires a management company to hold an annual general meeting–

    (a) within four months of the REIT’s financial year end; and
    (b) not more than 15 months after the last preceding annual general meeting.

    Notice of AGM

    The CA states that all shareholders must be sent a notice in writing about the AGM at least 21 days before it is being held. In addition, publicly listed companies must:

    • advertise the notice of AGM no later than 21 days before it occurs in at least one nationally circulated daily newspaper in Bahasa Malaysia or English;
    • send the notice of AGM in writing to each stock exchange where the company is listed; and
    • make an announcement to Bursa Malaysia Securities Berhad 21 days before the AGM is held.

    AGM venue and member participation

    The main AGM venue must be in Malaysia and with the chairperson present at this venue according to section 327 of the CA. Further, the venue must allow members to be able to participate and exercise their rights to speak and vote at the AGM using any technology or method.

    Meeting quorum

    To achieve quorum, there must be at least two members personally participating in the meeting or by proxy, pursuant to sub-section 328(2) of the CA.

    Voting scrutineer

    At least one scrutineer must be appointed to validate the votes cast at an AGM whether on-site or remotely.

    02 How COVID-19 has impacted these AGM requirements

    In response to COVID-19, the Malaysian Government have implemented a number of physical distancing and other safety precautions measures, including:

    • a movement control order (MCO);
    • a conditional movement control order (CMCO);
    • a recovery movement control order (RMCO);
    • an enhanced movement control order (EMCO); and
    • standard operating procedures (SOPs).

    Companies have started to conduct virtual AGMs to mitigate risks associated with Covid-19 and comply with Guidance Note on AGM requirements issued by the Securities Commission of Malaysia (“SC”).

    What are the definitions for Physical and Virtual AGM?

    SC’s Guidance Note defines them as:

    Physical AGM

    “Conducted at a physical meeting venue(s) only, without any online participation.”

    Physical AGMs are only an option during an RMCO, with the number of people allowed to physically attend subject to venue size and ability to comply with SOPs.

    Fully Virtual AGM

    “Conducted online where all meeting participants including the Chairperson of the meeting, board members, senior management and shareholders participate in the meeting online.”

    Fully Virtual AGMs are a recommended option during any of the Movement Control Orders. They are the only AGMs allowable under an EMCO.

    Virtual AGM

    “Conducted online from a broadcast venue, where only essential individuals are physically present to conduct the virtual general meeting. All shareholders in a virtual general meeting participate in the meeting online.”

    Virtual AGMs are a recommended option during an MCO, CMCO or RMCO. If held during an MCO, a maximum of 8 essential people are allowable at the broadcast venue. This increases to 20 people during a CMCO, and during an RMCO the number of people allowable is subject to venue size and ability to comply with SOPs.

    03 What are the advantages and disadvantages of each AGM type?




    • Helps alleviate shareholder concerns about transparency: Some shareholders have the perception that physical AGMs allow for more transparent and robust discussions on company performance.

    • Access equity: caters to those who lack skills/equipment to participate remotely.

    • Additional costs: eg. venue hire, travel, catering, security, door gift and audiovisual support costs.

    • Limited accessibility: difficult for all shareholders to attend if they do not live within proximity of the venue.

    • Inflexible: physical AGMs are not able to be held when force majeure events occur such as pandemics or natural disasters.

    Fully Virtual and Virtual

    • Lower costs if your company has a large shareholder base: companies can avoid the expenses associated with large physical venue hire and travel costs. While there is an initial upfront investment required for virtual AGM technology, companies save more in the long term.

    • Highly accessible: most shareholders can easily participate remotely.

    • Highly flexible: AGMs can proceed even during force majeure events such as pandemics or natural disasters.

    • Transparency concerns: perception held by some shareholders that Fully Virtual and Virtual AGMs may result in less transparent and robust discussions on company performance. However, reputable virtual AGM providers will offer a live Q&A function to help dispel these concerns.

    • Access equity issues: some shareholders may lack the equipment and skills to participate remotely.

    • Risk of technology failure: meetings may have to be adjourned until technology issues are resolved. An excellent meeting services provider will hold ‘dry-runs’ to minimise the risk of any technical issues.

    Digital AGM tools are no longer just ‘nice to have’, but essential

    Data from the SC’s Corporate Government Monitor 2020 (CG Monitor) indicates that younger people prefer to participate in AGMs using remote participation and voting facilities (RPV). In all age groups (except the 71 years and older category), vast majority of shareholders stated that they would like to have the option of remote AGM participation.

    In short, AGM participation in the future will be firmly rooted in digital technology. This means that it is important for companies to start making the transition now to running virtual AGMs.

    Need help running your next Virtual AGM?

    Our team of share registry experts here at BoardRoom are poised to support your business to deliver the best Virtual AGM possible. We have extensive experience in executing AGMs, scrutineering and also using an independent, thoroughly integrated and purpose-built e-polling platform, Lumi. Through our unique platform, your company can hold live Q&A discussions and authenticate shareholders in real-time at your next virtual AGM.

    Speak to one of our share registry experts today to find out why we are the leading provider of shareholder support solutions in the Asia Pacific region.

    Related Business Insights

    How to Register a Company in Malaysia

    how to register a company in Malaysia

    How to Register a Company in Malaysia

    How to Register a Company in Malaysia

    Thinking of registering a business in Malaysia? The country’s liberal government policies and strong economic outlook make it easy to see why Malaysia ranks twelfth on the World Bank’s Ease of Doing Business scale (2020). As a result, it is a desirable choice for investors.

    Only a short 45-minute flight from Singapore, Malaysia offers lower start-up costs, greater tax incentives and more extensive government support. However, the process of setting up a new office in Malaysia can appear complex for foreign business owners.

    This guide takes you step-by-step through how to open a company in Malaysia. And, most importantly, it shows you how to meet compliance requirements for a successful business venture.

    Malaysian market profile

    Malaysia is considered one of Southeast Asia’s most dynamic business environments. Its liberal market policies promote trade and economic development, while many government incentives encourage ongoing growth.
    Some key characteristics of the Malaysian Market include:

    • Average monthly office rental pricing: Grade A office space in Kuala Lumpur’s new central district averages RM 10.49 per square foot (2021)
    • Average fixed broadband internet download speed: 103.28 megabits per second (August 2021)
    • Average mobile internet download speed: 29.14 megabits per second (August 2021)
    • Gross Domestic Product US$ bn: 336.664 (2020)
    • Population: 32.6 million (2020)
    • Official languages: Malay, English
    how to check if a company is legal in Malaysia

    The benefits of setting up a company in Malaysia

    Malaysia’s multicultural, multilingual society provides a skilled workforce with relatively low wage costs, which appeals to many overseas companies. The transport and telecommunications infrastructures both also operate efficiently, while the growing economy and accessible location make Malaysia a preferred choice.

    Other benefits to registering a company in Malaysia include:

    • Low corporate tax: For resident companies in Malaysia with under RM50 million in sales, the tax rate is only 17% on your first RM600,000. Once you earn over this limit, the rate increases to 24% for non-resident companies. To check your estimated tax rates, speak to one of our Malaysian tax specialists.
    • Skilled and educated workers: Malaysia has a highly skilled workforce, over 70% of whom speak English. Malaysian locals are friendly, hospitable and eager to learn, which increases both productivity levels and customer service.
    • Liberal government policies: The Malaysian government’s approach to foreign investment is proactive, welcoming new trade with a variety of industry-specific incentives. The lack of restrictions on repatriating capital, royalties, dividends or profits also encourages many multinational companies to call Malaysia home.
    • Effective infrastructure: With five international airports and two international shipping ports, Malaysia is one of Asia’s busiest international hubs. Over the next few years, the Malaysian government will also invest more money into upgrading ports and building new rail links. As a result, the country will provide an efficient, high-tech transport system that enables seamless business operations.

    How to establish a company in Malaysia

    01 Step 1 - Choose a company type

    • Private Limited Company (Sdn Bhd): The only option for foreign investors is a Private Limited Company. This company type is a separate legal entity, enabling it to bind contracts, purchase assets and act as its own legal entity in court.

    Private Limited Companies in Malaysia can be owned by locals or foreigners, as long as at least one director has a residential address in Malaysia (see step 3). However, unlike Public Limited Companies, Private Limited Companies can only have up to fifty shareholders, and cannot offer shares to the public. To learn more, contact our specialist team.

    • Public Limited Company (Berhad): Most large-scale enterprises in Malaysia are Public Limited Companies, which allows them to sell shares and generate further investment. Listing the company as public also enhances the corporate image and profile, potentially inviting new business opportunities and further expansion.

    However, Public Limited Companies need to adhere to strict compliance requirements, including holding annual general meetings and audits. Additionally, to own a Public Limited Company in Malaysia, you need to be a Malaysian citizen.

    • Sole Proprietorship and Partnership: This entity type is also only available to Malaysian citizens. It’s ideal for local small business owners with either a sole proprietorship or up to 20 partners.
    • Limited Liability Partnership (LLP): This entity type combines the properties of a Private Limited Company and a conventional partnership. A Limited Liability Partnership is a separate legal entity from its owners, which provides additional protection for the partners’ personal assets and wealth.

    Please note that to help rebuild local trade during the COVID-19 pandemic, the Malaysian government has restricted foreigners from initiating some business types. These types may include supermarkets, convenience stores, hairdressers, retail shops and more. Contact our specialist team for the most up-to-date information on foreign business restrictions.

    02 Step 2 – Give your company a name

    The name of your business can fall under two different categories:

    Your company name must meet the following conditions:

    • No negative connotations or undesirable names: A business name cannot breach the constitution or law, or contain any elements that are negative, vulgar, obscene or offensive.
    • Correct spelling: The company name must use correct language and spelling. If the name contains a word that is not from Bahasa Malaysia or English, or that is fictitious, you must provide the meaning and/or origin of the word.
    • No generic names: Your business name must have its own identity, and must not be too common. Avoid using only generic words like ‘Marketing Resources’.
    • Not already registered: You cannot use a business name that has already been registered or in safekeeping. This includes changing symbols, letters or words that carry the same meaning.

    View the complete list of guidelines for business name registration online, and find out if your business name is available in Malaysia.

    how to register an enterprise company in Malaysia

    03 Step 3 – Set up your company structure

    Next, determine your company structure, ensuring you meet the following requirements for a Private Limited Company (Sdn Bhd):

    • Director: your company will need at least one director who meets all of the following criteria:
      • Must be a natural person (individual) and at least 18 years of age;
      • Must be of sound mind;
      • Must ordinarily reside in Malaysia, with a principal place of residence there;
      • Must not be an undischarged bankrupt under the Insolvency Act 1967; and
      • Must not be disqualified under the Companies Act 2016.

    To satisfy your local director requirements in Malaysia, we can provide a nominee director service.

    • Shareholder: you must also have at least one shareholder, who can be either a foreigner, a local or a corporate entity.
    • Company secretary: you must appoint a qualified natural person living in Malaysia as your company secretary.

    We provide expert company secretarial services to ensure your company meets all of its statutory obligations in Malaysia.

    • Share capital: you must issue a minimum share capital of:
      • RM1,000 for locally owned companies; or
      • RM500,000 for foreign-owned companies.
    • Registered address: your registered office must be a physical address in Malaysia. If your business does not have local office space, professional service firms like BoardRoom can provide a registered office location.

    04 Step 4 – Submit your company registration application

    To submit your company application, the owner or partner who submits it must be a Malaysian Citizen or Permanent Resident of Malaysia, aged 18 years or over. Only the owner or partner/s can apply to register a new business.

    To help you navigate the process of registering your business in Malaysia, we have a comprehensive company setup and incorporation service with local experts.

    05 Step 5 – Apply for other permits and business licences (if relevant)

    Depending on your specific business operations, you may also need to apply for additional permits and business licences. Find out which permits and business licenses you could require after you register your company in Malaysia.

    How to successfully open a business in Malaysia

    Registering your business in Malaysia may be easier than you think.

    Our specialist BoardRoom team can provide expert advice and assistance whether you’re looking for information on:

    • how to register an enterprise in Malaysia;
    • how to meet compliance requirements;
    • how to check whether a company is legal in Malaysia; or
    • how to evaluate a company for acquisition.

    Other services we can provide include company set up and incorporation, corporate secretarial services, accounting and bookkeeping, payroll and more.

    Speak to one of our specialists today to find out how to register your business in Malaysia.

    Note: if you’re interested in more business opportunities in Southeast Asia, we can help. Explore our guide on how to start a business in Singapore, learn about the benefits of incorporating online there, or learn how to start a business in Hong Kong.

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    Business Expansion into Malaysia — Yay or Nay?

    Business Expansion Malaysia

    Business Expansion into Malaysia — Yay or Nay?

    4 Reasons why incorporating in Malaysia could be a wise decision

    Over the last ten years, Malaysia has become a destination of choice for business expansion. The World Bank ranked Malaysia at a respectable 55th place out of 157 countries, across the globe, as the easiest place to do business. While the government continues to play its part in facilitating greater ease, there are geological factors that help boost Malaysia’s chances as your next business expansion destination. The country is strategically located in the Asia Pacific Rim, at the centre with numerous other ASEAN nations surrounding it. This means businesses in Malaysia can take advantage and gain easy access to a substantial 667 million regional population1, which together, boast a combined GDP of over US$3.3 trillion1.

    If you are thinking of expanding your business into Malaysia, here is FOUR reasons why it would prove to be a wise choice.

    01 It’s Quick, Easy and Low-Cost to Incorporate

    Comparatively, Malaysia is possibly one of the easiest places for businesses to incorporate. Malaysia’s effort to reform —policy enhancements and procedural improvements — over the past few years have increased efficiencies and reduced the waiting time involved with registration and permit application processes. Registration of a new business takes between 5-10 days and employment permits for expatriates will be processed within 5 working days.

    Operationally and financially Malaysia builds a strong case for itself. It boasts one of the lowest start-up costs compared to the other Asia Pacific countries. This is largely driven by its low property rental rates and generally low minimum wage.

    Knight Frank currently estimates supply of office space in Kuala Lumpur (KL) city is 58.26 million sq ft, followed by KL fringe with 29.43 million sq ft and Selangor with 23.91 million sq ft. This brings the total to 111.60 million sq ft2 with affordable average office rental rate at RM5.55 psf2.

    In addition to low office rental rates, businesses can operate economically because of Malaysia’s relatively low minimum wage, which sits at RM1,200 (US$286) per month.

    incorporating in Malaysia

    02 You’ll Avoid Double Taxation

    In most countries, double taxation usually occurs when any taxpayer of a specific country engages in international business transactions. However, this is not the case for businesses in Malaysia. The country is a part of DTAs (Double Taxation Agreements) involving counties located in every continent of the world. This allows Malaysia to create an attractive tax environment where a greater international flow of investment, trade and financial activities, and technical knowledge are facilitated and exchanged.

    These DTAs, outline the treatment of income or profits earned outside of Malaysia by Malaysian businesses and within Malaysia by foreign-owned businesses. On that note, businesses in Malaysia are protected against the possibility of a singular income being subject to two countries’ tax simultaneously. The double taxation agreement also provides taxpayers with certainty about their tax treatment. In the event of an absent DTA, businesses are still eligible for tax relief through the foreign tax credit.

    03 The Locals are Ready to Buy

    When shortlisting a country for your business expansion plans, qualifying your list of countries based on their economic strength is an excellent place to start. A country’s GDP is the best measure to assess its’ overall economic strength because it is closely connected with the country’s average consumer purchasing power. Malaysia’s GDP is expected to reach US$359 Billion by the end of 20213 with a healthy growth rate of 3.0% – 4.0%.4

    Malaysia’s strong GDP is attributed to the government’s effort to remain robust in the agriculture, construction, manufacturing, mining, and services industries. One of the main objectives of its Budget 2022 is to strengthen economic recovery and improve business resiliency as the world move into the Covid-19 epidemic stage. With such a thriving market, Malaysians’ incomes are increasing and depending on your type of business, you can expect a growing number of consumers becoming or already are in the position to purchase low to middle market products and services readily.

    04 The Local Government Supports You

    Malaysia has been growing economically in tandem with global trends. In line with the Industrial Revolution 4.0 (IR4.0) adoption, it has introduced its own National 4IR Policy – a broad, overarching national policy that drives coherence in transforming the socioeconomic development of the country through ethical use of 4IR technologies.

    While there are limited restrictions on foreign ownerships in certain strategic sectors, the Malaysian government encourages inflow of foreign investments. This is apparent in the incremental liberalization of equity conditions by various government agencies and the broad range of attractive incentives to entice new foreign investments and promote local start-ups. These incentives range from generous tax exemptions and allowance to grants.

    Depending on your business, you might even be eligible for specific grants and incentives aimed at supporting innovation or projects that contribute strategically to the country’s economy and industries. Having a good knowledge of these incentives and how they may apply to you will allow you to maximise your business potential and put you on the fast track to success. Here are 5 grants that might be helpful as you incorporate in Malaysia.

    1. Cradle Investment Programme 300 (CIP300)
    2. MaGIC Global Accelerator Programme (MaGICGAP)
    3. Technology Acquisition Fund (TAF)
    4. Domestic Investment Strategic Fund
    5. Women Exporters Development Programme (WEDP)

    The Malaysian government also has a dedicated agency – the Malaysian Investment Development Authority (“MIDA”) to help facilitate your new venture into the country.

    business expansion support


    So, if you were wondering if you should incorporate in Malaysia, here is our advice; you should. Whilst it is a relatively simple process — requiring only basic knowledge of application processes and local regulations — you should always consult a team of dedicated experts. Experts can assist you in leveraging Malaysia’s incentives and opportunities to their fullest extent while allowing you to have peace of mind, knowing that your company will remain compliant with the local regulation. By doing so, you can ensure the best possible outcome for your business planning and investment strategy.

    Here is where BoardRoom can help.

    BoardRoom is the market leader in Malaysia for Corporate Services as we command the majority of the market. Our affiliation with local regulators and government agencies such as the Malaysian Investment Development Authority (MIDA), local stock exchange Bursa Malaysia, Companies Commission of Malaysia, InvestKL, Malaysia Digital Economy Corporation (MDEC), etc. allows us to advise on the latest regulatory requirements and incentives accurately and swiftly put your business on a fuss-free journey towards success.

    Are you planning to incorporate in Malaysia? Perhaps we could be of some help. Contact our Corporate Secretarial experts today!

    2. Knight Frank Kuala Lumpur and Selangor Office Monitor 2Q2021. The Edge Malaysia, 7 October 2021
    4. Press Release by the Ministry of Finance, Malaysia on 12 November 2021

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    Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs

    Malaysia Budget 2022

    Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs

    On 29th October 2021, Malaysia’s 2022 Budget, themed “Keluarga Malaysia, Makmur Sejahtera”, was tabled by Finance Minister Tengku Datuk Seri Utama Zafrul bin Tengku Abdul with a wide range of tax incentives offered to both individuals and corporates. The expansionary budget is aimed to act as a catalyst to boost economic recovery and close the gap on the country’s fiscal deficit.

    If you have any questions relating to any of the information contained in this report, please email our tax advisors via or call us at +60 3 7890 4500.

    Individual Tax Relief

    Individual Tax Relief

    New Corporate Tax Incentive

    New Corporate Tax Incentive

    New Sales & Service Tax Exemptions

    Sales and Service Tax Exemptions

    Related Business Insights

    The Benefits of Outsourcing for ‘The Next Normal’

    benefits of outsourcing

    The Benefits of Outsourcing for ‘The Next Normal’

    The Benefits of Outsourcing for ‘The Next Normal’

    The Malaysian economy recently rebounded from its lowest point in twenty years during the second quarter of 2020. However, growth forecasts for the remainder of this financial year are not looking as favourable.

    In mid-August, the central bank downgraded its growth forecasts for 2021. Now, as COVID-19 vaccinations are increasing and the country gradually reopens, businesses in Malaysia are looking for ways to adapt to ‘the next normal’.

    Embracing digital transformation is one way that forward-thinking SMEs have already adapted. As well as boosting business continuity, this has allowed them to enjoy the significant benefits offered by outsourcing non-core functions.

    Let’s take a deeper look into how digital transformation and outsourcing have become major players in the economic recovery drive from COVID-19.

    Pandemic resilience through digital transformation and outsourcing

    COVID-19 has been a game-changer for digital transformation in Malaysia. A small business survey by global professional accounting organisation CPA Australia found that 40% of surveyed small businesses in Malaysia increased their focus to online sales in 2020. Of those small businesses that invested in technology in 2020, 42.4% of them said it made their business more profitable.

    For global companies, the digital transformation has happened in the space of just months during the pandemic. According to Twilio CEO, Jeff Lawson, some large multinational corporations have fast-tracked their digital transformation by an average of six years.

    digital transformation Malaysia

    The increased speed of digital transformation has meant that more companies have been able to appreciate the benefits of outsourcing. This has been particularly important for maintaining business continuity during the pandemic.

    For example, pre-COVID, some companies had payroll systems requiring on-site staff to process payroll. But when the Movement Control Order (MCO) was in place, payroll staff couldn’t get to their offices to perform their duties. The solution for many of these companies was to outsource payroll to an expert provider using a cloud-based HRMS, to ensure their employees were paid on time, even in the middle of a pandemic.

    While the pandemic has fast-tracked digital transformation, it will remain an important driver of business growth for the foreseeable future. SMEs may find it difficult to keep up with the rapid pace of technological change, but this is where outsourcing can be truly valuable. By outsourcing their non-core business functions to a specialist outsourcing company, SMEs can:

    • save money from not having to implement and maintain expensive technology;
    • have greater business continuity when the unexpected happens; and
    • increase operational efficiency by allowing staff to focus on core strategic business drivers.

    How your company could benefit from outsourcing

    Here are the top three ways your company could benefit from outsourcing:

    01 Save money

    Outsourcing business processes to a professional services provider like BoardRoom improves your business continuity so that your teams have the support they need to keep the business operating during unforeseen events. You’ll save money by minimising costly downtime.

    In addition, outsourcing reduces key person risk. This means your company can save by avoiding the business interruption costs that can occur when senior team members are not available.

    What’s more, your company will benefit from getting access to the latest technology without having to spend money on finding, implementing and maintaining big-ticket technology solutions.

    02 Save time

    One of the key advantages of outsourcing is that your company can regain precious time and use it to focus on what matters – growth and profitability. For example, when you outsource payroll, your in-house HR team can focus on achieving more strategic objectives, such as increasing employee engagement and productivity. With the time saved by outsourcing, your company can then reallocate staff towards core business activities.

    03 Gain expert advice

    Outsourcing to a professional corporate services provider gives your company access to a pool of business knowledge specialists without:

    • the salary overheads;
    • constant training costs; or
    • the expense of having your in-house team spend vast amounts of time trying to stay on top of changing regulations.
    business process outsourcing

    Focus on strategic planning to stay competitive

    While the Malaysian economy is forecast to gradually recover from Q4 in 2021 and into 2022, businesses need to focus on strategic planning to stay competitive. A good place to start is understanding the current financial health of your company.

    Outsourcing your accounting function can help to clarify your company’s financial health status. A complete picture of your company’s finances enables you to make more informed decisions as the economy begins to recover.

    Our team of professional chartered accountants at BoardRoom can help by painting a clearer picture of your company’s current cash flow and seasonality. They have the expertise to critically analyse your receivables and collections, so you can more effectively assess organisational performance. With this information, you can then make the best strategic decisions to stay competitive while adapting to ‘the next normal’.

    Futureproof your business by outsourcing to a trusted corporate services provider

    Outsourcing can help your company stay resilient in the face of uncertain and challenging market conditions.

    As one of the leading professional services outsourcing companies in the Asia Pacific region, BoardRoom offers a variety of integrated, value-add corporate services, including:

    By consolidating all your back-office functions into one vendor, you gain greater efficiencies and business productivity.

    Speak to our team of experts today about how we can help to futureproof your business.

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    A guide to the payroll process and compliance in Malaysia

    payroll process and compliance regulations

    A guide to the payroll process and compliance in Malaysia

    Guide: The payroll process and compliance regulations in Malaysia

    With Malaysia’s strategic location, market competitiveness, skilled multilingual talent pool and world-class technology capabilities, it’s easy to see why so many companies choose to establish operations there.

    If your company is considering expanding into Malaysia, one of the keys to success is to understand the payroll process and compliance regulations from the outset. The last thing you want is for your newly established operation to attract the wrong kind of attention from government auditors.

    That’s why we’ve prepared a helpful guide to the payroll process and compliance regulations your company needs to know when starting out in Malaysia.

    Payroll process and compliance essentials in Malaysia

    Before we examine some common payroll compliance challenges in Malaysia, it’s useful to understand the essentials of the payroll process and the main compliance considerations. Let’s start with a primer on the fundamentals of payroll in Malaysia.

    Working conditions and wages
    • Working hours: Malaysia has an eight-hour workday with an average working week of no longer than 48 hours, and (most commonly) one day off per week. Government protection provisions prevent women from working in the industrial or agricultural sectors between the hours of 10pm and 5am. Women must also have at least 11 consecutive hours off work between each shift.
    • Pay cycles: salaries in Malaysia are typically paid monthly.
    • Minimum wages: Nationally, the minimum wage is RM1,100, except for areas under 56 city and municipal councils where the minimum wage is RM1,200. Our team of payroll experts here at BoardRoom can advise you on the relevant government guidelines that apply to your employees.
    • Overtime, rest day and holiday pay rates: Employees covered by the Employment Act 1955 (“EA 1955”) should be paid overtime at 1.5 times their hourly pay rate. Rest days are paid at two times, and public holidays at three times the hourly pay rate. However, the EA 1955 only applies to:
      • employees whose monthly salary does not exceed RM2,000;
      • employees within the private sector;
      • employees working in Peninsular Malaysia or the Federal Territory of Labuan; and
      • employees (irrespective of salary) involved in manual labour, operating or driving transport vehicles and domestic servants.

    For non EA 1955 employees, employers can stipulate relevant provisions relating to overtime rates within their employment contracts.

    Income tax
    • Withholding tax: Malaysia has a monthly tax deduction (MTD) system requiring employers to deduct withholding tax at source. Each month, employers must then send this tax to the Inland Revenue Board (IRB) of Malaysia on behalf of their employees.
    • Income tax rates: the maximum income tax rate in Malaysia is 30%, which applies to those with incomes greater than MYR 2,000,000 or ‘non-residents’. Employees who work between 60–182 days per year in Malaysia are considered ‘non-residents’, irrespective of their actual citizenship status.
    • Tax clearing and tax filing: employees must complete their tax clearing and filing at year-end before April. The financial year in Malaysia runs from 1 January to 31 December.
    international payroll processing companies
    Holidays and leave
    • Paid public holidays: Employees are entitled to be paid for 11 gazetted public holidays per year. Of these 11 days, five must be:

    1. Hari Kebangsaan or National Day;
    2. Birthday of Yang di-Pertuan Agong;
    3. Birthday of the Ruler or Yang di-Pertua Negeri or Federal Territory day (varies per state);
    4. Labour Day; and
    5. Malaysia Day (16 September).

    The remaining six paid public holidays are chosen at the discretion of the employer from the following list and these must be communicated to employees either via written notice or as stated in their employment contracts:

    • Birthday of the Prophet Muhammad (s.a.w);
    • Chinese New Year (2 days, except 1 day in the states of Terengganu and Kelantan);
    • Vesak Day;
    • Hari Raya Puasa (2 days);
    • Hari Raya Haji (1 day, except 2 days in the states of Terengganu and Kelantan);
    • Deepavali;
    • Christmas Day; and
    • Awal Muharam.

    However, the government can declare additional ad hoc, paid public holidays throughout the year. If these days are declared at short notice, employers can nominate a replacement day.

    In addition, there are a number of state based holidays observed around the country. However, employers are not required to pay employees for these holidays unless they have selected them to be included in their list of paid public holidays for their employees.

    • Compulsory annual leave entitlements: employees are typically entitled to between 8-16 days of paid annual leave, depending on their length of service with the company.
    • Compulsory sick leave entitlements: Employees are entitled to between 14-22 days of paid sick leave, depending on their length of service with the company.
    • Compulsory maternity leave entitlements: New mothers are entitled to 60 consecutive days of paid leave for each of their first five children.
    • Optional leave entitlements: employees can also apply for the following optional leave types, which are typically unpaid and subject to employer approval:
      • compassionate/bereavement leave;
      • marriage leave; and
      • study leave.
    • Paternity leave: most employers also offer 1-3 days of paid paternity leave, but this is not a statutory requirement.
    Social security and statutory contributions
    • Employees’ Provident Fund (EPF): employers and most employees (Malaysian citizens or permanent residents only) must contribute to the EPF retirement benefits scheme. The EPF contribution rate for employees varies depending on their monthly salary, whereas the employer contribution is 12%.
    • Social Security Organisation (SOCSO): employers must contribute to Malaysia’s mandatory social insurance schemes, which are administered by SOCSO. There are two schemes:
      • The Employment Injury Insurance Scheme (EIIS) provides cover for employees who experience work-related injuries or diseases. The EIIS applies to all Malaysian citizens, permanent residents, and foreign workers (excluding domestic servants).
      • The Invalidity Pension Schemes (IPS) provides cover for employees who experience invalidity or die from causes unrelated to their work.

    Employers must make a monthly contribution to SOCSO on behalf of each eligible employee.

    • Employment Insurance Scheme (EIS): employers are required to make monthly contributions for each employee. The EIS provides financial assistance to workers who have lost their job while they seek new employment.
    • Human Resources Development Fund (HRDF) Levy: this is a compulsory levy paid by employers with 10 or more employees (Malaysian citizens only) working in the manufacturing, services, mining and quarrying sectors. The levy rate is 1% of each eligible employee’s monthly wage. It allows companies registered with the HRDF to receive financial assistance when they participate in specific training and upskilling programs delivered by HRDF training providers.
    • Other contributions>: some employees may also be required to make student loan repayments to the National Higher Education Fund Corporation, or make donations known as Zakat to fulfil their religious obligations.
    payroll Malaysia

    Common payroll compliance issues to be aware of in Malaysia

    Payroll errors can result in your company needing to pay expensive fines. They can also cause reputational damage and employee dissatisfaction. To help you avoid unpleasant situations, here are some common payroll compliance issues to be aware of in Malaysia:

    • Late MTD payments: the Inland Revenue Board (IRB) imposes penalties if employers fail to pay monthly employee income tax withholdings by the 15th of each month.
    • Failing to include perquisites, benefits-in-kind or equity incentives in compensation reporting: sometimes these benefits are not paid through payroll, which means they can be easily overlooked in compensation reporting.
    • Incorrect classification of employees: Foreign workers, non-residents and secondees are often classified incorrectly during payroll data system entry. As a result, your company might underpay these employees and deduct the wrong income tax amounts.
    • Failing to stay up-to-date with regulation changes impacting payroll: In Malaysia, there are four regulatory bodies that influence payroll processing rules which makes it more of a challenge staying up-to-date with payroll requirements.
    • Overlooking cultural norms: It’s common in Malaysian payroll processing to include ‘13th-month pay’ – a single annual payment on top of an employee’s total annual wage. This payment isn’t mandatory and would not be considered non-compliance if you did not adhere to it, but it is the cultural norm that could impact employee satisfaction.
    payroll processing companies

    Want expert help in processing your company’s payroll in Malaysia?

    Our team of payroll experts can guide you through the complexities of the payroll process in Malaysia to help make your business expansion more successful. We can set up your company’s payroll so that you get it right the first time, every time.

    It doesn’t matter whether you are a large multinational corporation or a fast-growing SME. Outsourcing to an international payroll processing company like BoardRoom ensures your company has an efficient, accurate and compliant payroll process right from the start.

    Speak to our team of specialists today about how outsourcing payroll can give you more time to focus on what really matters: your company’s growth and profitability.

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    10 advantages of outsourcing your payroll services

    advantages of outsourcing payroll services

    10 advantages of outsourcing your payroll services

    10 advantages of outsourcing your payroll services

    Outsourcing is the key to making your payroll process seamless. It means everyone gets paid the right amount at the right time, every time.

    All too often HR professionals find themselves spending far too much time processing pay runs at the expense of dedicating time to strategy and higher-value tasks.

    Payroll is a time-intensive process – not just because you need to complete the necessary process tasks, but also because you need to ensure compliance with tax and legislative requirements.

    The key advantage of outsourcing payroll services is that you can get back your time to focus on what really matters: the strategic business drivers that grow your company and culture.

    Here are the top ten benefits your company stands to gain by outsourcing your payroll.

    01 Save time

    Outsourcing payroll is the low-hanging fruit for increasing company efficiency. Instead of spending hours every pay cycle on payroll processing, an administratively heavy task, HR teams can focus on achieving more strategic objectives, like increasing employee engagement to boost organisational productivity.

    02 Reduce costs

    Saving time also saves you money, which can come in the form of a lower wage bill. For example, as companies scale, they can save money by outsourcing payroll instead of spending it on expanding in-house HR teams purely  to manage a growing payroll. You may also see savings to your business from not needing to maintain cloud security for your payroll software or manage paperwork.

    how to outsource payroll

    03 Minimise compliance and regulatory risks

    Regulatory changes that affect payroll happen at break-neck speeds, which can make staying compliant a challenging, time-consuming process. In Malaysia, four regulatory bodies develop payroll processing rules. They each issue notifications when a change to the law is made and your company needs to ensure that these changes are accurately translated into payroll formulas.

    It is easy to make mistakes when updating payroll formulas, especially if they involve IF, AND, OR logical functions. If the formula is wrong, payroll is calculated incorrectly which can cause problems like under or over paying wages and tax. Chances are, you may not even realise that an error has occurred until after receiving an expensive non-compliance fine.

    Outsourcing your payroll to a specialist service provider, like our team of experts here at BoardRoom, can minimise your exposure to these compliance and regulatory risks because we take care of it all for you, including updating payroll formulas correctly.

    04 Gain access to specialised, local knowledge

    Having a dedicated team of professionals with local knowledge of Malaysia’s labour laws is essential for your company. It means your business can take advantage of the team’s years of payroll experience without being exposed to the strict protocols and multi-level cross-checking that they’re subject to.

    This is especially beneficial for companies that operate in different states or across multiple countries because an external partner will work with you to ensure compliance in each area, freeing up your in-house HR team.

    05 Build payroll continuity

    Some companies operate payroll systems that require staff to be on-site in order to process payroll. If the unexpected happens, as an example; your payroll staff can’t get to the office to perform their duties, or a key member of your team responsible for payroll approval resigns, how will your employees get paid? Outsourcing payroll to an expert provider guarantees payroll continuity so that your employees are paid on time, every time.

    06 Enhance data security and protection

    Data security is crucial for payroll processing because of the incredibly sensitive information involved such as employees’ personal data and compensation details. In Malaysia, HR departments must adhere to local laws such as the Personal Data Protection Act 2010 (“PDPA”).

    If your company has limited time and budget resources, it can be challenging to maintain an appropriate level of data security and protection in-house. For one, in-house teams need to keep pace with ever-evolving cybersecurity threats. Secondly, your company is more exposed to payroll fraud when payroll is processed in-house. Third, in-house teams may not have the appropriate protocols to ensure that data is backed up regularly.

    Quality payroll outsourcing providers store their data on highly secure cloud-based servers using state-of-the-art encryption. They perform regular backups to ensure that data is protected. Data protection and security are top priorities for us at BoardRoom, which is why our data centres have achieved ISO27001, and our cloud hosting has SOC 2 certification.


    07 Reduce stress

    Getting your employees paid accurately and on time is critical to the success of your company. And as every HR professional knows, there is no room for error when it comes to payroll. However, managing payroll effectively can be challenging for in-house teams when they are trying to keep up with local regulatory compliance while simultaneously managing the needs of a growing workforce. This is especially true if your company operates in  multiple countries across the APAC Region.

    Our team of payroll experts here at BoardRoom will take care of payroll management for you, ensuring that pay runs are efficient, accurate and compliant. Our team has worked across multiple industries, countries and situations, so you can rest assured knowing that your payroll is in the best of hands. Ultimately, this means less stress for your HR teams.

    08 Increase flexibility

    Another advantage of outsourcing payroll services is that you can stay flexible in rapidly changing business environments. Outsourcing allows you to quickly scale your payroll service requirements as needed, instead of having to recruit, onboard, train and retain additional in-house staff.

    09 Gain access to a pool of payroll knowledge experts

    As the saying goes, ‘two heads are better than one’. Outsourcing to a professional payroll service provider gives your company access to a pool of payroll knowledge specialists without the expense of retaining them in-house. Our team of experienced payroll experts have managed payroll for businesses of all sizes, types and industries across the APAC Region. Take advantage of their vast experience and knowledge to really build your business so you can take it to the next level.

    10 Integrate knowledge with value-add services

    The best payroll outsourcing vendors are not only experts in all things payroll, but also offer a variety of integrated, value-add corporate services, including:

    By consolidating all your back office functions into one vendor you stand to gain greater efficiencies and business productivity.

    Outsourcing makes payroll easy

    Spend less time sorting out pay runs and more time on your company’s growth and profitability by outsourcing your payroll function to our team of BoardRoom payroll experts.

    Whether you are a large multinational corporation or a fast-growing SME, our team makes processing your payroll in Malaysia and across the APAC region easy.

    So if you want efficient, accurate, compliant payroll processing, speak to our payroll specialists today about how to outsource your company’s payroll function.

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    What is an Employee Share Plan? (ESAS vs ESPP)

    Employee Share Plans in Malaysia

    What is an Employee Share Plan? (ESAS vs ESPP)

    How Employee Share Plans work in Malaysia

    Essentially, an Employee Share Plan is a remuneration package that can reward employees of both privately held, and publicly listed, companies in Malaysia with either:

    • the company’s ordinary shares; or
    • the option to buy these shares in the future at a subsidised rate.

    Employee Share Plans are an effective way to attract and motivate your employees while providing an incentive for them to contribute to long-term company performance. These plans can help you to retain and reward your talent whilst managing company cash flow or working capital.

    You can use several Employee Share Plan types to provide cash-free remuneration to staff, including:

    • Employee Share Option Schemes (ESOSs);
    • Performance Share Plans (PSPs);
    • Restricted Share Plans (RSPs); and
    • Employee Share Purchase Plans (ESPPs).

    Our guide to each type below can help you to decide on the best option for your company.

    Employee Share Option Schemes (ESOSs)

    An ESOS gives employees the contractual right to buy company shares at an exercise price in future. Reason being, the greater the share price, the greater the gain from exercising their options. Typically, you will assign a preferential, pre-determined price or benchmarked value to the share options.

    An ESOS case study example

    Nora Yeoh, the Chief Operating Officer of Jack Manufacturing Company, has received a share option offer to acquire 50,000 company shares. The offer price (also known as the exercise price) per share is RM20.00. There can be a moratorium period which Nora will not be able to exercise the options, this is called a vesting period. Once the moratorium has been lifted, Nora’s options are now vested and Nora can pay an exercise cost to acquire the shares within a specified period of time.

    There could also be a performance criteria that Nora will have to fulfil before the options vest.

    Assuming that the share options vest and Nora still works at the company on 1 April 2020, she can choose to exercise her share options. If she does this, she will pay RM20.00 per share to receive 50,000 shares in the company.

    Malaysia Employee share option schemes

    Share Award Schemes (SASs)

    A Share Award Scheme (SAS) is very similar to an ESOS. The key difference is that employees are rewarded with actual share ownership from the outset, instead of only receiving the option to buy future shares.

    As with an ESOS, there could also be certain criteria or performance metrics that the employee will have to fulfil. 

    To prevent share dilution, companies often only allot 15% of their current outstanding ordinary shares at any time to use in an SAS.

    As outlined in the table below, there are two types of SAS:

    • Performance Share Plans (PSPs); or
    • Restricted Share Plans (RSPs).
    Type of SASPlan DurationVesting PeriodPerformance MetricParticipantTarget Companies
    PSP3-5 YearsEnd of Plan (with Annual Evaluation)– Total Shareholder Return

    – Return on Equity

    – Return on Sales

    – Market Ranking

    – Directors

    – Non-Executive Directors

    – Senior Managers

    – Heads of Department


    – Listed and Private Companies
    RSP3 YearsAnnually– EBITDA

    – Economic Value Added

    – Manager 

    Performance Share Plans (PSPs)

    Performance Share Plans are typically aimed at a company’s senior management team. They provide incentives to focus on delivering long-term company performance that creates shareholder value. To help achieve longer-term company objectives, PSPs tend to have longer plan durations (often 3-5 years), and the shares vest at the end of a PSP.

    Some companies have a claw-back policy that requires the individual to return a certain number (if not all) of their rewarded shares if their performance is dissatisfactory.

    A PSP case study example

    After joining the Jack Manufacturing Company Performance Share Plan (PSP), Sarah Perry was allotted 1,000,000 shares on 1 April 2020. At each annual performance evaluation, Sarah receives a score that is independent of her score in previous years.

    At the end of her three-year period, Sarah receives 900,000 ordinary shares, based on the average of all of her scores. She can choose to keep or sell these shares. However, she knows that keeping them allows her to enjoy voting rights and makes her eligible to receive dividend payments.

    Sarah’s PSP results appear in the table below:

    Evaluation Date (Annually)2 April 20212 April 20222 April 2023
    Score Card95%110%65%
    Average Score across 3 years(95% + 110% + 65%) / 3 = 90%
    Total Awarded1,000,000 x 90% = 900,000 Ordinary Shares

    Restricted Share Plans (RSP)

    Restricted Share Plans work similarly to PSPs, but over a shorter term.  The key difference is that shares in an RSP vest annually, which means these plans tend to better suit companies with short-term objectives. 

    An RSP case study example

    After joining the Jack Manufacturing Company Restricted Share Plan (RSP), Peter Li was allotted 1,000,000 shares on 1 April 2020. The RSP plan has a three-year duration and two vesting periods.

    The first vesting date is 2 April 2022. On this date, 50% of Peter’s allotted shares will vest based on his performance from 2 April 2020 until 1 April 2022.

    The second vesting date is on 2 April 2023. On this date, the remaining 50% of Peter’s allotted shares will vest, depending on his performance from 2 April 2020 till 1 April 2023.

    During the first vesting period, Peter only manages to reach 95% of his pre-set target. The Remuneration Committee (RC) therefore decides to vest only 450,000 shares. They could place the remaining 50,000 shares back in the company’s treasury account, or evaluate it again towards the second vesting period.

    For simplicity, let’s assume for this example that they place Peter’s unvested 50,000 shares back into Jack Manufacturing Company’s treasury account.

    During the second vesting period, Peter performs well and manages to reach his target. The RC therefore decides to reward him with 500,000 shares.

    At the end of the three-year period, Peter has received a total of 950,000 ordinary shares. Like Sarah, he can choose to keep or sell the shares.

    Peter’s PSP results appear in the following table:

    Vesting Period2 April 20222 April 2023
    Performance Metrics95%100%
    Total Awarded450,000 + 500,00 = 950,000
    Employee Shared Plan in Malaysia

    Employee Share Purchase Plan (ESPP)

    You can offer this type of Employee Share Plan to all company employees. Effectively, it means your company subsidises employees to buy ordinary shares in the company.

    In an ESPP, you automatically deduct a portion of the employee’s gross income every month and place it in a separate company account for a minimum one-year period. 

    At the end of the year, the employee can either:

    • choose to use those funds to purchase ordinary shares; or
    • have the money transferred back to their personal account.

    As an extra incentive for employee participation, you can also offer a good interest rate on the set-aside funds. This means that the employee benefits even if they don’t choose to buy your company’s ordinary shares. 

    Other effective participation incentives include:

    • subsidising a certain amount (such as 25%) of the total cost of any shares that an employee purchases; and
    • share purchase matching, in which your company uses its own funds to buy x number of ordinary shares for every x number of ordinary shares the employee buys.

    We can help you to identify which ESP is best for your company

    In theory, you can use any of the Employee Share Plans in this article to provide cash-free remuneration to staff. However, you still need to consider the complexities and administrative costs of each option.

    In our experience, coming up with a single Employee Share Plan that will work for everyone is not possible. That’s why we have designed a specialised digital Employee Share Plan system that is completely flexible.

    Our experts can provide you with a purpose-built solution for your needs that will increase efficiencies and reduce costs, while still complying with current and future reporting requirements.

    Looking for a trusted Employee Share Plan firm in Malaysia?

    We have designed an all-encompassing Employee Share Plan solution that combines the experience of our expert team with a powerful digital platform, EmployeeServe.

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