Streamline business growth by transitioning to outsourced accounting services in Malaysia

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Streamline business growth by transitioning to outsourced accounting services in Malaysia

If you have ambitions to expand throughout the Asia-Pacific region (APAC), outsourced accounting services can help your firm grow smoothly in a challenging economic climate.

Business owners sometimes feel intimidated by the thought of working with an outside team because of the complexity of the accounting function. So, can accounting be outsourced? This article covers how outsourcing supports an intelligent business model and what you can do to make the transition go smoothly.

Why outsource accounting?

APAC firms are increasingly choosing to outsource accounting services because of the many benefits they offer. According to a 2020 global study, over half of finance and accounting professionals are considering outsourcing additional tasks.

There are three primary reasons for this trend.

1. Access to knowledge and expertise

Firstly, outsourcing makes it possible to hire experts with high levels of specialised knowledge and experience – professionals that are sometimes difficult to find through traditional hiring processes.

According to Yang Shuzhen, Accounting Director at BoardRoom, “Often, companies outsource because they’re looking for specialists who can improve their processes.”

The typical daily responsibilities of operational teams and supervisors are intensive and leave little time to objectively analyse procedures and spot improvement areas. An external team can help in many areas, and this is one such area.

Shuzhen notes that many people returned to their home countries after the COVID pandemic. As such, many organisations need help finding the essential skills and experience required to fill positions due to the tight labour market this has caused.

2. Fast and trustworthy service

Secondly, accounting outsourcing offers immediate, effective assistance when the turnover rate for financial personnel is significant.

“A lot of financial professionals want to take a break or try a totally new industry,” says Shuzhen. “So people are leaving, and in many cases, businesses are not able to replace them quickly enough.”

Worker shortages and poor handovers can lead to transactions and procedures going awry. Thus, businesses encountering these difficulties will seek the assistance of an external firm with a pool of qualified, experienced accountants available to evaluate the problem and swiftly support with processing.

“They require experts who have the knowledge to guide them in the future in addition to taking over their accounting duties,” says Shuzhen. “Standard operating procedures and internal controls, which are essential for success, can be established with the aid of an external team.”

Fast and trustworthy service

3. Digital transformation support

The accounting sector is going through a period of significant change due to increased digital transformation, creating opportunities to turn data into valuable business insights. In addition to executing transactional activities, the finance department is now expected to advance strategic company goals. As a result, the required skill set for finance professionals is changing.

To fulfil finance’s new position as a strategic business partner, organisations must mix human and machine-based skills while also exhibiting the four characteristics of future-ready companies: analytical, adaptable, agile and anticipatory. This is according to a 2020 Deloitte study.

The technical know-how and data analytics capabilities necessary to accomplish this can be challenging to maintain internally. This is why many organisations turn to premium accounting firms as a solution.

The effects of the COVID-19 pandemic have pushed outsourcing demand even further. By 2026, it is predicted that the worldwide finance and accounting outsourcing market will be worth USD 53.4 billion by 2026. This is primarily because corporate services companies can meet the industry’s demand for efficient solutions and stability during difficult times.

Challenges associated with in-house accounting

Businesses in the APAC region are turning away from in-house accounting for two main reasons.

It can be labour-intensive

It takes time to find, train and manage a financial team, and it also takes time to expand the team as your company grows.

“A company that is fast growing will see a lot of resources going toward educating the staff, maintaining morale and ensuring the team is performing properly,” says Shuzhen. “This is crucial because timely reporting and accurate financial information help the company when stakeholders are making decisions.”

But resignations can be demanding on a team. Businesses may invest time in providing the new team with adequate handoff and training, but because there will be a learning curve, it is doubtful they will have the same immediate impact as the last team. Additionally, there is no assurance that the employees will be around for a long time.

Shuzhen says that “Deliverables may be impacted by frequent transitions and short handover times.”

It can be challenging to adapt to technological change

Internal teams are under pressure to embrace new accounting systems that are more complicated than conventional ones due to the digital advancements occurring throughout APAC.

Although this adaptability is crucial for sustained productivity, the Great Resignation’s workforce shortages mean that there is often not enough time to guarantee that new processes are properly implemented. As a result, the new software can become more of a burden than a benefit, adding to the delays and costs.

A skilled accounting partner can connect with software providers to guarantee that new systems are customised to suit your company. Thanks to their ability to plan a systematic and trouble-free implementation of the latest software, they can ensure that the most crucial fixes are performed first, saving you time and reducing costs.

Accounting outsourcing: here are the steps

We recommend taking the following actions for an easy transition to outsourced accounting services in Malaysia:

  1. Consider the challenges you are faced with and the problems you are hoping outsourcing can help you with.
  2. Analyse the available funding for accounting outsourcing.
  3. Make contact with a premium accounting services company. They will converse with you to understand your current situation, assist you in compiling all the relevant data and provide guidance on what to do next.
  4. Ask about the accounting software options the company offers to get the best solution for your company.

A capable provider will focus on the most important jobs first. Whether this means creating solutions for immediate problems or troubleshooting existing issues, your primary concerns will be addressed before moving on to the next steps. Once these issues are under control, they will collaborate with you to develop a comprehensive end-to-end accounting system that works for your company and offers you individualised support.

It is also important to think about who within your organisation would be the best to communicate with your supplier on a one-on-one basis to facilitate effective and seamless communication.

The essential factor is that the appointed person has excellent financial knowledge and can discuss financial topics in detail. The chosen individual might be a finance manager, CEO, firm owner or director. Additionally, it will guarantee that the merging solutions are specific to your needs.

Accounting outsourcing

Choosing the best provider for your company

Just as an in-house team would, your accounting services provider should seamlessly integrate with your company. Once we have gained a deep understanding of your issues, we can provide all of the benefits of an in-house team while removing all the disadvantages.

From your accounts receivable and payable to your general ledger and financial reporting, a full-service business can handle all facets of your accounting and bookkeeping. To assist your organisation in achieving its objectives, they will also be able to offer business support in other areas, such as cash flow management.

“At BoardRoom, our accounting service extends beyond transactional processing,” says Shuzhen. “Financial data can be valuable, and we utilise this data to the fullest extent when advising our customers.”

It is important to choose an experienced provider because they will be able to quickly and easily pinpoint workable solutions to any accounting problems you may be experiencing. Also, you will be able to trust that your business has adhered to all regulations the next time it is audited.

Accounting outsourcing pitfalls you need to avoid

Avoid postponing your decision if you are thinking about switching to accounting outsourcing. Businesses frequently waste resources trying to address accounting difficulties on their own when an external services provider could have stepped in much sooner and implemented solutions much faster.

Even a small organisation can have a build-up of financial problems and commitments. For this reason, involving an outside provider from the beginning is vital if you are establishing a new business or branch in a neighbouring country. They will ensure that the proper accounting procedures are in place from the start.

The more you wait to outsource, the more difficult and time-consuming it can be to manage your funds, potentially exposing your business to unnecessary risks.

What to avoid when outsourcing your accounting

The ways outsourcing can accelerate business growth

An accounting services provider can be a crucial business partner on your growth journey if your firm has expansion goals.

They will be able to help you by:

Giving you thorough guidance and reliable data at any time (so you can make timely decisions)
Creating reports for possible investors
Creating financial ratios so you can have timely conversations with banks

An accounting partner can assist with setting up internal accounting controls at your corporate headquarters and implementing them within the finance departments of other countries. You can quickly provide reliable group-wide statistics at any time of the year if you have similar internal controls in place throughout your regional sites.

Maintain compliance across multiple countries

Accounting partners also help businesses thrive by guaranteeing complete regulatory compliance, including creating and filing statutory reports.

Concerning your Malaysian requirements, they will ensure that all Malaysia Financial Reporting Standards are satisfied and SST returns are submitted on time. Different regulatory frameworks, some highly onerous and complicated, may also be present in other APAC areas. Therefore, having a provider that supports multiple regions is essential.

Begin your transition to outsourced accounting

No matter where you are in your expansion process, setting up your accounts is essential for guaranteeing a straightforward and successful course.

Please contact us to learn more about the premium accounting and bookkeeping services that BoardRoom offers, and our complementary payroll outsourcing and tax advisory services.

Contact BoardRoom for more information:

Yang Shu Zhen

Yang Shuzhen

Director, Regional Accounting

E: [email protected]

T: +60-3-7890 4800

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Malaysia Budget 2023

Malaysia 2023 Budget Key Tax Highlights Membangun Malaysia MADANI (Re-tabled on 24 February 2023)

Malaysia Budget 2023

Malaysia’s 2023 Budget, which was re-tabled on 24 February under the new Unity Government, totaled RM388 billion. Almost 75% of its budget has been allocated to Operating Expenditure, signaling the Government’s commitment to drive its reform agenda and revitalise Malaysia’s economy.

Several tax incentives were announced as part of the Government’s strategy to drive an inclusive and sustainable economy. To find out how the tax measures announced will implicate your tax planning, download our Malaysia 2023 Budget Report today.

If you have any questions relating to the information contained in this report or require tax advisory services, please email our tax advisors at [email protected].

Malaysia Budget 2023 Main Highlights Preview Updated

Should you have any questions regarding the information provided in the report, please do not hesitate to reach out to your respective BoardRoom client managers or email us at [email protected].

Best regards,

BoardRoom Team

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What is SST? Your guide to sales and service tax in Malaysia

SST Banner

What is SST? Your guide to sales and service tax in Malaysia

If you are planning to expand your business into Malaysia, you are likely asking the question, What is SST?

SST refers to the Malaysian sales and service tax, where a sales tax is imposed at the manufacturer level, and a service tax is paid by consumers who are using taxable services.

Tax regulations are relatively fluid in Malaysia compared to neighbouring regions, which can make compliance challenging to maintain. This is why many growing businesses partner with a corporate services team who can help them navigate multi-country taxes as they evolve.

Read on as BoardRoom’s Tax Director for Malaysia, Cheong Woon Chee, provides an overview of how SST works, and what you can do as a taxable person to ensure compliance.

Did SST replace GST?

In 2018, the Malaysian Government reintroduced sales and service tax to replace the goods and services tax (GST), which reformed the local tax system.

“Many people actually believed that GST had increased the living cost since it was implemented,” Woon Chee says. “Therefore, the main objective of this abolishment was to put more purchasing power in the hands of the Malaysian people – especially the lower- to middle-income earners – which would result in a much higher disposable income.”

How SST works in Malaysia: definition and rates

SST is an indirect tax made up of the following components.

Sales tax

The sales tax component of SST is imposed on products manufactured and produced locally and on taxable goods imported into Malaysia. It is charged to consumers based on the purchase price of certain goods and services.

The sales tax is only imposed at one stage of the supply chain (at the time of the goods’ sale or disposal).

The sales tax rate in Malaysia ranges from 5%, 10% or another specified rate, depending on the type of goods.

Your business is required to pay SST if your total sales value of taxable goods has exceeded RM 500,000 in the past 12 months.

Service tax

The service tax is a consumption tax imposed on taxable services provided in Malaysia by a registered business.

The rate for service tax is 6% in Malaysia.

Your business is required to pay SST if your total value of taxable services within 12 months exceeds the prescribed threshold, which is usually RM 500,000. Some services have a different threshold (for example, the threshold for operators of restaurants and cafes is RM 1.5 million).

TaxServices

How to register for SST

If your business’s annual income has exceeded the respective thresholds for sales or service tax, you need to register for SST on the MySST website. A tax professional can assist you with this process.

Is there anything or anyone exempt from SST in Malaysia?

In Malaysia, services that are imported or exported are exempt from service tax, as are goods manufactured for export.

Other exempted goods include:

Bicycles, including certain parts, and accessories
Books, newspapers, magazines, and journals
Live animals, meat, seafood, and eggs
Insecticides and disinfectant
Cereals
Coffee and tea
Fertilisers
Pharmaceutical products
Spices
Wood pulp

Manufacturers of non-taxable goods are exempt from SST, as are certain government bodies and educational institutions.

You can view complete lists of exempted goods, services and persons on the MySST website.

Exemption rules can be complicated, and the ramifications for tax evasion are severe. This is why it is a good idea to consult a tax professional who can help determine whether SST applies to your business.

Is SST different from company tax?

Another common question among businesses branching into Malaysia is, What is the company tax rate?

When it comes to understanding how to pay tax in Malaysia, business leaders should first learn the difference between SST and company tax.

While SST is imposed by the Royal Malaysian Customs Department, corporate tax is imposed by the Inland Revenue Board.

“Corporate tax is governed under the Income Tax Act 1967, which applies to all companies registered in Malaysia for chargeable income derived from Malaysia, including profits, dividends, interest, rentals, royalties, premiums, and other income,” Woon Chee explains.

Currently, the general rate for corporate income tax in Malaysia is 24%.

SST different

What is required of businesses to comply with SST?

All companies doing business in Malaysia – no matter their size – should do the following to ensure compliance with SST:

Find out if you are liable for SST by checking the prescribed thresholds for goods and/or services
Determine if your business is eligible for exemption from SST (and apply for an exemption if eligible)

If your business is liable for SST, ensure that you:

Register for SST on the MySST website (check first whether you are already registered)
Charge service tax on your taxable service (if applicable)
Issue invoices in the national language or in English
File returns every two months
Make payments on time
Keep accurate records

Ensuring SST compliance can be an arduous process, which is why many businesses in Malaysia choose to engage a skilled corporate services provider for ongoing support.

What you may not know about Malaysian taxation

As a business leader, it is important that you stay aware of local taxation developments and discourse. With this knowledge, you will be able to make smarter decisions when it comes to company strategy and forward planning.

Some of the latest tax facts you should know include:

  • In its first year of implementation, Malaysia’s digital services tax brought in more than RM 400 million for the government. With the uptake of digital tools and streaming services on the rise, this indirect tax is likely to provide a significant revenue stream for the government in the years to come.
  • A tax exemption for SST on cars ended on 30 June 2022 after an extension was provided as part of the Malaysia Budget 2022. The exemption was introduced in 2020 to help automotive companies survive the impacts of the COVID-19 pandemic and also stimulate local economic growth.
  • Malaysia’s tax regulations are in a near-constant state of flux. Malaysia’s 2023 budget is set to be retabled, meaning businesses must be ready to adapt to potential new tax requirements in the near future.
  • Many companies find outsourced accounting and tax services benefit their business by ensuring they meet regulatory requirements, particularly as they grow and evolve.

Maintain SST compliance in Malaysia with the help of a tax professional

Navigating Malaysia’s tax landscape can be a complex and time-consuming exercise, especially for new businesses. In contrast to neighbouring countries, tax regulations and rates in Malaysia change so often that the tax research you performed at the start of your expansion journey may no longer be relevant just six months later, such as with the reintroduction of SST.

To ensure smooth and successful business growth, and to answer any of your questions about sales and service tax or otherwise, contact a local tax professional who can help ensure your Malaysian venture is fully compliant from the start.

Contact us to find out more.

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The impact of a great company secretary in modern Malaysia

The impact of a great company secretary in modern Malaysia

The impact of a great company secretary in modern Malaysia

How company secretary responsibilities are evolving in Malaysia

Historically, the responsibilities of a company secretary were limited to basic administrative tasks such as minute taking, annual return filing, editing company constitutions and other internal office duties. But the role is evolving as business management and corporate governance grow increasingly complex and gain greater importance.

In modern-day Malaysia, the company secretary is an executive-level role tasked with a wide range of important responsibilities across multiple business functions. As such, the company secretary plays a critical role in helping a business reach its maximum potential.

In this article, we explore the evolving role of a company secretary, and how a skilled company secretary can help your business gain a competitive advantage.

Why is a company secretary important?

Company secretaries carry out various duties to support the running of a business: importantly, they ensure full compliance with the Companies Act and related regulations.

If your goal is to succeed in business, particularly in competitive markets, do not underestimate the value of an experienced company secretary. They will be able to help elevate your governance practices in a way that maximises both benefits and performance.

Company secretarial services can include:

  • establishing the best structure for your business;
  • lobbying for the development of a strong environmental, social and governance strategy, known as ESG in Malaysia;
  • ensuring regulatory compliance; and
  • implementing contemporary corporate governance practices.

The company secretary acts as a voice of reason, ensuring your business pursues its goals with equal determination and integrity.

Corporate Secretary

The role of a company secretary in Malaysia

The rules and regulations for company secretarial services vary across the Asia-Pacific (APAC) region. In Malaysia, businesses are required by law to appoint a company secretary after incorporation.

Common duties for company secretaries in Malaysia include:

Participating in board meetings
Coordinating annual general meetings
Liaising with shareholders and directors
Keeping secretarial records of the company
Preparing and lodging annual returns
Obtaining certification of documents by local authorities
Handling the consolidation, division and transfer of shares
Performing ad hoc tasks on behalf of the board (e.g. signing bank or statutory statements).

Company secretaries can help at every stage of business, from registering a company to closing a company.

How has the company secretary role evolved?

While company secretaries used to have very little authority, today they are well-versed in local laws and regulations. This means the role has taken on a key business advisory function: directors and shareholders can seek the company secretary’s advice on the best way to handle compliance matters.

New focus areas for company secretaries include guiding the board on ESG and matters of legal compliance.

Environmental, social and governance

Rising expectations from regulators, investors and customers for strong ESG in Malaysia means businesses are under mounting pressure to demonstrate good governance. According to a 2020 KPMG survey, sustainability reporting in APAC has grown from 78–84% since 2017.

The company secretary’s broad involvement in both business operations and board activities means they have a crucial role to play in ESG advancement.

Company secretaries can support ESG performance by:

  • helping devise contemporary ESG measures (e.g. introduction of a whistleblower protection policy);
  • working collaboratively with the sustainability team to manage and control ESG risks and opportunities;
  • arranging regular ESG auditing; and
  • assisting with transparent ESG reporting in the company’s annual report.

 

    Legal compliance

    Keeping up with statutory requirements and advising updates to the legal team is a core responsibility of the company secretary. While the company secretary is not held accountable for legal decisions, directors and management teams must be able to trust that the company secretary’s compliance advice is reliable and up to date.

    On top of this, company secretaries must help the company prepare for all types of legislative uncertainty.

    Company secretaries support legal compliance in many ways, including:

    • planning and coordinating shareholder and board meetings and taking attendance;
    • preparing shareholder and board resolutions;
    • ensuring timely filing of all necessary ​​returns with the Companies Commission of Malaysia;
    • updating the Companies Commission on changes to statutory information;
    • ensuring compliance with Securities Commission legislation;
    • reviewing and preparing corporate governance reports for inclusion in annual reports; and
    • helping the company meet the requirements of Bursa Malaysia.

    The best company secretaries can develop tailored compliance solutions that satisfy requirements without costing unnecessary resources.

    Top challenges in company secretarial services

    Key qualities to look for in a company secretary include adaptability and strong communication skills. These attributes are crucial for overcoming common challenges in the compliance space.

    Here are the three main challenges company secretarial services may face.

    1. Keeping up with changing regulations

    The biggest obstacle for company secretaries is keeping their organisations compliant amid rapidly evolving regulatory landscapes. One way they support ongoing compliance is by working hand-in-hand with regulators.

    Company secretaries act as a vital link between organisations and authorities. They are able to access information about regulatory changes before they are made and can therefore help their organisation prepare in advance.

    This way, there is no big rush to adjust processes or take action once the changes come into effect.

      2. Developing tailored compliance solutions

      A successful compliance framework will look different for every business depending on its location, size, industry and listing status. This means company secretaries must have the skills to devise tailored business solutions for their organisation in line with the company’s constitution and within the framework of the Companies Act.

      When properly customised, a compliance framework supports a business to operate with integrity while also performing well in its industry.

      3. Obtaining buy-in from stakeholders

      Sometimes, companies fail to see the value of investing in a skilled company secretary. This is usually due to a poor compliance culture, where compliance is viewed as a burdensome box-ticking exercise rather than an opportunity to advance company goals.

      It is the responsibility of the company secretary to oversee compliance activities across the organisation.

      They should help the directors, shareholders and all staff to understand:

      • why statutory, regulatory and corporate requirements exist;
      • why the organisation must comply with these requirements; and
      • how the organisation and its people benefit from strong compliance.

      To ensure your business remains in strict compliance with all relevant requirements, make sure to appoint a company secretary that takes compliance very seriously.

      Corporate Secretary

      Partner with a company secretary you can trust

      If your company secretary lacks the right qualifications, skills or attitude to support good corporate governance, your business will be at risk of penalisation for failing to fulfil its compliance obligations. You may also miss out on valuable opportunities to improve your efficiency, productivity and profitability.

      Many organisations choose to streamline their operations by engaging in a reputable third-party corporate services provider. With this approach, executive staff can worry less about compliance obligations and focus more on business growth.

      Additionally, you can:

      Ensure your company incorporation is handled seamlessly
      Streamline your cross-border business administration
      Achieve multi-country compliance via one point of contact
      Receive vital business advisory services to support success in new regions
      Save time and money through a reduced administrative load
      Put more resources into achieving your primary objectives

      If your organisation has plans to expand across APAC, it is important to consider and prepare for the new set of regulations and cultural nuances each region will bring. You will also need to adhere to legislative requirements for any international partnerships you establish.

      The complexity of your operations can increase however if you engage corporate service providers in each region to meet relevant requirements.

      Corporate Secretary

      Gain a competitive advantage

      If your aim is to achieve successful business growth across APAC, BoardRoom provides a full suite of corporate services to suit your needs. Our Malaysian company secretary team stays up to date on regulatory developments and industry best practices to provide you with insightful advice every step of the way.

      To find out more about partnering with a skilled corporate secretarial team, chat with our specialists today.

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      Great corporate governance in Malaysia starts with a qualified company secretary

      Great corporate governance in Malaysia starts with a qualified company secretary

      Great corporate governance in Malaysia starts with a qualified company secretary

      The COVID-19 pandemic reshaped the corporate landscape of markets all over the world. Survival has meant adapting to ongoing uncertainty and change. But as we enter a new era of economic promise, Asia-Pacific businesses are proactively pursuing corporate governance to secure a prosperous future for themselves and the broader economy.

      In this article, CEO of BoardRoom Malaysia, Samantha Tai, explains the importance of corporate governance in Malaysia and how leaders can establish values-based governance practices for the best outcomes. We will also explore the pivotal role of the company secretary in advising and implementing best-practice corporate governance initiatives effectively.

      What is corporate governance?

      At an organisational level, the meaning of corporate governance lies in achieving higher performance, acting with integrity and maximising value to stakeholders. Businesses that meet corporate governance standards are more likely to achieve corporate objectives, attract investment and outperform competitors.

      Importantly, Group-wide corporate governance also helps reduce the risk of malpractice and subsequent penalisation.

      “Under Section 17A of Malaysia’s Anti-Corruption Commission Act, organisations can now be held liable for the corruption act of an individual officer,” Samantha says. “So companies need to make sure they have adequate procedures in place.”

      Corporate governance itself is not a legal requirement for all businesses in Malaysia, but Samantha says its alignment with fiduciary duty makes it an important investment for any leader.

      “In BoardRoom training sessions, we start by explaining a director’s fiduciary duty to the Commonwealth to always prioritise the best interests of the company, minimise conflicts of interest and act in good faith,” she says.

      “In Malaysia, fiduciary duty is taken very seriously, with regulators taking action against directors who neglect their duty — including independent directors.”

      Successful corporate governance frameworks involve:

      • the development of customised policies; and
      • the subsequent implementation of those policies.

      Stewardship of this function usually resides with the company secretary.

      CorporateGovernance

      How company secretaries drive good governance

      Historically, the company secretary performed a purely administrative role and had very little authority. Today, the company secretary performs a wide range of vital responsibilities for the company, as both a senior business manager and a statutory officer.

      Alongside their key role in the administration of important undertakings such as company incorporation, company secretaries serve as the link between the board of directors, senior management and the company’s stakeholders (including regulatory bodies). This includes leveraging digital technologies, such as board management and ESG software, to strengthen board and shareholder processes and improve corporate governance. In addition, their thorough knowledge of local regulations means they can ensure corporate governance standards are implemented, followed and regularly reviewed.

      Samantha says the current role of the company secretary is clearly set out in the Malaysian Code on Corporate Governance.

      “In Malaysia, the views of the company secretary on corporate governance are sought because they attend all board meetings, know the relevant policies and understand compliance requirements,” she says. “They advise the board on corporate governance processes that need to be put in place. This may relate to the board composition or the company’s policies and code of ethics, for example.”

      They also help publicly listed companies demonstrate corporate governance in their annual report, including mention of any alternative methods used to achieve the same objective.

      Company secretarial duties have become so synonymous with corporate governance that the UK’s Institute of Company Secretaries and Australia’s Institute of Chartered Secretaries and Administrators have both rebranded to the ‘Chartered Governance Institute’, with other regions expected to follow suit.

      Corporate Secretarial

      How to improve your corporate governance

      Good corporate governance will become increasingly important in the years to come, with regulators expected to introduce new recommendations for both public and private businesses. Organisations that continue to meet best-practice standards as they evolve will be in a strong position to grasp new opportunities and meet market demands.

      By taking the following steps, you can lead your organisation towards stronger corporate governance.

      1. Appoint a qualified company secretary in Malaysia

      The first step to improving your corporate governance is ensuring your business complies with current rules and applies best practices, particularly those prescribed in the Malaysian Code on Corporate Governance. This also means adapting to new standards as they come into effect.

      For example, the Securities Commission Malaysia recently rolled out group-wide governance requirements for listed corporations.

      “Publicly listed companies already need corporate governance because they must report to the stock exchange,” Samantha explains. “But now, on top of that, they must ensure corporate governance is practised in all their subsidiaries too — regardless of whether the subsidiaries are themselves listed entities or located in Malaysia or overseas.”

      To satisfy this requirement, an experienced company secretary would assist with the establishment of a group-wide framework for corporate governance. The framework would include a code of conduct, as well as policies and procedures for corporate governance issues such as whistleblowing, anti-corruption, board diversity and sustainability.

      Company secretaries help uphold corporate governance by:

        • Staying across changing standards
        • Checking compliance levels
        • Conducting gap analyses

        Company secretarial services providers are a popular choice for leaders who want peace of mind about receiving specialist advice that’s tailored to their organisation.

        2. Develop detailed, customised policies

        Despite Malaysia’s relatively strong corporate governance performance, the country still experiences corporate irregularities month to month. Failure to meet expectations tends to come down to internal perceptions of corporate governance as a mere box-ticking exercise, with the resulting policies lacking sufficient length and detail.

        Demanding workloads at a senior level can lead to quick copy-paste solutions.

        “But corporate governance is not just copywriting,” Samantha warns. “For corporate governance frameworks to work, you have to bring your relevant management team together to discuss their development, as there are many tools available.”

        The most effective corporate governance policies:

        • are comprehensive;
        • reflect the values of the organisation;
        • suit the organisation’s industry and size; and
        • detail how good governance is actively applied.

        3. Adopt integrated reporting

        While it is important to ensure your corporate governance policies and annual reports are up to standard, good governance can’t be achieved through documentation alone. Samantha says that integrated reporting is likely to become mandatory in the coming years.

        “Integrated reporting is a process founded on integrated thinking for communicating how an organisation’s strategy, governance, performance and prospects lead to value creation,” Samantha says. “It makes your annual report more meaningful.” Embarking on an integrated reporting journey allows for better employee engagement and value creation, rather than looking at reporting as a compliance exercise alone.

        All members of an organisation have a role to play in pursuing good governance, so it is also important to spend time demonstrating the value of corporate governance to board members and staff. You can do this by explaining how corporate governance practices are important tools for enhanced company performance, rather than arbitrary obligations that must be met.

        “Successful corporate governance is integrated into the day-to-day operations of the company,” Samantha says. “It’s not just a policy for compliance.”

        CSReporting

        4. Incorporate and prioritise ESG in your company culture

        Aligning your company culture with your Environmental, Social and Governance (ESG) initiatives, will help employees better understand corporate governance and the role they play in it. Investing in an ESG professional can help you communicate important messages, maintain up-to-date ESG reporting and ultimately drive a positive company culture.

        According to Samantha, many leaders are so focused on navigating a challenging economy that they deprioritise ESG issues. “But remember, the ‘social’ part of ESG is about your employees,” she says. “At the end of the day, taking care of your employees will impact your bottom line.”

        In the interests of top-down corporate governance, regulators are also encouraging greater board involvement in ESG initiatives, with country-specific compliance requirements changing regularly. Board directors are in the best position to account for ESG risks and make decisions to lift shareholder value. Because of this, greater responsibility is placed on securing a comprehensive ESG strategy that benefits the company, its shareholders, employees and the environment.

        ESG

        Start practising good governance today

        The effectiveness of your corporate governance efforts in the years to come will determine your business success in the short and long term.

        It is important that your company board and executive staff champion your governance framework, but it is equally important that your company secretary drives its success. For the best results, choose a company secretary that offers varied expertise, strong ethics and outstanding communication skills.

        Having a reliable company secretary handling your corporate governance also allows your executive team to focus on key business objectives, such as taking your company digital.

        Contact BoardRoom’s corporate secretarial experts to discuss how we can help your business reach its corporate governance goals.

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        Never Underestimate the Importance of Employee Engagement in a Hybrid Working Malaysia

        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 Working Malaysia

        In the wake of the global shift brought about by the COVID-19 pandemic, the dynamics of the workforce have evolved significantly. Understanding the changing landscape, particularly in Malaysia, is crucial for businesses striving to foster employee engagement in this post-COVID era.

        The “Great Resignation” phenomenon, as highlighted by Microsoft’s 2022 Work Trend Index, remains a noteworthy factor. It emphasises the need for businesses to adapt and prioritise employee engagement, as 41% of the global workforce is likely to consider leaving their current employer within the next year, with workers 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 in a hybrid working Malaysia simply cannot be underestimated.

        The hybrid working Malaysia 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 offices to suit a hybrid working Malaysian 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.

        5 ways to encourage employee engagement in the hybrid world of work

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

        Here are five ways how to increase employee engagement 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 employee engagement strategies.  

        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. Acknowledge and Show Employee Appreciation

        Publicly celebrating accomplishments might involve regular team shout-outs in virtual meetings, spotlighting achievements in company newsletters, or hosting virtual events to honour milestones. Establishing a culture of peer-to-peer recognition could involve platforms or channels where team members can acknowledge and commend each other’s efforts.

        For instance, a dedicated Slack channel for shout-outs or a monthly newsletter highlighting peer recognition contributes to a positive and appreciative work environment. These measures collectively foster engagement, which is particularly crucial for those managing the dynamics of hybrid roles.

        4. Promote Employee Development and Growth

        To promote continuous learning and growth, organisations can offer diverse training opportunities. This might include workshops on effective virtual collaboration, seminars on time management in a hybrid setting, or access to specialised online courses related to industry trends. Encouraging professional development could involve supporting employees in obtaining relevant certifications or sponsoring attendance at virtual conferences. Utilising feedback surveys and performance metrics allows organisations to gather insights on the effectiveness of these initiatives.

        For instance, a post-training survey could assess the perceived impact on job performance and satisfaction. Organisations can then tailor future programs based on this valuable feedback, ensuring that employee development remains aligned with their evolving needs and aspirations.

        5. 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 , 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 offer Employee Stock Options Plans (ESOP) Services for your business. 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 Malaysian regulations, as well as regional and international experience. 

        Wherever your employees work, we’ll be able to support the implementation and ongoing 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.

        Related Business Insights

        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.

        Communication

        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.

        Compliance

        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.

          Outsourcing

          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.

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          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?

          Advantages

          Disadvantages

          Physical


          • 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 company 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 to a foreign business owner.

          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. Read on for more insight on how to register a company in Malaysia:

          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 which make it ideal for registering a company 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, allowing an increase in foreign company interaction.

          How to establish and register a company in Malaysia

          01 Step 1 - Choose a company type

          • Private Limited Company (Sdn Bhd): Although there are many different business entities, the only option for foreign investors registering a company in Malaysia is a Private Limited Company. This private 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

          When you register a company, the name of your business can fall under two different categories:

          The Companies Commission will make sure your company name meets 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 before registering a company.

          how to register an enterprise company in Malaysia

          03 Step 3 – Set up your company structure

          Next, determine your suitable business entity or company structure, ensuring you meet the following requirements for a Private Limited Company (Sdn Bhd company), as this is the only option for foreign companies:

          • 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 business registration application

          To submit your company registration 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 entity.

          To help you navigate the process of registering your company 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 your Malaysian company registration.

          How to successfully open a company 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 open a corporate bank account;
          • 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 or want more information on the business registration process 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 and register a company 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 geographical factors that help boost Malaysia’s chances as the next destination to launch your business expansion strategy.

          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 of 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 are 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 efforts 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 5-10 days, and employment permits for expatriates are processed within 5 working days. Find out the steps on How to register a company in Malaysia.

          Operationally and financially, Malaysia has built a strong case for itself. It boasts one of the lowest start-up costs compared to the other Asia Pacific countries, as shown by its 17.5 days and 11.1% of income per capita2 required to start a business. This is largely driven by its low property rental rates, with an average gross rental yield of 5.16%3, and its generally low minimum wage.

          Knight Frank currently estimates the supply of office space in Kuala Lumpur (KL) city is 58.33 million sq ft, followed by KL fringe with 30.31 million sq ft and Selangor with 26.09 million sq ft, which brings the total to 114.73 million sq ft4.

          In addition to low office rental rates, businesses can operate economically because of Malaysia’s relatively low minimum wage, which sits at RM1,288.35 (US$275.235) per month.

          incorporating in Malaysia

          02 You’ll Avoid Double Taxation for Your Business Expansion Strategy

          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 countries 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 Malaysia by Malaysian businesses and within Malaysia by foreign-owned businesses. On this note, companies in Malaysia are protected against the possibility of a singular income being subject to two countries’ taxes 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.

          For advisory on double taxation reduction, consider speaking with a professional tax consultant who can provide expert guidance on how to enhance your company’s tax savings.

          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 total nominal GDP is expected to reach US$710 billion by 2030 and US$1 trillion by 20356, with a healthy growth rate of 4.0% – 4.5%7.

          Malaysia’s strong GDP is attributed to the government’s effort to remain robust in the agriculture, construction, manufacturing, mining, and services industries. The theme of Budget 2024, “Reformasi Ekonomi, Memperkasa Rakyat8” (Economic Reform, Empowering People), focuses on three main objectives: improving governance and public delivery system, transforming the business and economic sectors, and enhancing the quality of life of the people. This budget, which is the largest in the nation’s history, also reaffirms the government’s dedication to fiscal reforms to overcome the dual challenges of a less robust global economic outlook and Malaysia’s financial constraints.

          With such a reform-oriented and resilient budget, Malaysians’ incomes are improving, and depending on your type of business, you can benefit from a growing number of consumers who are able or willing to purchase low- to middle-market products and services readily.

          04 The Local Government Supports Your International Expansion Strategy

          Malaysia has been growing economically in tandem with global trends. In line with the adoption of Industrial Revolution 4.0 (IR4.0), it has introduced its own National 4IR Policy. This broad, overarching national policy drives coherence in transforming the socioeconomic development of the country through the ethical use of 4IR technologies, such as Artificial Intelligence, Blockchain, and the Internet of Things.

          The National 4IR Policy aims to attract foreign investments by fostering a culture of innovation and digitalisation, enhancing the performance and productivity of local industries, and enabling Malaysia to join global value chains. The policy also offers incentives and support for foreign investors who adopt 4IR technologies and develop the human capital and infrastructure in Malaysia. By tapping into the opportunities of 4IR, Malaysia can position itself as a regional hub for advanced and knowledge-intensive industries and achieve its vision of becoming a high-income and inclusive nation by 2030.

          While there are limited restrictions on foreign ownership in certain strategic sectors, the Malaysian government encourages the inflow of foreign investments. This is apparent in the incremental liberalisation 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 allowances 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) stands as a pre-seed initiative targeting aspiring entrepreneurs in sectors such as ICT and other technology fields. This program offers up to RM 300,000 to these startups looking to develop and promote their innovative services.
          2. MaGIC Global Accelerator Programme (MaGICGAP) is a three-month intensive programme that helps promising local and global mid-to-late stage start-ups with established product-market-fit to get investment. It is designed for start-ups that have launched a product with reasonable traction, as well as highly scalable ones carrying a growth potential business model. This programme is open to start-ups from various industries, such as creative and lifestyle, e-commerce, education, finance, healthcare, and smart cities.
          3. Technology Acquisition Fund (TAF) is a hybrid grant and loan scheme that assists eligible Malaysian companies in procuring foreign technologies and integrating them into their existing business and manufacturing activities. The fund aims to allow companies to accelerate their growth potential by acquiring new technology and improving their technological capabilities and production processes. This applies to businesses in the priority technology clusters identified by MOSTI, such as aerospace, medical devices, pharmaceuticals, advanced electronics, and renewable energy.
          4. Domestic Investment Strategic Fund is a matching grant designed to offer incentives to established companies within the manufacturing and services sectors, boasting a minimum of 60% Malaysian equity ownership. This fund supports and encourages reinvestments, encompassing activities such as expansion, modernisation, and diversification. Notably, it facilitates initiatives like training, R&D, outsourcing, international standards, and technology licensing or acquisition. The fund is accessible to businesses in priority sectors such as aerospace, food security, machinery and equipment, and services.
          5. Women Exporters Development Programme (WEDP) is a specialised export support program aimed at empowering women in the export industry. This three-year program is tailored to assist competitive and sustainable businesses led by women to foster the growth of product and service exports. To be eligible for this programme, the company must be women-owned, hold a majority stake (at least 51%) and hold key leadership positions as the CEO and/or Managing Director. This programme covers both merchandise and services trade across various industries.

          The Malaysian government also has a dedicated agency, the Malaysian Investment Development Authority (“MIDA”), to help facilitate your international expansion strategy into the country. Besides the ease and low cost of incorporation, Malaysia also offers other advantages for businesses, including:

          • Low corporate tax rates of 15%-24%9 depending on the company size and income
          • New Companies Act 2016 simplifies the registration process and reduces the compliance burden for companies

          Strategic location in the heart of the ASEAN Community, providing access to a large and diverse market of over 600 million people

          business expansion support

          Launch Your Business Expansion Plans in Malaysia with BoardRoom

          So, if you were wondering if you should establish incorporation in Malaysia, here is our advice: you should. Malaysia is a promising destination for business expansion in the Asia Pacific region, offering a range of advantages for businesses across all industries. If you are looking for an international expansion strategy that can help you grow your business and achieve your goals, Malaysia might be the perfect option for you!

          However, whilst incorporating a business in Malaysia may seem like a straightforward process, it can be fraught with challenges and risks. You may encounter common difficulties like obtaining the necessary permits, licenses, and approvals, opening a bank account, complying with local laws and regulations, and dealing with cultural and language barriers. These challenges can cause delays, errors, and frustrations and ultimately affect your business performance and reputation.

          That is why you should always consult a team of dedicated experts who can guide you through the entire process of company incorporation in Malaysia. These professionals can assist you in your business expansion by 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 local regulations. By doing so, you can ensure the best possible outcome for your business expansion plan 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.

          If you are looking to incorporate in Malaysia, or if you already have a business in Malaysia but are looking to outsource your administrative functions so you can focus on expanding your business, a full-suite corporate services provider offering end to end services can help you with:

           

          Contact us today to find out how we can help you!

          Source
          1. statista.com
          2. https://www.doingbusiness.org/
          3. https://www.globalpropertyguide.com/
          4. The Edge | Knight Frank Kuala Lumpur and Selangor Office Monitor 2Q2023: Klang Valley office market sees sustained, steady recovery
          5. https://www.statista.com/
          6. https://www.spglobal.com/
          7. https://www.nst.com.my/
          8. https://www.mof.gov.my/
          9. https://taxsummaries.pwc.com/

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