BoardRoom Malaysia https://www.boardroomlimited.com/my/ Smart Business Solutions Wed, 07 Dec 2022 07:41:47 +0000 en-US hourly 1 https://boardroomlimitedwp.s3.ap-southeast-1.amazonaws.com/wp-content/uploads/sites/2/2018/10/24085252/favicon-60x60.png BoardRoom Malaysia https://www.boardroomlimited.com/my/ 32 32 The impact of a great company secretary in modern Malaysia https://www.boardroomlimited.com/my/2022/12/07/the-impact-of-a-great-company-secretary-in-modern-malaysia/ Wed, 07 Dec 2022 07:41:47 +0000 https://www.boardroomlimited.com/my/?p=7945 Elevating your corporate governance in Malaysia can help you remain compliant and retain skilled employees. Ensure your company secretary can help you achieve success.

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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.

      Related Business Insights

      The post The impact of a great company secretary in modern Malaysia appeared first on BoardRoom Malaysia.

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      Great corporate governance in Malaysia starts with a qualified company secretary https://www.boardroomlimited.com/my/2022/11/23/corporate-governance-in-malaysia/ Wed, 23 Nov 2022 03:14:23 +0000 https://www.boardroomlimited.com/my/?p=7882 Elevating your corporate governance in Malaysia can help you remain compliant and retain skilled employees. Ensure your company secretary can help you achieve success.

      The post Great corporate governance in Malaysia starts with a qualified company secretary appeared first on BoardRoom Malaysia.

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      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.

        Related Business Insights

        The post Great corporate governance in Malaysia starts with a qualified company secretary appeared first on BoardRoom Malaysia.

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        Never underestimate the importance of employee engagement in a hybrid world https://www.boardroomlimited.com/my/2022/07/29/the-importance-of-employee-engagement-in-a-hybrid-world/ Fri, 29 Jul 2022 09:03:09 +0000 https://www.boardroomlimited.com/my/?p=7699 The post Never underestimate the importance of employee engagement in a hybrid world appeared first on BoardRoom Malaysia.

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

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

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

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

        The hybrid engagement juggle

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

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

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

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

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

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

        1. Bridge the physical and digital worlds with technology

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

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

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

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

        2. Prioritise wellness

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

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

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

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

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

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

        3. Reward your team

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

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

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

        Mechanics aside, how much you pay people also matters.

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

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

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

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

        What is an employee stock option plan?

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

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

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

        ESOPs help employees:

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

        And for companies, ESOPs enable them to:

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

        How ESOPs work

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

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

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

        Other important considerations to think about are:

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

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

        Other options include:

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

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

        Cut the complexity with a global strategy

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

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

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

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

        These include:

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

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

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

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

        Related Business Insights

        The post Never underestimate the importance of employee engagement in a hybrid world appeared first on BoardRoom Malaysia.

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        The advantages of consolidating multi-country taxes with one provider https://www.boardroomlimited.com/my/2022/06/10/the-advantages-of-consolidating-multi-country-taxes-with-one-provider/ Fri, 10 Jun 2022 08:37:43 +0000 https://www.boardroomlimited.com/my/?p=7668 The post The advantages of consolidating multi-country taxes with one provider appeared first on BoardRoom Malaysia.

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        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.

          Related Business Insights

          The post The advantages of consolidating multi-country taxes with one provider appeared first on BoardRoom Malaysia.

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          How is planning a Virtual AGM different from Physical AGM? https://www.boardroomlimited.com/my/2022/02/23/virtual-agm/ Wed, 23 Feb 2022 01:19:14 +0000 https://www.boardroomlimited.com/my/?p=7513 The post How is planning a Virtual AGM different from Physical AGM? appeared first on BoardRoom Malaysia.

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          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

          The post How is planning a Virtual AGM different from Physical AGM? appeared first on BoardRoom Malaysia.

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          How to Register a Company in Malaysia https://www.boardroomlimited.com/my/2021/12/17/how-to-register-a-company-in-malaysia/ Fri, 17 Dec 2021 02:04:30 +0000 https://www.boardroomlimited.com/my/?p=7538 The post How to Register a Company in Malaysia appeared first on BoardRoom Malaysia.

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          How to Register a Company in Malaysia

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

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

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

          Malaysian market profile

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

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

          The benefits of setting up a company in Malaysia

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

          Other benefits to registering a company in Malaysia include:

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

          How to establish a company in Malaysia

          01 Step 1 - Choose a company type

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

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

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

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

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

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

          02 Step 2 – Give your company a name

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

          Your company name must meet the following conditions:

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

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

          how to register an enterprise company in Malaysia

          03 Step 3 – Set up your company structure

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

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

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

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

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

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

          04 Step 4 – Submit your company registration application

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

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

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

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

          How to successfully open a business in Malaysia

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

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

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

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

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

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

          Related Business Insights

          The post How to Register a Company in Malaysia appeared first on BoardRoom Malaysia.

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          Business Expansion into Malaysia — Yay or Nay? https://www.boardroomlimited.com/my/2021/12/10/business-expansion-into-malaysia-yay-or-nay/ Fri, 10 Dec 2021 03:42:53 +0000 https://www.boardroomlimited.com/my/?p=7510 The post Business Expansion into Malaysia — Yay or Nay? appeared first on BoardRoom Malaysia.

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          4 Reasons why incorporating in Malaysia could be a wise decision

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

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

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

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

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

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

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

          incorporating in Malaysia

          02 You’ll Avoid Double Taxation

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

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

          03 The Locals are Ready to Buy

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

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

          04 The Local Government Supports You

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

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

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

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

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

          business expansion support

          Conclusion

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

          Here is where BoardRoom can help.

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

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

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

          Related Business Insights

          The post Business Expansion into Malaysia — Yay or Nay? appeared first on BoardRoom Malaysia.

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          Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs https://www.boardroomlimited.com/my/2021/11/15/malaysia-budget-2022-tax-highlights/ Mon, 15 Nov 2021 04:43:21 +0000 https://www.boardroomlimited.com/my/?p=7488 The post Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs appeared first on BoardRoom Malaysia.

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

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

          Individual Tax Relief

          Individual Tax Relief

          New Corporate Tax Incentive

          New Corporate Tax Incentive

          New Sales & Service Tax Exemptions

          Sales and Service Tax Exemptions

          Related Business Insights

          The post Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs appeared first on BoardRoom Malaysia.

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          The Benefits of Outsourcing for ‘The Next Normal’ https://www.boardroomlimited.com/my/2021/10/20/benefits-of-outsourcing/ Wed, 20 Oct 2021 01:05:33 +0000 https://www.boardroomlimited.com/my/?p=7438 The post The Benefits of Outsourcing for ‘The Next Normal’ appeared first on BoardRoom Malaysia.

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          The Benefits of Outsourcing for ‘The Next Normal’

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

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

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

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

          Pandemic resilience through digital transformation and outsourcing

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

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

          digital transformation Malaysia

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

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

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

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

          How your company could benefit from outsourcing

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

          01 Save money

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

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

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

          02 Save time

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

          03 Gain expert advice

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

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

          Focus on strategic planning to stay competitive

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

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

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

          Futureproof your business by outsourcing to a trusted corporate services provider

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

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

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

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

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          The post The Benefits of Outsourcing for ‘The Next Normal’ appeared first on BoardRoom Malaysia.

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          A guide to the payroll process and compliance in Malaysia https://www.boardroomlimited.com/my/2021/09/14/payroll-process/ Tue, 14 Sep 2021 09:23:30 +0000 https://www.boardroomlimited.com/my/?p=7403 The post A guide to the payroll process and compliance in Malaysia appeared first on BoardRoom Malaysia.

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          Guide: The payroll process and compliance regulations in Malaysia

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

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

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

          Payroll process and compliance essentials in Malaysia

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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          The post A guide to the payroll process and compliance in Malaysia appeared first on BoardRoom Malaysia.

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