Frequently Asked Questions (FAQ)
Audit FAQ
Prior to the first annual general meeting, the company’s directors have the authority to appoint an auditor. If the directors do not exercise this authority, the appointment may instead be made by the shareholders during a general meeting. An auditor appointed in this manner shall serve in office until the conclusion of the first annual general meeting.
External audit fees are determined by the level of responsibility assumed, the expertise required, and the amount of time spent performing the audit. While there is no fixed or standard rate for audit fees, an estimate may be guided by the principles formerly outlined in Recommended Practice Guide 7, which was issued by the Malaysian Institute of Accountants but has been withdrawn effective 1 June 2015.
It is our responsibility to provide an opinion on these financial statements based on our audit. Our audit was carried out in accordance with the approved auditing standards applicable in Malaysia. These standards mandate adherence to ethical principles and require that the audit be planned and executed to obtain reasonable assurance that the financial statements are free of material misstatements.
An external audit is a review carried out periodically or for a specific purpose by an independent and professionally qualified accountant. The main aim is to assess whether:
(a) the financial records are complete and accurately maintained;
(b) they comply with the requirements set out by Generally Accepted Accounting Principles (GAAP);
(c) the financial statements derived from these records provide a true and fair view of the organization’s financial status and operational results.
(a) the financial records are complete and accurately maintained;
(b) they comply with the requirements set out by Generally Accepted Accounting Principles (GAAP);
(c) the financial statements derived from these records provide a true and fair view of the organization’s financial status and operational results.
In Malaysia, all companies incorporated under the Companies Act 1965 are mandated to undergo an annual audit and submit their audited financial statements to the Companies Commission of Malaysia (CCM). This process ensures the accuracy and credibility of the financial information prepared by the company’s directors, which is relied upon by various stakeholders for decision-making purposes.
Moreover, an audit serves as a valuable tool for identifying weaknesses in the company’s internal control system. If any such deficiencies are detected during the course of our audit and are deemed significant, we will report them to the Board of Directors or, in the case of listed companies, to the Audit Committee, along with our recommendations for improvement.
Audited financial statements are commonly used to support applications for bank loans, renewals of licenses (such as licensed manufacturing warehouses), and participation in project tenders. As these reports are verified by an independent third party, they carry more weight and credibility than internal management accounts, which may be subject to unintentional errors or potential manipulation.
Moreover, an audit serves as a valuable tool for identifying weaknesses in the company’s internal control system. If any such deficiencies are detected during the course of our audit and are deemed significant, we will report them to the Board of Directors or, in the case of listed companies, to the Audit Committee, along with our recommendations for improvement.
Audited financial statements are commonly used to support applications for bank loans, renewals of licenses (such as licensed manufacturing warehouses), and participation in project tenders. As these reports are verified by an independent third party, they carry more weight and credibility than internal management accounts, which may be subject to unintentional errors or potential manipulation.
The audit report is prepared only for the shareholders of the company as a group, as required under Section 174 of the Companies Act 1965 in Malaysia.
A company’s financial statements should be audited every year. The audit report is usually presented at the Annual General Meeting (AGM) and sent to the Companies Commission of Malaysia together with the annual return.
External auditors are independent and work for outside parties like shareholders. They mainly check the company’s financial statements. Internal auditors are employees of the company. They help the management by checking daily operations and internal controls.
Business Registration (Sdn. Bhd.)
- Company limited by shares
- Company limited by guarantee
- An Unlimited company
- Company limited by guarantee
- An Unlimited company
✅ Businesses with high risk, as it provides limited liability protection to owners.
✅ Businesses with multiple investors, since it allows up to 50 shareholders.
✅ Foreign individuals or entities, as foreigners are allowed to incorporate a Sdn. Bhd. in Malaysia.
✅ Businesses aiming for long-term continuity, because a Sdn. Bhd. has perpetual succession.
✅ Businesses with multiple investors, since it allows up to 50 shareholders.
✅ Foreign individuals or entities, as foreigners are allowed to incorporate a Sdn. Bhd. in Malaysia.
✅ Businesses aiming for long-term continuity, because a Sdn. Bhd. has perpetual succession.
Yes, you can. However, there are important considerations:
✅ You are allowed to set up a Sdn. Bhd. on your own.
⚖️ According to Section 235 of the Companies Act 2016, every company must have at least one qualified company secretary.
📌 Because of this requirement, it's highly recommended to engage a licensed company secretary.
⏱️ Doing so can save you time and effort, and ensure your company complies with legal procedures and filings.
✅ You are allowed to set up a Sdn. Bhd. on your own.
⚖️ According to Section 235 of the Companies Act 2016, every company must have at least one qualified company secretary.
📌 Because of this requirement, it's highly recommended to engage a licensed company secretary.
⏱️ Doing so can save you time and effort, and ensure your company complies with legal procedures and filings.
To register a Sdn. Bhd., the company must have at least one (1) director who meets the following criteria:
✅ Ordinarily resides in Malaysia, meaning they have a principal place of residence in Malaysia.
✅ At least 18 years old.
❌ Not an undischarged bankrupt.
❌ Has not been convicted of any serious offence within the past 5 years.
✅ Ordinarily resides in Malaysia, meaning they have a principal place of residence in Malaysia.
✅ At least 18 years old.
❌ Not an undischarged bankrupt.
❌ Has not been convicted of any serious offence within the past 5 years.
To incorporate a Sdn. Bhd., the following information and documents are required:
🆔 Copy of the director’s identity card (I/C) or passport (for foreign directors).
🏢 Proposed name of the company.
📄 Nature of the business – a brief description of what the company will do.
📬 Proposed address of the registered office – where statutory documents will be kept.
🏠 Ordinary place of residence of every shareholder and director.
📊 Details of shareholding – class and number of shares to be held by each shareholder.
🆔 Copy of the director’s identity card (I/C) or passport (for foreign directors).
🏢 Proposed name of the company.
📄 Nature of the business – a brief description of what the company will do.
📬 Proposed address of the registered office – where statutory documents will be kept.
🏠 Ordinary place of residence of every shareholder and director.
📊 Details of shareholding – class and number of shares to be held by each shareholder.
No, the Companies Act 2016 does not impose any minimum paid-up capital requirement for the incorporation of a private limited company.
A private limited company is required to prepare its first audited report within 18 months from its date of incorporation, and for every financial year thereafter, within 6 months after the end of that financial year.
In most cases, the incorporation process for a private limited company can be completed within 3 to 10 working days.
Incorporating a private limited company in Malaysia generally involves three key stages:
1. Name Application with SSM
The first step is to apply for approval of the proposed company name through the Companies Commission of Malaysia (SSM). This process typically takes from a few hours up to 2 working days. The outcome may be:
Approved: You may move forward to the next step.
Queried: SSM may request additional documents or clarifications. Once the query is resolved satisfactorily, the name can be approved, usually within 2–3 working days.
Rejected: The proposed name must be replaced with a new one for a fresh application.
2. Signing of Incorporation Documents
Once the name is approved, the required documents will be prepared for signing by the company’s directors and shareholders. This usually takes a few hours to a few working days, depending on the availability of all parties and coordination with the company secretary. Full payment for incorporation must be made before proceeding.
3. Submission and Issuance of Certificate
After all documents are signed, they are submitted to the relevant authorities, including SSM, for processing and stamping. The issuance of the Certificate of Incorporation (under Section 17) typically takes between 1 to 5 working days. The company is officially incorporated once this certificate is issued.
1. Name Application with SSM
The first step is to apply for approval of the proposed company name through the Companies Commission of Malaysia (SSM). This process typically takes from a few hours up to 2 working days. The outcome may be:
Approved: You may move forward to the next step.
Queried: SSM may request additional documents or clarifications. Once the query is resolved satisfactorily, the name can be approved, usually within 2–3 working days.
Rejected: The proposed name must be replaced with a new one for a fresh application.
2. Signing of Incorporation Documents
Once the name is approved, the required documents will be prepared for signing by the company’s directors and shareholders. This usually takes a few hours to a few working days, depending on the availability of all parties and coordination with the company secretary. Full payment for incorporation must be made before proceeding.
3. Submission and Issuance of Certificate
After all documents are signed, they are submitted to the relevant authorities, including SSM, for processing and stamping. The issuance of the Certificate of Incorporation (under Section 17) typically takes between 1 to 5 working days. The company is officially incorporated once this certificate is issued.
Yes, a private limited company in Malaysia can be 100% foreign-owned, and it can be incorporated without any Malaysian shareholders. However, under Section 196 of the Companies Act 2016, the company must have at least one director—who may be either a Malaysian or a foreigner—who resides in Malaysia and maintains a principal place of residence in the country.
For a dormant Sdn. Bhd., the annual maintenance cost typically ranges between RM2,000 to RM3,000, covering both audit and company secretary fees. If the company is operational, the yearly compliance expenses necessary to maintain its legal standing generally include:
Audit Fees
Tax Agent Fees
Company Secretary Fees
The actual amount will vary depending on the scale and activity level of the business.
Audit Fees
Tax Agent Fees
Company Secretary Fees
The actual amount will vary depending on the scale and activity level of the business.
The primary distinction lies in liability. In a private limited company (Sdn. Bhd.), shareholders have limited liability, meaning they are only liable for debts up to the amount they invested. In contrast, owners in a sole proprietorship or partnership have unlimited liability, making them personally responsible for all business debts and obligations.
Additionally, a private limited company is a separate legal entity, meaning it continues to exist regardless of any changes in ownership or management, unlike a sole proprietorship or partnership which may cease upon the owner’s exit or death.
Additionally, a private limited company is a separate legal entity, meaning it continues to exist regardless of any changes in ownership or management, unlike a sole proprietorship or partnership which may cease upon the owner’s exit or death.
While some business owners may wish to have their company incorporated on a specific date—often for reasons such as personal preference, feng shui, or symbolic significance—it is not possible to guarantee an exact incorporation date. This is due to potential unforeseen circumstances on the part of the Companies Commission of Malaysia (SSM), such as staff unavailability, technical issues with their online system, and other administrative delays. As such, the incorporation date is ultimately determined by SSM's processing timeline.
A private limited company must file its annual return with the Companies Commission of Malaysia (SSM) within 30 days from the anniversary date of its incorporation, every calendar year.
A private limited company can be terminated through any of the following methods:
Voluntary Winding Up – Initiated by the company’s members or creditors when the company decides to cease operations.
Strike Off – Under Section 549 of the Companies Act 2016, the company may apply to be struck off the register if it is no longer in operation and meets the eligibility criteria.
Winding Up by Court Order – This is a legal process initiated through the courts, often in cases involving insolvency or disputes.
Voluntary Winding Up – Initiated by the company’s members or creditors when the company decides to cease operations.
Strike Off – Under Section 549 of the Companies Act 2016, the company may apply to be struck off the register if it is no longer in operation and meets the eligibility criteria.
Winding Up by Court Order – This is a legal process initiated through the courts, often in cases involving insolvency or disputes.
Others
Yes, a private limited company in Malaysia may have its shares held by another company, including a holding company. However, the holding company must formally approve the share acquisition by passing a directors’ resolution confirming the purchase of shares in the subsidiary.