Author: boardroomsuperadmin

The Future of AGM Shareholder Meetings

The Future of AGM Shareholder Meetings

The Future of AGM Shareholder Meetings

boardroomsuperadmin

Table of Content

  1. Understanding Hybrid AGM Shareholder Meetings
  2. Who can attend an AGM meeting in Malaysia?
  3. Navigating Compliance and Regulatory Expectations
  4. Strategic Advantages of Hybrid AGMs for Listed Companies
  5. Why Work with BoardRoom for Your Hybrid AGM?
  6. Preparing for the Future of Shareholder Meetings

As Malaysia moves towards a more digitised, transparent corporate governance model, the AGM shareholder meeting is undergoing a significant transformation. Recent regulatory changes now permit listed companies to follow a hybrid meeting format, combining physical and virtual participation.

This shift aligns with broader trends in shareholder engagement, allowing companies to enhance accessibility while meeting their compliance obligations. From 1 March 2025, all publicly listed companies (PLCs) will be required to conduct their general meetings in either a physical or hybrid format, as mandated by the Securities Commission Malaysia.

As the corporate landscape evolves, company directors are weighing key considerations such as transparency, compliance, shareholder engagement, risk management, and, increasingly, reputation. Hybrid formats offer strategic opportunities to address all of the above while reinforcing best practices in governance.

Understanding Hybrid AGM Shareholder Meetings

The AGM shareholder meeting is a legally mandated annual event where shareholders review financial performance, elect directors, approve dividends and make other major corporate decisions. It plays a central role in upholding corporate accountability.

In Malaysia, there are several types of shareholders’ meetings.

These include:

  • Annual General Meeting of Shareholders (AGM) – a statutory annual shareholder meeting for listed companies.
  • Extraordinary General Meeting (EGM) – called to address urgent or special matters.
  • Class Meetings – held for shareholders of a specific class of shares, typically to vote on issues that affect their rights.

What is changing now is the format in which these meetings can be conducted. The hybrid meeting model allows participants to attend either in person or online. According to Richard Lee, Director of Client Management at BoardRoom Malaysia, hybrid meetings have risen significantly.

Listed companies increasingly favour hybrid meetings, aiming to improve flexibility, reduce venue costs, and expand shareholder access.

Who can attend an AGM meeting in Malaysia?

All registered shareholders of a company are entitled to attend its AGM shareholder meeting. They may participate in person, via proxy, or through virtual platforms for meetings conducted in hybrid formats. This ensures inclusive access, allowing both local and international shareholders to engage in key corporate decisions regardless of location.

The Malaysian regulatory environment has been quick to adapt. Under the Companies Act 2016, all public companies must hold AGMs within six months of their financial year-end. Bursa Malaysia also imposes listing rules around disclosure, shareholder voting, and proper conduct of meetings.

Hybrid meetings help ensure:

  • Transparency: All shareholders can attend, regardless of location.
  • Accountability: Online voting and documentation mirror in-person processes.
  • Shareholder rights: Electronic registration, e-proxy, and remote voting maintain equal participation.

As Richard notes, while the AGM meeting procedure for hybrid formats largely mirrors that of physical ones, additional team members may be required to manage the online experience, including Q&A handling, live streaming and e-voting logistics.

BoardRoom, as a leading share registrar in Malaysia, handles these processes end-to-end, ensuring companies maintain full compliance and a seamless user experience.

AGM meeting scheduling and documentation validation also require particular attention in hybrid formats, especially to meet submission deadlines and ensure that proxies and remote attendees are properly authenticated.

Strategic Advantages of Hybrid AGMs for Listed Companies

Beyond compliance, hybrid AGMs offer numerous strategic benefits for listed companies:

Greater Shareholder Participation

Hybrid formats allow shareholders, especially international or institutional investors, to join remotely, increasing turnout and inclusivity. As Richard says, companies are responding to shareholder requests for remote options: ‘They asked why not hybrid – it’s easier for them to join anytime, anywhere.’

Strengthened Governance, Decision-making and Trust

Hybrid meetings enhance corporate governance by enabling secure, real-time participation and transparent communication, whether shareholders attend in person or remotely. Features like integrated e-polling ensure every vote counts, while live Q&A and accessible documentation support more informed, inclusive decision-making. Together, these elements build lasting shareholder trust and demonstrate a company’s commitment to modern, accountable governance.

Cost Efficiency, Resource Planning and Sustainability

Many companies overinvest in large venues, expecting high turnout, only to have limited attendance. Hybrid meetings provide more predictable headcounts and reduce venue and travel costs. By offering remote participation, companies can minimise venue and travel expenses while maintaining full shareholder access, helping to improve cost predictability and support sustainability by minimising the environmental footprint of large-scale events.

Reputation Protection

A seamless, well-executed hybrid AGM demonstrates operational professionalism and protects the company’s public image, especially in high-stakes shareholder engagements. BoardRoom builds redundancy into its systems – including dual live-streaming servers and pre-event load testing – to guard against technical failures. Contingency planning is essential to any hybrid AGM strategy. Not only does this guard against the risk of technical failures, but it also protects the company from the reputational damage that may result from a disrupted AGM.

Why Work with BoardRoom for Your Hybrid AGM

Why Work with BoardRoom for Your Hybrid AGM?

As one of Malaysia’s most experienced share registry and AGM meeting services provider, BoardRoom has facilitated thousands of annual general meetings for listed companies. Boardroom offers end-to-end solutions, personalisation and after event support.

What sets BoardRoom apart?

Proprietary Technology

Integrated platforms like the BoardRoom Smart Investor Portal (BSIP) offer secure registration, e-proxy submission and document publishing, all in one.

Scalable Support

With the capacity to manage physical meetings of thousands of participants and concurrent virtual sessions up to 10,000 securely, BoardRoom delivers consistent quality across formats.

Flexibility

BoardRoom supports companies even when it is not the appointed share registrar, offering technology personnel and expertise to help run the meetings.

Trust and Track Record

As Richard says, ‘It’s about trust. The client knows we’ve run every kind of meeting – physical, virtual, and hybrid. Even complex ones across multiple venues.”

BoardRoom is the AGM partner of choice for companies listed on Bursa Malaysia – a testament to our proven track record, depth of experience, and unwavering commitment to precision, compliance, and service excellence.

Preparing for the Future of Shareholder Meetings

The move to hybrid AGM shareholder meetings is more than a regulatory shift. It allows listed companies to elevate governance, engage more shareholders, and future-proof their operations.

By embracing hybrid formats, companies can align with regulatory best practices while unlocking strategic benefits like improved participation, reduced risk, operational efficiency and enhanced corporate reputation. However, doing so requires a partner with the experience, systems and local expertise to execute flawlessly.

To learn more about how BoardRoom can support your next hybrid AGM, visit: BoardRoom Share Registry Services

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The Role Of A Company Constitution In Corporate Governance

The Role Of A Company Constitution In Corporate Governance

The Role Of A Company Constitution In Corporate Governance

boardroomsuperadmin

A company constitution is a foundational document that outlines the governance structure of a business. It serves as a legally binding agreement between the company and its internal members, defining shareholder rights, the appointment and powers of directors, meeting procedures (such as AGMs and EGMs) and rules on amending the constitution. A company constitution ensures that the company operates according to the shareholders’ intentions, enhancing governance practices and providing flexibility in decision-making and control.

While Malaysia’s New Companies Act 2016 allows new companies to rely on the Act for governance, a tailored constitution remains valuable and critical in some cases. A company constitution provides clearer control over internal operations, helping companies address unique needs beyond standard laws. Existing companies with constitutions – formerly called the Memorandum and Articles of Association – should keep them updated to ensure ongoing compliance.

In this article, we explain exactly what the constitution of a company is in corporate governance and highlight how BoardRoom can assist in maintaining an up-to-date constitution.

The Importance Of A Company Constitution In Corporate Governance

So, what is a company constitution? A company constitution is a crucial legal framework that governs the relationships between the company, its directors and its stakeholders. It aligns with corporate governance principles by establishing clear fiduciary duties for directors, ensuring they act in the best interests of the company and its shareholders.

Tan Ai Ning, Director, Corporate Secretarial at BoardRoom Malaysia says, “The company’s constitution is like a contract regulating how the stakeholders want the company to be governed.”

By outlining the rights and obligations of all parties, the constitution promotes transparency and accountability.

In addition, the constitution protects shareholder rights, allowing for customised governance rules that go beyond statutory requirements. Generally, provisions in a Constitution should not provide more stringent requirements than legal requirements (if there are already specific requirements in Companies Act 1965 unless provided therein).

This flexibility empowers shareholders and mitigates risks by clarifying decision-making processes.

A company constitution also plays a vital role in managing relationships among stakeholders. It regulates critical decisions regarding shareholder voting rights, board composition and governance policies, providing peace of mind to directors and shareholders alike.

Ai Ning says, “These internal regulations are good to have so that they govern the management of the company. These regulations facilitate smoother interactions with authorities and aid in licensing matters.”

Why Is A Regular Review Of The Company Constitution Necessary?

With the business landscape continually evolving, regular reviews of a company’s constitution are necessary to ensure it remains compliant with changing laws. As regulations change, companies must adapt their governing documents to reflect these shifts and maintain legal compliance.

Ai Ning highlights the recent amendments to the Companies Act that mandate the disclosure of beneficial ownership. She explains that, while this requirement is government-mandated, including a declaration clause within a company’s constitution provides an additional governance framework. This clause establishes a clear set of rules for directors and future owners, such as during mergers or acquisitions, to ensure consistent compliance. By embedding these guidelines into the constitution, companies strengthen their governance practices and demonstrate a proactive approach to regulatory compliance requirements.

In addition to legal compliance, businesses often face changes in their operating environment that necessitate a review of their constitution. These may include adopting new electronic signatures practices for passing resolutions, which contrasts with the traditional ink signatures practices specified in older constitutions.

“We need to keep up-to-date and relevant in light of the new business environment,” Ai Ning adds.

The question remains: does a company constitution need to be signed? This is one area where specific requirements can vary by jurisdiction, so it’s important to consult a corporate secretary familiar with local laws, such as BoardRoom, to ensure compliance.

Changes that may require an update to a company’s constitution may also arise from expansions into new markets, shifts in ownership structures or alterations in corporate strategy.

Furthermore, regular reviews can prevent potential conflicts among stakeholders by clarifying roles, responsibilities and procedures. For instance, as companies grow, their governance needs may evolve, requiring updates to provisions concerning board composition, decision-making processes or shareholder rights.

By proactively reviewing and updating the constitution, companies can mitigate risks and ensure that their governance framework remains effective and aligned with best practices.

Review Of Company Constitution

Consequences Of An Outdated Company Constitution

An outdated company constitution can lead to significant legal and compliance risks, conflicts and disputes among stakeholders. One critical area where ambiguity can arise is in the context of donations. Ai Ning explains that while charitable donations may appear straightforward, the complexities increase when it comes to political donations. Without a clear constitutional framework outlining the nature of permissible donations, companies may inadvertently find themselves in legal dilemmas.

Such situations can tarnish a company’s reputation and lead to potential legal repercussions, emphasising the need for clear guidelines within the constitution.

Additionally, a lack of clarity regarding shareholding thresholds can cause friction among shareholders. In a private limited company, maintaining a clear governance structure is crucial, as there’s a minimum number of members required for decision-making. For example, if a shareholder owning 5% of the company wishes to nominate a board member, but the constitution is outdated or unclear regarding the threshold for nominations, conflicts can arise.

“If the constitution sets a minimum threshold for shareholding, then you qualify to nominate a board member,” Ai Ning adds.

Failure to address these nuances can result in shareholder disputes, undermining trust and harmony within the company.

Moreover, companies may face compliance risks if their constitutions do not align with the latest legal requirements. Take the introduction of regulations around beneficial ownership, which necessitates that companies explicitly state disclosure obligations within their constitutions. Without these provisions, companies could find themselves non-compliant, which may lead to fines or legal actions.

Consequences Of An Outdated Company Constitution

Best Practices For Reviewing And Updating A Company Constitution

Regular reviews of a company constitution are essential for ensuring compliance with evolving laws and business practices. While there is no specific guidance on how often to conduct these reviews, staying up-to-date on legal changes and integrating any necessary adjustments in business practices is important.

Engaging stakeholders during the review process is vital to represent their interests effectively. Including directors, shareholders and key management personnel ensures that diverse perspectives are considered, contributing to a more robust constitution.

Ai Ning says, “We work together with stakeholders and if they have a legal counsel or lawyers, we review whatever joint venture (JV) agreements or shareholder agreements that they may have regulating their relationships as business partners. For amendments to Constitution to align with any JV or Shareholders Agreement, it is pertinent for a company secretary to review, as well as to state which will supersede in the event of any discrepancies between both.”

Furthermore, aligning the company constitution with current corporate governance codes is important for maintaining relevance and compliance. Regular checks against these codes help identify potential gaps or outdated provisions.

Seeking professional guidance during the review or update process is also a best practice. Engaging experts, such as a professional company secretary firm like BoardRoom, can provide invaluable insights. “It’s very important to have a good company secretary to help clients stay abreast with developments in law changes that are pertinent to their businesses,” Ai Ning adds.

By working with corporate services firms like BoardRoom, companies can ensure their constitutions remain effective tools for governance and risk management, ultimately fostering a healthier corporate environment.

Ensuring Sound Corporate Governance Through A Robust Company Constitution

A well-structured company constitution is essential for effective corporate governance, acting as a foundational document that guides the relationships among shareholders, directors and the company itself. Regular reviews and updates are crucial to ensure alignment with evolving laws and business practices.

BoardRoom’s company secretarial services play a pivotal role in this process, leveraging regional expertise to navigate local regulations effectively. By prioritising client interests and providing timely updates and comprehensive advice, BoardRoom helps organisations maintain a strong governance framework, ensuring they operate with both clarity and in full compliance.

Contact BoardRoom today to learn how our comprehensive corporate secretarial services can strengthen your governance framework.

Contact BoardRoom for more information:

Tan Ai Ning

Corporate Secretarial Services Director, BoardRoom Malaysia

E: [email protected]

T: +60 3 7890 4800

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Malaysia’s Expanded Sales and Services Tax (SST) takes effect on 1 July 2025

Malaysia’s Expanded Sales and Services Tax (SST) takes effect on 1 July 2025

Malaysia’s Expanded Sales and Services Tax (SST) takes effect on 1 July 2025

boardroomsuperadmin

As Malaysia gears up for a significant shift in its tax landscape, businesses and consumers need to prepare for the expanded Sales and Service Tax (SST) set to take effect on 1 July 2025. Announced in Budget 2025 on 18 October 2024, this expansion marks a pivotal move to strengthen Malaysia’s fiscal framework under the MADANI Government, ensuring sustainable revenue to fund essential public services. With new goods and services now taxable, the changes will impact businesses in their pricing, compliance, and operations across multiple sectors.

In this article, we break down the key changes, affected sectors, exemptions, and practical steps for businesses to meet your compliance obligations. Whether you’re a business owner, financial professional or consumer, our tax professionals at BoardRoom are here to equip you with the insights and guidance needed to adapt seamlessly to the new SST framework.

Overview of Malaysia’s SST System

Malaysia’s Sales and Service Tax (SST) is a single-stage tax system designed to generate revenue while keeping essential goods and services affordable. It comprises two components: Sales Tax, applied to manufactured or imported goods, and Service Tax, levied on specific services provided in Malaysia.

The SST system, reintroduced in 2018 to replace the Goods and Services Tax (GST), was designed to simplify taxation and reduce costs of living. As of March 2024, Sales Tax rates stand at 5% or 10%, depending on the type of goods, while Service Tax rates are 6% or 8% for designated services, applied to businesses with annual revenue exceeding RM500,000 (or RM1.5 million for food and beverage services).

This 2025 expansion, effective 1 July 2025, broadens its scope to include non-essential goods and additional service sectors, with the aim to boost revenue while keeping essentials tax-free. In the next sections, we take a look at the changes and how companies should prepare themselves for the changes.

Key Changes in the Expanded SST Effective 1 July 2025

Below are the key changes in the expanded scope of SST. Please note that the list of items are not exhaustive, and varying registration thresholds apply to the taxable services.

Sales Tax
  1. Basic consumer goods are exempted from sales tax:
    • Essential goods such as chicken, fish, lamb, vegetables, local fruits, rice, milk, cooking oil, medicine etc.
    • Basic construction materials.
    • Agricultural items (e.g. fertilisers) and equipment.
  2. Non-essential goods are now taxable at 5%:
    • King crabs, salmon, imported fruits, silk and industry machinery.
  3. Premium goods are now taxable at 10%:
    • Goods such as racing bicycles and antique artworks.
Service Tax
  1. Rental or leasing services taxable at 8%
    • Applies to all service providers whose rental or lease incomes exceeds RM500,000 in a 12-month period.
    • Exemptions:
      • Residential buildings, reading materials, financial leasing and tangible assets outside Malaysia.
      • MSMEs tenants with annual revenue under RM500,000.
      • B2B and Group Relief to avoid tax cascading.
      • 12-month exemption from effective date for non-reviewable contracts.
  2. Construction services taxable at 6%
    • Applies to all services providers whose value of taxable services exceeds RM1.5 million in a 12-month period.
    • Exemptions:
      • Residential buildings and public facilities related to residential buildings.
      • B2B and Group Relief to avoid tax cascading.
      • 12-month exemption from effective date for non-reviewable contracts.
  3. Financial Services taxable at 8%
    • Applies to fee or commission-based financial services.
    • Exemptions:
      • Basic services for Malaysians e.g. basic banking.
      • Foreign exchange gains, capital market deals, penalty fees, outward remittances, export-related financing.
      • Inbound transfer charges to foreign remittance agents.
      • Brokerage/underwriting for life, medical and family insurance or takaful.
      • B2B transactions, shariah-compliant fees and services for Bursa Malaysia or Labuan.
  4. Private healthcare services taxable at 6%
    • Applies to private healthcare, traditional and complementary practices and allied health services for foreigners.
    • For value of taxable service that exceeds RM1.5 million in a 12-month period.
  5. Education services taxable at 6%
    • Applies to private preschools, primary and secondary schools.
    • If annual tuition fees exceed RM60,000 per student.
    • For private higher education for international students.
    • Exemptions:
      • Malaysian students with disabilities.
      • Malaysian students in private higher education.
  6. Beauty services taxable at 8%
    • Applies to services like facial treatment and hairdressing.
    • For value of taxable service that exceeds RM500,000 in a 12-months period.
Service Sales Tax (SST)

Implementation Timeline

The new regulations will take effect on 1 July 2025, with a grace period extending to 31 December 2025, during which no prosecution or penalties will be enforced. This allows businesses sufficient time to adapt to the changes.

Impact of Expanded Scope of SST on Businesses

The expanded scope of the Service Sales Tax (SST) introduces significant changes for businesses in newly taxable sectors, requiring them to adapt to new compliance and pricing demands.

Below are some key impact:

  • Businesses in newly taxable sectors, such as private education and beauty services, must assess their Service Tax registration obligations and ensure compliance.
  • Companies with an annual turnover exceeding RM500,000 (or RM1.5 million for food and beverage services) are required to register for SST.
  • Businesses may need to make adjustments to their pricing strategies to accommodate the tax increases, particularly for non-essential goods and services.

Action Steps for Businesses

To comply with the expanded Service Sales Tax (SST) regulations, businesses must take proactive steps to ensure adherence to compliance requirements.

The following outlines the key actions:

Register for Service Tax

Businesses with annual revenue exceeding RM500,000 (or RM1.5 million for construction and food & beverage sectors) must register via the MySST portal, with separate registrations for Sales Tax and Service Tax. After submitting the registration, companies can check their registration status on the same portal.

File Bimonthly Returns

Businesses must file their SST returns bimonthly, by submitting SST-02 forms through the MySST portal by the last day of the month following the taxable period.

Penalties may be imposed for offenses such as failing to pay the correct net tax amount, not submitting an SST return, submitting an SST return with no payment or underpayment, or failing to register for SST.

Late Payment Penalty:

  • 10% of the amount not paid after the last date of the first 30 days period.
  • 15% of the amount not paid after the last date of the second 30 days period.
  • 15% of the amount not paid after the last date of the third 30 days period.

Seek Professional Guidance

Consult a tax professional to navigate SST obligations and exemptions, ensure compliance, and address specific business needs related to SST regulations.

Businesses should maintain accurate records for seven years, as mandated by the Royal Malaysian Customs Department (RMCD).

How can BoardRoom Support your Business?

Navigating Malaysia’s expanded SST can be complex, but BoardRoom is here to simplify the process. With over 50 years as Asia-Pacific’s leading corporate services provider, BoardRoom offers an integrated suite of services from Tax and Accounting to Payroll, Employee Share Schemes, Corporate Secretarial, Share Registry, IPO and Sustainability services. Our team of tax specialists helps businesses seamlessly adapt to new SST regulations, ensuring compliance while minimising operational disruptions. From handling registrations to tax compliance and strategic tax planning, we tailor our solutions to your unique needs.

Unsure if you’re ready for the new SST rules? Contact us for a consultation today!

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E-Invoicing For Tax and Accounting Excellence

E-Invoicing For Tax and Accounting Excellence

E-Invoicing For Tax and Accounting Excellence

boardroomsuperadmin

Table of contents

  1. E-Invoicing Enhances Tax Compliance and Drives Digital Accounting Transformation
  2. Automating Intercompany Transactions for Compliance
  3. Streamlining Accounting Practices With E-Invoicing
  4. Preparing Your Team For Successful E-Invoicing
  5. Overcoming E-Invoicing Challenges
  6. The Importance of a Comprehensive Implementation Process
  7. E-Invoicing as a Strategic Asset for Financial Management

 

E-invoicing has emerged as a vital platform for companies to streamline financial operations and comply with regulatory requirements. With the Malaysian government rolling out mandatory e-invoicing, businesses must act now to integrate robust e-invoicing solutions into their tax and accounting frameworks to ensure compliance.

E-invoicing is not just a regulatory compliance measure; it is a strategic tool enabler. E-invoicing enhances transparency and compliance by accurately matching income and expenses throughout the supply chain, identifying and reducing discrepancies in reported figures, and facilitating accurate tax reporting.

This article explores how e-invoicing supports tax compliance, drives accounting efficiencies, and serves as a key enabler for strategic financial management.

E-Invoicing Enhances Tax Compliance and Drives Digital Accounting Transformation

E-invoicing is certainly transforming how businesses approach tax compliance, pushing them towards digitalising their accounting operations. This shift involves reviewing existing accounting processes and solutions to ensure they meet the requirements of the e-invoicing framework.

According to Eunice Hooi, Managing Director Asia, Tax and Accounting, BoardRoom Group, one key advantage of the automation of e-invoicing process is that “it ensures that data flows seamlessly from accounting systems to the e-invoicing platform for tax reporting purpose, reducing the need for manual data entry and minimising errors”. This enhancement ensures a higher degree of accuracy in tax reporting.

Additionally, the introduction of e-invoicing requires companies to digitalise all invoice-related processes, which significantly improves financial forecasting and cash flow management. By automating and digitalising invoicing and payments, businesses can optimise their cash flow and improve financial predictability, enabling them to plan with more confidence and accuracy.

Eunice further elaborates: “As more businesses adopt e-invoicing, they gain valuable visibility into their accounts receivable; this visibility allows the businesses to track outstanding invoices and payment schedules more effectively.” she says. “At the same time, businesses can rely on accurate and timely invoicing data for more precise financial forecasting and budgeting.”

With e-invoicing, businesses not only meet compliance obligations but also strengthen their digital infrastructure for better control and efficiency.

Automating Intercompany Transactions For Compliance

E-invoicing plays a crucial role in managing related party transactions and transfer pricing, which are essential for maintaining tax compliance.

“It’s crucial for companies dealing with related entities to generate invoices that comply with local regulations,” Eunice explains. “Transfer pricing documentation must align with the specific regional requirements, which can vary greatly across jurisdictions This ensures that companies can provide the necessary documentation in case of tax audits, avoiding potential penalties or adjustments.”

The adoption of e-invoicing can also streamline self-billed invoicing and facilitate the management of transfer pricing agreements. Centrally recording and standardising data helps companies minimise discrepancies, improve compliance and optimise overall financial processes.

Automating Intercompany Transactions For Compliance

Streamlining Accounting Practices With E-Invoicing

From an accounting perspective, e-invoicing brings significant improvements, particularly in faster processing times and reduced manual data entry. Automation allows accounting personnel to focus less on repetitive administrative tasks and more on activities that add strategic value. However, automation does not entirely eliminate the need for human oversight.

Yang Shuzhen, Director of Regional Accounting Services at BoardRoom Group, explains more. “The automated e-invoicing process cuts down human errors because the information will flow from your accounting system to the API for submission. But you will still need an accountant or skilled personnel overseeing the process to ensure accuracy, handle any exceptions, and troubleshoot issues that the system might not detect.”

Shuzhen emphasises that e-invoicing plays a crucial role in improving the accuracy of financial reporting. “Because there’s actually more regular submission of invoices, it means people are more wary as to what transactions are going through,” Shuzhen says.

Take the case of a seafood trading company that needs to deal with damaged/returned items on a daily basis. The supplier may issue an invoice for 100 crabs, and upon delivery, eight crabs may be rejected by the buyer due to quality issues. Typically, the supplier would consider replacing the “damaged/returned” items in the next order without issuing a credit note or refund. With the implementation of e-invoicing, this would be a challenge as every returned item would have to be accounted for, and the supplier would have to issue an e-invoice in the form of a credit note/refund for every order with such a discrepancy.

“The additional credit notes increased workload and prompted the company to rethink its processes for greater accuracy,” says Shuzhen. Implementing e-invoicing introduced validation steps that encouraged issuing more precise invoices, ultimately reducing errors and improving efficiency.

Preparing Your Team For Successful E-Invoicing

Successful e-invoicing implementation requires a dedicated project leader to oversee the transition and manage all aspects effectively. Shuzhen emphasises the importance of having a project driver to propel the process forward. “There must be a dedicated leader who fully understands the process and takes charge, clearly defining the responsibilities and guiding the finance team through each step of the transition.” This leadership role is crucial for guiding the team through changes, addressing challenges and verifying that the system integration aligns with the company’s needs.

Preparing Your Team For Successful E-Invoicing With A Dedicated Leader

Overcoming E-Invoicing Challenges

Transitioning to e-invoicing can present several obstacles that companies must navigate. These challenges often stem from integrating new systems, gaining the necessary internal support, and ensuring procedures are updated to meet regulatory standards. Here are the common challenges companies face.

System compatibility

Companies often have complex or legacy systems that are difficult to integrate with e-invoicing software. Shuzhen explains, “The more systems you have, the harder it can be to integrate. You have to find a way to simplify it.”


  Solution

Simplify existing systems and ensure IT teams are equipped to handle integration and keep up with regulatory changes.

Managing system updates and changes

Frequent regulatory changes can complicate integration, particularly when multiple systems are involved. “If you choose to do direct integration yourself, you must ensure that your IT team or the project team have the capability to keep track of any changes,” says Shuzhen. “Otherwise, it will be a disaster.”


  Solution

Consider using an external service provider to manage the ongoing changes, allowing you to reduce the burden on internal teams.

Management support

A lack of buy-in from top management can significantly hinder progress. Shuzhen says, “When this happens, the operational level often struggles with the implementation. Getting buy-in from the decision-makers is essential.”


  Solution

Educate management on the necessity of e-invoicing for operational efficiency and compliance to gain their full commitment.

High initial costs

Implementing an API solution can be costly, particularly for companies with complex operations that cannot rely on MyInvois Portal.


  Solution

Explore government incentives, such as grants and tax benefits, to offset initial implementation costs.

Creating or modifying SOPs

Developing or updating standard operating procedures (SOPs) is often required when implementing and transitioning to e-invoicing. Designating clear process owners is also crucial to ensure the correct execution of the new e-invoicing procedures.


  Solution

BoardRoom has vast experience implementing e-invoicing SOPs to guide the development of processes and work with the company’s process owners to maintain accountability.

By understanding these challenges and having a structured approach, businesses can ensure a comprehensive and successful e-invoicing implementation.

The Importance of a Comprehensive Implementation Process

The Importance of a Comprehensive Implementation Process

A successful e-invoicing implementation requires a comprehensive approach, starting with designating clear process owners responsible for managing the transition and ensuring that all mandatory fields – over 50 in total – are completed correctly.

Shuzhen advises, “Ensuring existing enterprise resource planning (ERP) and cloud systems integrate seamlessly with the API invoice software is critical, and businesses may need to upgrade or modify their systems to accommodate this change”. Careful planning, testing, and verification are essential steps to avoid errors and ensure the system functions as intended.

Education and training are also key to successful adoption. Management must understand that e-invoicing is not just about meeting regulatory requirements but also about enhancing the efficiency of financial processes. Investing in training ensures that both leadership and staff are well-prepared for the transition, facilitating smoother implementation and optimising e-invoicing tools.

E-invoicing as a Strategic Asset for Financial Management

E-invoicing is a powerful tool for transforming both tax and accounting functions in Malaysian businesses. It has become a vital tool for managing tax and accounting functions strategically. To fully leverage e-invoicing, businesses must plan carefully, ensuring system compatibility, comprehensive staff training, and securing management support.

Our long-standing expertise in tax and accounting compliance, along with our comprehensive e-invoicing solutions, makes us a trusted partner for businesses seeking tailored e-invoicing solutions that address both accounting and tax needs.

Contact us today to learn more about how we can help your business achieve e-invoicing excellence.

Contact BoardRoom for more information:

Eunice Hooi

Eunice Hooi

Managing Director Asia, Tax & Accounting

E: [email protected]

T: +60-3-7890 4800

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How a Share Registry Portal can Transform Shareholder Management and Engagement

How a Share Registry Portal can Transform Shareholder Management and Engagement

How a Share Registry Portal can Transform Shareholder Management and Engagement

boardroomsuperadmin

In Malaysia, the share registry landscape is undergoing a significant transformation as technology reshapes traditional processes. One of the key innovations driving this change is the share registry portal, an advanced online tool that streamlines shareholder services and regulatory compliance.

These portals not only enhance operational efficiency but also play a critical role in improving shareholder engagement. By integrating technology into share registry services, Malaysian companies can reduce administrative burdens and ensure transparency and compliance with local regulations, making share registry portals essential to their success.

The Evolving Landscape of Shareholder Services in Malaysia

The share registry market in Malaysia is evolving rapidly, driven by an increasing number of IPO listings and demand for advanced technological integration to meet the changing needs of modern investors. Key innovations like share registry portals, shareholder management systems and online meeting services are reshaping the industry.

Alex Chew, Director of Share Registrar Services Asia at BoardRoom Malaysia says the COVID-19 pandemic pushed many traditionally brick-and-mortar businesses to adopt digital solutions to remain competitive.

“To stay ahead, you’ve got to embrace technology to drive the business,” he says, emphasising that the shift from conventional paper-based services to online mediums is now essential. “Realistically, a fully digital adoption may take time but the journey to engage and adopt technology solutions is unavoidable to remain relevant,” he added.

As the number of share registry providers increases, the focus on regulatory compliance and operational efficiency becomes paramount. Richard Lee, Director of Client Management, Share Registrar Services Asia at BoardRoom Malaysia, stresses the importance of up-to-date shareholder solutions in navigating the ever-changing regulatory landscape. Technology can help by providing a clear audit trail, improving communication and ensuring accurate record-keeping.

“Share registry solutions are crucial in supporting operational and compliance efficiency,” Richard says.

The move towards paperless transactions is a testament to this evolution. It simplifies processes like the Dividend Reinvestment Plan (DRP), which can now be submitted electronically rather than through cumbersome paper forms.

From a corporate governance perspective, implementing a standard operating procedure (SOP) is vital for ensuring compliance and protecting shareholder interests, Alex explains.

“If you have a policy on SOP in place, whether in manual or digital mode, you are able to comply from the get-go because everything is in electronic mode,” Alex says. This shift not only aids in maintaining accurate records and transparent communication but also aligns with the stringent regulations set forth by the Securities Commission Malaysia (SC) and Bursa Malaysia, reinforcing the need for efficient and compliant shareholder management software in the industry.

Enhancing Efficiency and Shareholder Engagement Through Technology

The integration of technology significantly enhances shareholder engagement and operational efficiency. Tech-enabled share registry portals, such as the BoardRoom Smart Investor Portal (BSIP), provide 24/7 access to vital services, allowing investors to engage with their share registrars anytime, anywhere.

As Alex says, “Online mediums like our online portal have become a crucial and essential channel for the public or an investor to reach our share registrar services electronically.

“The best thing about going online is it’s available around the clock. It’s a service that is available 24/7 versus the typical over-the-counter service, which is only available on a weekday during business hours.”

This shift away from traditional manual services has streamlined processes, eliminating the need for in-person visits to submit forms or request hard copies. BoardRoom’s online platform allows shareholders to engage more efficiently with the share registry, providing instant notifications and system mailers regarding important updates. This digital approach improves user experience and aligns with modern shareholders’ expectations for seamless technology in their interactions.

Moreover, shareholder management software enhances flexibility and convenience for users. Shareholders can now manage their investments smoothly across multiple devices, ensuring they remain informed and engaged.

As the share registry market in Malaysia continues to evolve, the increasing adoption of technology is set to play a critical role in shaping the future of shareholder services. With the potential for artificial intelligence to enhance these systems further, companies that embrace these advancements will likely enjoy improved shareholder satisfaction and loyalty, solidifying their position in a competitive landscape.

Enhancing Efficiency and Shareholder Engagement Through Technology

Shareholder Platform Solutions

BoardRoom Smart Investor Portal (BSIP) offers a significant competitive advantage. Its advanced features and functionality increase shareholder engagement and ensure seamless execution of corporate actions.

Key features of BoardRoom Smart Investor Portal (BSIP)

E-submission services

  • e-Proxy service: allows shareholders to submit proxy forms online, eliminating the process of manual submissions.
  • e-DRP (dividend reinvestment plan): enables seamless participation in dividend reinvestment programs.
  • e-GO (general offer): facilitates online submissions of Acceptance Forms.
  • e-MITI: facilitates online subscription for MITI (Ministry of International Trade and Industry) investors especially during IPO exercise.
  • e-PINK: facilitates online submission of PINK FORMS during IPO exercises.

Online request services

  • e-Forms and AR (annual reports) Requisition: Shareholders can download various e-forms and request for hard copies of annual reports or circulars through the platform.

Online attendance registration

  • RPEV (remote participation and electronic voting): Provides online registration for virtual and hybrid meetings, allowing shareholders to attend and vote remotely.

BoardRoom’s shareholder platform solutions not only meet but exceed current market demands, positioning BoardRoom as a leader in the industry. Its solutions are scalable, giving the ability to meet future demands. Not only do BoardRoom’s online solutions offer shareholders new ways to engage, but they are also cost-effective and paperless, reducing the user’s carbon footprint. Continuous effort to bring more services online is in progress.

Dedicated Helpdesk

BoardRoom’s emphasis on delivering high-quality service is reinforced by its dedicated helpdesk, ensuring shareholders receive immediate assistance and support. Staffed by knowledgeable professionals, the helpdesk addresses a wide range of inquiries – from technical issues to questions about corporate actions – accessible via phone, email, and BSIP portal. This commitment to support empowers shareholders to engage more fully with the BoardRoom Smart Investor Portal (BSIP), enhancing the overall shareholder experience.

How BoardRoom’s Shareholder Management Software Provides a Competitive Edge

How BoardRoom’s Shareholder Management Software Provides a Competitive Edge

BoardRoom’s state-of-the-art shareholder management software exemplifies how tech-enabled solutions can transform share registry services. Focusing on enhancing efficiency and reducing costs, these advanced tools position BoardRoom as a market leader.

Recently, some of Boardroom’s clients BoardRoom client reported saving up to 30-40% on mailing costs by using BoardRoom’s electronic communications.

Traditionally, shareholders received dividends by cheque with a copy of the tax voucher, but with the implementation of e-payment more than 15 years ago, a good majority shareholders now received dividend paid by electronic crediting to their bank account directly. Most of the tax vouchers are still being sent separately via postal mail. Now, with the introduction of BoardRoom’s e-Notice system, the tax vouchers are delivered electronically. This streamlined approach accelerates communication, reduces reliance on paper usage, supports sustainability initiatives, and lowers costs.

The Future of Shareholder Services Lies in Technology-driven Efficiency

By embracing cutting-edge technology, such as share registry portals and shareholder management software, BoardRoom empowers businesses to streamline their operations and improve overall shareholder satisfaction.

BoardRoom’s solutions facilitate effective communication, providing shareholders with easy access to essential services. A dedicated help desk reinforces BoardRoom’s commitment to exceptional service and means clients receive prompt assistance.

Explore BoardRoom’s advanced share registry services and discover how they can transform your shareholder experience, making it more efficient and engaging. With BoardRoom, you can trust that you are partnering with an industry leader dedicated to leveraging technology to benefit both businesses and their shareholders. Contact BoardRoom today.

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MY Budget 2025 : Key Tax Measures You Need to Know

MY Budget 2025 Banner

MY Budget 2025 : Key Tax Measures You Need to Know

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Malaysia’s Budget 2025 aims to reinvigorate the economy through various tax reforms and tax measures impacting both businesses and individuals.

Unveiled by Prime Minister Datuk Seri Anwar Ibrahim on 18 October 2024, Malaysia Budget 2025 represents a crucial turning point for the nation’s economy with a record allocation of RM421 billion.

The theme, ‘Membugar Ekonomi, Menjana Perubahan, Mensejahtera Rakyat’ (Reinvigorating the Economy, Driving Reforms, and Prospering the People), reflects a dual focus in addressing immediate socio-economic challenges and building long-term resilience.

This budget balances economic growth, fiscal prudence and social welfare. It aims to revitalise the economy through key tax reforms and tax measures, addressing post-pandemic recovery, technological advancements, and climate change while improving the welfare of the Rakyat.

Our exclusive Malaysia Budget 2025 Commentary delves into the intricacies of these tax measures, providing valuable insights that will impact both the business and individual landscapes.

✓ Business Tax Reforms and Incentives for Corporate Taxpayers and Businesses

  • Implementation of Global Minimum Tax (GMT)and Accelerated Capital Allowance (ACA) for e-invoicing
  • Introduction of targeted incentives such as Investment Tax Allowance (ITA) for Smart Logistics Complexes (SLCs) and enhanced export incentives for Integrated Circuit (IC) Design Services

✓ Revenue and Fiscal Responsibility for Consumers and Businesses

  • Broadening the Sales and Services Tax (SST) framework and rationalising subsidies

✓ Tax Measures and Reliefs for Individual Taxpayers

  • Balancing the Introduction of new 2% Dividend Tax with extension of tax exemption on Foreign-Sourced Income (FSI)
  • Introduction of targeted tax reliefs for certain individual taxpayers

✓ ESG-Driven Initiatives

  • Introduction of a carbon tax and incentives for carbon capture, utilization and storage (CCUS) projects

As we navigate these changes line with the national aspiration, businesses and individuals must reassess their tax strategies to stay compliant and competitive.

Download our exclusive commentary now to navigate these changes with confidence. If you have any questions, please email our regional tax team at [email protected].

DOWNLOAD MALAYSIA BUDGET 2025 COMMENTARY

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Mastering Payroll in Manufacturing Industry: Advanced Solutions for a Global Workforce

Mastering Payroll in Manufacturing Industry Advanced Solutions for a Global Workforce

Mastering Payroll in Manufacturing Industry: Advanced Solutions for a Global Workforce

boardroomsuperadmin

Navigating the complexities of payroll management in the manufacturing sector presents unique challenges distinct from those in other industries. Diverse roles and large operational scales require an advanced payroll system to comply with varied labour laws, protecting a predominantly blue-collar workforce and addressing multi-country statutory requirements.

In the manufacturing industry, employees tend to work complex shift schedules to meet operational demands. Adjustments to human resources in response to fluctuating business demands and supply chain issues further complicate payroll processing.

Outsourcing payroll to specialists ensures greater accuracy, compliance and efficiency. It allows manufacturing companies to focus on core production activities rather than administration, mitigating the risk of errors and leveraging advanced systems capable of seamlessly handling global payroll requirements.

As the industry evolves amid increasing regulatory and operational demands, sophisticated payroll solutions for the manufacturing industry has become increasingly critical in enhancing business efficiency and compliance.

Adapting Payroll Systems in Manufacturing Sector for Global Compliance and Worker Protection

A payroll system for the manufacturing industry can be more challenging than in other industries due to several factors. Companies in this sector employ a large number of blue-collar workers, and stringent employment laws are in place to protect them. For this reason, it’s necessary to have a payroll system that can navigate the complex terrain of regulations designed to protect workers, who may be vulnerable to exploitation.

The precision required in processing payroll in the manufacturing industry ensures that employees are compensated fairly and accurately, reflecting the actual hours worked and any overtime, which can be significant.

In addition, manufacturing operations often span multiple countries, each with its own set of labour laws and regulations. A multi-country payroll system is essential to ensure compliance and efficiency across all locations.

Ken Wong, Managing Director Asia, Payroll at BoardRoom Group emphasises the importance of having a payroll system that complies with local laws.

“Having a payroll system that complies with the local statutory requirements is critical,” he says.

The payroll system must account for various shift operations, overtime calculations and local holidays. Additionally, manufacturing plants often operate 24 hours a day, 7 days a week, requiring a flexible approach to employee scheduling and payroll management.

“In the manufacturing industry, you have very complex shift patterns,” Ken says. “There are people who work on Saturdays and Sundays, and then people who work shift hours that are different from what a regular employee who works in a technology company or an office environment would experience. You need to roster these employees into different time slots, and it’s not always easy because, depending on the demands of your business, you may have to increase the number of employees in each shift so that you get more productivity out of it.

“Another factor to consider is the high attrition rate in manufacturing. In a month, multiple employees may resign. Most manufacturing companies employ a large percentage of foreigners, and when they leave the business or leave the country, your tax computation is also more complex because you need to compute the withholding tax before the foreigners can leave the country.”

Integrating the payroll into one platform improves operational efficiency and reduces data duplication. By centralising payroll operations, manufacturing companies can better manage their workforce, ensure accurate payment for all employees and significantly reduce the administrative burden associated with multi-regional compliance and payroll processing.

Essentials of a Multi-country Payroll System for Manufacturing Businesses

Essentials of a Multi-country Payroll System for Manufacturing Businesses

In the complex global manufacturing landscape, the payroll system must be linked with existing HR systems to ensure seamless employee data management.

Ken highlights the importance of data accuracy, especially for manufacturing employees whose earnings may fluctuate with the demands of the business.

“For manufacturing employees, their wage fluctuates according to the demand and supply of the business. So every single dollar counts for them, and being able to process the data accurately and on time ensures that what they have worked and the hours they have put in are being paid correctly.”

Real-time data processing is important in a payroll system tailored for the manufacturing sector as it ensures that adjustments, such as overtime and shift changes, are updated instantly, thus preventing delays and errors. It also enables managers to assess employee output and productivity and adjust rosters to ensure production targets are met.

Integrating the payroll and HR systems is also important when it comes to leave.

“When someone is supposed to be rostered to work today and does not show up, the time system will flag this as someone missing from work,” Ken explains. “The payroll system then goes to your leave system to check whether this person is on leave and if it’s medical leave or annual leave. Therefore, this person does not have their pay deducted and is excused for not being at work. So the time and attendance system keeps the whole process humming.”

Why Integrated HR and Payroll Software is Beneficial

Integrating the HR and payroll systems ensures that employee information stored by the HR system from onboarding can be automatically transferred to the payroll system once the employee starts work.

The importance of having an HR system fully integrated with the payroll system is even more critical for large manufacturing companies that maintain physical operations across multiple countries.

“With many of these companies, what I’ve noticed is that they want to make sure all data comes from one source so there’s a source of proof. They want to deal with integrated data, which means no manual entry of information, and it interfaces with our platform. BoardRoom’s all-inone cloud-based HRMS solution, Ignite, allows us to manage payroll for most countries in Asia,” Ken says.

These integrated systems significantly reduce errors and provide essential reporting features that assist in strategic financial management and compliance audits. The payroll system’s ability to scale and adapt flexibly to the changing needs of a global workforce is not merely a convenience but a necessity.

Integrated HR and Payroll Software is Beneficial

Benefits of Outsourcing Payroll in Manufacturing Industry

Manufacturing companies benefit from the expertise of an outsourcing partner like BoardRoom in managing payroll effectively. The advantages of outsourcing payroll include:

  • cost-efficiency
  • compliance expertise
  • enhanced security
  • freeing up resources to concentrate on core operations

BoardRoom is the ideal outsourcing partner because of its extensive experience in handling large headcounts and complex scenarios.

Ken explains, “Outsourcing isn’t just about handling payroll; it’s about leveraging expertise to effectively accommodate the peaks and troughs of business demands.”

Benefits of Outsourcing Payroll in Manufacturing Industry

Transitioning to an Outsourced Payroll Solution in Eight Steps

Opting for an outsourcing partner like BoardRoom not only simplifies payroll management but enhances overall business efficiency by enabling manufacturers to focus more on their primary business goals.

Here’s how BoardRoom can transition your manufacturing company to an outsourced payroll solution:

Initial consultation and scoping

We’ll engage stakeholders in meetings and collect data to create a detailed needs assessment, which will allow us to tailor our payroll service precisely to the manufacturing site’s requirements.

Solution proposal

Craft a custom proposal based on the initial scoping phase, ensuring the solution addresses all specific operational complexities.

System configuration and customisation

The system is adapted to align seamlessly with existing operational processes and meet any unique payroll and compliance requirements.

User acceptance testing (UAT)

The system is rigorously tested to ensure all functionalities meet your specifications, including comprehensive scenario testing.

Parallel run

This critical phase involves running the new system alongside the current one to identify and rectify any discrepancies or errors and ensure accuracy.

Employee training

We’ll ensure all relevant staff are well-trained in using the new system.

Go live

The system officially becomes operational after successful testing and training.

Post-implementation support

Continuous support and feedback mechanisms are established to ensure the system evolves with the company’s needs and any issues are swiftly addressed.

Drive Success with Advanced Payroll Solutions

The complexity of managing payroll in the manufacturing sector requires sophisticated systems. BoardRoom specialises in offering comprehensive outsourcing services that simplify payroll processes, ensure compliance and enhance operational efficiency.

BoardRoom’s deep understanding of the specific challenges in processing payroll for the manufacturing industry means we are adept at handling everything from employee onboarding to multi-country compliance with precision. Best of all, our tailored solutions are designed to meet the distinct needs of each and every client.

For manufacturing companies aiming to enhance their operational efficiency, partnering with BoardRoom offers a clear advantage. Visit BoardRoom payroll services to discover more about how our expert solutions can simplify your payroll needs. Take the first step towards a seamless, efficient payroll solution today.

Contact BoardRoom for more information:

Ken Wong

Ken Wong

Managing Director for Payroll for Asia

E: [email protected]

T: +60 3 7890 4800

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Guide to e-invoicing: A fast track to compliance with Malaysia’s e-invoicing transition

Guide to e-invoicing A fast track to compliance with Malaysia’s e-invoicing transition

Guide to e-invoicing: A fast track to compliance with Malaysia’s e-invoicing transition

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E-invoicing was announced in Malaysia as the Inland Revenue Board’s (IRB) solution to combating the issue of the shadow economy and revenue leakage. With the first major deadline in August 2024 fast looming, now is the time for businesses to start preparing for the transition.

E-invoicing implementation is significant for all businesses, and major changes may be required for systems, processes and even strategic direction. While the rollout will be phased, implementation is essential, with all businesses expected to comply by 1 July 2025.

What is e-invoicing and how can you maximise the benefits for your business? Our comprehensive guide offers you insight into the requirements, what you need to do to switch over and the benefits it can bring.

How does e-invoicing work?

An e-invoice is a digital representation of a transaction between a supplier and a buyer. Many companies already issue electronic invoices, such as PDF invoices. However, having such electronic invoices does not necessarily mean being compliant with Malaysia’s e-invoicing requirements as set out by the Inland Revenue Board of Malaysia (IRBM). The Malaysia e-invoice requirements go beyond to include specific processes and reporting formats.

E-invoicing works by enabling seller’s accounts receivable to input invoices into their financial system, which then sends them in a structured electronic format directly to the buyer’s system. Upon receipt, the buyer’s e-invoicing system automatically processes and imports the data into their accounts payable system, which streamlines the payment process without the need for manual handling.

Only two formats of e-invoice are acceptable – XML and JSON. Both of these formats are easy for machines to read, which reduces the time it takes for a machine to translate and process the invoice.

E Invoicing Infographic

What is the timeline for implementation?

There are a number of dates that you need to be aware of in the transition. It’s critical to be mindful of the timeline, as e-invoicing implementation can take up to three to four months to complete.

The following table provides a breakdown of the key dates for the e-invoicing implementation rollout based on business turnover.

Annual Revenue of businesses Implementation Date
Businesses with an annual turnover greater than RM 100 million 1 August 2024
Businesses with an annual turnover greater than RM 25 million and up to RM 100 million  1 January 2025
All businesses  1 July 2025

The above timeline is subject to changes. Please refer to LDHN website for detailed guidelines and updates.

Exemptions from e-invoicing requirements

Certain types of income expenses do not require an e-invoice.

These include:

  • Employment income
  • Pensions
  • Alimony
  • Dividend distribution by companies listed in Bursa Malaysia, or companies that are not required to deduct tax under Section 108 of the Income Tax Act 1967
  • Zakat

While government bodies, local authorities and statutory bodies are exempt from the e-invoicing requirements, they may voluntarily choose to participate. A complete list of exemptions is detailed in the IRBM’s official e-invoice guidelines.

A step-by-step guide to e-invoicing implementation

A step-by-step guide to e-invoicing implementation

E-invoicing implementation is quite complex. The process may include upgrading infrastructure, integrating systems and training staff to ensure a smooth transition.

Here is a step-by-step guide to help you understand the process and how you can best implement e-invoicing.

1. Confirm business turnover

Your turnover will dictate when you must transition to e-invoicing. Refer to your 2022 audited financial statement or tax return to confirm your business turnover.

If you had a change of accounting year end for financial year 2022, your turnover or revenue will be pro-rated to 12 months. This will be used to determine your implementation date.

2. Conduct a gap assessment analysis

Cheong Woon Chee, Head of Tax Services, BoardRoom Malaysia, says that a gap assessment analysis is a critical next step in the process.

“A gap assessment will help you to determine what you need to do to meet the e-invoicing implementation requirements,” explains Woon Chee. “This should encompass current systems and processes but also the people and the training you’ll need to undertake in preparation for the transition.”

A comprehensive gap assessment should include the following components:

Accounting system compatibility
Evaluate the compatibility of the current accounting system with e-invoicing requirements.
Invoice format compliance
Ensure the invoice format adheres to the required e-invoicing standards.
Self-billing e-invoices
Determine the need for self-billing e-invoices.
Transaction management
Assess how transactions with both B2B and B2C buyers will be managed.
Legal and contractual review
Conduct a thorough review of all legal documents, including contracts and employment agreements.

Once a gap assessment analysis has taken place, a tailored gap closure strategy should be developed that addresses the identified gaps. The strategy should provide detailed recommendations and action plans to ensure a seamless transition to e-invoicing. By understanding the requirements thoroughly, you can plan effectively, working backwards from the implementation date to ensure you are ready on time.

Having this lead time also gives you the opportunity to start talking to your clients, partners and service providers. They are critical in the transition, so it’s important to engage them early to understand their timelines and requirements.

3. Determine the best model for your needs

You have a choice between two e-invoicing models, which will depend on your business needs and size.

The first model uses the MyInvois portal, hosted by the IRB. This portal is available to all taxpayers, and Woon Chee says that if you’re processing around 20 invoices or less a month, MyInvois is a cost-effective solution.

“The other option is an application programming interface (API),” explains Woon Chee. “APIs are more suitable for businesses or taxpayers that process a substantial number of transactions.

“It is likely that your current systems will need enhancements or upgrades to support an API configuration, which comes with an upfront investment.”

Train staff on the new system

4. Train staff on the new system

E-invoicing implementation involves training in the lead up to the transition as well as after the transition to ensure a seamless changeover.

“E-invoicing isn’t like the standard invoices staff are familiar with,” adds Woon Chee. “Initially, training should focus on awareness before moving to additional rounds of training that go into detail about the new process.”

Training is crucial and should cover the strategic approaches the organisation is taking to implement e-invoicing effectively across departments, the tax implications and the compliance requirements. Staff must understand the effects e-invoicing will have on existing accounting processes, especially as the new forms now feature over 50 mandatory fields, raising the chance of errors. Post-implementation training can help identify errors and ensure they are rectified moving forward.

5. Understand the PEPPOL network

The Malaysian e-invoicing requirement is powered by the Pan-European Public Procurement Online (PEPPOL) network. PEPPOL is not a provider. It is an enabler that allows any organisation to send and receive business documents – in this case, e-invoices – through PEPPOL-accredited service providers.

While businesses aren’t required to use a PEPPOL service provider for e-invoicing, there are benefits to doing so. Namely, a PEPPOL-enabled solution ensures effortless compliance and security, seamless integration and error-free automation with real-time insights into your e-invoice progress.

6. Apply for grants and tax incentives

There are grants and tax incentives available to support you with the costs of investing in the infrastructure required to transition to e-invoicing.

These include:

Digital grant
Micro, small, and medium enterprises (MSME) can apply for a grant of up to RM 5,000 (total allocation of RM 100 million) to upgrade digital sales, inventory and accounting systems.
Tax deduction
From YA2024 to YA2027, MSME can receive a tax deduction of up to RM 50,000 for each Year of Assessment (including consultation fees incurred for e-invoicing implementation).
Capital allowance
The capital allowance claim period has been reduced from four years to three years. Capital allowance can be claimed on the purchase of ICT equipment and computer software packages, as well as consultation, licensing and incidental fees related to customised computer software development.

What are the benefits of e-invoicing?

According to the IRB, the benefits of e-invoicing include reducing manual work and associated human error. It will also help streamline operational efficiency, facilitate efficient tax filing, and digitise financial reporting to be in line with industry standards.

The Malaysia Digital Economy Corporate (MDEC) shares similar sentiments around the way e-invoicing will increase business efficiency, improve cash flow and facilitate effective tax reporting.

The BoardRoom team can see a range of benefits for our clients. Eunice Hooi, BoardRoom’s Managing Director Asia, Tax, explains that one of the biggest benefits is the minimisation of inaccuracies thanks to real-time monitoring.

“Shifting to e-invoicing will reduce inaccuracies, as both income and expenses are verified on the spot rather than retrospectively. This immediate validation allows businesses to promptly address any discrepancies identified by the tax authorities, such as disallowed expenses,” says Eunice.

What are the benefits of e-invoicing

The key benefits of implementing e-invoicing include:

  • Seamless compliance through adherence to the e-invoicing mandates, PEPPOL standards and data security.
  • Eliminate errors with automated creation, validation, delivery and archiving of invoices.
  • Smooth integration with existing ERP and business applications, enhancing overall business operations.
  • Gain real-time insights into the status of invoices to ensure timely payments, resulting in visibility and control.
  • Save time and resources by digitising and automating invoicing processes, boosting cost savings and efficiency.

The switch to e-invoicing is not just a system change. It’s a complete mindset shift. A reliable partner will be a critical part of ensuring a seamless transition and maximising your investment.

“We are currently working very closely with some of the API and IT solution providers,” adds Eunice. “Aside from tax services and outsourced accounting services, we can provide our clients with an integrated service, including the IT component with a PEPPOL-Enabled Solution.”

BoardRoom offers a range of services to support you with your e-invoicing implementation. From standalone comprehensive project management service to training workshops or ad hoc consulting, we can tailor a solution to your needs. As your strategic partner, the BoardRoom team will help you to navigate the transition with ease.

“As outsourced accountants and tax experts, we can work with the finance team to advise them on strategically leveraging the e-invoicing data for tax optimisation,” explains Eunice. “For example, we can identify the deductible expenses immediately and ensure we maximise the tax credit and tax deduction without delay.”

Your partner in e-invoicing

With the right experts on your side, you will set your business up with a strategic advantage to leverage the benefits of the e-invoicing requirements. Learn more about BoardRoom’s e-invoice solutions to save you time and money for your e-invoicing transition and beyond. Our expert accounting and tax teams will ensure a smooth and compliant transition, providing you with support every step of the way.

Contact BoardRoom for more information:

Eunice Hooi

Eunice Hooi

Managing Director Asia, Tax

E: [email protected]

T: +60-3-7890 4800

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Employee share option schemes: a boost for Malaysian employers

Employee share option schemes a boost for Malaysian employers

Employee share option schemes: a boost for Malaysian employers

boardroomsuperadmin

In today’s competitive business landscape, attracting and retaining top talent has become a key consideration in Malaysia, particularly for startups. The ability to secure and nurture skilled professionals can significantly enhance a company’s growth trajectory.

This is where an employee share option scheme (ESOS) can help. A type of employee share plan, an ESOS offers an enticing solution that aligns the interests of an employee with the success of their company.

This article delves into the advantages of ESOS, exploring how equity compensation can be a powerful tool for attracting, retaining and engaging top talent in Malaysia.

Understanding employee stock options in Malaysia’s competitive landscape

Malaysian business leaders continue to face the challenge of skills shortages. Despite efforts by the government and private enterprises, many of Malaysia’s employers, particularly those in the technology sector, face difficulty filling vacancies.

Thirty-seven occupations are listed in the latest Critical Occupations List (MyCOL), an annual report commissioned by the Malaysian Government. From managing directors and CEOs to earth-moving operators and truck drivers, the list spans a range of industries where skills shortages are critical.

Given the talent shortages, attracting and retaining top talent is a priority for businesses in Malaysia. Therefore, many are exploring incentives such as employee share option schemes (ESOS) as a way to reward and incentivise employees and engender loyalty.

An ESOS gives employees the option to purchase company shares at a predetermined price, offering a unique opportunity to become shareholders themselves. This connection between employee and company ownership fosters a sense of belonging.

Nora Jasmine Lai, Operations Manager of Employee Plan Services, BoardRoom Group, explains, “The purpose of these programs is to align the company’s goals with employee incentives by allowing the employee to become a part owner of the company and participate in the growth of the business.”

The schemes can be complex and challenging to understand. For example, an ESOS has similarities to an employee share ownership plan (ESOP), though the two vary in terms of the structure, governance, purpose and nature of ownership. However, they broadly aim to achieve the same thing, which is to provide long-term incentives to employees.

Understanding employee stock options in Malaysia’s competitive landscape

Employee benefits in Malaysia: why employers should consider ESOS

Schemes such as ESOS and ESOP provide long-term value for employers by inspiring loyalty among employees. By signing an employee up for the scheme, an employer is essentially saying to them that while they are committed to the growth of the business and contributing to it, they will be rewarded by becoming a shareholder.

As more employees join, the talent within the company grows, strengthening it over time.

Employee turnover costs more than you think

In a competitive landscape, no business leader wants to lose good employees. Experienced employees hold institutional knowledge that can be lost when they leave which can disrupt a business. They are also more likely to have established important relationships with customers and other staff. On the other hand, hiring and training new employees takes time and money. High turnover can destabilise employees, damage a business’s reputation and harm customer relationships.

A report from Employee Benefit News found that it can cost a business more than 30% of the employee’s yearly salary to replace them.

Employee retention comes down to many factors. Employees want to feel valued, engaged and an important part of the team. TINYpulse reports that those workers who feel they have control over their careers are more likely to stay than those who don’t. Employees who are dedicated to their workplace achieve more and are 87% less likely to leave their workplace than those who aren’t. Finally, employees who report they are ‘engaged and thriving’ are much less likely to be searching for other jobs than those who are not.

Employee turnover costs more than you think

How employee share option schemes reduce turnover and benefit employees

There are many benefits of employee share option schemes. They give employees a sense of ownership and their interests become more aligned with other shareholders. Employee engagement also increases as the schemes motivate them to be more productive and focus on overall business success rather than just their day-to-day responsibilities.

It is not just the company that benefits. “The financial gains from an ESOS are defined by the difference between a company’s stock price and the exercise price of the ESOS, which is fixed when ESOS are granted,” Nora says. “Therefore, the higher the stock price, the larger the financial gain. Employees who are granted an ESOS are incentivised and motivated to act in the company’s interest. This, in turn, improves the investor’s perception of the company’s ability to earn and grow its profits in the future, which increases the demand of the company’s shares and therefore, its share price.”

The higher the share price, the larger the financial gain for the employee. Through ESOS, an employee’s financial growth is directly tied to the company’s stock market performance, serving as a strong motivator for employees to contribute to the company’s success.

ESOS in Malaysia: what are the implementation challenges?

There is no doubt that schemes such as ESOSs and ESOPs are valuable tools for employers to attract and retain talent. There are also many benefits to the employee in such a scheme. However, establishing and implementing any type of employee share scheme can be complicated, and the administration and maintenance of such schemes can be onerous for already busy managers and business owners.

“When businesses implement an ESOS, one of the key challenges is helping employees understand how it works,” says Nora. “From the employer’s perspective, managing an ESOS program involves hefty administrative tasks, such as preparing the grant letters, tracking the ESOS data, communicating information to the employees and addressing any questions from time to time.”

The benefits, however, far outweigh the challenges. As we have touched on, setting up and maintaining a scheme can help retain valuable employees, attract top talent and improve productivity. So, how do businesses overcome the challenges and enjoy the benefits of an employee share option scheme?

Administering an employee share option scheme

When establishing a scheme such as an ESOS or ESOP, a company will engage a corporate services provider so they can set up a platform where employees can access useful information on their ESOS holdings.

It is important for businesses to have a platform that effectively implements and maintains the scheme. The platform should enable the employee to easily check on their holdings and guide them on how to transact and update their information. Clear communication about the scheme is also vital so all employees are constantly working towards common goals.

Many businesses choose to outsource the administration of this portal or platform so they can focus on their core objectives. “A good ESOS platform should be easy to understand and easily accessible,” says Nora. “At BoardRoom, we have partners covering end-to-end plan designs, lawyers who are skilled in this area, and administrative services to oversee the schemes on behalf of the company.”

BoardRoom’s comprehensive, user-friendly and secure platform, EmployeeServe, keeps the employees engaged with their company’s employee share scheme.

BoardRoom helps companies design, implement and manage effective ESOS and ESOP programs

How BoardRoom can help

An ESOS is an innovative and compelling way to attract, retain and engage exceptional employees. By linking employees’ success with that of the company, an ESOS helps create a shared goal of growth, prosperity and long-lasting success.

As the business ecosystem in Malaysia continues to evolve, embracing an ESOS could be the key for businesses looking to secure talent and unlock a competitive advantage.

BoardRoom offers tailored solutions to help companies design, implement and manage effective ESOS and ESOP programs. Our software, EmployeeServe, is easy to use and is mobile optimised so that employees can access the portal 24/7 with the latest real-time data on their holdings. The software’s security features also offer peace of mind to employers and employees.

BoardRoom’s team is available to answer questions and offers personalised support to discuss employee share plans such as ESOPs, ESOSs and other employee stock option plans.

Contact our team and discover how we can support your business today.

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How to navigate transfer pricing in Malaysia: a guide for companies

How to navigate transfer pricing in Malaysia a guide for companies

How to navigate transfer pricing in Malaysia: a guide for companies

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For companies operating across multiple geographies in Asia, regulatory compliance stands as a strategic cornerstone for companies pursuing successful and sustainable growth. Therefore, keeping up to date with the local regulations in each region you operate is important. This includes learning about the transfer pricing rules as they apply to intercompany transactions.

In this article, we consult Cheong Woon Chee, Head of Tax Services for BoardRoom Malaysia, for an overview of transfer pricing in Malaysia, recent updates to reporting requirements and what businesses can do to ensure strong compliance.

What transfer pricing is

Transfer pricing is the setting of prices for the transfer of goods, services and intellectual property between associated parties.

In Malaysia, associated parties include entities within a multinational enterprise group, such as subsidiary companies and branches.

“These are parties who control one another or are under the common control of another party, either directly or indirectly,” Woon Chee says. Transfers between these entities are referred to as related party transactions.

“Transfer pricing exists because every country has a different tax rate,” Woon Chee explains. “For example, in Malaysia, our corporate tax rate is 24%, but in Singapore it’s 17%. Considering this huge difference, companies can use transfer pricing to save on tax.”

In addition, transfer pricing can support transparent transactions between related parties. However, a potential drawback of this transparency is that it may cause conflict internally.

“If the price is higher or lower than the market price, one of the entities may feel their interests are being sacrificed and deem it unjustifiable,” Woon Chee says.

Transfer Pricing in Malaysia

An overview of transfer pricing guidelines in Malaysia

Transfer pricing is strictly regulated by the Inland Revenue Board of Malaysia (IRBM). Companies must abide by the Malaysian Transfer Pricing Guidelines, which provide detailed standards and rules on how businesses should handle transfer pricing in accordance with Section 140A of the Income Tax Act 1967 and the Transfer Pricing Rules 2023.

The arm’s length principle

Central to these regulations is the arm’s length principle, which dictates that transactions between related entities should be priced as if they were conducted between independent parties.

“Ideally, the transfer price should not be very different from the market price,” Woon Chee says. “So companies must do benchmarking to understand whether the mark-up they apply as part of their transfer pricing is at the median range for their industry.

“If your pricing is too high or low, you will need to justify this when you make the transfer to your related party.”

Transfer pricing documentation

Transfer pricing documentation requirements

Malaysian regulations require taxpayers to prepare and keep transfer pricing documentation if their company:

  • makes over RM 25 million in gross income, and the total amount of related party transactions exceeds RM 15 million; or
  • provides financial assistance exceeding RM 50 million (this does not apply to transactions involving financial institutions).

“This documentation is simply a report to show how the transfer price was determined and justify why these prices are comparable to the price that would be applied to a third party in a similar situation,” Woon Chee says. “It enables the IRBM to ensure that the transactions between related parties were priced at arm’s length.”

The documents must be detailed and contemporaneous, meaning they should be prepared at the same time as transfer pricing policies are developed or implemented.

New transfer pricing rules introduced in May 2023 require companies to complete their contemporaneous documentation before their tax return for the year of assessment is due.

“In Malaysia, the timeline to file your corporate tax return is seven months after you close your financial year end,” Woon Chee says.

Companies that fall below the threshold are held to less scrutiny and can prepare a limited (simplified) version of transfer pricing documentation instead.

The following table shows the different types of information required for detailed and simplified transfer pricing documentation:

Analysis Required Full TPD Simplified TPD
Organisation structure
Nature of the business or industry and market conditions
Controlled transaction
Pricing policies
Assumption, strategies and information regarding factors that influence the setting of pricing policies
Comparability, functional and risk analysis
Selection of the transfer pricing metho
Application of the transfer pricing method
Financial information

Why compliance is vital

Taxpayers in Malaysia must supply their transfer pricing documentation upon request by the IRBM. You will only have 14 days to do so. Fail to provide your documents in time, and you may be subject to a fine between RM 20,000 and RM 100,000, or imprisonment of up to six months.

Common compliance challenges

If you are a company with multiple entities in the APAC region and looking to establish a local business in Malaysia, navigating transfer pricing regulations can be challenging. However, prioritising compliance is essential to avoid financial penalisation, potential imprisonment and reputational harm.

Without professional support, businesses often struggle with:

    Understanding their obligations
    Malaysia’s regulatory system is complex and constantly evolving, so it can be difficult to understand which rules and requirements apply to your company throughout its lifecycle.
    Maintaining robust documentation
    Preparing exhaustive transfer pricing documentation can be time-consuming and usually requires at least one month to complete.
    Conducting accurate benchmarking
    Conducting quality benchmarking ahead of transactions is not a simple process. A wealth of accurate, relevant data must be gathered before meaningful comparisons can be drawn.
    Resource constraints
    Many growing businesses lack the resources to establish robust transfer pricing practices and update them regularly.

    According to Woon Chee, the most effective way businesses can overcome the challenges of transfer pricing in Malaysia is by partnering with a knowledgeable corporate services provider.

    “Businesses often don’t have time to monitor all the developments in Malaysia’s rapidly changing tax regulations,” she says. “So it can be helpful to have an expert always on hand to advise on these updates.”

    Premium providers not only have extensive knowledge of local regulations but also maintain open communication with local authorities and industry bodies. This means, armed with their extensive knowledge, they serve as invaluable navigators, assisting your business to adeptly steer through the complex landscape of compliance and governance.

    Another benefit of having a skilled external team support your compliance is that it frees up your executive staff to focus on what really matters to your business.

    “Those running the business have more time to focus on revenue-generating operations,” Woon Chee says. “Why not leave it to the experts so that you can save time and also manage your risk?”

    Tailored support with transfer pricing in Malaysia

    Tailored support with transfer pricing in Malaysia

    BoardRoom provides a full suite of customised business solutions to help your company flourish in the Asia-Pacific region. Our highly sought-after service offerings include Corporate Secretarial, Company Incorporation, Accounting & Bookkeeping and Payroll, among others. With in-depth knowledge of the local tax and regulatory landscapes and a host of resources such as webinars on tax and Budget updates, our specialist Tax Advisory & Filing team can provide quality, customised support to enhance your financial planning and compliance.

    Let us manage transfer pricing compliance for you so you can concentrate on taking your business to new heights.

    Contact BoardRoom for more information:

    Woon Chee MY TAX

    Cheong Woon Chee

    Head of Tax Services for BoardRoom Malaysia

    E: [email protected]

    T: +60-3-7890 4800

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