Category: Business Insights

Employee Statutory Contributions: EPF, SOCSO, EIS & HRD

Employee Statutory Contributions EPF, SOCSO, EIS & HRD

Employee Statutory Contributions: EPF, SOCSO, EIS & HRD

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In Malaysia, statutory contributions form an essential framework that safeguards employees’ welfare, providing them with social protection, retirement savings, and access to training and upskilling programmes. Employers need to meet these obligations, as they mean upholding responsibility to staff and preserving the credibility of the business, essentially building employees’ trust in the organisation.

The Employees Provident Fund (EPF), the Social Security Organisation (SOCSO), the Employment Insurance System (EIS), and the Human Resources Development (HRD) levy are the four main statutory payroll contributions in Malaysia. In this guide, you’ll learn how each of them works, including key calculations, employee and employer obligations, and benefits, helping you navigate the challenging landscape of managing statutory employee contributions. A practical checklist is also included so you can take the proper steps to ensure compliance.

Understanding Each Statutory Contribution

Each of these statutory contributions helps establish a comprehensive system, which can benefit employees in the aspects of career development, occupational security, and retirement life, contributing to the wider economy.

EPF (Employees Provident Fund)

The EPF is Malaysia’s main retirement savings scheme, requiring mandatory contributions from both employer and employee. For employees under the age of 60 with a salary of RM5,000 or below, employers typically need to contribute 13% of an employee’s wages, while employees contribute 11%. The rates vary with other income levels and age groups.

Contributions are calculated from the employee’s monthly wages, and employers are required to remit the total sum to the EPF by the 15th day of the following month. Late payment may result in additional charges or penalties.

For employees, EPF contributions are critical to financial security after retirement. Balances grow over time with annual dividends declared by the EPF, and funds can be withdrawn under specific conditions, such as retirement, permanent disability, or reaching the statutory withdrawal age. This system ensures that employees are not left financially vulnerable in later life.

SOCSO (Social Security Organisation)

SOCSO provides social insurance protection, covering employees through two principal schemes: the Employment Injury Scheme, which offers protection in the event of workplace accidents or occupational diseases, and the Invalidity Scheme, which provides coverage for invalidity or death not related to employment.

Both employers and employees are required to contribute to SOCSO, with contribution rates determined by wage brackets and capped at specific ceilings. Typically, employers are required to contribute 1.75% of the employee’s monthly wage, while employees need to contribute 0.5%, provided they are under 60 years old.

Benefits available under SOCSO are extensive and include medical care, temporary disablement benefits, permanent disablement pensions, dependants’ benefits, and rehabilitation programmes. This safety net reassures employees that they and their families will receive support if unforeseen circumstances arise.

EIS (Employment Insurance System)

The Employment Insurance System was introduced to provide financial relief and job search support to employees who lose their jobs through retrenchment, redundancy, or other economic reasons. The scheme is applicable to all citizens and permanent residents in Malaysia aged between 18 and 60 years old working in the private sector, with certain exclusions, such as domestic workers, self-employed persons, and retirees.

Under the EIS, both employer and employee contribute 0.2% each of the employee’s monthly wage, subject to a wage ceiling. While the contributions are small in proportion to wages, they create a meaningful safety net for affected employees.

To submit a statutory contribution for EIS, employers must register on PERKESO’s Assist Portal first. After making the deductions, upload the contribution files and submit the payments on or before the 15th of the following month.

Employees who qualify can receive benefits such as job search allowances, training allowances, and career counselling services. The scheme also funds retraining and skills upgrading, helping displaced workers return to the job market with stronger employability.

HRD (Human Resources Development) Levy

The HRD levy, administered by the Human Resource Development Corporation (HRD Corp), is designed to fund workforce upskilling and continuous professional development. Employers in industries with at least 10 Malaysian employees are mandated to contribute, while those with 5 to 9 employees may also opt in. Employees are not required to make the contribution.

Contributions are calculated as 1% of employees’ monthly wages and are remitted to HRD Corp. This funding pool enables companies to reclaim training costs through grants that support courses, certifications, and skills programmes.

For employers, the HRD levy is not just a compliance obligation but an investment in workforce capability. By tapping into HRD grants, businesses can strengthen employee productivity and competitiveness. For employees, the levy ensures access to structured learning opportunities that advance career progression.

Employee Statutory Contributions Checklist

As an employer in Malaysia, you can follow the guidelines below to ensure you take every necessary step for compliance with statutory contributions:

Employee Registration

Check and make sure every new hire of the company has been registered with EPF, SOCSO, and EIS, and HRDF where applicable. Any delay can result in potential penalties, fines, or even legal actions.

Monthly Deductions & Payments

Calculate the statutory contributions per month in advance to ensure timely and accurate submissions of the contributions. Contributions are due by the 15th of the following month.

Payslip Transparency

Transparency can strengthen the trust your employees have in the organisation. Clearly indicate the deductions on the payslips to establish transparent communication with them.

Record Keeping

Keep a record of every receipt and supporting documents related to the statutory contributions. They are essential to internal audits and any government inspections.

Staying Updated

The rates of every payroll statutory contribution may Stay updated on any news from EPF, SOCSO, EIS, and HRD Corp to ensure that your payroll processes reflect any updates. You must update your employees regularly to maintain trust and transparency.

Preparation for Inspections:

Authorities may inspect all the relevant documentation from time to time to ensure compliance and accuracy of the contributions. Therefore, it’s important to gather and maintain all the essential documents for government audits.

How BoardRoom Can Help with the Administration of Employee Statutory Contributions

With various payroll statutory contributions, namely EPF, SOCSO, EIS and HRD, in place, companies and businesses must manage them effectively to ensure compliance and the welfare of employees, contributing to the overall economy of the country. Companies should conduct regular evaluations of deductions and consistently inform employees of any relevant updates to ensure more transparent communications and facilitate timely and accurate submissions.

Whether you are managing a large organisation or operating a small business in Malaysia, it can be challenging to handle the administration of statutory contributions for your employees. BoardRoom is here to support you with a professional team that is experienced in helping businesses navigate the complex statutory matters through expert advisory services. In addition, BoardRoom offers an advanced payroll system, automating all the calculations of deductions to ensure compliance and accurate submission.

Talk to BoardRoom today to learn how our payroll solutions can benefit both your business and employees today.

SSM Crackdown: Ensure Annual Return Compliance

SSM Crackdown Ensure Annual Return Compliance

SSM Crackdown: Ensure Annual Return Compliance

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The Companies Commission of Malaysia (SSM) has recently intensified its enforcement of annual return compliance regulations. This development has serious implications for all companies operating in Malaysia, especially those that have not kept up with filing obligations for their company annual return, Audited Financial Statements (AFS), and Ultimate Beneficial Ownership (UBO) declarations.

Many organisations are still unaware of how important it is to meet statutory deadlines. Yet, inaction now could cost more than just fines; it could lead to the suspension of your company secretary’s licence or the striking off of your company from the register.

If your business is not yet compliant, it is essential to act immediately. With the right corporate governance support, such as the expertise provided by BoardRoom Malaysia, your company can align quickly and effectively with all of Malaysia’s annual return requirements before enforcement actions begin.

What Is Driving SSM’s Crackdown?

Low Compliance Rates Among Malaysian Companies

Despite clear regulatory obligations, a significant number of companies continue to overlook or delay their annual return submissions in Malaysia. This widespread non-compliance has triggered the SSM’s heightened surveillance and zero-tolerance approach.

Stricter Enforcement Timeline

SSM has made it clear that submitting company annual return filings and related documents is no longer an administrative task to be taken lightly.

SSM has outlined a phased enforcement plan:

  • July 2025: Show-cause letters to non-compliant company secretaries.
  • August 2025: Issuance of compounds under Section 259(1) of the Companies Act 2016.
  • Post-September 2025: Full enforcement actions

Late or inaccurate filings will be treated as serious non-compliance issues, subject to legal penalties.

Who Is at Risk?

Company secretaries may face licence suspension if the entities under their care persistently fail to meet their statutory responsibilities. Likewise, directors are personally accountable for ensuring that their company complies with all requirements, including the timely submission of the company’s annual return and AFS documents.

Dormant Companies Are Not Exempt

Many businesses mistakenly assume that dormant or inactive companies are exempt from these filing obligations. However, unless the company has been formally struck off or liquidated, it must still submit its annual return documentation annually. Ignoring this can lead to penalties and administrative complications.

SSM’s Moratorium Until 30 September

Recognising the need for a transitional period, SSM has granted a temporary moratorium until 30 September 2025. During this time, companies have a limited window of opportunity to rectify non-compliance issues for eligible applicants before tougher enforcement action begins.

Risks of Non-Compliance

Failing to meet annual return compliance obligations can trigger multiple issues, extending beyond monetary penalties.

Financial Penalties

Every day of delay increases the fines and compounds the risk. Over 36,000 fines were issued in 2024 alone, with the majority related to late AR submissions. Such delays can turn into costly compliance issues, particularly if left unaddressed for months or years.

Public Reputational Damage

Compliance records are public. Late or missing filings reflect poorly on your business’s reliability, governance, and transparency. Investors and business partners are less likely to trust organisations with inconsistent corporate practices.

Operational Disruption

Non-compliance may prompt an investigation or result in your company being struck off the SSM register. This can significantly impact your ability to operate, conduct business, or access financing.

How to Ensure Annual Return Compliance

How to Ensure Annual Return Compliance

In this environment of stricter oversight, businesses must prioritise accuracy, timeliness, and transparency in their filings.

Here are steps you can take immediately to protect your business:

Take Immediate Measures

Conduct a full compliance review by evaluating the current status of your company’s filings. Ensure that your company’s annual return, AFS, and UBO declarations are up to date. If any documents are missing or overdue, submit them before the moratorium ends.

Implement Annual Return Reminders

Create a structured compliance calendar. Use digital tools to automate your annual return reminder system and track key deadlines. This reduces the risk of human error and makes year-round compliance easier.

If you are working with multiple entities or subsidiaries, a centralised system for annual return reminders can help you to avoid gaps in compliance across different company structures.

Engage with a Trusted Compliance Partner

Navigating these statutory filing requirements internally can be time-consuming, resource-intensive, and likely to result in mistakes. Collaborating with a professional services provider like BoardRoom ensures that all legal obligations, including annual return compliance and timely financial statement submissions, are met accurately and efficiently.

By partnering with an experienced provider, you not only receive timely annual return reminders, but also gain peace of mind knowing that your company’s annual return obligations are managed in line with SSM’s AR Malaysia framework.

With a trusted compliance partner, your internal team can remain focused on core operations while regulatory professionals handle the complexity of Malaysia’s annual return requirements and other SSM submissions.

Annual Return Compliance in Malaysia – How BoardRoom Can Help

Annual return compliance in Malaysia requires coordination across both corporate secretarial and accounting functions. Our team ensures that your annual filings, from statutory returns to financial statements, are accurate, timely, and fully compliant with SSM requirements.

If your organisation has dormant or inactive entities, leaving them idle can increase compliance risks and add unnecessary administrative costs. Properly closing such companies through strike-off or voluntary liquidation helps streamline operations and strengthens your group’s overall compliance status.

Whether your business is active or no longer operational, we provide end-to-end support for both corporate secretarial and accounting compliance, including:

  • Preparing and finalising Audited Financial Statements (AFS) and converting to XBRL for MBRS submissions
  • Filing Annual Returns and updating Beneficial Ownership (BO) details
  • Ensuring timely and accurate submissions across all SSM corporate secretarial and accounting compliance requirements
  • Advising on and executing company strike-offs or Members’ Voluntary Winding Up (MVWU) for dormant entities

By partnering with BoardRoom, you gain the assurance of full annual return compliance across both secretarial and accounting obligations, while reducing the strain on your internal resources.

Act Now to Secure Compliance

Now is the time to act. With the SSM moratorium ending on 30 September 2025, the risk of non-compliance is increasing daily. Financial penalties, operational disruptions, and reputational damage are all avoidable if you act early.

Whether you need help filing your company’s annual return, ensuring your AR records are up to date, or closing dormant entities that no longer serve a purpose, BoardRoom is here to support you.

Our experienced team is ready to help you stay compliant with all aspects of Malaysia’s annual return regulations from timely submissions to strategic advice on corporate restructuring.

Reach out to us today to get expert support and complete peace of mind.

Malaysia AGM Report 2025

Malaysia AGM Report 2025

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Unveiling Insights into Malaysia’s Annual General Meetings (AGMs)

The 2025 AGM meeting season in Malaysia reflects a dynamic shift toward physical and hybrid meeting formats, driven by regulatory changes and a focus on enhanced shareholder engagement. Companies are adapting to evolving expectations by leveraging advanced digital tools and hybrid-ready solutions to ensure compliance and accessibility. At BoardRoom Malaysia, our expertise in managing AGM meetings underscores our leadership in delivering seamless, engaging, and compliant shareholder experiences.

Our comprehensive report, based on data from AGM and EGM proceedings in 1H 2025, provides actionable insights into meeting trends, attendance patterns, proxy form processing, and strategies to optimise shareholder participation.

Discover how you can navigate the busy AGM season effectively while balancing regulatory demands and stakeholder expectations.

Key Takeaways:

  • Plan AGM Timelines Early: With a high volume of AGMs in May and June, secure optimal dates and venues early to ensure sufficient preparation time for financial reporting and stakeholder engagement, avoiding resource constraints and boosting attendance.
  • Embrace Hybrid Meeting Formats: Balance in-person and virtual accessibility by partnering with reliable service providers equipped with robust AV and digital infrastructure and support for live streaming, e-voting, and real-time polling. This ensures a seamless and compliant AGM meeting experience for both your company and your shareholders.
  • Boost Attendance with Hybrid AGMs: Address logistical barriers of physical meetings by adopting hybrid formats that enhance participation while maintaining in-person interaction.
  • Streamline Proxy Form Processing: Manage the surge in proxy forms in the second quarter, particularly in May, by leveraging digital share registry portals like BoardRoom Smart Investor Portal (BSIP) for efficient e-Proxy submissions and enhanced shareholder engagement.
  • Optimise Meeting Duration: Streamline agendas and allocate timed Q&A segments to manage longer meetings driven by increased shareholder interaction in physical and hybrid formats. Invest in robust technology and pre-meeting rehearsals to minimise delays.
  • Leverage Digital Tools for Support: Utilise BSIP’s self-service features, such as e-Proxy submissions and annual report downloads, to manage high call volumes during peak AGM months (February and June) and ensure seamless shareholder support.
  • Enhance Attendee Experience: Offer cost-effective door gifts and refreshments, such as branded merchandise or locally sourced items, to strengthen shareholder relations and encourage in-person attendance at physical meetings.

Download the full report to read about the AGM meeting trends and gain actionable strategies for optimising your AGM practices, ensuring compliance, and fostering meaningful shareholder engagement.

DOWNLOAD FULL REPORT

Related Business Insights

The Future of AGM Shareholder Meetings

The Future of AGM Shareholder Meetings

The Future of AGM Shareholder Meetings

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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

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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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How a Transfer Listing Can Elevate Your Company’s Market Standing

How a Transfer Listing Can Elevate Your Company’s Market Standing

How a Transfer Listing Can Elevate Your Company’s Market Standing

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Table of contents

  1. What Is Uplisting?
  2. What Does a Transfer Listing Involve?
  3. Key Benefits of Transfer of Listing for Companies
  4. Strategic Considerations Before a Transfer Listing
  5. Common Challenges of a Transfer Listing and How to Overcome Them
  6. Real-World Impact of a Successful Transfer Listing
  7. Navigate Your Uplisting Journey with Confidence

 

In Malaysia’s dynamic capital markets, companies often reach an inflexion point — a phase where strategic expansion, greater investor access, or stronger market visibility becomes essential to continued growth. One proven pathway is a transfer of listing, commonly known as an uplistingin the financial and investment circles, where companies migrate from alternative boards such as the ACE or LEAP Markets to the Main Market of Bursa Malaysia.

This move is not merely symbolic. For many growth-stage or mid-cap companies, uplisting offers the chance to reposition as stable, investor-ready entities with robust governance and long-term potential. As the regulatory framework evolves to support such transitions, understanding the true value of a transfer listing has never been more important for corporate leaders.

What Is Uplisting?

Uplisting refers to the process of moving a company’s stock from a junior or alternative exchange board, such as the ACE Market or LEAP Market, to a more regulated and prestigious platform, namely the Main Market. In Malaysia, these listing boards differ in terms of financial performance requirements, public shareholding spread, governance expectations, and investor accessibility.

The LEAP Market is tailored for micro and small enterprises with fewer compliance obligations and a limited investor audience (primarily sophisticated investors).

The ACE Market, by contrast, caters to growth-stage companies with broader investor access and moderately stricter requirements.

The Main Market caters to mature businesses with strong financial track records, robust governance practices, and the capacity to meet more stringent regulatory standards. A successful transfer listing to this board signals a company’s ability to operate at a higher level of public market scrutiny and often signals its ambitions for national or regional expansion.

What Does a Transfer Listing Involve?

A transfer listing entails a comprehensive review of the company’s financial position, corporate governance, internal controls, and operational readiness. Bursa Malaysia assesses applicants based on profitability track records, shareholder thresholds, and compliance history.

Enhancements to the listing framework introduced in 2023 have made streamlined the transfer listing process, especially for transfers from the ACE Market to the Main Market. These updates have reduced procedural duplication and accelerated access to the Main Market’s benefits, such as increased visibility, broader investor reach and wider access to capital.

Key Benefits of Transfer of Listing for Companies

Choosing to pursue a transfer of listing isn’t simply about prestige; it delivers tangible, long-term strategic benefits that can enhance a company’s growth and sustainability.

Here are some of the key advantages:

Enhanced Visibility and Credibility

Listing on the Main Market elevates a company’s profile significantly. The Main Market is closely monitored by analysts, institutional investors, and the media, offering companies a platform to gain broader recognition. This increased visibility strengthens the company’s corporate image and builds greater trust among stakeholders.

Greater Liquidity and Shareholder Base

A transfer listing opens the door to a larger and more diverse investor pool, including retail investors, institutions, and foreign participants. This typically results in higher trading volumes and improved share price stability and increased investor confidence, making it easier for existing shareholders to realise value and for new investors to come on board.

Better Access to Capital Markets

With enhanced investor confidence, transparency and credibility, companies in the Main Market often find it easier to raise funds through private placements, rights issues, or bond offerings. This improved access to capital enables strategic investments, supports expansion plans, and strengthens the company’s overall financial resilience.

Improved Corporate Governance and Transparency

Transfer listings to the Main Market requires compliance with stricter disclosure and governance standards, pushing companies to improve board composition and independence, risk management frameworks, and financial reporting. These enhancements not only meet regulatory standards, but also foster long-term organisational trust and accountability.

Increased Attractiveness to Institutional Investors

Institutional funds — both local and international — often have mandates that restrict investments to Main Market companies due to liquidity and governance criteria. A successful transfer listing to the Main Market, therefore, expands the company’s investor base to include a wider range of funding sources and strategic investors who can support its growth and expansion efforts.

Transfer Listing

Strategic Considerations Before a Transfer Listing

Before committing to a transfer listing, companies must carefully evaluate their current capabilities and level of readiness. This involves meeting regulatory thresholds and implementing internal transformation to align with Main Market expectations.

Regulatory and Financial Requirements

To qualify for the Main Market, a company must meet Bursa Malaysia’s listing requirements, which include profitability benchmarks, adequate public shareholding spread, and audited financial track records. Any gaps must be identified and addressed early in the planning phase to avoid delays or potential rejection.

Governance and Operational Readiness

Beyond financial metrics, companies must demonstrate strong internal governance which includes robust internal controls, an independent and effective board structure, and formalised policies to manage risks and disclosures. These elements reflect the governance maturity required for the company to operate under the scrutiny that comes with a Main Market listing.

Common Challenges of a Transfer Listing and How to Overcome Them

Even well-prepared companies can face roadblocks during the transfer listing process. Anticipating these challenges early on can help pave the way for a smooth and successful transition.

Navigating Regulatory Complexities

The application process involves coordination among multiple stakeholders: legal advisers, financial consultants, auditors, and regulators. Aligning documentation and meeting disclosure requirements can be resource-intensive without guidance from experienced advisors.

Managing Stakeholder Expectations

Transitioning to the Main Market can lead to scrutiny from internal and external stakeholders. From employees to investors, it is essential to manage expectations through consistent, proactive communication and transparency throughout the transfer listing journey.

Leveraging Professional Support

Engaging an experienced corporate services provider can significantly ease the burden of the transfer listing process. From conducting due diligence to liaising with regulators and ensuring post-listing compliance, professional guidance can help streamline the transfer listing journey and reduce risk.

Real-World Impact of a Successful Transfer Listing

What tangible outcomes can companies expect after a transfer listing?

Apart from achieving its strategic objectives, several positive outcomes are commonly observed:

Stronger Valuation and Re-Rating Opportunities

Companies that transition to the Main Market often experience upward re-rating on their stock valuation, driven by increased analyst coverage and investor demand.

Greater Investor Confidence and Participation

A listing on the Main Market is viewed as a mark of corporate maturity and governance. This fosters higher investor trust, resulting in stronger trading volumes and sustained long-term participation.

Increased Access to International Markets

With improved credibility, companies may find it easier to establish partnerships, attract cross-border investments, or even consider dual listings (secondary listings) in other global financial exchanges.

Enhanced Brand Reputation Within the Industry

Being a Main Market-listed company raises the company’s standing not only among investors but also within its sector, offering competitive advantages in attracting new clients and partnerships.

Improved Employee Morale and Talent Acquisition

Being a Main Market-listed company is a powerful symbol of achievement, growth and stability, which can help attract top-tier talent and improve morale among existing employees.

A successful transfer listing is more than a compliance milestone; it’s a strategic transformation in how a company operates, presents itself, and competes in the marketplace. From enhanced investor trust to operational maturity, the impact of a transfer listing extends well beyond listing day. It lays the foundation for sustainable growth and broader opportunities in Malaysia’s capital market.

To navigate this journey successfully, it is important to work with experts who understand the nuances of governance, regulatory compliance, and market readiness. At BoardRoom Malaysia, we guide companies through every phase of the IPO application and share registration process and into their post-listing journey. Whether you’re taking early steps or preparing to leap to the Main Market, our team is ready to help unlock your company’s full potential.

Read about the regional IPOs we’ve supported and see how we’ve helped companies achieve successful market debuts.

Ready to go public or transfer a listing on Bursa Malaysia? Contact us today to start your journey with confidence.

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Tips for Hybrid Meetings: Prepare for the New AGM Rules in Malaysia

Tips for Hybrid Meetings_ Prepare for the New AGM Rules in Malaysia

Tips for Hybrid Meetings: Prepare for the New AGM Rules in Malaysia

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Starting 1 March 2025, companies in Malaysia will no longer be permitted to hold fully virtual Annual General Meetings (AGMs). Under the new guidelines issued by Bursa Malaysia, all listed companies must provide a physical venue for shareholders, even if they also allow online participation.

Although this may seem like an added responsibility, it’s also a chance to host more engaging and accessible meetings. Hybrid AGMs, which combine physical and virtual attendance, can help you comply with the updated rules while offering shareholders the convenience of joining from anywhere.

In this article, we will explain the key regulatory changes, highlight the advantages of hybrid AGMs, and share practical tips to help you adapt smoothly. We will also introduce BoardRoom’s new fixed-location hybrid meeting venue, a cost-effective solution to simplify your AGM planning.

What Is Changing for AGMs in Malaysia?

Under Bursa Malaysia’s revised Listing Requirements, all public-listed companies (PLCs) must host AGMs at a physical venue starting from 1 March 2025. This means fully virtual AGMs will no longer be allowed.

The aim is to promote greater transparency and inclusivity by allowing shareholders to attend in person, while addressing technological barriers through hybrid setups that maintain online access.

To meet these requirements, companies will need to:

  • Book a physical location for their AGM.
  • Ensure that the quorum requirements are met with attendees present on-site.
  • Provide seamless connectivity and clear communication for virtual participants.
  • Enable secure live voting and interactive Q&A functions for both physical and online attendees to ensure equitable participation.

With the right support and tools, a hybrid meeting can help you manage all these tasks effectively, ensuring a smooth experience for your team and your shareholders.

Why Choose a Hybrid AGM?

A hybrid AGM combines the best of both worlds — a physical venue for in-person participation, along with virtual tools that allow remote shareholders to join, vote and engage online while meeting Bursa Malaysia’s requirements.

Key Advantages of Hybrid Meetings:

Flexibility for Shareholders

Not everyone can attend meetings in person due to travel, work, or health reasons. A hybrid format ensures all shareholders have the chance to join and vote.

Wider Participation

Hybrid meetings typically see higher attendance, especially from shareholders who are based overseas or in different time zones, expanding participation for PLCs.

Stronger Engagement

With features like live Q&A, online polling and digital hand-raising, shareholders feel equally involved and engaged, even though they are not attending in-person.

Better Records and Reporting

Digital tools allow for easy recording, attendance tracking and automated reporting. This helps companies save time, reduce errors and enhance transparency.

Compliance with Confidence

A well-run hybrid meeting ensures you meet Bursa Malaysia’s rules without sacrificing convenience or shareholder satisfaction.

To get the most from a hybrid AGM, it is important to plan ahead, secure a suitable venue and invest in reliable technology to ensure a seamless experience.

Hybrid AGM

Hybrid Meeting Tips for a successful AGM

Here are some straightforward tips to help you run a successful and compliant hybrid Annual General Meeting:

Secure a Suitable Venue

Choose an accessible venue that has proper facilities to support both in-person and online participation. The venue should have strong internet, ample space for AV setup, and comfortable seating for shareholders.

Test Your Technology Early

Ensure that your cameras, microphones, internet connection, broadcasting software and e-voting platform are tested well in advance. A trial run can help identify issues early and avoid last-minute hiccups.

Have On-Site Technical Support

Always have an experienced tech team available onsite on the day of the meeting. They can manage equipment setup, troubleshoot problems, and support online features like e-voting and online Q&A submissions for a seamless AGM experience.

Communicate the Details

Send out AGM invitations early and explain clearly how to join in-person or online. Provide instructions, log-in details and any necessary links for voting or accessing the live stream.

Ensure Real-Time Interaction

Shareholders should be able to ask questions, respond to polls and vote in real-time. Use a digital platform that supports secure voting and two-way communication. Appoint an independent scrutineer to validate votes.

Train Your Presenters

Whether your speakers are joining online or speaking at the venue, make sure they understand how the hybrid setup works. Offer a briefing on how to use the microphone, camera and presentation tools.

Keep a Backup Plan Ready

Always have a contingency plan in case of technical issues. For example, have backup internet access or an alternative livestream link to ensure continuity and compliance.

Introducing BoardRoom Malaysia’s Hybrid-Ready AGM Suite

To help companies adapt to the new AGM requirements, BoardRoom Malaysia has partnered with a trusted provider to launch a new fixed-location hybrid meeting venue. This service is designed to help you hold a professional, compliant, and stress-free AGM without needing to manage every detail yourself.

What the Venue Offers:

  • Prime Location: Conveniently located with easy public transport access such as LRT, and ample parking.
  • State-of-the-Art Technology: Stable high-speed internet, live streaming setup, interactive display, real-time voting systems and tech tools to ensure your AGM run without a hicth.
  • On-Site Expert Support: A dedicated team of meeting managers and IT professionals to handle everything, from logistics to troubleshooting, so you can focus on your presentation.
  • Cost-Effective Packages: Affordable and flexible packages tailored to suit your needs, whether you expect a small turnout or a larger audience.

BoardRoom’s Share Registry Services (SRS) team can support every part of your AGM process, from preparing your Notice of Meeting and managing proxies to ensuring accurate vote tabulation.

Learn more about our Share Registry Services and how we can help with your next AGM.

Why Work with BoardRoom?

With decades of experience supporting listed companies across Asia, BoardRoom Malaysia is trusted for delivering secure and compliant meeting services.

When you choose our Hybrid-Ready AGM Suite solution, you are getting:

  • A fully equipped, compliant meeting space
  • End-to-end AGM support from our SRS professionals
  • Peace of mind knowing your AGM is in expert hands

Let us take care of the venue, the tech and the admin so you can focus on engaging with your shareholders and delivering results.

Your Next AGM Strategy Starts Here

The move away from fully virtual AGMs may feel like a big shift, but it presents a great opportunity to improve how you connect with your shareholders. With the right planning and support, hybrid meetings can be both compliant, cost-efficient and highly effective.

By following these simple tips, you can run hybrid meetings that are professional, smooth and inclusive for everyone, whether they attend in-person or online.

Contact our team today to learn more or request a custom quote.

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MBRS 2.0 Benefits Every Malaysian Business Should Know

MBRS 2.0 Benefits Every Malaysian Business Should Know

MBRS 2.0 Benefits Every Malaysian Business Should Know

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As Malaysian businesses advance in digital transformation, regulatory compliance is also evolving. The introduction of Malaysian Business Reporting System (MBRS) 2.0 is a significant step towards streamlining the filing of corporate documents, XBRL conversion, and simplifying annual reporting requirements, making MBRS compliance more efficient and transparent.

In this article, we’ll explore the key MBRS 2.0 benefits and how businesses can prepare for a smooth transition. Understanding these advantages will help companies adapt to the system efficiently and remain compliant with regulatory requirements.

What is MBRS 2.0?

MBRS is an online submission platform introduced by the Companies Commission of Malaysia (SSM) in 2018 for corporate filing and reporting. Released in September 2024, MBRS 2.0 is an enhanced version designed to improve efficiency, accuracy, and accessibility for businesses. It also introduces structured digital submissions through XBRL conversion, a key feature that standardises financial data across all filings.

The upgraded system introduces better automation, standardisation, and integration with digital reporting tools. These improvements help reduce errors, cut down on paperwork, and speed up the submission process for XBRL-compliant financial statements, annual returns, and exemption applications.

MBRS 2.0 Rollout Timeline for Businesses

The transition to MBRS 2.0 is being implemented in three phases, with different filing requirements becoming mandatory at each stage. Businesses must ensure they comply with the relevant deadlines to avoid penalties.

Phase Effective Date Filing Requirements
Phase 1 1 December 2024 Annual returns and unaudited financial statements (UFS) under CA 2016, exemption applications, and rectifications.
Phase 2 1 March 2025 Annual returns and audited financial statements (AFS) under CA 1965, AFS for financial institutions under CA 1965 and CA 2016, and foreign company filings.
Phase 3 1 June 2025 Audited financial statements under CA 2016, including all exemption applications and rectifications.

As MBRS 2.0 transitions through each phase, the use of XBRL conversion tools will be essential for businesses to meet submission requirements in the prescribed format. Companies should engage their finance and compliance teams early to prepare for the transition and stay updated on any additional guidelines from SSM Malaysia.

Annual reporting compliance

The Key MBRS 2.0 Benefits for Malaysian Businesses

MBRS 2.0 introduces several advantages that enhance compliance and reporting for companies in Malaysia. These improvements help businesses operate more efficiently while meeting regulatory requirements with ease.

Streamlined MBRS Compliance and Reporting

MBRS 2.0 eliminates manual paperwork, making it easier to submit corporate filings online. This standardised approach ensures that businesses can meet compliance requirements efficiently while lowering the risk of errors.

Reduced Costs and Time Efficiency

By automating the reporting process, businesses can cut down on administrative costs and lessen the time spent on manual data entry. Faster submissions mean companies can allocate resources more effectively.

Better Data Accuracy and Transparency

The MBRS system enhances data integrity by minimising human errors and establishing consistency in financial reporting. This increased transparency benefits not just businesses but also regulators and stakeholders.

Enhanced Accessibility and Convenience

With MBRS 2.0, businesses can file reports from anywhere with an internet connection. This remote accessibility simplifies compliance, particularly for companies with multiple locations or remote teams.

Improved Regulatory Oversight and Fraud Prevention

A structured and automated reporting system helps regulatory authorities detect discrepancies and non-compliance more effectively. This reduces opportunities for fraud and strengthens corporate governance.

Future-Proofing Businesses for Digital Transformation

MBRS 2.0 aligns with Malaysia’s broader digitalisation initiatives, ensuring that businesses remain competitive in an increasingly technology-driven landscape. The system integrates well with modern accounting and compliance tools, making it easier for businesses to stay up-to-date.

Sustainability and Environmental Benefits

By shifting to digital filings, MBRS 2.0 significantly eases the reliance on paper-based processes. This move supports corporate sustainability efforts and helps businesses reduce their carbon footprint.

How Malaysian Businesses Can Prepare for MBRS 2.0

Adapting to MBRS 2.0 requires businesses to take proactive steps to guarantee a smooth transition. From understanding new regulations to upgrading internal processes and training of staff, preparation is key to maintaining compliance.

Understand the New Compliance Requirements

Companies should familiarise themselves with MBRS 2.0 guidelines to confirm they meet the latest regulatory standards. Staying informed will prevent non-compliance issues and penalties.

Upgrade Internal Systems and Processes

Businesses should evaluate their existing accounting and reporting systems to verify compatibility with MBRS 2.0XBRL conversion requirements. Investing in updated software solutions can streamline the transition.

Train Teams and Key Personnel

Employees handling compliance and financial reporting should undergo training to understand how MBRS 2.0 works. SSM and other regulatory bodies often provide resources to facilitate this learning process.

Leverage Digital Tools for Seamless Transition

Adopting automation tools and AI-driven compliance solutions can help businesses file reports more efficiently. These tools can reduce errors and improve reporting accuracy.

Stay Updated on Regulatory Announcements

Since MBRS 2.0 is being rolled out in phases, businesses should monitor updates from SSM to stay compliant with any new requirements or deadlines.

Partner with a Trusted Corporate Service Provider

Navigating new compliance requirements can be challenging. Engaging a professional MBRS Filing & XBRL Conversion service provider like BoardRoom Malaysia can help businesses transition smoothly to MBRS 2.0. Our expertise in regulatory compliance ensures that companies meet all filing obligations efficiently and accurately.

Making MBRS 2.0 Work for Your Business

The transition to MBRS 2.0 represents a significant shift in how Malaysian businesses handle corporate compliance. With its many benefits, including streamlined reporting, improved accuracy, and cost efficiency, this digital transformation is a step forward for businesses of all sizes.

If your company is seeking expert guidance on MBRS 2.0, look no further than BoardRoom Malaysia. We offer comprehensive corporate compliance services to help businesses like yours navigate the transition with ease.

Contact us today to ensure your business stays ahead in an evolving regulatory landscape.

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Johor-Singapore SEZ: A New Era of Incorporation & Tax Incentives for Businesses

Johor-Singapore SEZ A New Era of Incorporation & Tax Incentives for Businesses

Johor-Singapore SEZ: A New Era of Incorporation & Tax Incentives for Businesses

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Table of Content

  1. What Is the Johor-Singapore SEZ (JS-SEZ)?
  2. Why Incorporate in the Johor-Singapore SEZ?
  3. Unlocking Tax Incentives in the Johor-Singapore SEZ
  4. Which Sectors Benefit Most?
  5. Economic Impact & Forward Outlook
  6. Why Act Now? 

On 7 January 2025, Malaysia and Singapore marked a historic milestone with the formal launch of the Johor-Singapore Special Economic Zone (JS-SEZ), a bold step forward in regional economic collaboration. More than just a bilateral agreement, the Johor-Singapore SEZ represents a platform for cross-border synergy, sustainable development, and high-value investments. For companies eyeing expansion in Southeast Asia, the Johor-Singapore SEZ presents a compelling proposition – attractive tax incentives and schemes that that lower the cost of entry, accelerate operational setup, and create long-term advantages for cross-border businesses.

In this article, we explore how the JS-SEZ initiative could help transform your business.

What Is the Johor-Singapore SEZ (JS-SEZ)?

The Johor-Singapore SEZ is a strategic cross-border initiative that combines the strengths of both Johor and Singapore. It facilitates the smoother flow of goods, services, investments, and people between the two regions and aims to emerge as a key engine of Southeast Asia’s economic future.

The Special Economic Zone covers nine flagship development zones, including well-established powerhouses like Iskandar Malaysia and the Pengerang Integrated Petroleum Complex. Each area is designated for strategic industries such as clean energy, digital innovation, advanced manufacturing, and tourism.

According to the Malaysian Investment Development Authority (MIDA), these are the nine Special Economic Zones in JS-SEZ and their focus areas:

  • Johor Bahru City Centre: Business services, digital economy, health
  • Forest City Special Financial Zone: Financial services, sustainable urban development
  • Iskandar Puteri: Manufacturing, business services, digital economy, education, health, tourism
  • Tanjung Pelepas–Tanjung Bin: Manufacturing, energy, logistics
  • Pasir Gudang: Manufacturing, energy, logistics
  • Senai–Skudai: Manufacturing, digital economy, education, logistics, tourism
  • Sedenak: Manufacturing, business services, digital economy, education, energy, food security, health, logistics, tourism
  • Pengerang Integrated Petroleum Complex (PIPC): Manufacturing, energy, logistics, petrochemicals
  • Desaru: Education, food security, health, tourism

Why Incorporate in the Johor-Singapore SEZ?

To fully access the tax incentives, regulatory support, and strategic advantages offered under the Johor-Singapore SEZ framework, businesses must incorporate or register a legal presence in Malaysia. While the SEZ is designed to enhances bilateral cooperation, most government-administered incentives including reduced corporate tax rates and investment allowances are specifically tied to incorporation and operations within the designated Malaysian zones.

Incorporating within the JS-SEZ positions your business to unlock a wide range of government-backed benefits, tailored to accelerate business growth.

These include:

Streamlined Incorporation Process

The JS-SEZ initiative simplifies and accelerates the incorporation journey in alignment with Malaysia’s broader push for a pro-business ecosystem. Startups and multinational companies alike can establish operations quickly and gain faster access to key regional markets and capitalise on first-movers advantages.

Need expert assistance with your company setup? Discover our incorporation services designed for end-to-end support.

Strategic Cross-Border Location

Incorporated businesses in the Johor-Singapore SEZ enjoy proximity to Singapore’s global trade and finance hub while benefiting from Johor’s lower cost base, extensive infrastructure, and access to a growing talent pool. This unique positioning enables companies to optimise both operational efficiency and regional market access which are ideal for ASEAN expansion.

Unlocking Tax Incentives in the Johor-Singapore SEZ

One of the most compelling reasons to consider incorporation in the Johor-Singapore SEZ is the strong set of tax incentives rolled out by the Ministry of Finance and Johor State Government, administered by the Malaysian Investment Development Authority (MIDA).

Here’s a breakdown of the tax incentives available to eligible businesses:

Corporate Income Tax (CIT)

Businesses operating within qualifying sectors of the SEZ may enjoy a reduced corporate tax rate as low as 5% for up to 15 years, compared to Malaysia’s standard corporate tax rate of 24%.

Investment Tax Allowance (ITA)

Companies in targeted industries can benefit from up to 100% Investment Tax Allowance on qualifying capital expenditure, encouraging reinvestment and business expansion within the Johor-Singapore SEZ.

Knowledge Worker Tax Relief

To attract high-value talent, the SEZ offers a flat tax rate of 15% on employment income for knowledge workers, applicable for up to 10 years.

Stamp Duty Exemptions & Sponsorship Deductions

Eligible companies can receive up to 40% exemptions on stamp duty for commercial property transfers. Companies can also claim tax deductions of up to RM1 million for sponsoring major business events.

Renovation Incentives

Qualifying renovation costs are eligible for Accelerated Capital Allowance (ACA) of up to 60%, making it more cost-effective for businesses to modernise their workspaces within the Johor-Singapore SEZ.

Qualifying renovation costs are eligible for Accelerated Capital Allowance (ACA) of up to 60%, making it more cost-effective for businesses to modernise their workspaces within the Johor-Singapore SEZ.

Which Sectors Benefit Most?

The SEZ’s tax incentives are tailor-made for key growth sectors, including:

  • Global Business Services (GBS)
  • Smart Logistics & Supply Chain Management
  • Aerospace & Specialty Chemicals
  • Artificial Intelligence & Medical Technology
  • Tourism, Hospitality & Retail
  • Green Energy & Sustainable Infrastructure

Whether you operate in high-tech industries or tourism sector, the Johor-Singapore SEZ offers targeted tax incentives to help your business scale more efficiently and competitively.

High-tech industries

Economic Impact & Forward Outlook

The JS-SEZ is projected to generate 20,000 high-skilled jobs and execute over 100 high-impact projects within the next decade. This ambitious plan positions Johor on the map as a premier investment destination, while allowing Singapore-based firms to benefit from regional expansion at a lower cost base.

Initiatives such as passport-free clearance trials and upgraded customs protocols complement these efforts, further reinforcing the SEZ’s commitment to ease of doing business.

Why Act Now?

Applications for tax incentives under the Johor-Singapore SEZ are open from 1 January 2025 until 31 December 2034. With growing investor interest and a limited window for early movers, businesses that act now are better positioned to secure first-mover advantages and unlock the full range of SEZ tax incentives.

How BoardRoom Malaysia Can Help

At BoardRoom, we specialise in helping businesses navigate the complexities of incorporation, corporate governance, and regional tax incentive programmes. With our deep understanding of the Johor-Singapore SEZ environment, we provide end-to-end support, from entity structuring to tax incentives application and long-term compliance.

Ready to expand into the Johor-Singapore SEZ? Contact us to learn more about our tailored Company Incorporation Services and how your business can benefit from this game-changing opportunity.

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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

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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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