On 26 November 2024, Suruhanjaya Syarikat Malaysia (SSM) announced the mandatory implementation for Financial Statements under Malaysian Business Reporting System 2.0 (MBRS 2.0). This highly anticipated announcement follows the market Go-Live of MBRS 2.0 on 25 September 2024.
All companies including foreign companies registered in Malaysia are now mandated to file their submissions of Annual Return, Exemption Application and Financial Statements via the digital platform in phases, including previously exempted banking, financing and insurance companies regulated by Bank Negara Malaysia (“BNM”) and companies with Financial Statements prepared in accordance with Companies Act 1965.
1. Annual Return Filing Requirements
Filing annual returns is a statutory obligation for all companies incorporated in Malaysia. The Companies Act 2016 mandates that these returns include up-to-date information about a company’s structure, directors, shareholders, and registered address.
What’s New for 2025?
Under Phase 1 (effective 1 December 2024), annual returns must be submitted digitally via the MBRS 2.0 system, ensuring accuracy and compliance with the latest reporting standards. Companies failing to meet this obligation risk penalties and may face delays in obtaining approvals for other filings. To avoid penalties, companies should ensure their records are accurate and begin preparing their submissions early.
2. Unaudited Financial Statements and Reports
For exempt private companies (EPCs) and other qualifying entities, unaudited financial statements provide a simplified way to fulfill compliance requirements.
Implementation Timeline:
- Phase 1 (effective 1 December 2024): Companies must submit unaudited financial statements and reports for EPCs through MBRS 2.0.
- Phase 2 (effective 1 March 2025): The requirement is extended to include financial statements for companies limited by guarantee and those regulated by Bank Negara Malaysia.
3. Rectification Applications and Court Order Filings
Errors in statutory submissions, such as annual returns or financial statements, can lead to complications for companies. Rectification applications and court order filings allow businesses to correct errors while maintaining compliance.
- Key Scenarios for Rectification:
- Incorrect details in annual returns or unaudited financial statements.
- Filing discrepancies in financial reports regulated under the Companies Act 2016.
- Process Updates for 2025:
- Phase 1 (effective 1 December 2024): Companies may submit rectification applications via MBRS 2.0 for annual returns and unaudited financial statements.
- Phase 2 (effective 1 March 2025): Similar provisions are available for audited financial statements and companies regulated by Bank Negara Malaysia.
4. Applications for Extensions of Time
Unforeseen circumstances may prevent timely submission of financial statements or annual returns. The Companies Act 2016 allows companies to apply for an extension of time, but this must be done in compliance with SSM’s guidelines.
- What’s Changing?
- From Phase 1, companies can apply for an extension of time for:
- Financial statements of exempt private companies.
- Unaudited financial statements and annual returns.
- By Phase 3 (effective 1 June 2025), this provision will also cover audited financial statements and related exemption applications.
- From Phase 1, companies can apply for an extension of time for:
- Common Reasons for Extensions:
- Delays in compiling financial data.
- Unavailability of directors or auditors to complete required approvals.
- How to Apply: Applications must be submitted digitally via MBRS 2.0 with a valid justification and supporting documents.
Conclusion
The phased implementation of these compliance requirements highlights Malaysia’s commitment to modernizing its regulatory framework. By aligning with the updates under the Companies Act, businesses can ensure seamless operations, avoid penalties, and build trust with stakeholders.