SSM Announcement on Seven Initiatives to Ease the Burden on the Corporate Sector during the Movement Control Order (MCO)

By Tommy Wong

The COVID-19 pandemic has seen the implementation and initial extension of the Movement Control Order (MCO) until 14.4.2020. Due to the severity of COVID-19, the Malaysian government  extended the MCO further, until 28.4.2020, bringing the total period of the MCO to six weeks. With the MCO now in its second extension, many companies are struggling to keep afloat. On 10.4.2020, the Companies Commission of Malaysia (SSM) announced and issued new initiatives to ease the burden on companies. The Minister of Domestic Trade and Consumer Affairs, who oversees SSM, said that the introduction of these initiatives was to reduce the number of companies being wound up.^[1] The new initiatives announced by SSM are as follows:

1. Moratorium of 30 Days

There is a moratorium period of 30 days from the end of the MCO to lodge all affected statutory documents with SSM. This moratorium period will cover the exemption of payment of late lodgment fee. Do note that this exemption is only valid if the relevant documents are lodged with the Registrar within 30 days from the date of the conclusion of the MCO.

A copy of SSM’s FAQs on this initiative is available here.

2. Extension of 3 Months to File Statement of Accounts

An extension of time of 3 months will be granted to companies to lodge their financial statements with SSM, together with a waiver of the application fee of RM100.

The application fee is required to be paid by companies making an application for extension of time under Item 19 of the Schedule to the Companies Regulations 2017 but, pursuant to to Regulation 8(4) of the Companies Regulations 2017, the Registrar has the power to reduce or waive, partly or in wholly, any fees specified under the Schedule.

A copy of SSM’s FAQs on this initiative is available here.

3. Extension of Time to Comply with Section 241 of the Companies Act 2016

The period for company secretaries to collect and comply with the 20 Continuing Professional Education (CPE) Points requirement to renew their practising certificates will be extended until 31.12.2020, subject to the following terms and conditions:

• Company secretaries are still required to comply with the CPE requirements set out in paragraphs 34 and 35 of the Guidelines Relating to Practising Certificate for Secretaries under Section 241 of the Companies Act 2016;
• The extension of time shall only apply to practising certificates which expire between 14.3.2020 and 31.12.2020;
• The extension of time shall only apply to the first renewal of practising certificates; and
• Any failure to collect the remaining CPE points will result in the rejection of the second application for the renewal of the practising certificate.

You can read more about this initiative by clicking on this link.  A copy of SSM’s FAQs on this initiative is available here.

4. Increase of the Winding-Up Threshold under Section 466 of the Companies Act and the Extension of the Period to Respond to a Notice of Demand

This initiative increases the value of indebtedness under Section 466 of the Companies Act 2016 from RM10,000 to RM50,000 until 31.12.2020. In raising the threshold, the Government hopes that the number of companies being subject to winding-up proceedings will reduce. Other than the threshold, the Government has also extended the period for companies to respond to statutory notices of demand, i.e. from the original 21 days to 6 months

This move is considered to be one of the more significant measures announced by SSM. A copy of SSM’s FAQs on this initiative is available here.

5. Extension of the “2020 Compliance Campaign of the Companies Act 2016”

The 2020 Compliance Campaign of the Companies Act 2016 was implemented to encourage companies to comply with the Companies Act 2016. The campaign offered a 90% reduction on penalties and compounds imposed on companies who have failed to comply with certain provisions of the Companies Act 2016. Due to the MCO, the campaign will be extended until 30.6.2020. Companies will still be entitled to the said 90% reduction as long as they are able to rectify the non-compliances with the provisions of the Companies Act 2016.

A copy of SSM’s FAQs on this initiative is available here.

6. Introduction of the Exemption for Obtaining Approval in relation to Companies Limited By Guarantee

SSM will introduce an exemption for companies limited by guarantee (“CLBG”) to obtain approvals for the solicitation of donations from the public to assist those affected by COVID-19. CLBGs that have previously been approved by the Inland Revenue Board will be exempted from obtaining SSM’s approval to collect such donations. Meanwhile, CLBGs which have not obtained approval from the Inland Revenue Board can still proceed to conduct solicitation of donations from the public provided that an official application is made within 30 days after the date of the conclusion of the MCO.

This exemption is applicable until 31.12.2020. A copy of SSM’s FAQs on this initiative is available here.

7. Extension of Time for Annual General Meetings

Companies will be granted an extension of time of 3 months after the conclusion of the MCO to hold their annual general meetings. However, companies are required to apply to SSM for the said extension of time. In addition, there will also be an exemption of the applicable fee of RM100 for the extension of time.

The application fee is required to be paid by companies making an application for extension of time under Item 23 of the Schedule to the Companies Regulations 2017 but, pursuant to to Regulation 8(4) of the Companies Regulations 2017, the Registrar has the power to reduce or waive, partly or in wholly, any fees specified under the Schedule.

A copy of SSM’s FAQs on this initiative is available here.

By Tommy Wong