The Relief Measures Provided by the Companies Commission of Malaysia for Companies during and as a Result of the Movement Control Order

      The indebtedness threshold for winding up purposes under Section 466(1)(a) of the Companies Act 2016 (“CA 2016”) is prescribed at RM10,000 pursuant to the Federal Gazette dated 26th January 2017. To ease the financial constraints, the indebtedness threshold has been increased from RM10,000 to RM50,000.00 by the Minister of Domestic Trade and Consumer Affairs from 23rd April 2020 to 31st  December 2020¹. This increase is significant as it means that no winding up proceedings can be commenced against a company for a debt sum below RM50,000.00 until 31st December 2020.

      Further, the time frame to pay the sum stated in a statutory notice of demand has also been increased from twenty-one (21) days to six (6) months. With these relief measures in place, companies that faces cash flow issues arising from the implementation of MCO will be given a period of six (6) months to settle or negotiate for the settlement of the sum demanded by their respective creditors2.

      The increase in the indebtedness threshold is welcoming as this would offer some breathing space for business owners in view of the current economic outlook.

      CCM has granted an automatic moratorium of thirty (30) days after the MCO is lifted to lodge and submit all the requisite statutory documents under the CA 2016 and Limited Liability Partnerships Act 2012 with CCM. The usual late lodgement fee will also be exempted during the 30-day moratorium period³.

      CCM will grant an EOT for companies to hold annual general meetings (“AGM”) under Section 340(4) of the CA 2016. The EOT will be granted for a period of ninety (90) days from the end of the MCO. However, companies are required to apply to CCM for such EOT without incurring any expenses as the usual application fee of RM100.00 will be waived.

      The Practice Directive No 6/2020 dated 7th April 2020 (“Practice Directive”) issued by CCM on 7th April 2020 (revised on 15th April 2020) , has provided the special procedures for companies which are affected by the MCO to apply for EOT to hold AGM and lodgement of financial statements. The salient points are presented in the Q&A format, as tabulated below.

       In view that companies might be unable to prepare and audit their financial statements and reports as a result of the MCO, CCM will grant an EOT for a period of ninety (90) days for companies to:
       (i) circulate its financial reports to its members under Section 258(1) of the CA 2016;
       and
       (ii) lodge their financial statements and reports to CCM under Section 259(1) of CA 2016.

       The usual EOT application fee of RM100.00 will also be waived by CCM. However, this EOT application only applies to companies with financial year End (“FYE”) after 31st August 2019 to 31st December 2019.

       The FAQs below are summarised from the Practice Directive and the “FAQ on EOT For Circulation and Lodgement of Financial Statements” issued by CCM on 15th April 2020.

      The Compliance Campaign is an initiative by CCM to increase the corporate community’s compliance rate to the Companies Act 1965 (“CA 1965”) and the CA 2016, by offering a maximum compound reduction rate of ninety per centum (90%) from the original compound rate imposed under the CA 1965 and CA 2016.

      This Compliance Campaign has started since 1st January 2020. In order to achieve the abovementioned objectives, CCM has taken the initiative to extend the Compliance Campaign from 30th April 2020 to 30th June 2020 as a result of the MCO. This mean that companies will still be able to obtain the maximum of ninety per centum (90%) compound reduction rate from CCM if they rectify their non-compliance before 30th June 2020. The Compliance Campaign only applies to compounds for common offences under CA 1965 and CA 2016 which include the company’s failure to hold AGM, the failure to lodge annual return, the failure to prepare, circulate and lodge financial statement.⁴

      CCM has introduced an exemption for CLBG from the need to obtain approval before soliciting and collecting donations from the public to help those affected by COVID-19 pandemic5. CLBG which has obtained approval from the Inland Revenue Board Malaysia (“IRB”) pursuant to subsection 44(6) of the Income Tax Act 1967 (“ITA 1967”) will be automatically exempted until 31st December 2020 from seeking  CCM’s approval to collect such donations and funds from the public.

      However, a CLGB which has not previously obtained an approval from IRB is allowed to proceed to solicit and collect donations for COVID-19 related charities on the condition that formal application must be made within thirty (30) days after the MCO is lifted⁶. Each CLBG is also required to keep proper records of all the donations and funds collected for COVID-19 related charities for CCM’s supervision. This is to ensure that good corporate governance practice is always in place.

      CCM is prepared to grant eligible company secretary an EOT to fulfil their Continuing Professional Education (CPE) requirements until 31st December 2020, subject to the terms and conditions as provided in the FAQs issued by CCM on the application of practicing certificate under section 241 of the CA 2016⁷. 

In conclusion, it is important for companies and enterprises to be aware of and tap into the initiatives by CCM as these relief measures would alleviate the hardships faced during these challenging times.