What is "Piercing the Corporate Veil” under the Malaysian Company Law context?
SMEs, let’s delve into the complexities of "piercing the corporate veil" in the Malaysian company law, particularly in light of the Federal Court's (…
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Do you know SMEs play a vital role in the Malaysian economy representing 97% of the total business establishments and comprising nearly 40% of the country’s Gross Domestic Product (GDP).
Do you know many among the B40 (Bottom 40%) income groups are employed in SMEs?
Are you concerned that Government regulation can have a significant impact on these SMEs and compliance with regulations is a major burden for the SMEs.
Recent studies reveal many SMEs are badly impacted by increasing costs of doing business due to penalties arising from non-compliance. Running a company requires compliance with statutory requirements set out by the Companies Act, and failure to do so may result in fines and imprisonment. Some common mistakes SMEs may make are not notifying the Registrar of any business changes, failing to lodge annual returns within the required timeline, not keeping proper documentation, to name a few.
Some of the compliance requirements relevant to SMEs are:-
- Personal Data Protection & Privacy Policy: PDPA 2010 requires SMEs to comply with the “Notice” requirement, that is, notice given must consist of how the personal data is processed, purpose of collection, and rights of access by data user.
- Occupation Safety and Health (OSH) Policy: OSHA 1994 requires employers to implement an effective system to ensure safety of workplace for staff, employee's participation & continual improvement in the management of OSH.
- Tax Compliance: Businesses are required to register for taxes, including GST (Goods and Services Tax), if applicable, and file annual income tax returns, in compliance with the Income Tax Act 1967.
- Labor Laws: Compliance with the Employment Act 1955 is essential, which covers employment terms, wages, working hours, and employee benefits. SMEs must adhere to the regulations set by the Ministry of Human Resources.
- Environmental Regulations: Some SMEs may need to comply with environmental laws, such as the Environmental Quality Act 1974, which governs pollution control and waste management.
Conclusion:
Non-compliance with any applicable law may cause SMEs to be subjected to potential fines and /or imprisonment. For example, section 15 of OSHA 1994 requires every employer and every self-employed person to ensure the safety, health and welfare of their staff at the workplace. Penalties for breaches have increased from RM50,000.00 to RM500,000.00, and imprisonment term reduced from not exceeding 5 to not exceeding 2 years.
Non-compliance with any applicable laws governed under the Local Government Act 1976 may result in retraction of business and advertising licences by local authorities. Without such licences, companies are prohibited from operating their businesses and this may cause losses to the company and potential loss of reputation within the industry.
So, do you want your business to stay compliant? Don’t wait for compliance, legal issues to hit you! Take a proactive approach - secure your business’s future with our in-house legal team.
We are committed to providing with proactive, strategic legal and compliance advice that helps your business to minimize legal costs, non compliance penalties. We help your business to thrive.