KUALA LUMPUR: The Companies Commission of Malaysia (SSM) reported that many companies continue to commit routine offences, such as failing to submit annual returns and financial statements, which result in legal action.
SSM revealed that 6,517 legal actions were taken against companies last year for various offences, including corporate governance violations, Berita Harian reported today.
In cases involving corporate governance, legal action is initiated when SSM investigations show that companies or their officers have violated regulations under the commission's jurisdiction.
"Court action is pursued when companies fail to settle fines for their offences.
"For instance, the failure to file annual returns and financial statements is one of the most frequent offences leading to legal action," SSM said in a statement.
SSM issued 36,510 fines, with the highest number related to failures in submitting annual returns to the registrar. The commission also reported 29 cases involving corporate governance violations, while the remaining 6,488 cases were for other common offences.
"Of the 6,517 legal actions, the most common offence was the failure to file annual returns under Section 68(1) of the Companies Act 2016, accounting for 5,712 cases," SSM said.
"The second most common offence involved failing to file financial statements, followed by cases where businesses operated without proper registration."
As of March 31, 2023, SSM registered 9,208,607 businesses, with 1,638,025 still active. Among these, 1,547,394 were companies, 673,393 of which were active, while 38,362 were limited liability partnerships, with 34,625 active.
Under Section 68(1) of the Companies Act, the most frequent offence remains the failure to file an annual return within 30 days of a company's incorporation anniversary, resulting in 24,658 fines issued.
SSM opened 452 inquiry and investigation files last year, of which 368 were successfully concluded.
In addition, 70,969 companies went through liquidation, with 32,785 doing so voluntarily, and 38,184 liquidated by court order.
By Dec 31, 2023, 41,620 companies had been dissolved. Of these, 37,439 dissolved voluntarily, while 4,181 were dissolved by court order.
SSM also noted that its overall compliance rate stood at 93 per cent as of Dec 31, last year, with 93 per cent compliance for submitting annual returns and 86 per cent for submitting financial statements.
SSM remains consistent in enforcing compliance with the laws it regulates and ensuring that the corporate community upholds its responsibilities and business ethics, it said.
The commission said it was also committed to fostering a conducive business environment and enhance corporate transparency in the country.
To maintain legal adherence, SSM added that it conducts inspections of companies, businesses, and limited liability partnerships, while running awareness programmes to ensure compliance with the relevant laws.