How do I find my financial year end if I incorporate a Sdn Bhd on 18/10/22?
How do I find my financial year end if I incorporate a Sdn Bhd on 18/10/22?
โThe beginning is the most important part of the workโ โ Plato
The same thing can be applied when ๐๐๐ญ๐๐ซ๐ฆ๐ข๐ง๐ข๐ง๐ ๐ ๐ง๐๐ฐ๐ฅ๐ฒ ๐ข๐ง๐๐จ๐ซ๐ฉ๐จ๐ซ๐๐ญ๐๐ ๐๐๐ง๐๐ข๐ซ๐ข๐๐ง ๐๐๐ซ๐ก๐๐ (๐๐๐๐๐ซ ๐ก๐๐ซ๐๐ข๐ง ๐๐ฌ โ๐๐โ) ๐๐ข๐ซ๐ฌ๐ญ ๐๐ข๐ง๐๐ง๐๐ข๐๐ฅ ๐ฒ๐๐๐ซ ๐๐ง๐.
As simple as it sounds, there is more to it than meets the eye. There are various compliance standards that the Company need to adhere to as well as multiple factors to be taken into consideration when making the financial decision on fixing the SB first financial year-end.
Firstly, the Company is required to comply with Section 248 of the Companies Act 2016 (refer herein as โCA 2016โ)
Every SB is obligated to fix its financial year end (refer herein as โFYEโ) within 18 months from the date of its incorporation.
Indeed,18 months may sound like a lot, but you may not want to max out the time frame given. The company may want to consider including a time buffer in their planning for unforeseen circumstances.
๐ฐ๐ ๐๐๐๐ ๐๐? ๐ซ๐๐๐ ๐๐๐๐ ๐๐๐๐ ๐๐ ๐๐๐ ๐๐๐ ๐๐๐ ๐๐๐๐๐๐๐๐๐ ๐๐๐๐ ๐๐๐ ๐๐ ๐๐๐ ๐ญ๐๐ฌ ๐๐ ๐ ๐๐๐๐๐๐ ๐๐ ๐๐๐๐ ๐๐ ๐๐ ๐๐๐๐๐๐ ๐๐ ๐๐๐ ๐๐๐๐๐?
๐ฉ๐๐๐๐๐ ๐๐๐ ๐๐๐๐ ๐๐๐๐ ๐๐๐๐ ๐ ๐๐๐๐๐ ๐ญ๐๐ฌ, ๐๐๐๐ ๐๐๐๐๐๐๐ ๐๐๐ ๐๐ ๐ ๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐ ๐๐ ๐๐๐๐๐:
(๐ข) ๐๐จ๐ฆ๐ฉ๐ฅ๐ข๐๐ง๐๐ ๐ญ๐จ ๐๐๐๐ญ๐ข๐จ๐ง 247 of ๐๐ 2016
(a) If the SB becomes a subsidiary of any holding company that is incorporated in Malaysia within two years from its incorporation date, the FYE should be synchronized with the FYE of the holding company.
(b) Having said that, a holding company may apply in writing to the Registrar under Section 247(3) of CA 2016 if the holding company has good reason for the subsidiary to continue having a different financial year.
(c) Although the SB may initially fix its FYE differently compared to its holding company and change it on a later date (within two years of its incorporation date), but why go through the hassle when you can do it neat at the initial stage not to mention the additional professional fee that will be incurred when change of FYE involved.
(๐ข๐ข) ๐๐๐ฑ ๐ข๐ฆ๐ฉ๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง - ๐๐ฎ๐๐ฅ๐ข๐ ๐๐ฎ๐ฅ๐ข๐ง๐ 8/2014 (๐๐)
As stipulated under Para 4.2 of the PR, the first accounting period would be the first year of assessment for the SB.
But of course, if the Company intended to opt for (i)(c) above, the Company is obliged to comply to Para 5 of the PR as well.
All in all, of course, other than the above, there are a lot more factors which may come into play that may affect the decision such as the agreement with a third party, decision by key management personnel of the Company and etc. Hence, I am confident, each Company out there will come up with its best decision when fixing its first financial year end after a thorough consideration.
Authored by Calvin Lim, audit senior, from his personal Linkedin posting https://bit.ly/3SwfJFr
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