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?

โ€œThe beginning is the most important part of the workโ€ โ€“ Plato

The same thing can be applied when ๐๐ž๐ญ๐ž๐ซ๐ฆ๐ข๐ง๐ข๐ง๐  ๐š ๐ง๐ž๐ฐ๐ฅ๐ฒ ๐ข๐ง๐œ๐จ๐ซ๐ฉ๐จ๐ซ๐š๐ญ๐ž๐ ๐’๐ž๐ง๐๐ข๐ซ๐ข๐š๐ง ๐๐ž๐ซ๐ก๐š๐ (๐‘๐ž๐Ÿ๐ž๐ซ ๐ก๐ž๐ซ๐ž๐ข๐ง ๐š๐ฌ โ€œ๐’๐โ€) ๐Ÿ๐ข๐ซ๐ฌ๐ญ ๐Ÿ๐ข๐ง๐š๐ง๐œ๐ข๐š๐ฅ ๐ฒ๐ž๐š๐ซ ๐ž๐ง๐.

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 โ€œCA 2016โ€)

Every SB is obligated to fix its financial year end (refer herein as โ€œFYEโ€) 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.

๐‘ฐ๐’” ๐’•๐’‰๐’‚๐’• ๐’Š๐’•? ๐‘ซ๐’๐’†๐’” ๐’•๐’‰๐’‚๐’• ๐’Ž๐’†๐’‚๐’ ๐’˜๐’† ๐’„๐’‚๐’ ๐’‡๐’Š๐’™ ๐’๐’–๐’“ ๐’‡๐’Š๐’๐’‚๐’๐’„๐’Š๐’‚๐’ ๐’š๐’†๐’‚๐’“ ๐’†๐’๐’… ๐’‚๐’• ๐’‚๐’๐’š ๐‘ญ๐’€๐‘ฌ ๐’˜๐’† ๐’…๐’†๐’”๐’Š๐’“๐’†๐’… ๐’‚๐’” ๐’๐’๐’๐’ˆ ๐’‚๐’” ๐’˜๐’† ๐’„๐’๐’Ž๐’‘๐’๐’š ๐’•๐’ ๐’•๐’‰๐’† ๐’‚๐’ƒ๐’๐’—๐’†?

๐‘ฉ๐’†๐’‡๐’๐’“๐’† ๐’š๐’๐’– ๐’‹๐’–๐’Ž๐’‘ ๐’Š๐’๐’•๐’ ๐’š๐’๐’–๐’“ ๐’…๐’†๐’”๐’Š๐’“๐’† ๐‘ญ๐’€๐‘ฌ, ๐’๐’๐’๐’Œ ๐’„๐’๐’๐’”๐’†๐’๐’š ๐’‡๐’๐’“ ๐’‚๐’…๐’…๐’Š๐’•๐’Š๐’๐’๐’‚๐’ ๐’„๐’๐’Ž๐’‘๐’๐’Š๐’‚๐’๐’„๐’† ๐’‚๐’” ๐’ƒ๐’†๐’๐’๐’˜:

(๐ข) ๐‚๐จ๐ฆ๐ฉ๐ฅ๐ข๐š๐ง๐œ๐ž ๐ญ๐จ ๐’๐ž๐œ๐ญ๐ข๐จ๐ง 247 of ๐‚๐€ 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.

(๐ข๐ข) ๐“๐š๐ฑ ๐ข๐ฆ๐ฉ๐ฅ๐ข๐œ๐š๐ญ๐ข๐จ๐ง - ๐๐ฎ๐›๐ฅ๐ข๐œ ๐‘๐ฎ๐ฅ๐ข๐ง๐  8/2014 (๐๐‘)

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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