Understanding Penalties and Compliance Requirements for Audited Financial Statements [Issue 2 of 2]
Adhering to statutory deadlines is crucial for maintaining corporate governance in Malaysia. The Companies Commission of Malaysia (SSM) enforces compliance through a structured penalty system, ensuring companies submit their audited financial statements on time. Failure to comply not only incurs financial penalties but also poses significant legal risks, affecting the company’s reputation and credibility. Understanding these penalties is vital for companies to avoid the serious repercussions of non-compliance.
Penalties for Non-Compliance
The SSM imposes a tiered penalty system for companies that fail to comply with the stipulated timelines:
1.Late Submission Penalties (after the deadline):
- More than 7 days but less than 3 months – RM50.00
- More than 3 months but less than 6 months – RM100.00.
- More than 6 months but less than 12 months – RM150.00.
- Exceeding 12 months – RM200.00.
- Directors who fail to prepare the financial statements within the required timeframe may face fines up to RM500,000, imprisonment for up to one year, or both.
- The failure to circulate financial statements within the required period can result in fines up to RM50,000.
- Continuous non-compliance can lead to additional daily fines of RM500, highlighting the ongoing financial burden of neglecting this obligation.
- The failure to lodge financial statements within the required period can result in fines up to RM50,000.
- Companies may also face a daily fine of RM1,000 for continued delays, significantly escalating the cost of non-compliance.
Conclusion
The compliance requirements and penalties associated with audited financial statements are designed to enforce a high standard of corporate governance in Malaysia. Companies that fail to meet these obligations not only risk substantial financial penalties but also jeopardize their reputation and legal standing. Therefore, directors and corporate officers must prioritizethe timely preparation, circulation, and lodgement of audited financial statements to avoid the severe consequences of non-compliance.
