GISBH and corporate governance: MEF urges companies to meet legal requirements
Joint task force suggested to target financial and labour law violations in Malaysia.
SHAH ALAM - Private limited businesses in Malaysia are mandated to submit their annual returns to the Companies Commission of Malaysia (CCM) within 30 days of their incorporation anniversary.
According to Malaysian Employers Federation (MEF) President Datuk Dr Syed Hussain Syed Husman, non-compliance with this requirement could result in fines of up to RM5,000, with an additional RM1,000 for each day the offence continued.
He also said that directors were required to prepare audited financial statements within 18 months of incorporation and subsequently within six months of each financial year.
"Audited financial statements reflect the true and fair view of a company’s financial position and performance.
"Failure to comply with the requirement to file an audited account is an offence punishable by a fine not exceeding RM5,000 or imprisonment for a term not exceeding one year, or both," he told Sinar Daily when contacted recently.
Syed's comments came amidst a broader discussion on corporate compliance following the Inland Revenue Board's (LHDN) recent audits of GISB Holdings Sdn Bhd (GISBH) and its affiliates for past assessment years.
LHDN's enforcement actions—including audits, investigations, and collections—were part of efforts to ensure tax compliance.
GISBH and its subsidiaries had faced fines and tax penalties, which have since been settled.
LHDN confirmed that no preferential treatment was given to GISBH and that the entity remains under continuous scrutiny, which is in line with standard procedures for all taxpayers.
These developments followed claims by Inspector-General of Police Tan Sri Razarudin Husain that GISBH had never paid taxes.
LHDN has stated that it is cooperating with the police to support the ongoing investigation into these tax-related matters.
In addition to tax concerns, GISBH has also been accused of neglecting its zakat (Islamic almsgiving) obligations to the Selangor Zakat Board (LZS).
According to LZS, GISBH and its 20 subsidiaries have no record of zakat payments, despite repeated outreach efforts.
Syed also emphasised the importance of filing Form e-C tax returns (a statement under section 77A of the Income Tax Act 1967 (ITA 1967); an income tax computation pursuant to subsection 77A(3) of ITA 1967; and a deemed notice of assessment under subsection 90(2) of the same Act) within seven months after the financial year-end, as it was essential for reporting a company's earnings and taxes owed.
He highlighted that statutory compliance was not merely a regulatory obligation but a strategic necessity, leading to improved performance, better process control, and reduced risks.
By prioritising compliance, Syed stated, companies could focus on their core responsibilities, enhance strategies, and foster growth in a stable environment.
He further stressed the crucial role of the Companies Commission of Malaysia (SSM) in enforcing the Companies Act 2016 to ensure compliance and protect employees' statutory rights.
"On-site inspections need to be conducted regularly and in a timely manner to detect cases of non-compliance early. Detecting these non-compliances early provides employers the opportunity to rectify the infractions," he said.
Syed said that employees should receive briefings on their rights and obligations to understand their entitlements.
This awareness would enable them to effectively lodge complaints with the relevant authorities if their rights were violated.
In a related matter, Malaysian Trade Union Congress (MTUC) President Mohd Effendy Abdul Ghani highlighted the necessity of stricter legal enforcement.
"Government agencies like SSM and the Human Resources Ministry should conduct regular audits to monitor financial transparency and labour compliance.
"This includes ensuring that companies meet their legal obligations to workers, such as paying wages and making contributions to EPF and Social Security Organisation (Socso).
Effendy also called for heavier penalties for non-compliance, arguing that they would deter companies from exploiting their employees.
He stressed the importance of a collaborative effort involving various government bodies, including the Domestic Trade and Cost of Living Ministry (KPDN), SSM, and the Human Resources Ministry, to effectively address workplace issues.
Effendy emphasised that surprise inspections and audits, particularly for companies with a history of violations, could significantly prevent further exploitation.
To enhance transparency, Effendy suggested publicly naming non-compliant companies, which would create pressure for reform and alert potential employees about risky employers.
He proposed implementing automated systems to flag companies that failed to submit financial statements, facilitating quicker investigations and enforcement actions.
Effendy also highlighted the need to strengthen workers' rights. He called for better access to legal recourse for reporting unpaid wages and other violations, with trade unions like MTUC advocating for affected workers.
"Whistleblower protections are also critical, so that employees can report wrongdoing without fear of retaliation," he added.
He stressed the importance of strengthening labour laws and establishing mechanisms like a wage protection fund to enhance workers' security.
These initiatives would protect employees from exploitative practices while holding companies accountable for failing to meet their obligations.
Effendy further proposed increasing the frequency and scope of audits and inspections by relevant agencies, such as the SSM and the Human Resources Ministry, to detect non-compliance early.
These audits should include financial checks and reviews of employment practices to ensure companies adhered to legal requirements.
"Stricter penalties and fines for companies that fail to submit financial statements or neglect their responsibilities to workers can serve as a deterrent. By increasing the financial and legal consequences of non-compliance, the government can motivate companies to follow the rules more rigorously," he said.
To streamline enforcement, Effendy suggested forming a joint task force to specifically target companies violating both financial and labour laws, enhancing inter-agency collaboration. He reiterated the need for public disclosure of non-compliant companies to create social pressure for compliance and provide potential employees with information on trustworthy employers.
Effendy also advocated updating and reforming labour laws to close loopholes and ensure comprehensive protection for workers.
"By ensuring that laws reflect current workplace realities and are supported by robust enforcement mechanisms, the government can ensure that companies meet both their financial and legal obligations to their employees," he added.
