Q:
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Does a branch office need to file annual returns and financial statements?
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A:
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Yes. Pursuant to Sections 575 and 576 of the Companies Act 2016, a foreign company is required to comply with the following annual filing requirements:
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Annual Return – The branch office must lodge its Annual Return within thirty (30) days from the anniversary of its registration date. The Annual Return must include, among other particulars, the registered office address, business address(es) (including branch address(s)), and other prescribed information.
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Parent Company's Financial Statements – The branch office is required to lodge the parent company's financial statements with the Companies Commission of Malaysia within two (2) months after the parent company's Annual General Meeting (“AGM”). If the parent company is not required to hold an AGM under the laws of its place of incorporation, the financial statements must be lodged within such period as it is a public company in Malaysia.
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Q:
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Does a branch office need to appoint a company secretary?
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A:
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There is no provision under the Companies Act 2016 (“the Act”) that requires a branch office to appoint a company secretary. However, Section 563 of the Act requires every foreign company to appoint an agent in Malaysia who is responsible for ensuring the foreign company's compliance with the provisions of the Act.
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Q:
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Does the branch office need to notify SSM of changes to the parent company?
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A:
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Yes. Pursuant to Section 567(1) of the Companies Act 2016, a foreign company is required to notify the Companies Commission of Malaysia (“CCM”) of any changes to the particulars of the parent company, such as its constitution, directors, agent, or other prescribed information. The notification must be lodged with CCM within fourteen (14) days from the date of the change.
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Q:
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Can a branch office be converted into a Sdn. Bhd.?
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A:
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The Companies Act 2016 (“the Act”) does not contain any provision that allows a branch office to be directly converted into a Sdn. Bhd.
If a branch office wishes to carry on business through a company incorporated in Malaysia, it must first incorporate a new Sdn. Bhd. Upon incorporation, the branch office may transfer its business, assets, liabilities (where applicable), and other relevant operations to the newly incorporated company.
Once the branch office has ceased carrying on business in Malaysia, it is required to lodge the prescribed form with the Companies Commission of Malaysia to notify the cessation of its place of business and proceed with the deregistration of the branch office in accordance with the Act.
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Q:
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Is tax and Sales and Service Tax (SST) registration required for a branch office?
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A:
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SST registration depends on the nature of the business carried on by the branch office. If the branch office provides taxable goods or services, such as professional and consulting services or food and beverage services, and its taxable turnover exceeds the prescribed registration threshold, it is required to register for SST.
In addition, as the branch office is carrying on business in Malaysia, it is required to register with Inland Revenue Board of Malaysia and comply with all applicable Malaysian tax obligations, including the filing and payment of taxes in accordance with Malaysian tax laws.
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