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Understanding Annual Reports vs Annual Returns

It can certainly be confusing to tell between an annual report and an annual return! Well, fret not as we are here to help you! While both are important and sound fairly similar, Annual Reports and Annual Returns are two completely different things.

You may have already come across some of them previously, but as a business owner, it’s important to be clear on commonly used terms, especially ones as important as these.

Let’s start with Annual Reports.

What are Annual Reports?

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An annual report is something like a book or a PDF that is created by a public company. Annual Reports are created to notify and report to a company’s shareholders and stakeholders regarding information such as financial statements, sustainability statements, corporate governance, corporate information, auditor’s report on the financial report and even more.

An annual report acts as proof and evidence of a company’s yearly performance as it will be fully reflected in the annual report regardless of good or bad! 

In short, an annual report is made to highlight the activities and financial performance of the company.

Because of their more complex structures and distance from shareholders, only public companies are required to release an annual report. Private companies are not obligated to produce or release Annual Reports (though a simple email or letter providing a summary of the company’s performance would be a great idea).

What are Annual Returns?

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On the other hand, your annual return is an annual duty that every company must do regardless of public or private status.

The annual return provides an update on the company’s particulars, including:

  • registered office address
  • director and shareholder information
  • financial position including share capital

The annual return is an important document that helps the SSM maintain accurate records of all registered companies in Malaysia. It is also used to ensure that companies comply with the legal requirements of the Companies Act 2016.

Failure to submit the annual return on time can result in fines and penalties, and in extreme cases, the company’s deregistration!

So yes, if you want to start a company, your Company Secretary will always remind you of the annual return submission to the Companies Commission of Malaysia (SSM). In fact, only an appointed licensed Company Secretary or agent is allowed to submit the annual return!

Let MISHU help!

While MISHU currently does not help companies do any annual reporting, you can always give us a buzz if you need any help with annual returns!

If you appoint us as your Company Secretary, rest assured you will not have to deal with this problem yourself!  

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