Majority of small business registered under ROB do not have a business account or non compliance accounts. Except companies registered under the Companies Act 1965, small business entrepreneur registered under the Registration of Business Act 1956 under jurisdiction of SSM do not have to audit or declare its accounts.
But under the norm of business practice worldwide whether small or big firm, all business entrepreneurs must have a proper financial report (Profit & Loss A/C and Balance Sheet). Due to the absent of the Rule & Regulation under the Registration of Business Act 1956, majority of the small business which comprises about three over millions registered entrepreneurs do not have proper accounts
Reply
With respect to your proposal for SSM to have a link to IRB's e-filing and to use its powers under sections 5A(3), 5C(1) and 10 of the Registration of Businesses Act 1956 to refuse to renew the registration of a business which had not submitted its accounts for the preceding year to IRB, we are very concerned with the possible implications, including indirectly to require them to submit their yearly financial account (let alone audited account) and feels that the proposal may unduly burden businessmen and cause undue impediments for businesses.
Businesses such as sole proprietorship and partnership are registered under the Registration of Businesses Act 1956 (ROBA 1956). Under the ROBA 1956, businesses are not required to lodge their accounts to Suruhanjaya Syarikat Malaysia (SSM). The concept underlying the ROBA and the Companies Act 1965 is very different.
In this regard, SSM, through its Companies Law Reform Committee (CLRC) is seriously considering moving towards simplification of the law on some of the obligations imposed by law on private company as for a private company which is owner-managed, the necessity and value of audited accounts become less significant as compared to a public company where there exist elements of public interests or public accountabilities. Drawing analogy to that of businesses registered under ROBA 1956, the issue of public interest is confined to the business transactions undertaken instead of the internal management of the business. Unlike companies, sole proprietorship and partnership are businesses which are owner-managed and do not have shareholders’ accountability. Keeping of accounting records will be a matter of business prudent. This will become useful if they need external funding etc. to show their credit worthiness.
Business owners are fully aware of the obligations to have proper accounts to comply with the Income Tax Act 1967. SSM is of the view that to further introduce additional statutory obligations for businesses to lodge audited accounts with SSM will unnecessarily burden the businesses, increase the cost of doing business and inhibits the growth of small businesses. Inevitably, such a move will not spur the public’s interest to partake business activities. SSM further feels that the imposition of such a requirement on businesses would go against the spirit of creating a conducive business environment and this should be left to the market forces.
