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Insights Extension of compound reduction incentive until 31 December

Extension of compound reduction incentive until 31 December

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The Companies Commission of Malaysia (SSM) will extend the compound reduction incentive once more to aid companies which are still recovering from the impact of the pandemic, starting from 1 November 2022 until 31 December 2022. The incentive had previously been implemented for four months beginning March 1, 2022 until June 30, 2022, before it was initially extended to October 31, 2022.
   

Section 371A Companies Act 1965

The incentive refers to Sec 371A of the Companies Act 1965, according to which the Registrar may, in case he deems appropriate to do so, compound any offence committed by any person under this Act, by making a written offer to render payment within a specified period of time. Where an offence has been compounded, no prosecution shall thereafter be instituted in respect of such offence against the person to whom the compound offer was made. 
   

Effect of the compound reduction incentive

Under the current incentive scheme, companies and directors are eligible for a reduction of 90 percent from the original value of all respective compounds. The extension aims to provide more time for companies to comply with legislation, and to lessen the financial burden towards the nation’s post-pandemic economic recovery. 

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