TO ALL MEMBER FIRMS
SUPPORTIVE MEASURES DURING THE COVID-19 OUTBREAK
The onset of the COVID-19 outbreak is testing many businesses’ financial stability and emergency preparedness. While the COVID-19 outbreak is negatively impacting your firm’s normal operations, the Institute believes that a combination of prudent measures, investment in technology and flexible working arrangements can help you maintain efficiency while keeping you and your staff safe.
As part of risk management, you might want to consider the following actions to prepare your firm for a soft landing and to take advantage of the recovery at the later stage:
•Keep up-to-date with information from official sources on the COVID-19 outbreak and any directions from Ministry of Health;
•Evaluate the possible impact of the COVID-19 outbreak and develop mitigating strategies;
•Perform a financial health check on your practice;
•Re-do your budget based on the current situation;
•Engage your clients by continuing to enhance client relationship during difficult times. Advise them on their eligibility to apply for any special reliefs under the Economic Stimulus Package and seek for practical help from the government/financial institutions; and
•Manage your cash flows and if you are in financial difficulty, please connect with your respective banks to seek advice on deferment and restructuring of loan/financing facilities. Check out for announcements from the Government from time to time for any new relief measures that can benefit you.
A Quick Summary of Practical Assistance by the Government/Authorities
A sum of RM20 billion economic stimulus package was first announced by the Government on 27 February 2020, to be implemented over a six-month period. Subsequently, the Government announced the second economic stimulus package on 27 March 2020, i.e. Pakej Rangsangan Ekonomi Prihatin Rakyat (PRIHATIN), worth RM250 billion (inclusive of RM20 billion under the first stimulus package), to weather the impact of COVID-19.The stimulus packages comprise special relief financing facility, special allowances, one-off cash aid and schemes for small and medium enterprises (SMEs), among others. Kindly take note that SME is defined as per official national SME definition and member firms of MIA that meet the threshold criteria are also considered SMEs and hence eligible to apply for those special relief schemes.
Below is a quick summary of practical assistance announced by the Government and other regulators/authorities to reduce financial and regulatory compliance burden in times of crisis, that are relevant to your firm.
A. Financing facilities to reduce financial burden
To alleviate the short-term cash flow problems
i. Special Relief Facility (SRF)Under the SRF, RM5 billion was allocated to help alleviate the short-term cash flow problems faced by SMEs adversely affected by the COVID-19 outbreak. Eligible SMEs can obtain financing of up to RM1 million for a tenure of up to 5.5 years, including a 6-month grace period. The financing rate is capped at 3.5% p.a. The SRF is available from 6 March 2020 to 31 December 2020.Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will provide guarantee schemes worth RM5 billion for SMEs that face difficulty in securing loan/financing facilities. With the advocacy of the Institute, member firms are now eligible for applying for guarantee schemes under SJPP. Please visit SJPP website for more information on their guarantee schemes.
ii. Deferment and restructuring of loans/financing facilities to individual and SMEs Banking institutions will offer an automatic deferment of all loan/financing repayments for a period of 6 months, with effect from 1 April 2020. This offer is applicable to performing loans denominated in Malaysian Ringgit, that have not been in arrears for more than 90 days as at 1 April 2020. For credit card facilities, banking institutions will offer to convert the outstanding balances into a 3-year term loan with reduced interest rates to help borrowers better manage their debt.
It is important to note that the interest/profit will continue to accrue on loan/financing repayments that are deferred, and you should discuss with your financial institutions on the options available to resume your scheduled repayments after the deferment period. There will be a 100 percent stamp duty exemption arising from these rescheduling, restructuring, or moratoriums. The exemption is given from 1 March until 31 December 2020.Individuals and SMEs that do not wish or need to avail themselves of these flexibilities can continue with their current repayment structures. Please click here for Frequently Asked Questions (FAQs) on Deferment Package and Conversion Package.
In addition, moratorium on loans will be expanded to include loans from TEKUN, MARA and cooperatives as well as government agencies that grant loans to SMEs, starting 1 April 2020.To help you cope with the work-from-home arrangements.
A total of RM300 million SME Automation and Digitalisation Facility (ADF) has been prepared for SMEs looking to digitalise or automate their business. The financing can be used to help purchase hardware, software, and other IT solutions and services, in addition to equipment and machinery. Eligible SMEs can receive up to RM3 million with the tenure offered up until 10 years. The financing rate is at 4.00% p.a. The ADF is available from 6 March 2020 to 31 December 2020.Interested firms/SMEs can apply directly to participating financial institutions which comprise commercial banks, Islamic banks and development financial institutions regulated by Bank Negara Malaysia (BNM). You may also apply online through the business financing referral platform at imsme.com.my.
Please visit the following links for the BNM’s FAQs on financing facilities and further details of financial assistance from the respective financial institutions:
•BNM’s FAQs on financing facilities to assist SMEs affected by COVID-19
•Islamic financial institutions
B. Other measures that help in improving the short-term cash flows of firms
•Employees Provident Fund (EPF) will provide consultation services for employers beginning 15 April 2020, including the options of payment deferment, restructuring and rescheduling of employers’ contributions.
•The Government will also introduce a wage subsidy of RM600 a month for three months for employers with a 50% drop in business since 1 January 2020, for workers with a salary of below RM4,000. Eligible employers must comply with the stipulated terms and conditions.
•Deferment of income tax instalment payment for SMEs for three months starting 1 April 2020.
•Free internet from April 2020 onwards until the end of Movement Control Order (MCO).
C. Flexibility arrangements to reduce regulatory compliance burden
I. Submission of tax returns to the Inland Revenue Board (IRB)
•Up to two-month extension for filing of tax returns and payments of balance of tax payables are given to the taxpayers for the income tax returns with the actual deadlines fall between March 2020 and June 2020. The extension terms and filing deadlines may vary depending on the type of income tax return you are filing. For further information, please refer to the Return Form Filing Programme for the Year 2020 issued by the IRB for further details.
•The due date for submission of any customs returns of 31 March 2020 has also been extended to 30 April 2020. Any penalties imposed on the customs returns submitted on or before 30 April 2020 will be waived. For further information, please refer to Royal Malaysian Customs Department (RMCD)’s website.
II. Reporting and other deadlines to the Companies Commission of Malaysia (SSM), the Securities Commission Malaysia (SC) and Bursa Malaysia Berhad (Bursa)
Main Market and ACE Market
•Listed issuers and corporations can apply for extension of period to hold annual general meeting (AGM) to a time period longer than 6 months from their financial year end.
•SC has granted management companies of Real Estate Investment Trusts (REITs) listed in the Main Market with a financial year-end of 31 December 2019 an extension of time of two-month to hold AGMs by 30 June 2020.
•Listed issuers and corporations are granted automatic 1-month extension for issuance of quarterly and annual reports, that are due by 31 March 2020 and 30 April 2020.
•Listed issuers and corporations are granted automatic 24 months extension of time for submission of regularisation plans from the date of the First Announcement.
•Listed corporations are granted automatic 1-month extension for the announcement of the financial statements that are due by 31 March 2020 and 30 April 2020.
For further information, please refer to Bursa’s website on directives/clarifications for the Main Market, ACE Market and LEAP Market.
Other non-listed companies
•Non-listed companies can also apply for extension of period to hold AGM to a time period longer than 6 months from their financial year end. MIA has requested from SSM for an extension of at least two months for holding AGM to be granted to companies whose year-ends fall on 30 September 2019 to 31 December 2019, in view of the extended MCO and possibilities of bottlenecks in the finalisation of financial statements/audits and preparation of AGM after the lifting of the MCO.
For further information, please refer to press release issued by SSM.
D. Other relief measures by SSM, SC and Bursa Malaysia
I. Extension of time to comply with the CPE hours for renewal of practising certificate (PC) for company secretaries by SSM
•SSM has extended the time provided to company secretaries to comply with the 20 CPE points for renewal of the PC for company secretaries. For further information, please refer to SSM’s announcement.
II. Annual licensing fee waiver and CPD hours reduction for Capital Market Licensed Entities by the SC
•Waiver of SC’s annual licensing fees for 2020 on the core regulated activity of all Capital Markets Services Licence (CMSL) entities with profit before tax of RM5 million or less during financial year 2019.
•Waiver of the annual licensing fee for the Year 2020 for all individual CMSL holders and Capital Markets Services Representative’s Licence (CMSRL).
•Reduction of the minimum CPE requirements to 10 CPE points from the current 20 CPE points effective 1 July 2020 for a period of 12 months for all CMSRL holders and Employees of Registered Persons (ERPs).
•Reduction of the minimum training requirements to 3 days from the current 5 days effective 1 July 2020 for a period of 12 months for Trading Representatives and Marketing Representatives.
One-off training subsidy for existing registered firms of Audit Oversight Board (AOB) with less than 10 audit partners, up to RM30,000 per firm for Approved Training Programmes conducted by the Malaysian Institute of Certified Public Accountants (MICPA).
For further information, please refer to SC’s Media Releases.
III. Annual listing fee, margin accounts, margin financing, counter service hours and CDS transaction forms by Bursa Malaysia:
•Rebate of 50% of the annual listing fee for listed issuers with market capitalisation below RM500 million as at 31 December 2019 and report financial losses as measured by Group loss after tax in their quarterly report for a quarter ended on any date between 1 April 2020 to 30 June 2020.
•Greater flexibility for brokers by removing the requirement to automatically liquidate their client’s margin account if the equity in the margin account falls below 130% of the outstanding balance, and not be required to make additional margin calls or impose haircuts on any collateral and securities purchased in the margin accounts.
•Allowing brokers to accept other collaterals, such as bonds, collective investment schemes, unit trusts, gold and immovable properties for purposes of maintaining their clients’ margin account if such collaterals are valued as per the broker’s credit policy.
•Shortened counter service hours by market participants following the MCO from 10.00 a.m. to 3.00 p.m.
•Extension of time for submission of physical CDS transaction forms to Bursa Malaysia as follows:
a) Transactions performed between 2 March 2020 to 31 March 2020 are granted an extension of time for submission by 30 April 2020; and
b) Transactions performed between 1 April 2020 to 30 April 2020 are granted an extension of time for submission by 29 May 2020.
For further information, please refer to Bursa Malaysia’s Media Releases.
MIA’s Practice Review
The Practice Review Department (PRD) has postponed the scheduled onsite practice review visits to minimise direct contact between people. Given this development and to prevent major interruption in carrying out practice review visits, the Institute has opted for desktop reviews. This option is not new to our audit firms as the department had been performing desktop reviews and taken files and other materials from certain audit firms for practice review since our establishment. We believe that this is the best mode of practice for the time being to enable us to carry out this regulatory responsibility and at the same time, protecting the safety and health of all parties.
We will continue to communicate any important developments as they arise and we hope that with cooperation and understanding during this difficult period of time, our members and the Institute can work as close to what we would have under normal circumstances as possible.
MALAYSIAN INSTITUTE OF ACCOUNTANTS
DR. NURMAZILAH DATO’ MAHZAN
Chief Executive Officer