In Malaysia, appointing a qualified company secretary is not just good practice — it is a legal requirement under the Companies Act 2016. But what happens if your company has outstanding penalties or compound fines? Can you still change your company secretary?

The short answer is yes, but there are important compliance considerations you must address.

Understanding the Role of a Company Secretary

A company secretary plays a crucial role in ensuring statutory compliance with the Companies Commission of Malaysia (SSM). They are responsible for:

• Filing annual returns

• Maintaining statutory registers

• Preparing board resolutions

• Ensuring timely submission of statutory documents

• Advising directors on corporate governance matters

Because the company secretary acts as the compliance officer of the company, penalties often relate to late filings, failure to lodge annual returns, or delays in submitting financial statements.

Can You Change Company Secretary If There Are Penalties?

Yes, Malaysian law does not prohibit a company from changing its company secretary simply because there are outstanding penalties.

Under the Companies Act 2016, directors have the authority to remove and appoint a company secretary at any time through a board resolution. However, there are several practical and legal points to consider:

1. Outstanding Penalties Remain the Company’s Responsibility

Penalties issued by SSM belong to the company — not the company secretary personally. Even if you change your company secretary, the company must still settle:

• Late lodgement penalties

• Compound fines

• Outstanding compliance fees

Changing the secretary does not automatically erase or transfer liability.

2. The Incoming Secretary May Require Settlement First

In practice, many professional company secretaries will conduct due diligence before accepting appointment. If there are:

• Long-outstanding annual returns

• Years of non-compliance

• Accumulated SSM compounds

The new secretary may require the company to regularise or commit to resolving the issues before formally accepting the role.

3. Proper Resignation and Appointment Process Is Required

The change must follow proper procedures:

• The existing secretary submits a resignation letter (if voluntary).

• Directors pass a board resolution to remove and appoint.

• Notification of cessation and new appointment is lodged with SSM within the prescribed timeframe.

Failure to properly lodge these updates may result in further penalties.

What If the Penalties Were Caused by the Previous Secretary?

This is a common concern. Directors often ask whether they can hold the former secretary responsible for non-compliance.

While company secretaries are responsible for advising on compliance, ultimate responsibility lies with the directors. Under the Companies Act 2016, directors are legally accountable for ensuring statutory documents are lodged on time.

However, if there was clear professional negligence, companies may consider seeking legal advice separately. That issue does not affect the ability to appoint a new secretary.

When Should You Consider Changing Your Company Secretary?

You may consider changing your company secretary if:

• There is repeated non-compliance

• Communication is poor

• Deadlines are frequently missed

• You lack proper compliance advisory support

• Your business has grown and requires more structured governance

A proactive and experienced company secretary can help clean up outstanding issues, negotiate compounds where possible, and ensure future compliance.

Important: Do Not Delay the Change

If your company is already facing penalties, delaying corrective action can worsen the situation. SSM may impose additional compounds or initiate enforcement action if statutory obligations continue to be ignored.

Appointing a competent company secretary can help:

• Review your company’s compliance status

• Identify outstanding filings

• Communicate with SSM

• Regularise documentation

• Prevent further penalties

The sooner you act, the lower the long-term compliance risk.

Conclusion: Yes, You Can Change — But Do It Properly

So, can you change your company secretary if your company has penalties?

Yes, you absolutely can. There is no legal restriction preventing the change. However, outstanding penalties must still be resolved, and proper procedures must be followed to avoid further issues.

If your company is facing compliance challenges or you are considering changing your company secretary, professional guidance is essential.

At Consistant Info Sdn Bhd, we specialise in helping Malaysian companies resolve compliance issues, regularise SSM filings, and transition smoothly to a new company secretary. Our experienced team ensures all statutory procedures are properly handled so your business can move forward with confidence.

For professional assistance, contact Consistant Info Sdn Bhd today at +60 11-2611 1773 and let us help you restore your company’s compliance the right way.