FINANCIAL REPORTING ACT 1997

LAWS OF MALAYSIA ONLINE VERSION OF UPDATED TEXT OF REPRINT Act 558 FINANCIAL REPORTING ACT 1997 As at 1 September 2012 2 FINANCIAL REPORTING ACT 1997 Date of Royal Assent ………………… 6 February 1997 Date of publication in the Gazette … … … … 6 March 1997 Latest amendment made by Act A1427 which came into operation on … … … … … … … … 1 January 2012 PREVIOUS REPRINTS First Reprint ... ... ... ... 2002 Second Reprint ... ... ... ... 2006 3 LAWS OF MALAYSIA Act 558 FINANCIAL REPORTING ACT 1997 ARRANGEMENT OF SECTIONS PART I PRELIMINARY Section 1. Short title and commencement 2. Interpretation PART II THE FINANCIAL REPORTING FOUNDATION AND THE MALAYSIAN ACCOUNTING STANDARDS BOARD 3. Establishment of the Foundation 4. Functions of the Foundation 5. Members of the Foundation 6. Meetings of the Foundation 7. Establishment and functions of the Board 8. Members of the Board 9. Meetings of the Board 10. Disqualification 11. Remuneration 12. Term of office 13. Resignation and revocation of appointment 4 Laws of Malaysia Section 14. Vacation of office 15. Minister’s directions 16. Other powers and duties of the Foundation and Board 17. Engagement of chief executive officer and other persons 18. Employment of officers and servants PART III FINANCE 19. The Fund 20. Expenditure charged on the Fund 21. Foundation’s financial year 22. Investment 23. Annual report 24. Accounts 25. Non-application of Act 240 26. Power to borrow PART IIIA STANDARDS 26A. Other issuing bodies 26B. Standard for foreign companies 26C. Standard for persons other than foreign companies 26D. Compliance with approved accounting standards PART IV GENERAL 27. (Deleted) 28. Confidentiality 29. Power to make regulations 30. Protection against suits and legal proceedings ACT 558 5 LAWS OF MALAYSIA Act 558 FINANCIAL REPORTING ACT 1997 An Act to establish the Financial Reporting Foundation and the Malaysian Accounting Standards Board; to provide for their functions and powers; and to provide for matters connected therewith. [6 March 1997, P.U. (B) 69/1997] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: PART I PRELIMINARY Short title and commencement 1. (1) This Act may be cited as the Financial Reporting Act 1997. (2) This Act shall come into force on such date as the Minister may, by notification in the Gazette appoint, and the Minister may appoint different dates for the coming into force of different provisions of this Act. Interpretation 2. In this Act, unless the context otherwise requires— “acceptable internationally recognised accounting standards” means accounting standards issued by other accounting standards issuing bodies granted recognition by the Board under section 26A; 6 Laws of Malaysia ACT 558 “accounting standards” means statements of standard accounting practices used for the preparation of financial statements; “approved accounting standards” means— (a) new accounting standards issued by the Board under paragraph 7(1A)(a); (b) existing accounting standards adopted by the Board under paragraph 7(1A)(b); and (c) in relation to foreign companies listed on a stock exchange in Malaysia, acceptable internationally recognized accounting standards; “Audit Oversight Board” means the Audit Oversight Board established under section 31C of the Securities Commission Act 1993 [Act 498]; “Board” means the Malaysian Accounting Standards Board established under section 7; “Central Bank” means the Central Bank of Malaysia established under the Central Bank of Malaysia Act 1958 [Act 519]; “foreign company” has the same meaning as in the Companies Act 1965 [Act 125]; “Foundation” means the established under section 3; Financial Reporting Foundation “Fund” means the Fund established under subsection 19(1); “issues bulletin” means a statement issued or approved by the Board under subsection 7(1A) concerning the interpretation, application or implementation of any approved accounting standards or matters relating to approved accounting standards or any matter relating to accounting practices used for the preparation of financial statements, either generally or in relation to any specific accounting principles or transactions; Financial Reporting 7 “MASB approved accounting standards” means approved accounting standards other than acceptable internationally recognized accounting standards; “Malaysian Institute of Accountants” means the body established under section 3 of the Accountants Act 1967 [Act 94]; “Minister” means the Minister for the time being charged with the responsibility for finance; “principal officer”, in relation to a public listed company, means a person by whatever name called who is responsible for the conduct of the business and administration of the public listed company, and includes a non-executive chairman of the public listed company; “Registrar of Companies” means the Registrar of Companies appointed under the Companies Act 1965; “Securities Commission” means the Securities Commission established under the Securities Commission Act 1993. PART II THE FINANCIAL REPORTING FOUNDATION AND THE MALAYSIAN ACCOUNTING STANDARDS BOARD Establishment of the Foundation 3. There is hereby established a body corporate by the name of the “Financial Reporting Foundation” with perpetual succession and a common seal, which may sue and be sued in its name and, subject to and for the purposes of this Act, may enter into contracts and may acquire, purchase, take, hold and enjoy movable and immovable property of every description and may convey, assign, surrender, yield up, charge, mortgage, demise, reassign, transfer or otherwise dispose of, or deal with, any movable or immovable property or any interest therein vested in the Foundation upon such terms as it deems fit. 8 Laws of Malaysia ACT 558 Functions of the Foundation 4. (1) The functions of the Foundation are — (a) to oversee the carrying out of the functions of the Board under section 7; and (b) to perform any other function as the Minister may prescribe by order published in the Gazette. (2) Without limiting the generality of functions of the Foundation in subsection (1), the Foundation shall be responsible — (a) to provide its views to the Board on any matter which the Board seeks to undertake or implement in relation to the Board’s functions under section 7; (b) to review the performance of the Board; and (c) for all financing arrangements for the operations of the Board, including approving the budget of the Board. (3) The Foundation shall not, by virtue of or in connection with any of its power under subsections (1) and (2), direct the Board to undertake or omit to undertake any particular project or activity or otherwise affect the exercise of the Board’s power or the performance of the Board’s functions under this Act. Members of the Foundation 5. (1) The Foundation shall consist of the following members who shall be appointed by the Minister: (a) the Secretary representative; General of the Treasury or his (b) the Governor of the Central Bank or his representative; (c) the Chairman of the Securities Commission or his representative; Financial Reporting 9 (ca) the Chairman of the Audit Oversight Board or his representative; (d) the Registrar of Companies or his representative; (e) the Chief Executive Officer of Bursa Malaysia Berhad or his representative; (f) the President of the Malaysian Institute of Accountants or his representative who shall be a council member of the Malaysian Institute of Accountants; (g) the Chairman of the Board; (h) four other members who possess knowledge and experience in matters of financial accounting and in one or more of the following fields: (i) accountancy; (ii) law; (iii) business; or (iv) finance. (2) The Minister shall appoint a Chairman of the Foundation from amongst the persons referred to in subsection (1). Meetings of the Foundation 6. (1) Six members of the Foundation shall form the quorum at all meetings of the Foundation. (2) The Chairman of the Foundation shall preside over all meetings of the Foundation. (3) If the Chairman of the Foundation is absent from any meeting of the Foundation, the members present at the meeting of the Foundation shall elect one of the members specified in paragraphs 5(1)(a) to (f) present to preside over the meeting. 10 Laws of Malaysia ACT 558 (4) Any member of the Foundation may take part in a meeting of the Foundation using teleconferencing or videoconferencing or other electronic means. (5) A member of the Foundation who takes part in a meeting of the Foundation using teleconferencing or videoconferencing or other electronic means is deemed to have attended the meeting. (6) Subject to subsections (2), (3), (4) and (5), the Foundation may determine the conduct of its proceedings. Establishment and functions of the Board 7. (1) There is established a body by the name of the “Malaysian Accounting Standards Board” as the standard-setting body of the Foundation whose functions shall be the determination and issuance of accounting standards for the preparation of financial statements, which are required to be prepared or lodged under any law administered by the Securities Commission, the Central Bank or the Registrar of Companies. (1A) Without limiting the generality of functions of the Board in subsection (1), the Board shall be responsible — (a) to issue new accounting standards as approved accounting standards; (b) to review, revise or adopt as approved accounting standards, existing accounting standards; (c) to amend, substitute, suspend, defer, withdraw or revoke any approved accounting standards in whole or in part; (d) to issue, approve, review, revise, amend, substitute, suspend, defer, withdraw or revoke any issues bulletin in whole or in part; (e) to issue, approve, review, revise, amend, substitute, suspend, defer, withdraw or revoke any statement of principles, any technical and other releases and any other document relating Financial Reporting 11 to financial reporting by whatever name called in whole or in part; (f) to sponsor or undertake development of possible accounting standards; (g) to collaborate with other national and international accounting standard-setters and monitor the development of other national and international accounting standards; (h) to participate in and contribute to the development of a single set of accounting standards for international use; (i) to conduct such public consultation as may be necessary in order to determine the contents of accounting concepts, principles and standards; (j) to develop a conceptual framework for the purpose of evaluating proposed accounting standards; (k) to make such changes to the form and content of proposed accounting standards as it considers necessary; (l) to monitor the operation of approved accounting standards to assess their continued relevance and their effectiveness; and (m) to perform any other function conferred or imposed upon it by this Act or such other function as the Minister may prescribe by order published in the Gazette. (2) The Board shall, in relation to its functions under paragraph (1A)(a), (b), (c), (d), (e), (j) or (k), seek the views of the Foundation. (3) Approved accounting standards issued or adopted under subsection (1A) may be expressed to apply in relation to — (a) any published accounts of a commercial, industrial or business enterprise in Malaysia and of overseas subsidiaries and associated corporations where those accounts are to be incorporated in consolidated accounts in Malaysia; and (b) accounting periods or interim accounting periods; 12 Laws of Malaysia ACT 558 and may — (aa) have general or specific application; (bb) differ according to differences in ti