How long can a new company's first financial year be?
A company's first financial statements must be prepared within 18 months of incorporation (section 248(1)(a) of the Companies Act 2016), so the first financial year can be longer than 12 months only within that limit. Later statements are due within six months of each year end.
The first financial year of a newly incorporated company starts on the date of incorporation. Unlike later years, it need not be exactly 12 months, but the Act sets a deadline that limits how long it can sensibly be.
- Section 248(1)(a): the directors must prepare the first financial statements within 18 months from the date of incorporation
- Section 248(1)(b): after that, within six months of each financial year end
- Section 267(3)(a): for a private company that needs an auditor, the board appoints the first auditor at least 30 days before the end of the period for submitting the first financial statements to SSM
Typical approach:
- Pick a financial year end that works for the business (see the question on choosing one)
- The first year runs from incorporation to that date
- For tax, the first basis period begins when the business begins, and LHDN will expect a return covering it
Example: a company incorporated on 10 March can choose 31 December as its year end. The first financial year then runs from 10 March to 31 December of the same year (under 10 months). A year end of 30 June of the following year gives a first year of about 15 months, but the statements must still be prepared by 10 September of that following year. A year end of 31 December of the following year would fall after that 18-month limit.
Points to remember:
- Bookkeeping duties begin from incorporation, even before trading
- Financial statements must still be prepared for a dormant first year
- A longer first year means a bigger first set of accounts, so keep records tidy from day one
Legal basis
- Companies Act 2016, s.248(1)
- Companies Act 2016, s.267(3)(a)
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Is a Sdn Bhd legally required to keep accounting records?Yes. Section 245 of the Companies Act 2016 requires every company, including its directors and managers, to keep accounting and other records that explain its transactions and financial position. This applies even to a new, dormant or loss-making company.
- Do sole proprietors and partnerships in Malaysia need to keep books?Yes. The Income Tax Act requires anyone with business income to keep sufficient records to work out their income. LHDN has a separate public ruling for businesses that are not companies. The Companies Act rules apply only to companies.
- How do I choose my company's financial year end?You choose it, usually when you incorporate, and it is not fixed to 31 December. Pick a date that suits your business cycle and your accountant's workload; every later deadline for financial statements and filings is counted from it.
- Is there a simpler accounting standard for very small or micro companies?MPERS is already the simplified standard, and it is the lightest framework in common use for Malaysian companies. There is no further exemption that lets a very small company skip financial statements or the accounting framework, though some disclosures and audit rules differ for small companies.
- What is a chart of accounts and how should I set one up?A chart of accounts is the list of categories you use to record every transaction, grouped into assets, liabilities, equity, income and expenses. Set it up so it matches your business and the headings you need in the financial statements and tax computation.