Private entities shall comply with either:
- Private Entity Reporting Standards (PERS) in their entirety for financial statements with annual periods beginning before 1 January 2016; or
- Malaysian Private Entities Reporting Standard (MPERS) in their entirety for financial statements with annual periods beginning on or after 1 January 2016; or
- Malaysian Financial Reporting Standards (MFRS) in their entirety.
A Private Entity that has in the alternative applied FRSs as its financial reporting framework shall disclose when it will first present financial statements in accordance with the MFRS Framework or the Malaysian Private Entity Reporting Standard (MPERS). The entity shall not revert to apply FRSs if it has adopted the MFRS Framework or the MPERS even if it meets the criteria to do so (see Notice of Issuance dated 28 October 2015)
Private entities that have applied FRSs shall apply either MFRS or the MPERS for annual periods beginning on or after 1 January 2018.
Definition of a Private Entity
A private entity is a private company (See Note), incorporated under the Companies Act 1965, that -
- is not itself required to prepare or lodge any financial statements under any law administered by the Securities Commission or Bank Negara Malaysia; and
- is not a subsidiary or associate of, or jointly controlled by, an entity which is required to prepare or lodge any financial statements under any law administered by the Securities Commission or Bank Negara Malaysia.
The meaning of "subsidiary", "associate" and "jointly controlled" are as respectively defined and explained in MFRS 10 Consolidated Financial Statements / FRS 10 Consolidated Financial Statements, MFRS 128 Investments in Associates and Joint Ventures / FRS 128 Investments in Associates and Joint Ventures and MFRS 11 Joint Arrangements / FRS 11 Joint Arrangements.
An entity may only be treated as a private entity in relation to such annual periods or annual periods throughout which it is a private entity.
According to Section 15(1) of the Companies Act 1965, a company having a share capital may be incorporated as a private company if its memorandum or articles-
- restricts the right to transfer its shares;
- limits to not more than fifty the number of its members (counting joint holders of shares as one person and not counting any person in the employment of the company or its subsidiary or any person who while previously in the employment of the company or its subsidiary was and thereafter has continued to be a member of the company);
- prohibits any invitation to the public to subscribe for any shares in or debentures of the company; and
- prohibits any invitation to the public to deposit money with the company for fixed periods or payable at call, whether bearing or not bearing interest.
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