Malaysia has seen thriving economic growth over the last decades. As an upper-middle-income country, Malaysia has earned its place as one of the region's most developed economies. Therefore, it becomes the ideal gateway to enter Southeast Asia's vast market with FDI-friendly regulations and incorporation process. So, here is what you need to know and prepare to incorporate a company in Malaysia.
* Why incorporate a company in Malaysia?
* What is the type of business entity for a foreign company in Malaysia?
* How long does it take to incorporate a company in Malaysia?
* What do I need to incorporate a company in Malaysia?
* How much does it cost to incorporate a company in Malaysia?
* Is there any negative list of investments in Malaysia?
* What is a step-by-step guide to incorporate a company in Malaysia?
Why incorporate a company in Malaysia?
Strategically located at the heart of Southeast Asia, Malaysia is Asia’s first most attractive emerging market and second rank in the ease of doing business in ASEAN. In addition, it is generally receptive to FDI, as the Government doubles its efforts through political, economic, and regulatory reforms to ensure that it remains an attractive business destination for investments.
Our partner, TrustMaven, highlights the most practical reasons why you should consider incorporate a company in Malaysia:
- A dynamic business environment
- Economic strength
- Advancing with technology
- Well-developed infrastructure
- Human resources
- Easy incorporation process
What is the type of business entity for a foreign company in Malaysia?
There are eight types of business entities under three categories in Malaysia, which are:
Registration of Business (ROB):
Not separate legal entities, unlimited liabilities at a personal capacity of the business owner(s) under the Registration of Business Act 1956.
- Sole proprietorship
Registration of Company (ROC):
Separate legal entities under the Companies Act 2016.
- Private Limited Company (Sdn Bhd)
- Public Limited Company (Bhd)
- Company Limited by Guarantee (CLG) for non-profits
- Unlimited Company (Sdn)
- Foreign Company
Limited Liability of Partnership (LLP)
A hybrid combination of Partnership and Sdn Bhd under the Limited Liability Partnerships Act 2012.
- Limited Liability Partnership (LLP)
Under the Companies Commission of Malaysia (SSM) all foreigners are only allowed to register a company as either one of these 3 types of business entity:
- Private Limited Company (Sdn Bhd)
- Labuan International Company
- Representative/Regional Office
How long does it take to incorporate a company in Malaysia?
Malaysia’s company registration process can take between 5-10 working days. However, several factors could affect the incorporation timeline:
- Registering your company name with SSM
- Malaysia company name selection process
- Opening your corporate bank account in Malaysia
The Companies Commission of Malaysia or Suruhanjaya Syarikat Malaysia (SSM) is a board the government formed through the merging of the Register of Business (ROB) and Register of Companies (ROC). The role of SSM is to assist users in the registration, renewal, and rejection of both business and company.
What do I need to incorporate a company in Malaysia?
Upon registering to SSM, you will need to submit a completed Business Registration Form (Form A). You will also need a copy of your identification card and prepare the necessary payment. The Malaysia company registration documents you will be required to qualify to include:
- The proposed name(s) of your company
- Primary business activities
- Copy of all directors and shareholders identification card or passport
- Latest residential proof of address
- Minimum paid-up capital information
- Percentage of shareholding for each shareholder involved
Besides the incorporation documents listed above, Malaysia company incorporation requirements include having at least:
- one subscriber to the company’s shares (Section 14 CA)
- one resident director (Section 122)
- one company secretary in Malaysia
You also need to comply with:
How much does it cost to incorporate a company in Malaysia?
Under the new Companies Act 2016, a flat registration fee of RM1,000 (USD 250) is payable to SSM for each application to incorporate a company and register a company online in Malaysia. However, for foreign companies, the registration fee is also determined by the nominal share capital, listed below:
Although to incorporate a company in Malaysia required as little as RM2 paid-up capital, in order to qualify for work permits for foreign employees, a 100% foreign-owned company must have a minimum paid-up capital as follows:
- Advisory and consultancy business: RM 500,000 (USD 125,000)
- Foreign-owned companies engaging in import, export, restaurant, and trading business: RM 1,000,000 (USD 250,000) for 100%
- A joint venture with a Malaysian partner (at least 50% of shares): RM 350,000 (USD 90,000) with an authorized capital of RM 500,000 (USD 125,000)
- For non-export oriented industries: RM 100,000 (USD 25,000) with a required minimum of total sales of RM 2 million (USD 500,000)
Is there any negative list of investments in Malaysia?
Malaysia does not have a negative list, although there are some sectors in which foreign investment is not permitted. The absence of such a list may stem from the special nature of Malaysia equity restrictions. The government intends to promote Bumiputera ownership of domestic assets and which cover all sectors not promoted by MIDA, including:
- Financial services;
- Capital markets activities carried out by investment banks;
- Insurance and Islamic insurance (takaful);
- Communications and multimedia;
- Wholesale and distributive trade (in relation to hypermarkets and food and restaurant businesses);
- Transportation services, freight forwarding and shipping;
- Energy supply;
- Professional services; and
- Security and employment agencies.
What is a step-by-step guide to incorporate a company in Malaysia?
Setting up the right business entity is very important. All profiling and documentation on each stage need to be well connected and presentable to the following authorities for the five initial stages:
- Registry commission for your company entity (Malaysian Sdn Bhd)
- Multiple Trade Licenses from the local Town Council, Ministry Trade Consumerism, Tourism, Central Bank, Education, Transport authorities, etc.
- Letter of Recommendation for relevant authorities to boost your application.
- Expatriate Work Visa from the Immigration Department of Malaysia.
- Compliance and maintenance to keeping company status active (Company Commission, Company Secretary, Auditor, Accountant and Tax Agencies)
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