Company Registration in Malaysia- An Overview

The Malaysian economy has seen an upward trend in the last few years. As a result, the number of investments in Malaysia has also gone up. With a liberalised market, it offers much, especially to foreign investors.

Registering a foreign company in Malaysia is quite seamless and straightforward. The companies registered as public limited companies have the suffix in their name “Berhad” (Bhd). If a company is registered as a private limited company in Malaysia, then the company would have a suffix in the company's name as “Sendirian Berhad” (Sdn Bhd). Hence, if an applicant wants to go through the company registration process in Malaysia, then the documents below and the prescribed procedure must be followed.

Before going forward with the company registration process in Malaysia, the applicant must ensure that all the requirements prescribed by the Malaysian local law have been complied with. The primary legislation that regulates company registration in Malaysia is the Companies Act 2016.

Regulatory Authority/ Body for Company Registration in Malaysia

The primary regulatory authority for company registration in Malaysia is the Suruhanjaya Syarikat Malaysia (SSM). This authority is the nodal agency known as the Companies Commission of Malaysia. Apart from this, the law which regulates companies in Malaysia is the Companies Act, 2016.

What are the preferred Industries to Start a Business in Malaysia?

The following sectors have been thriving in Malaysia, and the Malaysian government has been offering incentives to foreign companies to set up their businesses in Malaysia:

• Agriculture;
• Banking and Finance;
• Education;
• Oil, Petroleum and Natural Gas;
• Manufacturing;
• Tourism Outbound and ticketing.

Benefits of Company Registration in Malaysia

The benefits of company registration in Malaysia are as follows:

• The cost to start a business is very low compared to other Asian countries
• Rentals are also lower compared toother Asian countries
• Lower Wages as the average wages are far less when compared with other countries.
• Malaysia has signed a number of double taxation treaties with other countries; hence there is no Double Taxation on income generated in Malaysia.
• There are no Withholding Taxes on dividends paid outside of Malaysia.
• There are no restrictions on Malaysian corporations upon repatriation of capital, profits, dividends, and royalties.
• The government of Malaysia has given strong incentives and subsidies to encourage business formation and capital investment.
• Foreign investors prefer Malaysia, particularly due to the level of investor protection guaranteed by the local legislation. 

Types of Business Structures in Malaysia- Company Registration in Malaysia

Following are the types of business structures adopted in Malaysia:

• Sole Proprietorship-

This form of entity can be easily set up in Malaysia. The sole proprietorship business structure requires only one owner, and their liability is unlimited. Personal income or assets of the owner can be used to settle the debts and obligations of the proprietorship or in case of bankruptcy.

• Private Limited Company-

A private limited company is a separate legal entity from its owners, meaning it can buy/sell property, enter into legal contracts and sue or get sued in the courts. The owners shall be liable only for the amount they have contributed to the company; their personal assets will be left untouched in case of insolvency or bankruptcy.

• Public Limited Company-

A public limited company is a company whose shares can be offered to the public. Public limited companies are listed on the stock exchange and are governed by the Securities Commission of Malaysia.

• Foreign Company (Branch Office and Representative Office)-

Foreign companies wanting to have an understanding of the Malaysian business environment can set up a representative office. A representative office does not have any independent legal stature in Malaysia. Therefore, the parent company shall be responsible for its debts and liabilities.

A branch office is an extension of the foreign parent company. Here also, the foreign parent company shall be liable and responsible for all the debts of the branch in Malaysia.

• Unlimited Company-

An unlimited company provides unlimited liability to the members and shareholders, meaning if there is a loss or the company falls under debt, the members and shareholders shall be personally responsible.

• Limited Liability Partnership-

An LLP has the characteristics of a partnership and a company. It is a corporate body and possesses a separate legal entity from its partners. An LLP can be set up under the Limited Liability Partnership Act, 2012.

• Partnership-

When 2 or more persons come together to generate profit from their commercial activities, the entity can be registered as a partnership. Not more than 20 partners can form a partnership. The partners must be Malaysian citizens or permanent citizens only. This form of organisation is suitable for auditors and lawyers. The partners have unlimited liability against the debts and obligations of the partnership. The partnership is not supposed to pay taxes, but the partners have to pay individually.

Minimum Registration requirements for Company Registration in Malaysia

The following requirements have to be satisfied by the applicant for company registration in Malaysia:

1. Shareholders

A minimum of one shareholder or member is required for company registration in Malaysia. Such a person can be a foreigner or private entity, or a local individual.

2. Directors

Requirement of at least 1 Resident Director who ordinarily resides in Malaysia in the case of a private limited company and two resident directors in the case of a public limited company. There should have been no proceedings against the directors. This includes any form of insolvency or bankruptcy proceedings. All the directors' duties have to be carried out per the requirements under the Companies Act, 2016.

3. Resident Company Secretary

Every company in Malaysia must have a qualified company secretary who should be either a citizen or permanent citizen of Malaysia and reside in Malaysia. The principal place of residence should also be in Malaysia.

4. Minimum Capital requirement

There is no requirement for a paid-up capital in Malaysia. If the company issues work permits to foreign employees, then a 100 per cent foreign-owned company must commit to 100% paid-up capital. The amount of the paid-up capital is decided based on the business activity the company is engaged in.

5. Objects

As per the Companies Act, 2016, the company must be established with a proper object. Such objects must be present in the Memorandum of Association of the company. The company is allowed to carry out lawful activities. No company can be registered to carry out unlawful activities.

6. Registered Office Address

Every incorporated business in Malaysia needs to have a registered office address.

Documents for Company Registration in Malaysia

The document required for company incorporation in Malaysia are as follows:

• Proposed Company name;
• Primary business activities;
• Declaration of compliance with the Companies Act;
• Address in Malaysia;
• Details of directors and shareholders;
• Percentage of the shareholding of each shareholder;
• Minimum paid-up capital; and
• A declaration by the directors of the company that they have not been convicted of any offence and are not declared undischarged bankrupts.

Cost of Company Registration in Malaysia

The registration rate of company registration in Malaysia is 1,000 ringgit, which amounts to roughly $240 and has to be paid by the company to the SSM. However, the registration fee of the company is dependent on the nominal share capital of the company. Follow the chart for more information:

 If the foreign company does not subscribe to share capital, the registration fee is 1000 MYR only.

Procedure for Company Registration in Malaysia

This is the process for registering your company  in Malaysia:

• Name Search and Reserving the name of the company
• Submission of application for incorporation
• Filing of Declaration
• Notice of Registration
• Obtaining a Certificate of Incorporation

• Name Search and Reserving the name of the company.

A name search is conducted to check the availability of the proposed name. The company's proposed name should be unique and not similar to any existing name. The name has to comply with the requirements related to the Companies Act of Malaysia. No offensive terms must be used. Apart from this, the company's name should not breach any forms of intellectual property rights. The name has to be reserved.

The company Incorporation Documents need to be submitted to SSM within 3 months from the date of approval of the company's name, failure of which a fresh application for a name search will be required to be submitted to SSM.

• Submission of application for incorporation

The company incorporation details must be provided in the application for company registration. The details related to the directors must be provided by the applicant and parties of shareholders or members, activities to be carried out by the company, and the applicant should also give the address.

• Filing of Declaration

The applicant must also provide a declaration for company registration in Malaysia. A such declaration would state that all the information provided in the application is correct to the applicant's knowledge.

• Notice of Registration

After completing these steps, the SSM will review and check the application for any form inconsistencies within the application. If there are no problems related to the application, then a registration notice will be sent.

• Obtaining Incorporation Certificate

Upon compliance with all procedures and submission of the duly attested documents with the prescribed fee, a Certificate of Incorporation is issued by SSM. After the incorporation, the company shall obtain the required license/permit/approval from the relevant authorities before carrying on any business specified in the Memorandum of Association.