Company Registration in Malaysia- An Overview
Registering a foreign company in Malaysia is quite seamless and straightforward. The companies which are registered as public limited companies have the suffix in the 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 the applicant wants to go for the process of company registration in Malaysia then the documents along with the prescribed procedure has to be considered.
The government of Malaysia has promoted foreign investment in the country. Hence the government allows majority of foreign ownership for such industries. Encouraging this will increase the amount of foreign investment in the country.
Before going for the process of company registration in Malaysia the applicant has to consider all the requirements to be in compliance of Malaysian local law. The main law that regulates company registration in Malaysia is the Companies Act, 2016.
Any applicant that wants to go for company registration in Malaysia has to ensure to comply with the requirements of section 14 of the Companies Act. If the criterion is satisfied by the company, then the register would consider
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 Business in Malaysia?
For company registration in Malaysia, the following sectors are thriving. Hence there will be lot of local government support for the above areas to flourish.
The following are the preferred industries and sectors to start a business:
How can a Foreign Company go for Company Registration in Malaysia?
An applicant can either choose to incorporate a new entity in Malaysia or go for the process of registering a foreign company in Malaysia. Hence the two methods can be utilised by an applicant to incorporate an entity in Malaysia. The following methods have to be registered with the SSM:
- Incorporating a local company with the Companies Commission of Malaysia (SSM); or
- Registering the foreign company in Malaysia with SSM.
Types of Company Registration in Malaysia
As per the Malaysian Companies Act, there are two types of Companies that can be incorporated locally in Malaysia.
The following are the companies incorporated in Malaysia:
Company Limited By Shares
A company having a share capital may be incorporated either as a private company, identified through the words ‘SendirianBerhad’ or ‘Sdn Bhd’ appearing together with the company’s name, or as a public company ‘Berhad’ or ‘Bhd’ appearing together with the company’s name.
- Private Limited Company- Usually a private limited company is formed with limited amount of capital. There are minimum amount of subscribers in the company. The company has to be formed with the objects of carrying out lawful business. Such companies are not allowed to list their shares in a stock exchange.
- Public Limited Company- A public limited company is formed with the object of inviting shares from the public. There are more amount of shareholders and directors in a public limited company.
An unlimited company can also be incorporated either as a private company or as a public company. For an unlimited company, the liability of its members must be stated in the Memorandum of Association as unlimited.
Minimum Requirement for company registration in Malaysia
The following requirements have to be satisfied by the applicant for company registration in Malaysia:
A minimum of two subscribers or members is required for company registration in Malaysia. The applicant has to have a list of shareholders for incorporation.
Apart from this, there must be minimum of two directors. At least one director must be a natural person and not an artificial person. The directors must be resident of Malaysia. There must be no form of proceedings against the directors. This will include any form of insolvency or bankruptcy proceedings. All the duties of the directors have to be carried out in accordance to the requirements under the Companies Act, 2016.
The Company must also have a qualified company secretary as per the provisions of the Companies Act, 2016. The governing provisions with respect to the company having a company secretary are section 238(1) and section 238(2). An individual would not be competent to carry out the duties of a company secretary if the individual is insolvent or incompetent to carry out responsibilities. The company secretary must have residence in Malaysia. The company secretary will either be:
- An individual who is a member of a professional body prescribed by the Minister of Domestic Trade Cooperative and Consumerism; or
- An individual who has been given license by the Companies Commission of Malaysia (SSM)
- The proposed director and company secretary in a Malaysian company shall have their principal or only place or residence within Malaysia.
As per the requirements of the Companies Act, 2016 the company must be established with proper objects. Such objects have to be present in the Memorandum of Association of the company. The company is allowed to carry out activities which are lawful. No company can be registered to carry out unlawful activities.
Residence of Directors-
As mentioned earlier, directors of a company have to be a natural person. Apart from this, the directors must be a Malaysian Resident
Malaysian Office Address and Local Agent
Every company in Malaysia must have a local office address and local registered agent. The registered office is the place where all formal communications and notices must be addressed. In Malaysia, it is very common to have the secretarial office as its registered office. The company can have a different office address located anywhere in the world.
Every company after incorporation must register itself for Goods and Services Tax (GST) if they meet certain requirements. Companies do not need to register for GST if their annual turnover exceeds RM 500, 000.
What are Benefits of a company registration in Malaysia?
The following benefits are present for the applicant by incorporating the company in Malaysia:
- Start-up costs are very low compared to Singapore and other Asian countries.
- Rental Rates are also lower than Singapore (and other Asian countries)
- Lower Wages as the average wages are $2.31 USD per hour which is far less when compared with other countries.
- Malaysia has 68 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.
What is Procedure for Company registration in Malaysia?
Incorporation process of a Malaysian Company is very much similar to that of Indian Company incorporation. The following stepwise procedure has to be carried out for company incorporation in Malaysia:
- Name Search
- Reserving the Name
- Notice of Registration
- Certificate of Incorporation
A name search is conducted to check the availability of the proposed name. To check the availability of name of the proposed company, one needs to refer to Government Gazette, which provides Guidelines For Naming A Company and Guidelines for Application of a Company Name. The name search can also be carried out online through the MyCoiD.
The steps involved in carrying out the name search and reservation on MyCoiD
- First and foremost, the applicant has to go online https://mycoid2016.ssm.com.my/. There the applicant has to login to the portal.
- After logging on to the system the applicant would be directed to the customer portal
- Click on New Name Reservation and search the proposed company name.
- The name has to comply with the requirements related to the companies’ act of Malaysia. No offensive terms must be utilised. Apart from this the name of the company must be not breaching any forms of intellectual property rights.
- The name availability search can also be performed for foreign companies through this portal.
Reserving the Name-
The applicant can also reserve the name of the company in advance. After logging in the website, the applicant would be directed to fill Form 13A. The following sections have to be filled by the applicant:
- Particulars of Application
- Particulars of Applicant
In the home page, the applicant has to go and click on Direct Incorporation Application. After this the applicant would have to fill the particulars related to the company incorporation. The details related to the application must also be filed by the applicant. All information of the registered office must be provided by the applicant.
- The details related to the directors must be provided by the applicant.
- The details of the shareholders or members must be provided by the applicant.
The applicant must also provide a declaration for company registration in Malaysia. Such declaration would state that all the information provided in the application is correct to the knowledge of the applicant.
The applicant would have to make the payment. Under this all information related to payment must be provided. Then the applicant has to click on pay. The SSM will check and process the application, and if the proposed name is available the same is approved by SSM. The name approved shall be reserved for three months from the date of approval.
Notice of Registration-
After such steps have been completed, the SSM will review and vet the application for any form of inconsistencies with the application. If there are no problems related to the application, then a notice of registration would be provided to the applicant.
The company Incorporation Documents needs 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.
Certificate of Incorporation-
Upon compliance with the incorporation procedures and submission of the duly completed Incorporation Documents with 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 starting to carry on any business outlined in the Memorandum of Association.
How to register a foreign company in Malaysia?
Foreign company under the Companies Act 1965 (CA 65) or Companies Act 2016 is defined as:
(a) a company, corporation, society, association or other body incorporated outside Malaysia; or
(b) an unincorporated society association, or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia.
If any of the required registration documents are in languages other than Malay or English, a certified translation of such documents in Malay or English shall be required to be submitted.
Documents Required for Company Registration in Malaysia
- Original copy of name application Form 13A.
- A copy of the letter from SSM approving the name of the company.
- A copy of the identity proof of each proposed director and company secretary.
- Declaration of Compliance which has to be signed by the company secretary of the registered company. The name of the company secretary would be present in the memorandum of association and articles of association.
- Memorandum of Association signed and stamped by the SSM.
- The information on the directors of the company.
- Information on the subscribers of the company.
- Table A of the Fourth Schedule of the CA can be adopted as the Article of Association of the company.
- The articles of association of a private company shall contain the following stipulations:
• Restriction on the right to transfer the company’s shares;
• Limitation on the number of members to not exceed the prescribed limit;
• Prohibition to any invitation to the public to subscribe the shares/debentures of the company; and
• Prohibition on the public invitation to deposit money with the company.
- The director or promoter shall give a declaration under oath, in the prescribed form, that:
• He/She is not a bankrupt; and
• He/She has not been convicted and imprisoned for any prescribed offenses.