Business

How to Register a Company in Malaysia for Foreigners?

Malaysia is one place that has attracted the attention of both entrepreneurs and investors from around the world. Due to the country’s friendly business policies, strategic location in Southeast Asia, and reasonable operation costs, the procedure for registering a company is not complicated, even for foreign nationals.  

This guide gives in-depth information on how foreigners can register a company in Malaysia, touching on requirements, procedures, and benefits. 

Understanding Organization Structure in Malaysia 

It is essential to have an idea of the various business structures in existence before starting a registration process. Each business structure comes with varying advantages and other implications regarding liability, taxation, and operation. 

Sole Proprietorship: 

• It requires one owner with unlimited liability. 

• Easy to establish, yet it involves personal financial risk since the owner’s assets may be used to pay business debts. 

Private Limited Company (Sendirian Berhad or Sdn. Bhd.):

• A popular choice for both local and foreign entrepreneurs. 

• A separate legal entity and thus liability extends only to the extent of the owner’s capital contribution. 

• Can have foreign directors and shareholders. 

Public Limited Company (Berhad or Bhd.): 

• This allows public trading of its shares. 

• It is regulated by the Securities Commission of Malaysia, with the requirement to list at the stock exchange. 

Limited Liability Partnership (LLP): 

• Combines the flexibility of a partnership with the limited liability of the company. 

• Operates as a distinct legal entity separate from its partners. 

Foreign Company: 

• Foreign companies could obtain a representative office or a branch office in Malaysia. 

• The parent company remains liable for all obligations and liabilities.  

Unlimited Company: 

• In this type of structure, members and shareholders are personally liable for the company’s debts. 

• This is a less common structure because of the associated financial risk. 

Requirements for Foreigners Seeking Malaysia Business Setup 

The foreigner has to fulfill certain criteria for the registration of the company in Malaysia. The requirements are intended to ensure compliance with Malaysian laws as well as facilitate the incorporation process. Therefore, the Basic Requirements for foreigners seeking company registration in Malaysia are as follows: 

1. Business Name: 

The name of the company must be unique and approved by the Companies Commission of Malaysia (SSM). 

2. Business Objectives: 

The nature and purpose of the business should be clearly defined. 

3. Address of the Registered Office: 

The official business address shall be a physical address located in Malaysia. 

4. Directors and Shareholders: 

There should be at least one director and shareholder. Foreign directors are allowed. The Directors of the company have to be above 18 years and not bankrupt. 

5. Paid-Up Capital:  

The minimum capital requirement varies upon the type of business and the industry involved. For most private limited companies, the minimum is RM1. 

6. Corporate Secretary: 

It shall appoint a licensed company secretary within 30 days of its incorporation.  

7. Additional Documents:  

• Passport copies of the directors and shareholders.  

• Proof of residential addresses. 

• Constitution of the company (This is optional but recommended) 

Guide on How to Register a Company in Malaysia 

A Step-by-Step Guide on How to Register a Company in Malaysia is as follows: 

STEP 1. Business name search and approval: 

• You are required to conduct a name search on the SSM online portal to make sure that such a name is not already in use. 

• After verifying, you are required to submit the proposed name for approval. This generally takes 1-3 working days. 

STEP 2. Arrange the Required Documents: 

You must compile all the necessary documents, including: 

• Approved company name. 

• Business objectives. 

• Details of Directors and Shareholders. 

• Registered office address. 

STEP 3. Complete the Incorporation Process: 

• Your applications should be submitted online through the MyCOID 2016 portal. 

• Upload the required documents and pay the incorporation fee. 

• The application usually gets processed in 5 to 7 business days. 

STEP 4. Obtain Certificate of Incorporation: 

Once your application is approved, SSM will issue a Certificate of Incorporation, an official proof that the office has already been incorporated. Along with this certificate comes a company registration number. 

STEP 5. Post-Incorporation Activities: 

• Appointment of Company Secretary: It shall be done within 30 days. 

• Opening a Corporate Bank Account: All business deals require this. 

• Taxation: Obtain a tax file number from the Inland Revenue Board of Malaysia.  

• Obtain Licenses: Some industries require additional licenses, you must obtain them.  

Advantages of Business Setup in Malaysia 

Malaysia provides so many advantages to foreign investors, hence making it an attractive hub for business operations. 

1. Low Operational Costs: 

• They have competitive rental rates. 

• They provide affordable wages compared to neighbouring countries. 

2. Favourable Tax Policies: 

• Many double taxation agreements exist to avoid double taxation on income. 

• There is no withholding tax on dividends paid to foreign shareholders. 

3. Ease of Capital Movement: 

• There are no restrictions on the repatriation of capital, profits, or dividends. 

4. Government Incentives: 

• Subsidies and incentives are provided to encourage business enterprise. 

• Industry-specific benefits, particularly for technology, manufacturing, and export-oriented industries, are also provided.  

5. Strategic location: 

• The location provides proximity to important Asian markets. 

• They have strong infrastructures and connectivity. 

Industries Open for Foreign Investment 

While foreign ownership is permitted in many sectors, some carry particular appeal for investors because of significant government support or market demand. A few of the most promising include: 

• Information Technology and Digital Services.  

• Renewable Energies.  

• Manufacturing and Export-Oriented Enterprises.  

• Tourism and Hospitality.  

• Services to provide Education and Training.  

Note: Some fields have restrictions or require partnerships with local firms only. 

Common Challenges and Solutions 

Although the process is quite straightforward, there are a few challenges that a foreign investor faces. Here’s how some of these challenges can be overcome: 

1. Understanding legal and taxation frameworks: 

You must engage with local legal/corporate advisory firms for navigating regulations. 

2. Language Barriers: 

You can employ bilingual professionals to help facilitate communication. 

3. Cultural Differences: 

You must learn about Malaysian business culture to build strong relationships with local stakeholders. 

4. Industry-specific permits: 

You must consult experts and obtain the necessary licenses. 

What Drives Entrepreneurs in Malaysia? 

Malaysia has been considered the most favorable destination for foreign investors in respect of their following reasons: 

• Stable political environment.  

• Robust legal framework offering strong investor protection. 

• Highly skilled workforce. 

• Commitment to the development of innovation and entrepreneurship. 

Conclusion 

Setting up a company in Malaysia is quite a well-structured process, further sweetened by the Malaysian government’s efforts and initiatives to attract investors from all parts of the world.  

A foreign businessman will be able to establish and extend his company in one of the most promising markets in Asia only by selecting an appropriate business structure, fulfilling the eligibility criteria, and following the sequence. Strategically located, cost-advantageous, and pursuing pro-business policies, Malaysia acts as a gateway to opportunities in the region. 

If you are a foreign entrepreneur looking to register a company in Malaysia, company registration in Malaysia can be an excellent option. To get expert assistance in registering your company in Malaysia, visit https://enterslice.com/.

Frequently Asked Questions