Business Resource

Step-by-Step Guide to Register a Company in Malaysia

Malaysia, a nation in Southeast Asia is considered to have a supporting and booming economy suitable to register a company in Malaysia and further carry all other business entities to grow and develop in the business-centric environment. Looking forward to the 2014 report of the World Bank’s Ease of Doing Business Survey, Malaysia is held to stand 6^th in the list of the friendliest countries where business in the private sector and the public sector contributes equally. Various industries like the Manufacturing, Tourism, and Petroleum industries are attracted to register a company in Malaysia because of the reasons establishing Malaysia suitable for carrying business. The reasons responsible for offering business favorable conditions for setting up a company in Malaysia are:

1. Affordable living standards;
2. Opportunities for corporate investment;
3. Economic stability;
4. Industrial hub;
5. Offers cheap materials;
6. Low-cost infrastructure for business(es);
7. High literacy rate among the workforce;
8. Fantastic location as touches the border with leading Asian markets;
9. Youth-friendly environment;
10. Strike-free environment;
11. Easy access to sea routes through its four major ports;
12. Government initiatives like the development of industrial parks, free industrial zones, technology parks, and Multi-media super corridor (MSC);
13. Cheap nation in comparison to neighboring countries like Singapore as it offers competitive taxes and low business costs;

The present blog offers a detailed and step-by-step explanation to register a company in Malaysia with all the supportive information and documents required to legally establish and carry the business operations in Malaysia. The blog also focuses on the post-registration requirements along with the benefits of Setting up a company in Malaysia.

A Guide for setting up a Company in Malaysia

The guide for setting up a company in Malaysia aims to provide a clear purview of all the information necessary to register a company in Malaysia. Setting up a company in Malaysia involves the registration of various corporate legal entities to carry out their business operations in Malaysia. The business entities required to register their business in Malaysia under the Companies Act of 2016 are:

Company Limited by Shares

A company limited by shares is a company with limited share capital that includes two different types of business entities to incorporate and register a company in Malaysia. Some of the examples of companies are:

Private limited Company

A private limited company, commonly known as Sendirian Berhad (Sdn Bhd) is a form of company or firm that possesses a minimum 1 shareholder with a maximum cap of 50 shareholders along with 1 director to be registered with the Companies Commission of Malaysia. The liability of the shareholders in a private limited company is restricted to the amount of their shareholdings in the company.

Public Limited Company

A public limited company, commonly known as Berhad (Bhd) is a firm that needs to register a company in Malaysia under the Companies Commission of Malaysia (CMA) (commonly known as the Suruhanjaya Syarikat Malaysia i.e., SSM) with a minimum of 2 shareholdings and at least 3 directors for smoothly regulating the business operations. The public limited company is regulated under the Securities Commission of Malaysia and hence, attracts characteristics similar to a private limited company, such as having limited liability of the shareholders similar to the amount of their shareholding.

Unlimited Company

An unlimited company means a company having unlimited liability for its shareholders and partners. The procedure required for setting up an unlimited liability company in Malaysia is similar to the registration of the company limited by shares. In an unlimited liability company, the liability of all the shareholders, members, and partners of the company is unlimited, and are personally liable for any loss or debt in the company.

Foreign Company

Any foreign alien who is not a resident of Malaysia is free to register a company in Malaysia commonly known as a foreign operating business through its branch offices holding the same legal status as a foreign company incorporated in Malaysia. The liability of the Foreign Company is unlimited and hence, it must be registered with the Commission of Malaysia (CCM), and the Malaysian Investment Development Authority (MIDA).

Legal Requirements to register a company in Malaysia

There exists a set of legal requirements that need to be fulfilled to legally register a company in Malaysia for at least 1-5 years, such as:

1. There must be at least 1 shareholder of the company;
2. The entrepreneur or the director setting up a company in Malaysia must be a citizen or permanent resident of Malaysia;
3. The director must be a natural person above the age of 18 years, capable of carrying business, not a bankrupt or convicted of any offense for the past 5 years;
4. The company must be registered within 30 days of its commencement;
5. The company must not be registered in contravention of any law of Malaysia;
6. There must be a licensed company secretary who is a local resident of Malaysia;
7. Must have a registered office in Malaysia;
8. Must hold at least RM 1 paid-up capital.

The procedure required to register a company in Malaysia

Any business in Malaysia is registered under the provisions of the Companies Act of 2016 with the Suruhanjaya Syarikat Malaysia (SSM) which is the Companies Commission of Malaysia established in 2002 as a leading authority or agency responsible for managing and setting up a company in Malaysia. The procedure to register a company in Malaysia bypasses 3 relevant processes or steps required to legally carry a corporate legal entity in Malaysia. The steps required to legally form and establish a company in Malaysia are:

Pre-Registration Process: Step 1

It is the first step required to register a company in Malaysia wherein the main purpose is to depict the basic requirements and the purpose under which the company must be instituted. It is a relevant step in the company formation, and hence it must be processed as per the rules established by the Company Law of Malaysia. The pre-registration process incorporates the following steps:

Incorporate a Business Plan

The first step is to incorporate a business plan with all the relevant factors assisting the entrepreneurs to register a company in Malaysia. The business plan must include:

1. A draft of the factors why conducting business in Malaysia;
2. Studying the market of Malaysia;
3. A brief study about the location for setting up a company in Malaysia;
4. Deciding upon the talent recruitment and distribution;
5. Guide to attract the investors;
6. Detailed discussion on the business and marketing strategies;
7. Receive pre-business incorporation advice;
8. Consult local professionals; etc.

Deciding the form of legal entity

The next step crucial for setting up a company in Malaysia requires deciding the nature and form of business best suited for carrying the business operations in Malaysia. The entrepreneurs are free to depict the form of the legal entity where they wish to carry the business as:

1. A sole-proprietorship;
2. A partnership firm;
3. A limited liability partnership;
4. A public limited company;
5. A private limited company;
6. A foreign company;
7. A cooperative corporation;
8. Listed and Unlisted Berhad Company;
9. An unlimited liability company; or
10. A company locally incorporated.

Prepare all supporting documents for setting up a company in Malaysia

The next step is to prepare all the supporting documents that are necessary to register a company in Malaysia leading to a well-established corporate legal entity running their business and legal operations in the nation. The list of supporting documents required for setting up a company in Malaysia are:

1. An application determining the reserved name of the company;
2. The document instituting the corporate address;
3. Letter of authorization (in case the name of the registering company is similar to the name of the parent company);
4. A document containing information regarding the paid-up capital of the company;
5. The passport and National Registration Identity Card (NRIC) of the shareholders;
6. Complete details of the directors and members of the company;
7. Complete information on the beneficial owner of the company;
8. Local address proof of all the shareholders, and directors of the company;
9. The memorandum and article of association of the company;
10. Completed form no. 13A required for reservation of the company name;
11. Any partnership agreement (is exists);
12. Completed and signed form no 6 (declaration of Compliance by the entrepreneur setting up a company in Malaysia);
13. A declaration from the director(s) and the promoter(s) of the company;
14. Percent of each Share held by the shareholders of the company;
15. The document qualifying the primary purpose of the business and the activities carried out in the company;
16. A facsimile of the Certificate of incorporation, and Memorandum of Association (for a foreign company or the branch office);
17. A notice that specifies the setting up a company in Malaysia;
18. Additional documents (if any).

Depict the structure of the company

Depicting the structure of the company means deciding the structure, and the allocation of the shares in the company. The minimum structure required for setting up a company in Malaysia is as follows:

1. At least 1 director;
2. At least 1 shareholder;
3. At least 1 secretary of the company (CS);
4. Amount of share capital.

Reserving the name of the company

The next pre-registration step requires finalizing at least 3 unique and ideal corporate names for the company with their appropriate meaning, the right of which is to be reserved and trademarked as the legal name of the company. The name is finalized only after checking the availability of the corporate name with the Companies Commission of Malaysia for 30 days.

KYC & Background Verification

The next step requires conducting a KYC (automated 3-step identity verification procedure), Bankruptcy checks & other Background verification of the shareholders proposing to invest in the company. The process of performing relevant checks is carried out by the Company Secretary when waiting for approval by the Companies Commission of Malaysia for the proposed name of the company.

Registration Process: Step 2

The next process indicating the procedure to register a company in Malaysia starts once the name of the company is reserved with the Suruhanjaya Syarikat Malaysia (SSM). The process to register a company in Malaysia involves the performance of detailed steps, such as:

Filling online form via the SSM portal

The first step to start the procedure to register a company in Malaysia is to fill out the application forms available on the Suruhanjaya Syarikat Malaysia portal. The necessary forms that need to be filled are:

1. FORM 48A, is a declaration for the promoter or the director of the company that hasn’t been bankrupt or ever convicted for any offense for at least 5 years;
2. FORM 6, is a declaration of Compliance to be filled by the entrepreneur setting up a company in Malaysia;
3. FORM 9, is required to be filled in, containing the information with respect to the registered office address of the company;
4. Attaching the original copy of the filled-up FORM 13A, enlisting the reserved name of the company;

E-signing & Submission of all the relevant documents

The next step in promoting the setting up a company in Malaysia includes obtaining the digital signature of the entrepreneur, submitting and uploading all the necessary documents compiled in the pre-registration process, applications, and declarations drafted and filled to register a company in Malaysia, on the Suruhanjaya Syarikat Malaysia portal.

Payment of the cost of Registration

The cost charged by the Suruhanjaya Syarikat Malaysia to register a company in Malaysia is divided into various heads, as provided below:

1. Payment of 50 Malaysian ringgit (MYR or RM) for name reservation;
2. Payment of 100 MYR if making an application for amending the name of the company;
3. Payment of MYR 20-30 for obtaining any information about the company;
4. Payment of MYR 20 for issuing any certificate of the company;
5. Payment of MYR 250 if making an application for amending the name of the foreign company.

The cost of setting up a company in Malaysia can be paid either through the online portal of the Companies Commission of Malaysia or at specific through payment kiosks. The receipt comprising the payment for the registration must be saved and presented as proof in a court of law.

Approval for Certificate of Incorporation

After the approval of the application by the Suruhanjaya Syarikat Malaysia, to register a company in Malaysia, the next step is receiving or downloading from the SSM portal, the Certificate of Incorporation for the company. It is officially the final step for setting up a company in Malaysia wherein the company gets officially created and ready to carry out the business proceedings.

Post-Registration Process: Step 3

There are procedures establishing post-requirements and obligations required to be followed post-registration of the company. The steps focusing on the post-registration procedure are:

Opening a Corporate Bank Account

The next step after setting up the company is to open a corporate or business bank account in the name of the company with any of the local banks of Malaysia such as CIMB Bank, HSBC Bank, Maybank, etc., required for processing the transactions, and managing the foreign and other business (es) and its finances such as payments, share issuance, deposits, fees, etc. in a better way.

The documents required to operate a corporate bank account are:

1. Account opening application form;
2. Company seal;
3. Facsimile of certificate of incorporation of the company;
4. Facsimile of the Identification cards of the director(s);
5. Facsimile of the board resolution to open a corporate bank account;
6. The passport or NRIC (if a foreign company);
7. Proof of the corporate registered address;

Obtaining other corporate licenses and permits

The next crucial step is to obtain the other relevant business licenses and permits according to the form of the business required for carrying on the smooth operations of the business. Some of the relevant permits and licenses in Malaysia are:

1. The Malaysia Employment Pass (EP)- a long-term work visa permit in Malaysia;
2. Temporary Employment pass or Visitor’s- pass a short-term work visa permit in Malaysia;
3. Professional employment pass or professional visit pass (PVP);
4. Other industry-specific licenses, like licenses to operate in the manufacturing sector construction sector, or any other sector;
5. Secure immigration permits (if applicable) like visitor visa permits, dependent visa permits, migration visa permits, etc.
6. Obtain activity-specific licenses, like certified machinery licenses, building plan approvals, permits to install or alter air pollution control equipment, etc.

Register for taxes and the Employee’s Provident Fund

It is a crucial step to plan and register for taxes for the payment of income tax, allowance tax, stamp duty, GST, real property gains tax, and other deductions (if any), with the Inland Revenue Board immediately after setting up a company in Malaysia.

The entrepreneur also has to register for the Employee’s provident fund within 7 days of the employment of the employee through the well-established procedure, such as:

1. Registration of employees via the i-Akuan online portal;
2. Follow the auto-registration procedure via the monthly contribution form;
3. Filling the other forms like MyKad, KWSP 3, etc.

Conducting an Audit of the company

It is a statutory and legal requirement for every company registered in Malaysia, to timely conduct an audit of the company to comply with the enforcement action. The audit of the company must include:

1. Preparing the financial statements of the company every 6 months;
2. File an annual report with the Suruhanjaya Syarikat Malaysia;
3. Maintain a record of all the transactions, invoices, and receipts of the business as proof;
4. Appoint an auditor at least 30 days prior to the submission of the first financial statement of the company;
5. Conducting the Annual General Meetings (AGM);

Mapping the time to register a company in Malaysia

The time required to register a company in Malaysia depends on the information provided, and the approval, which is different in various industries. The standard time stands from 5-10 business days, divided for various approvals such as:

1. 1-2 business days for reserving the name of the company;
2. 1-2 business days for preparation of the document;
3. 1-2 business days for Suruhanjaya Syarikat Malaysia processing;
4. 1-2 business days to issue relevant certificates;
5. The post-registration time varies according to the requirements.

Conclusion

Setting up a company in Malaysia is most preferred over establishments in other nations due to specific reasons offering entrepreneurs all over the world a strategic location, a business-friendly environment for the companies to grow, low cost of registration, a steady economy for attracting investors, along with a simple procedure required to register a company in Malaysia. The World Bank 2020, ranked Malaysia at 12^th position with its 5^th largest economy in South East Asia, in the list of ease of doing business establishing Malaysia as a desirable place to register and carry the business operations.

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