Malaysia Company
Incorporation Service
Essential guidance and critical points for new company registration in Malaysia
Owing to its superb geographical positioning and demonstrated resilience in the global economy, Malaysia has emerged as an appealing and extraordinary business centre for firms intending to strengthen their footprint in Southeast Asia and the Asia-Pacific region.
This presents a golden opportunity for those contemplating business endeavours in Malaysia. Comprehension of the prevailing investment climate and familiarity with the legal, accounting and taxation systems are crucial to steer your organisation along a path of dominance.
In Malaysia, there are multiple ways to structure a business:
- By an individual as a sole proprietor
- By a partnership involving two to twenty individuals
- Through a Limited Liability Partnership (LLP)
- By a domestic or foreign company registered in line with the Companies Act (CA) 2016.
Foreign enterprises have two options to engage in business activities in Malaysia:
- By establishing a local company, or
- By setting up a branch in Malaysia.
Malaysia Company Formation - Various Company Structures in Malaysia
Under the purview of the Companies Act 2016, three (3) distinct types of companies can be established:
- Share-Limited Company
Here, the members’ liability is constrained to the unpaid share capital. - Guarantee-Limited Company
In this structure, members’ liability is restricted to the amount they’ve pledged to contribute to the company’s assets should the company undergo liquidation. - Unlimited Company
There are no bounds on the liability of the members in this format.
The Companies Act 2016 mandates that any company intending to partake in commercial activities must secure registration with the Companies Commission of Malaysia (SSM).
Malaysia Business Establishment Guide:
| No. | Aspect | Description |
|---|---|---|
| 1. | Legal Entity Status | Regarded as an Independent Legal Entity |
| 2. | Shareholders/Partners Count |
Private Company: Ranging from 1 to 50
Public Company: Typically exceeds 50 |
| 3. | Liability | Limited |
| 4. | Management | Handled by Directors |
| 5. | Governing Law | Governed by the Companies Act 2016 |
| 6. | Foreign Setup | Permitted |
Submission of Application for Company Incorporation
Pre-Incorporation Steps
- Company Name Reservation: This involves securing approval and reserving the intended company name. Once the name is finalized, verify its availability with Suruhanjaya Syarikat Malaysia (SSM), also recognized as the Companies Commission of Malaysia (CCM).
- Directors, Shareholders, Company Secretary, and Issued/Paid-Up Capital: Implement proper Know Your Customer (KYC) protocols, compile the required documents, and submit them for validation or endorsement as necessary.
- Note: Every company must have at least one director who is a local resident (either a Malaysian citizen or a Permanent Resident of Malaysia).
Incorporation Stage
The incorporation process typically spans 5 to 10 business days. Online applications are generally processed within a day, given that the registration fee is settled and no inquiries are raised by the Registrar. The company becomes operative from the issuance date of the Certificate of Incorporation.
Appointment of Company Secretary
A company secretary must be designated within 30 days following the company’s incorporation. Every company is required to have a minimum of one company secretary. The secretary should be a member of a prescribed body as per the Companies Act 2016 or a person authorized by the SSM under the Companies Commission of Malaysia Act 2001.
Post-Incorporation Steps
- An E-Certificate of Incorporation is issued by the SSM, validating the registration of the newly created company.
- If deemed necessary by the company, the constitution of the company can be filed post-incorporation.
- A Company Information Profile should be procured from the SSM.
- The prepared forms should be submitted to the SSM. Mandatory documents and pertinent records will be securely stored at the registered office. For a public company, it’s obligatory to conduct the first Annual General Meeting within 18 months from the company’s incorporation date.
- The Company Secretary is tasked with preparing the share certificate and optionally, the common seal.
It’s recommended that the company secures any required licenses, permits, or approvals from the respective authorities prior to launching its operations.
Malaysia Company Registration - Processes
The most prevalent business entity in Malaysia is the Private Limited Company, or “Sdn Bhd”. This guide imparts valuable information about the significant elements of investing and conducting business in Malaysia. It alludes to the general issues that companies might encounter while expanding into this region.
A private limited company, limited by shares, enjoys a separate legal identity from its shareholders. It is considered a separate taxable entity. Hence, shareholders of a Malaysian private limited company are not responsible for its debts and losses beyond their share capital.
Every company in Malaysia is required to register with the Companies Commission of Malaysia (SSM) and comply with the Companies Act 2016. The following steps elucidate the process of incorporating a company in Malaysia:
Selecting a Company Name
The initial step to register a local company involves choosing a company name and submitting a name application via SSM’s online business registration and filing portal.
The chosen company name must not be identical to an existing name or include prohibited or undesirable words.
You can incorporate your company once your application has been approved. This incorporation process must be completed within 180 days from the date of the name approval.
Setting a Financial Year End
The end of a company’s financial year (FYE) signifies the closure of its accounting period.
The accounting period is the acknowledged interval needed to complete an accounting cycle of the business. This period provides insights about the business’s profitability on a regular basis. Records of transactions are maintained over this period and reported in the form of a financial statement.
Accounting periods can be 12 months or within 18 months from the company’s incorporation date for newly established companies.
Determining the FYE is crucial as it will decide the due dates for your corporate filings and taxes every year.
Malaysia Company Registration - Yearly Compliance Obligations
The Companies Act outlines the mandatory duties that company directors need to uphold to avoid regulatory penalties.
Financial Reports
The initial financial report should be prepared within eighteen (18) months from the company’s establishment date.
Subsequent financial reports need to be distributed within six (6) months of the company’s fiscal year-end.
The company directors are responsible for the accurate preparation and timely distribution of these financial reports.
Annual General Meeting (AGM)
As dictated by section 340 of the Companies Act 2016, public companies are obligated to hold an Annual General Meeting.
Private companies have the discretion to either hold an AGM or not. If they opt not to, they must distribute their financial reports to their members within six months from the fiscal year-end, before submitting it to the Registrar.
Annual Return (AR)
Under section 68 (for local companies) and section 576 (for foreign companies), companies are required to file an Annual Return with the Companies Commission of Malaysia (SSM). This filing should occur within thirty (30) days of the company’s incorporation anniversary each year.
Non-compliance with these requirements may lead to enforcement actions against the company and its officers who fail to submit the annual returns. Penalties for such breach include a maximum fine of RM 50,000 upon conviction and an additional fine not exceeding RM1,000.00 for each day the offence continues after conviction.
Moreover, if a company does not file an Annual Return for three or more consecutive years, the Registrar has the authority to remove the company from the registry.
Establishing Key Roles: Directors, Company Secretary, and Other Significant Positions
Once your company’s name has been approved, you’ll need to designate key personnel in your organization. It’s mandatory for all businesses to have at least one director and a secretary who are typically residing in Malaysia.
For private limited companies in Malaysia, the following structure is required:
| Position | Details |
|---|---|
| a) Director | A minimum of one director is required, who should ordinarily reside in Malaysia (i.e. be a Malaysian citizen, hold Permanent Residence (PR) status, hold a Malaysia My Second Home (MM2H) pass or its dependent pass, or possess a Malaysian work permit). The minimum age for a director is 18 years, with no maximum age specified by CA 2016. Directors don't necessarily need to be shareholders. If a local director is not available, we can offer a nominee director service for registration purposes. |
| b) Shareholder | The company should have at least one shareholder, but no more than 50. Shareholders don't need to be local residents, enabling 100% foreign ownership of the company. |
| c) Initial Paid-up Share Capital | The minimum initial paid-up share capital is RM1.00. |
| d) Corporate Secretary | The company is required to appoint a secretary who ordinarily resides in Malaysia. |
| e) Local Registered Office |
It's mandatory to have a registered office in Malaysia.
If you haven't yet established a physical office in Malaysia, we can help you register your company using our local office address. You're free to change the registered office address in the future. |
Share capital
To establish a business entity in Malaysia, a minimum share capital of RM1.00 is mandatory.
An individual’s financial contribution towards the business entity is manifested in the form of a share, representing a fragment of the company’s ownership. It is crucial that this share is entirely funded.
Investors, through the purchase of these shares, gain a fraction of the company’s ownership. Shareholders can range from individuals, corporate entities, to limited liability partnerships. It is not a requirement for a shareholder to be a local resident, hence, the company can be fully owned by foreign entities.
Registered Local Office Address
A physical local address is compulsory when applying for the incorporation of a company in Malaysia. This registered address serves as the official communication point and the location where company registers and records are maintained.
If a permanent physical location in Malaysia has yet to be determined, as your business service provider, we have the ability to register your Company under our local office address. The registered office address is adjustable should you decide to relocate in the future.
Get in touch with us if you need more information.
Premia TNC has the optimal solutions for all your business needs.
Get in touch today for a FREE consultation.
No hidden costs, no obligations.
Feel free to drop us an email too!
[email protected]
Premia TNC has the optimal solutions for all your business needs.
Get in touch today for a FREE consultation.
No hidden costs, no obligations.
Feel free to drop us an email too!
[email protected]
