Malaysia’s economy is quickly growing, making it an amazing place for business owners to start earning. It’s a great option for anyone wanting to invest in an up-and-coming market. If you’re interested in learning how to open a company in Malaysia, however, there are some things you should know about the Malaysia company formation process. This helpful guide walks you through what you need to know to set up a company and start doing business in Malaysia!
How to Open a Company in Malaysia?
Setting up a company in Malaysia involves several important steps and considerations for foreign entrepreneurs. To begin, you will need to register with the Companies Commission of Malaysia (SSM), which is the regulatory body overseeing company registrations. Foreign investors are required to complete a Business Registration Form, provide a copy of their identification card or passport, and prepare the necessary payment. The current fee for incorporation with SSM is RM1,010, including tax. Additionally, if you choose to engage a company secretary to assist with the incorporation process, there will be an extra fee for their services.
How to Open a Company in Malaysia: Why Entrepreneurs Choose Malaysia
One of the most common questions entrepreneurs ask when considering how to open a company in Malaysia is what makes the country an attractive destination for business incorporation. Malaysia offers a strategic advantage due to its central location within Southeast Asia, providing easy access to neighboring markets such as Singapore, Thailand, Indonesia, and the broader ASEAN region. Malaysia has become a key hub for trade, logistics, and investment due to its strategic geographic position.
In addition to its location, Malaysia is known for its investor-friendly policies, competitive tax rates, and a well-established legal framework that supports both local and foreign businesses. The government has introduced numerous initiatives to simplify the business registration process, reduce bureaucratic hurdles, and provide incentives for foreign direct investment. Sectors such as manufacturing, technology, digital services, and renewable energy have particularly benefited from these supportive measures.
The country’s relatively low operating costs, skilled multilingual workforce, and developed infrastructure further enhance its appeal as a business destination. These advantages, combined with the ease of setting up a company, make Malaysia an ideal choice for entrepreneurs looking to establish a presence in one of Asia’s most dynamic markets.
What are the Essential Requirements for Registering a Company in Malaysia?
To set up a private limited company in Malaysia, you must be at least 18 years old, a resident of Malaysia, and not disqualified under Section 198 of the Companies Act 2016. Foreigners need to have a clear business plan, identify corporate shareholders and directors, propose three company names for availability checks, and submit Incorporation information to the Malaysian government. A Registration Certificate will be issued upon approval.
Required documents include the company name, primary business activities, identification cards or passports of all shareholders, proof of residential address in Malaysia, paid-up capital, and shareholding percentages. Additionally, the company must have at least one subscriber to its shares, one resident director, and one company secretary. Prepare a passport for identity verification and authorization documents for trademarked company names, if applicable.
1. Choose a Business Type
Before you form a company in Malaysia, you’ll need to decide the business type. There are several different types of business entities that you can form in Malaysia, and each one has a different tax structure.
Labuan Company
A Labuan trading company is a company that is established to participate in either non-trading or trading activities. These businesses have a tax rate of 3 percent if they carry out trading activities or 0 percent if they operate non-trading activities.
In order to be classified as a Labuan company, a business must have a registered office located in Labuan, Malaysia, and meet the requirements for the minimum number of full-time employees. The business office can be registered at a virtual address, meaning you don’t have to be officially located in the country.
If you do plan to be in the country, however, you will need to have an active visa. You will also need to apply for the Labuan Company Work Permit. This permit is good for two years, after which time you can renew it.
Labuan businesses require at least one shareholder and one director. These can either be corporate entities or individuals.
Sendirian Berhad (Sdn Bhd)
A Sendirian Berhad is an option that foreign investors can set up. This type of company is 100% foreign-owned but is a separate entity from its owners, meaning that it can raise capital through shares.
In order to start an Sdn Bhd, you don’t need to be present in Malaysia as long as you can meet all the company management and shareholder requirements. These requirements mean that your business has:
- At least one director who is a resident of Malaysia
- At least one shareholder
- At least one person dedicated to raising capital and assisting with start-up operations
One way that Sdn Bhd companies are a little different from Labuan companies is that they can only operate in certain industries. These industries include maritime operations; petroleum, oil, and gas companies; the education sector; banking and finance; agriculture; and outbound tourism and ticketing.
2. Choose a Business Name
After you’ve selected your business entity type, it’s time for you to get to work choosing a business name. The name of your business will influence your brand identity and your marketing strategy.
Once you’ve come up with a business name that you like, you will need to complete a Request for Availability of name form. You’ll then send this form to the SSM, or Suruhanjaya Syarikat Malaysia, along with a fee of RM 50 for each name that you apply for.
After the name check is approved, register the name with the SSM. This will allow you to get approval for setting up your company.
3. Find a Business Location
So, now that you have a business name, you need to have a business location. After all, without a business location, you won’t be to operate your company and start doing business!
Look for locations that will help you bring in a lot of foot traffic and that are central to the operations your business will be carrying out. Don’t be afraid to check out multiple locations before settling on a business location.
4. Register Your Office Address
After you have your business location, it’s time to register your local office address. This is a legal requirement for owning and operating a business in Malaysia.
Remember, just because your business doesn’t have a physical location doesn’t mean that you can’t open your company. Simply use a virtual address to formalize the documentation and register your company.
Note that when applying for company registration, you will automatically be making a business registration application at the same time.
5. Incorporate the Company
Once your company address is registered, it’s time to start preparing your incorporation documents. To incorporate your company, you’ll need:
- A Memorandum and Article of Association
- A Statuary Declaration By a Director or Promoter Before Appointment
- A Declaration of Compliance
- One copy of the company’s name approval letter from the SSM
- One copy of each director’s ID
With these documents in hand, you’ll be ready to incorporate your company! You have three months after the name of your company is approved to submit all these documents to the SSM. If you don’t comply with the documentation within three months, you’ll need to choose a new name.
Don’t forget that along with your documentation, you’ll be required to pay registration fees. To register your company, you’ll need to pay RM 1,000. Once paid, your certificate of registration will get sent to you within the hour!
How to Open a Company in Malaysia: Expected Timeline
When exploring how to open a company in Malaysia, understanding the typical timeline for the incorporation process is essential for effective planning. While the duration may vary depending on the complexity of the business structure and the completeness of documentation, the overall process is relatively efficient compared to other jurisdictions in the region.
The first step involves conducting a name search and obtaining approval from the Companies Commission of Malaysia (SSM). This usually takes one to two working days, provided the proposed company name does not conflict with existing businesses or restricted terms. Once the name is approved, the incorporation documents, including the constitution and statutory declarations, must be prepared and submitted. This stage typically requires three to five working days, although the timeline may extend if additional information is requested by the authorities.
Upon successful submission of the required documents, the Certificate of Incorporation is generally issued within seven working days. As legal proof of formal registration and authorization to commence operations in Malaysia, this certificate confirms the company’s legitimacy. It is important to note that while the core incorporation process can be completed within two weeks, additional time may be needed for obtaining specific business licenses, registering for tax purposes, or opening a corporate bank account. Foreign investors should factor these elements into their overall timeline to avoid operational delays.
Essential Requirements for Foreign Investors to Open a Company in Malaysia
To open a company in Malaysia, it is essential to first understand the specific requirements for foreign investors. Business owners in Malaysia must meet specific regulatory conditions, particularly concerning ownership structure, directorship, and capital requirements, despite the country’s strong encouragement of foreign investment. In most industries, Malaysia allows for 100% foreign ownership, especially when registering a Private Limited Company (Sdn. Bhd.), which remains the preferred structure due to its limited liability protection and operational flexibility. However, certain sectors, such as wholesale, retail, agriculture, and trading, may impose ownership restrictions or require higher paid-up capital.
To establish a company in Malaysia, it is mandatory to appoint at least one director who is either a Malaysian citizen, a permanent resident, or a foreign national who has been residing in Malaysia. For companies operating in regulated sectors, additional licensing, ownership caps, or higher paid-up capital may apply. For example, trading businesses typically require RM 500,000 in paid-up capital, while other sectors such as agriculture or construction may impose stricter limits. Mandatory e-invoicing and registration with local tax and employment bodies are also required post-incorporation. Foreign investors should research industry-specific rules to ensure compliance and a smooth incorporation process.
Open a Company in Malaysia the Right Way
With this helpful Malaysia business setup guide, you’re ready to open a business in Malaysia. These steps will make it easier for you to tackle everything from Malaysia company incorporation to business taxes and more.
Want some support as you go through the setup process to open a company in Malaysia? Get in touch with Premia TNC, and we’ll help you start your own business in Malaysia!
