Types of Company in Malaysia

Malaysia is a country that is rich in culture, history, and economic opportunities. It is a hub of business activity in Southeast Asia, making it an ideal destination for entrepreneurs and investors looking to establish a company or expand their business in the region. In this article, we will explore the different types of companies in Malaysia, the process of incorporating a Malaysian type of company, corporate governance, financing, employment laws and regulations, intellectual property rights protection, taxation, and more. 

Types of Companies in Malaysia 

There are several types of companies that one can establish in Malaysia, including a private limited company (Sdn Bhd), public limited company (Berhad), sole proprietorship, and partnership. 

1. Private Limited Company (Sdn Bhd) 

A private limited company is the most common type of business entity in Malaysia. It is a separate legal entity, which means that it has its own legal identity, assets, and liabilities. A minimum of two shareholders is required to establish a private limited company, and the liability of shareholders is limited to the amount of their shareholdings. The directors and shareholders can be foreigners or locals. A private limited company is required to have a minimum of one director who is a resident in Malaysia. 

2. Public Limited Company (Berhad)

A public limited company is a company that has its shares listed on the stock exchange. It is required to have a minimum of three directors and a minimum of two shareholders. The liability of shareholders is limited to the amount of their shareholdings. A public limited company is subject to more stringent regulations than a private limited company. 

3. Sole Proprietorship 

A sole proprietorship is a business entity owned and operated by a single individual. It is the simplest form of business entity in Malaysia. The owner is personally liable for all the debts and liabilities of the business. 

4. Partnership 

A partnership is a business entity that is owned and operated by two or more individuals. The liability of partners is unlimited, and they are personally liable for all the debts and liabilities of the business. A partnership is not a separate legal entity, which means that the partners are personally liable for the business. 

Incorporation Process for a Malaysia Type of Company 

The process of incorporating a Malaysia type of company involves several steps, including choosing a company name, preparing the necessary documents, registering the company with the Companies Commission of Malaysia (SSM), obtaining business licenses and permits, and registering for taxes. 

Step 1: Choose a company name and get approval 

The first step in incorporating a Malaysia type of company is to choose a company name and get approval from the SSM. The company name must not be similar to the name of an existing company, and it must not contain any words that are offensive or misleading. 

Step 2: Prepare the necessary documents 

The next step is to prepare the necessary documents 

Step 3: Register the company with the Companies Commission of Malaysia (SSM) 

Once the necessary documents have been prepared, the company can be registered with the SSM. The registration process can be done online or in person at the SSM office. 

Step 4: Obtain business licenses and permits 

Depending on the nature of the business, the company may be required to obtain business licenses and permits from the relevant authorities. 

Step 5: Register for taxes 

Once the company has been registered with the SSM, it must register for taxes with the Inland Revenue Board (IRB) 

Corporate Governance 

Corporate governance refers to the set of rules, practices, and processes that are used to direct and control a company. In Malaysia, corporate governance is regulated by the Malaysian Code on Corporate Governance, which is aimed at ensuring that companies are managed in a transparent, accountable, and responsible manner. 

Financing 

There are several sources of financing available to companies in Malaysia, including bank loans, venture capital, private equity, and crowdfunding. The availability and terms of financing will depend on factors such as the size and stage of the company, the industry, and the business plan. 

Employment Laws and Regulations 

Companies in Malaysia are subject to several laws and regulations related to employment, including the Employment Act, the Industrial Relations Act, and the Minimum Wages Order. These laws and regulations govern issues such as minimum wage, working hours, leave entitlements, termination, and disputes between employers and employees. 

Intellectual Property Rights Protection 

Intellectual property rights protection is an important consideration for companies in Malaysia. The Malaysian government has established several laws and regulations aimed at protecting intellectual property, including the Copyright Act, the Patents Act, and the Trade Marks Act. 

Taxation 

Companies in Malaysia are subject to several taxes, including corporate income tax, sales and service tax, and goods and services tax. The rate and applicability of these taxes will depend on factors such as the type of company, the industry, and the income or revenue generated. 

Conclusion 

Establishing a Malaysia type of company involves several steps and considerations, including choosing the right type of company, incorporating the company, complying with corporate governance regulations, obtaining financing, navigating employment laws and regulations, protecting intellectual property rights, and managing taxes. However, with the right preparation and guidance, establishing a Malaysia type of company can be a rewarding and lucrative business venture.