Guidance and important notes for the new Company incorporation in Malaysia
Excellent strategic location and proven sustainable globalised economy make Malaysia an attractive and extraordinary business hub for organisations looking to establish their presence in Southeast Asia and Asia-Pacific.
This is an opportunity if you are planning on doing business in Malaysia, knowledge of the ascendancy investment environment and information on legal, accounting and taxation framework are essential to maintain the right track of your organisation in dominant position.
In Malaysia, a business may be conducted:
- By an individual operating as a sole proprietor, or
- By two or more (but not more than 20) persons in partnership, or
- By a limited liability partnership (LLP), or
- By a locally incorporated company or by a foreign company registered under the provisions of the Companies Act (CA) 2016.*Foreign Companies may carry on business in Malaysia either
1. Incorporating a local company; or
2. Registering a branch in Malaysia
Malaysia company incorporation - Malaysia Type of Companies
There are three (3) types of companies that can be incorporated under the Companies Act 2016:
- Company Limited by Share
The liability of members is limited to the amount of the unpaid shares capital - Company Limited by Guarantee
The liability of the members is limited to the amount which the members have undertaken to contribute to the assets of the company in the event the company is wound up. - Unlimited Company
No limit placed on the liability of its members
The Companies Act 2016 has stipulated that a company must be registered with the Companies Commission of Malaysia (SSM) in order to engage in any business activity.
Malaysia Company Setup
| Description | Company |
| Legal Entity Status | A Separate Legal Entity |
| Number of Shareholders/ Partners |
Private Company: 1 – 50 persons
Public Company: Usually more than 50 persons |
| Liability | Limited Liability |
| Management Control | Directors |
| Governing Law | Companies Act 2016 |
| Foreign Setup | Applicable 100% Foreign ownership |
Lodgement of application to incorporate the company
Pre-Incorporation
-
Company Name Reservation
To obtain approval and reserve the proposed name. Upon confirmation of the proposed company name, check the company name availability with Suruhanjaya Syarikat Malaysia (“SSM”), also known as Companies Commission of Malaysia (“CCM”).
-
Directors, Shareholders, Company Secretary and the issued / paid-up capital
Conduct proper KYC, prepare necessary documents and send for certification / endorsement, if required.
* All companies must have a minimum of one local director (either Malaysian or Malaysia Permanent Resident).
-
Incorporation
Incorporation procedure will take approximately 14 working days. The Online application normally within 1 working day after the registration fee is paid if no query raised from the Registrar. The Company is successfully incorporated from the date stated in the Certificate of Incorporation together with the company registration no.
-
Company secretary must be appointed within 30 days after the incorporation of the company
It is mandatory for every company to appoint at least one company secretary. The secretary shall be a member of a prescribed body in the Companies Act 2016 or a person licensed by the SSM under Companies Commission of Malaysia Act 2001.
Post Incorporation
(a) E-Certificate of Incorporation will be issued by SSM to confirm the registration of the newly established company.
(b) If required by the company, it may file the constitution of the company after the incorporation of the company.
(c) Company Information Profile will be purchased from SSM.
(d) Forms that were prepared will be filed with the SSM. Statutory documents and necessary records will be maintained and kept at the registered office. For public company, the first annual general meeting of the company must be held within 18 months from the date of incorporation of Company.
(e) Company Secretary to prepare share certificate and common seal (optional)
The company is advised to obtain the necessary license/permit/approval from the relevant authorities before commencing business.
Malaysia company incorporation - Procedures
The most common type of business entity to set up in Malaysia is a Private Limited Company or “Sdn Bhd”. This guide will provide you with insights into the key aspects of investing and undertaking business in Malaysia. It makes reference to some of the general issues companies might face when expanding into the city-state.
A private limited company is limited by shares and has a separate legal entity from its shareholders. It is recognised as a taxable entity in its own right. As a result, shareholders of a Malaysia private limited company are not liable for its debts and losses beyond their amount of share capital.
All companies in Malaysia must be registered with the Companies Commission of Malaysia (SSM) and abide by the Companies Act 2016. The following steps will help you gain an easy understanding of incorporating a company in Malaysia:
Choosing a Company Name
The first step of registering a local company is to choose a company name and submit a name application via SSM’s online business registration and filing portal.
Your proposed company name cannot be identical to an existing name or contain prohibited and undesirable words.
Once your application is approved, you can proceed to incorporate your company. You must complete your incorporation within 180 days from the date of the name approval.
Deciding on a Financial Year End
A company’s financial year end (FYE) represents the final day of its accounting period.
The accounting period is the recognised interval to complete an accounting cycle of the business. The periodicity provides perspective about the profitability of the business on an ongoing basis. Records of transactions are kept over this period and reported in the form of financial statement.
Accounting periods can be 12 months or within18 months from company’s incorporation date for newly setup company.
Deciding on the FYE is very important as it will determine when your corporate filings and taxes are due every year.
Malaysia company incorporation - What you have to file each year
There are statutory obligations under the Companies Act that company directors must comply with or face enforcement action.
Financial Statement
First Financial Statement – within eighteen (18) months from the date of its incorporation.
Subsequent Financial Statement – within six (6) months of its financial year end.
Mandatory to circulate within 6 months of the financial year end.
Preparation of Financial Statement is responsibility of the directors of company.
Annual General Meeting (AGM)
Annual General Meeting is a meeting that is required by public company to be held as per S340 of the Companies Act 2016.
Private company may or may not choose to hold its Annual General Meeting.
A private company that choose not hold its Annual General Meeting, must circulate its financial statement and reports to its members, within 6 months from its financial year end, before it is lodged to the Registrar.
Annual Return (AR)
Annual Return is a return required to be lodged under s68 (local company) and s576 (foreign company).
Private limited companies are required to lodge its Annual Return with the SSM within thirty (30) days from its anniversary of incorporation date each calendar year.
Please take note that if any breach of the compliance requirements will subject for the following enforcement actions against company and every officer who fail to file annual returns:
- On conviction, be liable to a fine not exceeding RM 50,000.
- In the case of a continuing offence, a further fine not exceeding RM1,000.00 for each day during which the offence continues after conviction.
- If a company fails to lodge an Annual Return for three or more consecutive years, The Registrar may strike a company off the registrar.
Appointing Directors, Company Secretary and Other Key Personnel
The next step is to appoint officers in your company. All companies must appoint at least one director and a secretary who are ordinarily resident in Malaysia.
In Malaysia, a private limited company must have the below structure:
| a) | Director |
Minimum of one director who has to be an ordinarily resident in Malaysia (i.e. Malaysian/ Malaysia Permanent Residence (PR)/ Malaysia My Second Home (MM2H) holder or dependent holder/ Malaysia work pass holder). The minimum age of a director is 18 years and the CA 2016 does not specified any maximum age. A director of the company need not necessarily be a shareholder of the company.
In the event that there is no local director, we are able to provide a nominee director service for registration purposes. |
| b) | Shareholder | Minimum of one shareholder and maximum are 50 shareholders. (the shareholder does not need to be a local resident and the company can be 100% foreign owned). |
| c) | Initial paid-up share capital | Minimum of RM1.00 |
| d) | Corporate Secretary | Must have one secretary who is ordinarily resident in Malaysia |
| e) | Local registered office | Must have a local registered office in Malaysia, which is usually the Company Secretary’s office address. |
Share Capital
The company requires to register a company with a minimum of RM1.00.
A share is a portion of the company which belongs to a shareholder in exchange for his financial contribution towards the company’s share capital. A share must be fully paid up.
By paying for the shares, an investor is buying partial ownership of a company. A shareholder may be an individual, a company or a limited liability partnership. The shareholder does not need to be a local resident and the company can be 100% foreign owned.
Registered Local Office Address
The company must provide a registered office address when submitting an application to incorporate a company in Malaysia. A registered office address is where all communications and notices to the company are addressed to, and where the company’s registers and records are kept.
Premia TNC will be providing the registered office address as part of our services. You may change the registered office address, in case you have a physical office in Malaysia that fulfill the registered office requirement stated in the Companies Act, 2016.
In case you have not decided to set up a physical office in Malaysia yet, we as your corporate service provider will be able to register the Company under our local office address. You may choose to change the local registered office address in the future.
Contact us for more details