Company Registration in Malaysia

The procedure of company registration in Malaysia is seamlessly straightforward. In Malaysia, companies registered as Public Limited must end their name with the suffix- Berhad or Bhd. For a company registered as Private Limited, it must end its name with the suffix- Sendirian Berhad or Sdn Bhd. Also, to go through the company registration process in Malaysia, the applicant must conform to the eligibility and documentation requirements and the prescribed procedure.

As per the company registration procedure of Malaysia, the applicant must also ensure the requirements prescribed by the Malaysian Local Law. In Malaysia, the primary Corporate Legislation for company regulations is its Companies Act of 2016. Let us look at them in detail.

Corporate Structures types for Company Registration in Malaysia

The Malaysian Corporate Legislation guarantees an array of corporate legal structures to its nationals as well as foreigners. The business person can choose the suitable corporate system for himself per his business requirements. Let us look at them in detail one by one.

Sole Proprietorship
It is the easiest corporate entity to set up in Malaysia.
Sole Proprietorship in Malaysia requires only one owner
The sole owner or the Proprietor’s liability is unlimited.
In this setup, the personal income and assets of the Proprietor can be compromised to settle the debts and obligations of the Proprietorship.
The Proprietorship will be declared bankrupt at the cost of the owner.

Private Limited Company
A Private Limited Company in Malaysia is a separate legal entity from its owners
The Company or the PLC can accomplish any of the following tasks as a separate legal entity:
Sell-Purchase Property
Enter into Legal Agreements
Sue someone or get sued by someone in the Courts of Law
In a PLC structure, the owners will be liable for the amount they have contributed to the PLC.
Personal assets of the shareholders will not be confiscated in case of insolvency/bankruptcy.

Public Limited Company
The Company can offer shares to the general public in a Public Limited setup.
Public Limited Companies in Malaysia are listed on its Stock Exchanges.
The Securities Commission of Malaysia governs such entities.

Foreign Company’s Branch Office and Representative Offices
As a Foreign Company, wanting to understand the business environment of Malaysia, you can set up your representative office(s) in any of the Malay cities.
An R.O. is not granted an independent legal stature in Malaysia.
The Malaysian Authority will hold the Parent Company responsible for the debts and liabilities of the Representative Offices.
A Branch Office is also an extension of its parent company in Foreign Lands.
The Parent Company is liable for all the debts of its branch in Malaysia.

Unlimited Company
In an Unlimited Company setup, members and shareholders of the Company have unlimited liability.
In case of a loss or debt situation, the members and shareholders will be personally responsible for the misfortunes.

Limited Liability Partnership
A Limited Liability Partnership is a combination of both partnership and a registered company.
An LLC is a corporate body.
LLPs in Malaysia have a separate legal entity from their member partners.
You can set up an LLP in Malaysia as per the regulations of the Limited Liability Partnership Act of 2012.

Partnership
In a Partnership, two or more persons come together to earn revenue from their commercial activities in the market.
The Malaysian Legislation restricts a Partnership to have more than 20 partners.
Each partner must be a Malaysian citizen or a permanent citizen of Malaysia.
Usually, auditors and lawyers prefer such a form of corporate structure.
Members partners of a Partnership have unlimited liability against its debts and obligations.
Partnership in Malaysia is exempted from paying any corporate taxes.
But each member partner must pay their individual taxes.

Who regulates Corporate Bodies in Malaysia?

The Regulatory Authority for Corporate Registration of the Malaysian Federation is the SSM, i.e., Suruhanjaya Syarikat Malaysia. It is the nodal agency for corporate registrations in Malaysia, also known as the CCM or Companies Commission of Malaysia. As mentioned earlier, the corporate Legislation which regulates corporate entities in Malaysia is the Companies Act of 2016.

Benefits of Company Registration in Malaysia

There are various benefits of company registration in Malaysia, such as:

Low Operational Cost
The cost to register and run a company in Malaysia is relatively low in comparison to other Asian countries.

Cheap Office Space Rents & Leases
You can easily avail of cheap office space on a rent or lease basis in Malaysia. Office spaces are well structured and available in prime business locations in Malaysia.

Overall Minimal Labour Wages
Companies can hire skilled and professional employees in Malaysia on comparatively lower wages or Cost-to-Companies. It is lesser than the average wages compared with other countries.

No Double Taxation scenario
The Malaysian Government is a signatory to a number of double taxation treaties with other trading countries. Therefore, there is no issue with paying the Double Taxes on revenue generated by Companies in Malaysia. Also, the Malaysian Corporate Authority levies no withholding taxes on dividends paid outside the country.

No restriction on Repatriation
Malaysian Authority puts no restrictions on its Corporations upon Repatriation of any of the following:

Capital earned
Profits generated
Dividends granted
Royalties issued

Various Incentives and Subsidies from the Malay Government
The Government offers strong incentives and subsidies to registered Corporations in Malaysia to encourage business registration and capital investment.

More Investors to raise Funds
Many Foreign Investors and Establishments prefer Malaysia as their business destination because their local Legislation guarantees a high level of investor protection.

Eligibility Criteria for Company Registration in Malaysia

Shareholders
Malay Authority mandates a minimum of one shareholder/member for company registration.
Shareholders can be any of the following entities:
Foreigner
Private Entity
Local Individual

Directors: Resident and Foreign

Malay Authority mandates a minimum of one Resident Director.
The Resident Director must ordinarily reside in Malaysia.
In the case of a Private Limited Company, a minimum of one resident Director is required.
In the case of a Public Limited Company, a minimum of two resident directors is required.
Every Director must be blemish-free of legal proceedings, including insolvency or bankruptcy.
Each Director must carry out his or her duties as per the regulations of the Companies Act of 2016.

Resident Company Secretary
Every registered Company in Malaysia must have a Company Secretary.
The Company Secretary or C.S.
The CS must be a citizen or permanent citizen of Malaysia.
He must reside in Malaysia.
The principal place of C.S.’s residence must be in Malaysia.

Minimum Capital Requirement: Paid-up Capital
The Malay Authority puts no capital requirement for Corporation’s paid-up capital in Malaysia.
If the company issues work permits to employees abroad, then it must commit a total paid-up capital to the foreign-owned Company.
The paid-up capital is decided based on the business activity of the Corporation, such as:
If you are involved in Consultancy and Advisory Business, the minimum paid-up capital requirement will be 500,000 MYR.
If you are involved in Import & Export and Trading Business, the minimum paid-up capital requirement will be 1,000,000 MYR.
If you are involved in a Joint Venture with a Malaysian partner(s), the minimum paid-up capital requirement will be 500,000 MYR.
If you are involved in Non-Export oriented Industries, the minimum paid-up capital requirement will be 100,000 MYR.

Object of the Corporation
As per the Companies Act of 2016, every company registration applicant must prepare a proper object.
The objects must be detailed in the applicant company’s Memorandum of Association (MoA).
The object must state the lawful activities to be conducted by the applicant company. Malay Authority prohibits every registered entity from carrying out unlawful activities.

Registered Office Address
Every incorporated entity in Malaysia must have a dedicated office space on a rent or lease basis. This office space must be registered with the Malay Authority. The applicant must provide proof of the office facility at the time of company registration.

Documents required for Company Registration in Malaysia

Company’s Trade Name reservation application
Details of the business activities to be undertaken
Declaration of regulatory Compliance as per the Companies Act
Details of the Official Address in Malaysia
Complete Details of the first directors and registered shareholders
Shareholding Arrangement of the Shareholders
Minimum paid-up capital requirement
Declaration by each Director that they have not been convicted of any legal or criminal offense in their country and are not declared undischarged as bankrupts or insolvents by the concerned Authority

Process for Company Registration in Malaysia

The process for registering your Company in Malaysia is enlisted in the following points:
Conduct Company’s Name Search and Reserve the name for the applicant company
Application filing for Company Incorporation
Required Declaration Filing for Incorporation
Application Assessment and Notice of Registration
Obtain the Incorporation Certificate and other required Licenses
The Process for company registration in Malaysia

Conduct Company’s Name Search and Reserve the Name

The applicant must conduct a name search to check the availability of its chosen name.
The chosen name must be unique and not similar to the already registered name.
The chosen name must comply with the Companies Act’s nomenclature requirements.
The applicant cannot use any offensive term for trade naming itself.
The chosen name must not breach any Intellectual Property Rights of Malaysia.
The chosen name must be reserved with the Authority.
The applicant must timely submit the company incorporation documents to the SSM.
The applicant must submit the documents within three months from the date of its name approval.

Application filing for Company Incorporation

The applicant must provide the incorporation details in the company registration application.
He must also provide the details related to the directors, shareholders, and members of the Company.
In addition, the applicant must also detail the commercial activities to be carried out by the Company, along with the official address.
Required Declaration Filing for Incorporation
The registration applicant must provide the declaration for business registration in Malaysia. The declaration must state the information provided in the incorporation application is absolutely true to the applicant’s knowledge.

Application Assessment and Notice of Registration

After the application submission, the SSM will review and check the application for any inconsistencies. If no problems are encountered by the SSM related to the application, then it will send a registration notice to the applicant.

Obtain the Incorporation Certificate and other required Licenses
If the applicant’s filed registration application is in compliance with the registration procedures and submission of the duly attested documents along with the prescribed licensing fee, the SSM will issue the Certificate of Incorporation to the applicant company.

After the Company’s incorporation, the newly registered Company must obtain the required licenses from the relevant authorities before starting its business activities as specified in its Memorandum of Association.

How we can help you

If you are considering forming a business or you need expert help with company registration in Malaysia, MagickFormations™ is ready to assist you with its skilled team of lawyers, consultants and tax experts. We are committed to making the process as stress-free and streamlined as possible for you, and we will take care of all your document preparation and administrative tasks regarding the registration forms, payment of government fees, local address registration, banking support, etc., whilst always keeping your exact objectives and unique vision in mind throughout the process.

Please use our Formation Wizard if you would like to set up your registered company in Malaysia or if you would like to know the costs involved prior to proceeding with our exceptional services. For other queries and special requests for complex or customised company formation services, please contact us at connect@magus.pro