Registering a foreign company in Malaysia is quite simple. You can register a company in Malaysia with foreign ownership this is called Sdn Bhd. Although, in order to own 100% foreign ownership, the company must be in certain industries, as dictated by the government.
Industries in which the Malaysian government is trying to encourage foreign investment are allowed to have complete foreign rights.
A foreign company can operate in Malaysia from any of these
- Incorporation of a local company in the Malaysian Commission of Companies (SSM); or
- Registration of foreign company from Malaysia to SSM.
Type of Company registration in Malaysia
According to the Malaysian Companies Act, there are two types of companies that can be locally incorporated in Malaysia.
- A limited stock company
- An unlimited company
Company Limited by Shares
A company with share capital can be incorporated either as a private company, identified by the words “Sendirian Berhad” or “Sdn. Bhd. “Which appears with the company name or as a public company” Berhad “or” Bhd “appearing with the company name.
Unlimited company
An unlimited company can also be incorporated as either a private company or a public company. For an unlimited company, the liability of its members must be declared in the Memorandum of Association as unlimited.
Minimum requirement for company registration in Malaysia
- At least two subscribers
- At least two directors; and
- A company secretary who can be:
- A natural person who is a member of a professional body prescribed by the Minister of Trade Cooperation and Internal Consumption; or
- A person who has been licensed by the Malaysian Company Commission (SSM)
The proposed director and company secretary in a Malaysian company have their principal or sole place or residence in Malaysia.
Malaysian Office Address and Local Agent
Each company in Malaysia must have a local office address and a locally registered agent. The registered office is the place where all formal communications and notifications must be addressed. In Malaysia, it is very common to have the secretariat office as a registered office.
The company may have a different office address, anywhere in the world.
Malaysian taxes
Each company after its establishment must register for the goods and services tax (GST) if they meet certain requirements. Companies do not have to register with GST if the annual turnover exceeds 500,000 lei.
What are the benefits of registering a company in Malaysia?
- Start-up costs are very low compared to Singapore and other Asian countries.
- Rental rates are also lower than Singapore (and other Asian countries)
- Lower wages because average wages are $ 2.31 USD per hour, which is much lower compared to other countries.
- Malaysia has 68 double taxation treaties with other countries, so there is no double taxation of income generated in Malaysia.
- There are no withholding taxes on dividends paid outside Malaysia.
- There are no restrictions on Malaysian corporations for repatriation of capital, profits, dividends and royalties.
- The Malaysian Government has provided strong incentives and subsidies to encourage business formation and capital investment.
What is Procedure for Company registration in Malaysia?
The process of incorporation of the Malaysian company is very similar to that of the incorporation of the Indian company.
Step-by-step procedure:
- . Name Search
A name search is performed to verify the availability of the proposed name. To check the availability of the proposed company name, you should consult the Government Monitor, which provides guidelines for naming a company and guidelines for applying the company name.
The steps involved in submitting an application for name availability are:
(i) File the application form Name 13A CA (Name Availability Request) with the name proposed in the SSM; and
(ii) Pay the prescribed fee for each name applied.
The SSM will verify and process the application, and if the proposed name is available, the same is approved by the SSM. The approved name is reserved for three months from the date of approval.
Filing of Incorporation Documents with SSM
Company incorporation documents must be submitted to the SSM within 3 months from the date of approval of the company name, the failure of which a new request for a name search will need to be sent to the SSM.
Incorporation Documents to be filed with SSM
1. Memorandum and Article of Association
The original, duly stamped copy of Article of Association and Memorandum of association needs to be submitted with SSM. Stamps are affixed at the Inland Revenue Board’s stamp office.
The name of first directors and secretaries shall be mentioned in the Memorandum and Article of Association.
The subscribers to the company’s shares shall sign the Memorandum and Articles of Association of the company in front of a witness.
Table A of the Fourth Schedule of the CA can be adopted as the Article of Association of the company.
The articles of association of a private company shall contain the following stipulations:
(i) Restriction on the right to transfer the company’s shares;
(ii) Limitation on the number of members to not exceed the prescribed limit;
(iii) Prohibition to any invitation to the public to subscribe the shares/debentures of the company; and
(iv) Prohibition on the public invitation to deposit money with the company.
2. Statuary Declaration By A Director Or Promoter Before Appointment
The director or promoter shall give a declaration under oath, in the prescribed form, that:
He/She is not a bankrupt; and
He/She has not been convicted and imprisoned for any prescribed offenses.
3. Declaration of Compliance
It is a declaration stating that all the requirements of the Companies Act have been complied with. This declaration needs to be signed by the company secretary handling the registration process and who is named in the Memorandum and Articles of Association.
4. Additional Documents:
Along with the abovementioned documents you need to submit following documents in addition.
Original copy of name application Form 13A.
A copy of the letter from SSM approving the name of the company.
A copy of the identity proof of each proposed director and company secretary.
Certificate of Incorporation
Upon compliance with the incorporation procedures and submission of the duly completed Incorporation Documents with prescribed fee, a Certificate of Incorporation is issued by SSM.
After the incorporation, the company shall obtain the required license/permit/approval from the relevant authorities before starting to carry on any business outlined in the Memorandum of Association.
How to register a foreign company in Malaysia?
Foreign company under the Companies Act 1965 (CA 65) is defined as:
(a) a company, corporation, society, association or other body incorporated outside Malaysia; or
(b) an unincorporated society association, or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia.