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1 Feb 2021

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5 Things Foreigners Should Know Before Incorporating in Malaysia

Malaysia, which is located strategically in Southeast Asia, has been facilitating as an economic hub over the years. Gradually, it has attracted more foreign investors and entrepreneurs to build their businesses here. Aside from the growing opportunities, these are the things that foreigners might want to know before you register a company in Malaysia.  

 

What type of business entities can you incorporate?

A foreigner is allowed to own a private limited company (Sdn. Bhd.) in Malaysia with a minimum of RM500,000 paid-up capital. For business natures with the likes of retail, wholesale and distributive business, their full foreign ownership of Sdn. Bhd. company is subject to approval from The Ministry of Domestic Trade and Consumer Affairs.

Even though its registration is carried out overseas, a foreigner is allowed to carry on his or her business in Malaysia.

 

What are the prerequisites before you can become a Malaysian company director and shareholder?

To become the sole director and shareholder of a private limited company, a foreign investor must be at least 18 years old, own a Malaysian permanent residency, and is not disqualified under Section 198 of the Companies Act 2016.

If you’re a non-Malaysian resident, you’re required to appoint a Malaysian as resident director of your private limited company. 

 

What is the budget to incorporate a company in Malaysia?

Paid-up Capital

The minimum paid-up capital to register a private limited company is RM1. However, you may need to find out the number of shares each shareholder has declared to hold during the incorporation. The total shares value equals the total paid-up capital of the company. 

 

Incorporation Fees

A fee of RM1,010 is charged by Companies Commission of Malaysia (SSM) for incorporating a local company. Whereas, you will be charged an incorporation fee of RM5,000 for when you set up a foreign company with an amount of share capital that is not more than RM1 million. Should the amount of share capital exceed RM 1 million but below RM10 million, you will be charged RM20,000. For foreign companies that do not prescribe any share capitals, a flat rate of RM 70,000 is payable to SSM.   

 

Company Secretarial Fees

According to the Companies Act 2016, the appointment of a company secretary is necessary for registering a private limited company. The monthly charges of a company secretary depend on the company secretarial firm you engage. 

 

What documents do you need for incorporation?

You’re required to fill out an application form with information about your local private limited company. In addition, you might be requested to submit a certified copy of the incorporation of a foreign company certificate, Memorandum and Articles or other instruments defining your company constitution. If all your documents are in languages other than Bahasa Malaysia or English, a certified translation of such documents in Bahasa Malaysia or English is required.

 

What are the laws and regulations of company incorporation in Malaysia?

According to SSM, it is not advisable to propose a company name with relation to Royal families or governmental bodies and authorities. These names might mislead the nature of your business and it might also be offensive. You might also want to avoid names that might involve activities controlled by other laws, namely “insurance”, “agent”, and “takaful” unless approved by the relevant agency.   

In terms of business nature, you are required to clarify the type of business that the company will be undertaking. If you are unsure about it, you can consult a company secretary company for ironing out the detailed description of your business purposes.

Once you are clear about these 5 particulars, you are all set to incorporate! Should you have any further inquiries regarding the role of company secretary, do leave us a message. We are ready to resolve all your uncertainties about how a company secretary can ease your incorporation process in Malaysia.