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Guide to Set up a Company in Malaysia

Unless otherwise indicated, the Malaysia company stated in this guide refers to a private company limited by shares (Sendirian Berhad or Sdn Bhd) formed and incorporated in Malaysia in accordance with the 2016 Companies Act of Malaysia.

1.      Features of a Malaysia Company

(1)    Suruhanjaya Syarikat Malaysia (Companies Commission Malaysia)

The Companies Commission of Malaysia (SSM) established on 16 April 2002, serves as an agency to incorporate companies and register businesses in Malaysia.

(2)    Name of Company

The Malaysia Companies Act provides that before a company is registered, the Minister of Domestic Trade and Consumer Affairs or the Registrar of Companies must first approve the name of the company. Once approved, the name will be reserved for a period of 30 days. The name of a Malaysia company must either be in Malay or English.

(3)    Share Capital

There is no minimum paid-up capital requirement to setup a Company in Malaysia, but it is important to note that most government agencies, banks, or other entities may require that a Company meet a minimum amount before they would even consider any application for a loan, license, tender as well as any business dealings.

For example, the immigration department of Malaysia would require a minimum capital of RM500,000.00 for a Company wholly owned by foreigner, to make a visa application.

(4)    Director

Every Malaysia company needs at least 1 director who is at least 18 years of age and is residing in Malaysia. He/she is not a bankrupt and has not been convicted and imprisoned for a period of past 5 years. A foreigner who possess a work permit or a permanent resident certificate or a dependent pass can also be appointed as a director of a Malaysia company.

(5)    Shareholder

Every company needs at least one shareholder who is at least 18 years of age. Corporate shareholder is allowed and there is no limitation on his nationality.

(6)    Company Secretary

A Malaysia company must have at least one company secretary. The company secretary must be a member of any one of the prescribed professional bodies or licensed by the SSM. The company secretary must be appointed at the time of incorporation of within 30 days of the date of incorporation.

(7)    Registered Office

Every Malaysia company must have a registered office located in Malaysia to which all communications and notices may be addressed. It is normal practice in Malaysia to have the secretarial office as registered office of the company.

(8)    Constitution

A company (other than a company limited by guarantee) can now choose to operate without any constitution. In that case, the rights, powers, duties and obligations of the company, its director(s) and member(s) as set out the Companies Act automatically applies.

If a company chooses to have a constitution, it may be adopted by passing a special resolution post-registration and lodging it with the Companies Commission of Malaysia (“SSM”) within 30 days of adoption. However, anything in a constitution that contravenes or is inconsistent with the provisions of the Companies Act will be invalid.

(9)    Accounts and Audit

Every Malaysia company is required by the Companies Act to appoint an approved auditor for their companies. Also, whether active or not, large or small, all companies must have its accounts audited by the auditors every year before the Annual General Meeting (AGM). The shareholders shall then adopt and approve the audited accounts (audited financial statements) during the AGM.

(10)  Annual General Meeting (AGM)

The mandatory requirement for a private company to hold an AGM has been abolished under the Companies Act 2016. As such, in the context of a private company, all meetings of private companies are referred to as meetings of members (without distinguishing between an annual general meeting and an extraordinary general meeting as in the case of a public company). Public company are still required to hold an AGM in every calendar year.

(11)  Annual Returns

The Companies Act 2106 requires the filing of an annual return not later than 30 days from the anniversary of the incorporation date. The Annual Return is a snapshot of general information about a company’s directors, secretary, registered office, shareholders, share capital, principal business activities, etc.

2.      Materials Required for Registration of a Malaysia Company

The following documents or information are required for the purpose of registering a company in Malaysia:

(1)    New company’s name

(2)    New company’s business activities

(3)    Identity card (Malaysian) or Passport (foreigner) and residential address proof of each director;

(4)    Identity card (Malaysian) or Passport (foreigner) and residential address proof of each shareholder; if the shareholder is another corporation, a set of the corporate documents of that corporation;

(5)    Amount of share capital and shareholding structure (percentage of shareholding by each shareholder if more than one).

The identity and residential address proof must be certified by Kaizen’s staff, an accountant, a lawyer, a attesting officer or a bank manager.

3.      Incorporation Process

(1)    Application for Name Search

It is essential to conduct a name search so as to determine whether the proposed name is appropriate for use and whether it is available. The name chosen should be desirable and should not be the similar to any existing one. The name should not contravene the national act or symbols.

On approval by SSM the name is reserved for a period of three months from the date of approval.

(2)    Submission of Incorporation Documents

(a)     A copy of the constitution duly signed by all subscribers, if the founder members decide to adopt a constitution. In the constitution, the first directors and secretaries should be named. Also the subscribers to the shares shall sign a Memorandum and the articles of association in front of a witness.

(b)    Statutory Declaration by a director/promoter before appointment

The director or promoter should declare under an oath that, he/she is not bankrupt and has not been convicted and imprisoned for any prescribed offences.

 (c)    It is a declaration that states all the requirements of the CA have been complied with. This form ought to be signed by the company secretary named in the Memorandum and Articles of association as the sole handler of registration.

(d)    A notice from SSM approving the name of the company, and a copy of the identity card (or passport for foreigner) of each director and company secretary and other documents that SSM may require.

(3)    Payment of Registration fees

Each application for the incorporation of a company shall be accompanied with payment. This payment is based on the amount of share capital.

(4)    Issuance of Certificate of Incorporation

Upon compliance with the incorporation statutes and procedures, SSM will issue a certificate of incorporation. Payments should be made duly and also documents submitted as required.

4.      Time Frame

Within 1-3 working days, SSM will issue the Notice of Registration via email. The issuance of Notice of Registration indicates that your new company has been successfully incorporated with SSM and you may now start your business immediately.

5.      Annual Maintenance Requirements

In accordance with the 2016 Companies Act, a Malaysia company is required to maintain a company secretary and a registered office. It is also required to submit annual return within 30 days after its anniversary date. In respect of accounting and auditing, a Malaysia company is required to maintain proper books of accounts, prepare financial reports and have the financial statements audited by a firm of public accountants practicing in Malaysia, and file audited financial statements (audited accounts/reports) to SSM within specified deadline.

(1)    Company Secretary and Registered Office

Every company incorporated in Malaysia is required to maintain a company secretary and a registered office at all time. Usually, these are provided a professional company secretarial firm or accounting firm like Kaizen. The fees for these two services are normally charged once a year in advance.

(2)    Submission of Tax Estimates  

Newly incorporated companies are required to submit its estimate tax payable within 3 months from the date of commencement of operations. It should be noted that Small and Medium Enterprise (SME) are exempted from submitting its estimate tax payable for the first 2 years of assessments from the date that it commenced business.

(3)    Preparation of Audited Financial Statements  

Every company shall not later than 18 months from the date of incorporation and subsequently once every calendar year circulate to its shareholders, a copy of Audited Financial Statements made up to a date not more than 6 months from its financial year end.

(4)    Submission of Annual Return  

A company is required to lodge a copy of its Annual Return with the Registrar within one (1) month from its anniversary date of incorporation.

(5)    Submission of Tax Return  

A company is required to submit its profits tax return (enterprise income tax return) within 7 months from its financial year end.

The following table lists the above mentioned compliance requirements and the associated estimated costs:

All the fees mentioned above are merely general estimated fees for a typical company with minimum operation. Actual fees may be higher if additional time and technical skills are required because of the complexity of the case. Example of cases require additional time and technical skills are those companies having their business activities as construction, developer, marine, offshore oil and gas, etc.

6.      Dissolution

If a Malaysia company had ceased business for a long time and it is no longer needed, it can apply to SSM to have it deregistered or struck off or apply to have it liquidated.

Striking-off process is a process in which the Registrar’s exercises his discretionary power to strike the name of a defunct company off the register. To be eligible for strike off, the company must be inactive for few years and have no outstanding debts or have not commenced any business before.

The voluntarily winding up involves numerous filings to SSM and meetings by the directors and shareholders as well as advertising on the nationwide newspapers. The whole process may take 9 months to 1½ years to complete.

While winding up of a company can easily cost more than RM10,000, the easiest and most cost effective way to close down a company is by way of Strike Off. The Strike off process may be completed within 6 to 12 months subject to the approval from SSM. The charges to strike off a company is ranging from RM1,500 to RM2,000.

If you wish to obtain more information or assistance, please visit the official website of Kaizen CPA Limited at www.kaizencpa.com or contact us through the following and talk to our professionals:

Tel: +852 2341 1444

Mobile: +852 5616 4140, +86 152 1943 4614

WhatsApp/ Line/ Wechat: +852 5616 4140

Skype: kaizencpa

Email: info@kaizencpa.com