How to Register a Company in Malaysia

how to register a company in Malaysia

How to Register a Company in Malaysia

How to Register a Company in Malaysia

Thinking of registering a company in Malaysia? The country’s liberal government policies and strong economic outlook make it easy to see why Malaysia ranks twelfth on the World Bank’s Ease of Doing Business scale (2020). As a result, it is a desirable choice for investors.

Only a short 45-minute flight from Singapore, Malaysia offers lower start-up costs, greater tax incentives and more extensive government support. However, the process of setting up a new office in Malaysia can appear complex to a foreign business owner.

This guide takes you step-by-step through how to open a company in Malaysia. And, most importantly, it shows you how to meet compliance requirements for a successful business venture. Read on for more insight on how to register a company in Malaysia:

Malaysian market profile

Malaysia is considered one of Southeast Asia’s most dynamic business environments. Its liberal market policies promote trade and economic development, while many government incentives encourage ongoing growth.

Some key characteristics of the Malaysian Market which make it ideal for registering a company include:

  • Average monthly office rental pricing: Grade A office space in Kuala Lumpur’s new central district averages RM 10.49 per square foot (2021)
  • Average fixed broadband internet download speed: 103.28 megabits per second (August 2021)
  • Average mobile internet download speed: 29.14 megabits per second (August 2021)
  • Gross Domestic Product US$ bn: 336.664 (2020)
  • Population: 32.6 million (2020)
  • Official languages: Malay, English
how to check if a company is legal in Malaysia

The benefits of setting up a company in Malaysia

Malaysia’s multicultural, multilingual society provides a skilled workforce with relatively low wage costs, which appeals to many overseas companies. The transport and telecommunications infrastructures both also operate efficiently, while the growing economy and accessible location make Malaysia a preferred choice.

Other benefits to registering a company in Malaysia include:

  • Low corporate tax: For resident companies in Malaysia with under RM50 million in sales, the tax rate is only 17% on your first RM600,000. Once you earn over this limit, the rate increases to 24% for non-resident companies. To check your estimated tax rates, speak to one of our Malaysian tax specialists.
  • Skilled and educated workers: Malaysia has a highly skilled workforce, over 70% of whom speak English. Malaysian locals are friendly, hospitable and eager to learn, which increases both productivity levels and customer service.
  • Liberal government policies: The Malaysian government’s approach to foreign investment is proactive, welcoming new trade with a variety of industry-specific incentives. The lack of restrictions on repatriating capital, royalties, dividends or profits also encourages many multinational companies to call Malaysia home.
  • Effective infrastructure: With five international airports and two international shipping ports, Malaysia is one of Asia’s busiest international hubs. Over the next few years, the Malaysian government will also invest more money into upgrading ports and building new rail links. As a result, the country will provide an efficient, high-tech transport system that enables seamless business operations, allowing an increase in foreign company interaction.

How to establish and register a company in Malaysia

01 Step 1 - Choose a company type

  • Private Limited Company (Sdn Bhd): Although there are many different business entities, the only option for foreign investors registering a company in Malaysia is a Private Limited Company. This private company type is a separate legal entity, enabling it to bind contracts, purchase assets and act as its own legal entity in court.

Private Limited Companies in Malaysia can be owned by locals or foreigners, as long as at least one director has a residential address in Malaysia (see step 3). However, unlike Public Limited Companies, Private Limited Companies can only have up to fifty shareholders, and cannot offer shares to the public. To learn more, contact our specialist team.

  • Public Limited Company (Berhad): Most large-scale enterprises in Malaysia are Public Limited Companies, which allows them to sell shares and generate further investment. Listing the company as public also enhances the corporate image and profile, potentially inviting new business opportunities and further expansion.

However, Public Limited Companies need to adhere to strict compliance requirements, including holding annual general meetings and audits. Additionally, to own a Public Limited Company in Malaysia, you need to be a Malaysian citizen.

  • Sole Proprietorship and Partnership: This entity type is also only available to Malaysian citizens. It’s ideal for local small business owners with either a sole proprietorship or up to 20 partners.
  • Limited Liability Partnership (LLP): This entity type combines the properties of a Private Limited Company and a conventional partnership. A Limited Liability Partnership is a separate legal entity from its owners, which provides additional protection for the partners’ personal assets and wealth.

Please note that to help rebuild local trade during the COVID-19 pandemic, the Malaysian government has restricted foreigners from initiating some business types. These types may include supermarkets, convenience stores, hairdressers, retail shops and more. Contact our specialist team for the most up-to-date information on foreign business restrictions.

02 Step 2 – Give your company a name

When you register a company, the name of your business can fall under two different categories:

The Companies Commission will make sure your company name meets the following conditions:

  • No negative connotations or undesirable names: A business name cannot breach the constitution or law, or contain any elements that are negative, vulgar, obscene or offensive.
  • Correct spelling: The company name must use correct language and spelling. If the name contains a word that is not from Bahasa Malaysia or English, or that is fictitious, you must provide the meaning and/or origin of the word.
  • No generic names: Your business name must have its own identity, and must not be too common. Avoid using only generic words like ‘Marketing Resources’.
  • Not already registered: You cannot use a business name that has already been registered or in safekeeping. This includes changing symbols, letters or words that carry the same meaning.

View the complete list of guidelines for business name registration online, and find out if your business name is available in Malaysia before registering a company.

how to register an enterprise company in Malaysia

03 Step 3 – Set up your company structure

Next, determine your suitable business entity or company structure, ensuring you meet the following requirements for a Private Limited Company (Sdn Bhd company), as this is the only option for foreign companies:

  • Director: your company will need at least one director who meets all of the following criteria:
    • Must be a natural person (individual) and at least 18 years of age;
    • Must be of sound mind;
    • Must ordinarily reside in Malaysia, with a principal place of residence there;
    • Must not be an undischarged bankrupt under the Insolvency Act 1967; and
    • Must not be disqualified under the Companies Act 2016.

To satisfy your local director requirements in Malaysia, we can provide a nominee director service.

  • Shareholder: you must also have at least one shareholder, who can be either a foreigner, a local or a corporate entity.
  • Company secretary: you must appoint a qualified natural person living in Malaysia as your company secretary.

We provide expert company secretarial services to ensure your company meets all of its statutory obligations in Malaysia.

  • Share capital: you must issue a minimum share capital of:
    • RM1,000 for locally owned companies; or
    • RM500,000 for foreign-owned companies.
  • Registered address: your registered office must be a physical address in Malaysia. If your business does not have local office space, professional service firms like BoardRoom can provide a registered office location.

04 Step 4 – Submit your business registration application

To submit your company registration application, the owner or partner who submits it must be a Malaysian Citizen or Permanent Resident of Malaysia, aged 18 years or over. Only the owner or partner/s can apply to register a new business entity.

To help you navigate the process of registering your company in Malaysia, we have a comprehensive company setup and incorporation service with local experts.

05 Step 5 – Apply for other permits and business licences (if relevant)

Depending on your specific business operations, you may also need to apply for additional permits and business licences. Find out which permits and business licenses you could require after your Malaysian company registration.

How to successfully open a company in Malaysia

Registering your business in Malaysia may be easier than you think.

Our specialist BoardRoom team can provide expert advice and assistance whether you’re looking for information on:

  • how to register an enterprise in Malaysia;
  • how to open a corporate bank account;
  • how to meet compliance requirements;
  • how to check whether a company is legal in Malaysia; or
  • how to evaluate a company for acquisition.

Other services we can provide include company set up and incorporation, corporate secretarial services, accounting and bookkeeping, payroll and more.

Speak to one of our specialists today to find out how to register your business in Malaysia.

Note: if you’re interested in more business opportunities or want more information on the business registration process in Southeast Asia, we can help. Explore our guide on how to start a business in Singapore, learn about the benefits of incorporating online there, or learn how to start a business and register a company in Hong Kong.

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Business Expansion into Malaysia — Yay or Nay?

Business Expansion Malaysia

Business Expansion into Malaysia — Yay or Nay?

4 Reasons why incorporating in Malaysia could be a wise decision

Over the last ten years, Malaysia has become a destination of choice for business expansion. The World Bank ranked Malaysia at a respectable 55th place out of 157 countries, across the globe, as the easiest place to do business. While the government continues to play its part in facilitating greater ease, there are geological factors that help boost Malaysia’s chances as your next business expansion destination. The country is strategically located in the Asia Pacific Rim, at the centre with numerous other ASEAN nations surrounding it. This means businesses in Malaysia can take advantage and gain easy access to a substantial 667 million regional population1, which together, boast a combined GDP of over US$3.3 trillion1.

If you are thinking of expanding your business into Malaysia, here is FOUR reasons why it would prove to be a wise choice.

01 It’s Quick, Easy and Low-Cost to Incorporate

Comparatively, Malaysia is possibly one of the easiest places for businesses to incorporate. Malaysia’s effort to reform —policy enhancements and procedural improvements — over the past few years have increased efficiencies and reduced the waiting time involved with registration and permit application processes. Registration of a new business takes between 5-10 days and employment permits for expatriates will be processed within 5 working days.

Operationally and financially Malaysia builds a strong case for itself. It boasts one of the lowest start-up costs compared to the other Asia Pacific countries. This is largely driven by its low property rental rates and generally low minimum wage.

Knight Frank currently estimates supply of office space in Kuala Lumpur (KL) city is 58.26 million sq ft, followed by KL fringe with 29.43 million sq ft and Selangor with 23.91 million sq ft. This brings the total to 111.60 million sq ft2 with affordable average office rental rate at RM5.55 psf2.

In addition to low office rental rates, businesses can operate economically because of Malaysia’s relatively low minimum wage, which sits at RM1,200 (US$286) per month.

incorporating in Malaysia

02 You’ll Avoid Double Taxation

In most countries, double taxation usually occurs when any taxpayer of a specific country engages in international business transactions. However, this is not the case for businesses in Malaysia. The country is a part of DTAs (Double Taxation Agreements) involving counties located in every continent of the world. This allows Malaysia to create an attractive tax environment where a greater international flow of investment, trade and financial activities, and technical knowledge are facilitated and exchanged.

These DTAs, outline the treatment of income or profits earned outside of Malaysia by Malaysian businesses and within Malaysia by foreign-owned businesses. On that note, businesses in Malaysia are protected against the possibility of a singular income being subject to two countries’ tax simultaneously. The double taxation agreement also provides taxpayers with certainty about their tax treatment. In the event of an absent DTA, businesses are still eligible for tax relief through the foreign tax credit.

03 The Locals are Ready to Buy

When shortlisting a country for your business expansion plans, qualifying your list of countries based on their economic strength is an excellent place to start. A country’s GDP is the best measure to assess its’ overall economic strength because it is closely connected with the country’s average consumer purchasing power. Malaysia’s GDP is expected to reach US$359 Billion by the end of 20213 with a healthy growth rate of 3.0% – 4.0%.4

Malaysia’s strong GDP is attributed to the government’s effort to remain robust in the agriculture, construction, manufacturing, mining, and services industries. One of the main objectives of its Budget 2022 is to strengthen economic recovery and improve business resiliency as the world move into the Covid-19 epidemic stage. With such a thriving market, Malaysians’ incomes are increasing and depending on your type of business, you can expect a growing number of consumers becoming or already are in the position to purchase low to middle market products and services readily.

04 The Local Government Supports You

Malaysia has been growing economically in tandem with global trends. In line with the Industrial Revolution 4.0 (IR4.0) adoption, it has introduced its own National 4IR Policy – a broad, overarching national policy that drives coherence in transforming the socioeconomic development of the country through ethical use of 4IR technologies.

While there are limited restrictions on foreign ownerships in certain strategic sectors, the Malaysian government encourages inflow of foreign investments. This is apparent in the incremental liberalization of equity conditions by various government agencies and the broad range of attractive incentives to entice new foreign investments and promote local start-ups. These incentives range from generous tax exemptions and allowance to grants.

Depending on your business, you might even be eligible for specific grants and incentives aimed at supporting innovation or projects that contribute strategically to the country’s economy and industries. Having a good knowledge of these incentives and how they may apply to you will allow you to maximise your business potential and put you on the fast track to success. Here are 5 grants that might be helpful as you incorporate in Malaysia.

  1. Cradle Investment Programme 300 (CIP300)
  2. MaGIC Global Accelerator Programme (MaGICGAP)
  3. Technology Acquisition Fund (TAF)
  4. Domestic Investment Strategic Fund
  5. Women Exporters Development Programme (WEDP)

The Malaysian government also has a dedicated agency – the Malaysian Investment Development Authority (“MIDA”) to help facilitate your new venture into the country.

business expansion support

Conclusion

So, if you were wondering if you should incorporate in Malaysia, here is our advice; you should. Whilst it is a relatively simple process — requiring only basic knowledge of application processes and local regulations — you should always consult a team of dedicated experts. Experts can assist you in leveraging Malaysia’s incentives and opportunities to their fullest extent while allowing you to have peace of mind, knowing that your company will remain compliant with the local regulation. By doing so, you can ensure the best possible outcome for your business planning and investment strategy.

Here is where BoardRoom can help.

BoardRoom is the market leader in Malaysia for Corporate Services as we command the majority of the market. Our affiliation with local regulators and government agencies such as the Malaysian Investment Development Authority (MIDA), local stock exchange Bursa Malaysia, Companies Commission of Malaysia, InvestKL, Malaysia Digital Economy Corporation (MDEC), etc. allows us to advise on the latest regulatory requirements and incentives accurately and swiftly put your business on a fuss-free journey towards success.

Are you planning to incorporate in Malaysia? Perhaps we could be of some help. Contact our Corporate Secretarial experts today!

Source
  1. www.statista.com
  2. Knight Frank Kuala Lumpur and Selangor Office Monitor 2Q2021. The Edge Malaysia, 7 October 2021
  3. www.tradingeconomics.com
  4. Press Release by the Ministry of Finance, Malaysia on 12 November 2021

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