BUSINESS ARTICLE

A guide to the entities available for business registration in Malaysia successfully

A guide to the entities available for business registration in Malaysia successfully

A guide to the entities available for business registration in Malaysia successfully

boardroomsuperadmin Business Insights, Corporate Secretarial

With its dynamic business environment, strategic location and excellent digital connectivity, Malaysia is an attractive destination for businesses looking to establish their presence in the Asia-Pacific region (APAC). Indeed, roughly 3,600 companies are formed in Malaysia every month.

Malaysia’s supportive government policies are particularly attractive for foreign investors, with the Malaysia Budget 2023 offering several business incentives to drive sustainable economic growth.

Whether you wish to learn about registering a private limited company in Malaysia or explore the other entity options available, this article provides guidance for successful set-up. Read on as BoardRoom Director of Corporate Secretarial Malaysia Tan Ai Ning unpacks the process of business registration in Malaysia and offers expert advice for getting your venture off to a strong start.

Entity options for business registration in Malaysia

Businesses expanding or starting in Malaysia have a variety of structures available to them.

Common entities formed are:

  • Sole proprietorship or partnership – Only available to Malaysian citizens (or permanent residents), this entity type is ideal for small business owners with either a sole proprietorship or up to 20 partners.
  • Limited liability partnership (LLP) – A hybrid between a company and a conventional partnership, an LLP provides the merits of the private limited companies (eg. limited liability) minus their cumbersome reporting requirements.
  • Company – Private limited or public limited companies are separate legal entities that can bind contracts, purchase assets and act as their own legal entity in court.
  • Private limited company – Many investors choose to register a Sendirian Berhad company (a private limited company) so they are able to conduct commercial activities, pursue long-term expansion, enjoy local tax benefits and obtain necessary grants and licences.
  • Foreign branch office – Ideal for short-term business expansion, this entity may only conduct business activities that align with the parent company.
  • Representative office – Valid for two years, and can be renewed, this entity type cannot generate revenue but allows foreign expatriates to explore business prospects and undertake product research locally.
  • Foreign LLP – Well suited to professional services, LLPs are a flexible, straightforward business structure investors can have full control over.

Foreign investors can set up a sole proprietorship or partnership in Malaysia on the condition that they have permanent residency in Malaysia.

Private versus public companies

The registration process for private and public limited companies is similar, but some key differences exist.

Private limited companies can be owned by Malaysian residents and foreign investors, but they can only have up to fifty shareholders and cannot offer shares to the public.

If you wish to access public markets to raise funds, as well as the benefit of liquidity and generate further investment, you may consider registering a public limited company.

Registering as a public limited company also provides the opportunity to apply for listing on the Malaysian stock exchange with the view to enhance your public profile, invite new business opportunities or promote expansion.

Malaysian stock exchange

LLP registration explained

Popular among business partners, family-owned businesses, start-ups and small-to-medium enterprises, LLPs offer more flexibility than private limited companies in their formation, maintenance and termination.

“Additionally, the compliance requirements for LLPs are less strict than they are for companies,” says Ai Ning.

As LLPs are a separate legal entity from the owners, they can provide additional protection for partners’ personal assets and wealth. However, this also means they may incur higher taxes, as partners are individually taxed based on their share of the profits.

“The tax bracket for individuals is higher than corporates in Malaysia,” Ai Ning explains. “When choosing between LLP and a company structure, several factors need to be considered. If the business is small and has a limited number of partners, LLP might be a better choice as it offers simpler compliance requirements. However, if you have a larger business that requires significant investments, a company might be a better choice as it offers greater flexibility in raising funds.”

Registering a company in Malaysia

How to register a company in Malaysia

The process for registering a company can seem complex to foreign investors, given the country’s unique legal and regulatory framework and navigating through unfamiliar administrative procedures. However, with the assistance of experienced local consultants and a clear understanding of the requirements, this process can be streamlined, unlocking the vast potential and opportunities Malaysia offers.

These steps include:

  1. Choose your entity type – Investigate the business structures available to you, and decide which will best suit your needs.
  2. Select a name – Choose a unique trade name that aligns with your marketing strategy and brand identity, then submit it for Companies Commission of Malaysia (CCM) approval.
  3. Organise your structure – You must nominate at least one resident director and a local company secretary. Private companies must also have at least one shareholder, while public companies must have at least two.
  4. Designate a local office address – This must be a physical address for receiving mail, such as legal and tax correspondence. If you do not have a registered office location, BoardRoom can provide one.
  5. Prepare your incorporation documents – You will need to collate a constitution, statutory declaration for directors, Declaration of Compliance, company name approval letter, and the identity card of every director and company secretary. Public limited companies must also supply an abridged prospectus for investors.
  6. Complete the online form – Visit the CCM website to submit your registration application.
  7. Pay the registration fee – The company registration fee is MYR 1,000.

“In the absence of any issues or questions, the CCM will then issue a certificate of registration, and the company will be registered,” Ai Ning says. “All in all, this generally takes about five to seven working days.”

The benefits of professional corporate services

Expanding into a new international market can be equally exciting and nerve-wracking. Consider engaging the support of a reputable corporate services firm who can assist with:

  • applying for government schemes and grants you may be eligible for;
  • opening a secure bank account;
  • meeting your compliance obligations (including obtaining necessary licences and permits);
  • helping your company thrive post-incorporation.

At BoardRoom, our highly credentialed Company Incorporation experts can help you register a business in Malaysia with confidence. Thanks to our deep knowledge and extensive network of trusted professionals, we can guide you on the most advantageous structure for your business, considering the types of activities you wish to conduct in Malaysia and the goals you aim to achieve.

We can then support you through the entire incorporation process so that you can make informed decisions every step of the way.

“When foreign investors want to establish a presence in Malaysia, they usually want to know about the local financing schemes, grants and compliance requirements they should be aware of once the incorporation process is finished,” Ai Ning says. “That is why we’re here – BoardRoom has the technology, international presence and professional advice to assist during incorporation and beyond.”

Our suite of end-to-end corporate services is designed to support you with all aspects of running a successful business, including corporate secretarial, tax, accounting, payroll, share registry, Employee Stock Options Plans and Environmental, Social and Governance.

Benefits of professional corporate services

Comprehensive support for business growth in Malaysia

A leading provider of corporate services in APAC, BoardRoom is ready to support and guide your regional or global business expansion journey. Our personalised, prompt and reliable service delivery helps ensure efficient, stress-free business registration in Malaysia.

“With a 60-year history of delivering outstanding corporate services, we have a strong track record, we anticipate problems, and we inspire action,” Ai Ning says. “Our full suite of services means we can support our clients throughout the entire business lifecycle, from the date of incorporation to the end.”

Contact us today to find out more about setting your new business up for success.

Contact BoardRoom for more information:

Tan Ai Ning

Corporate Secretarial services Director, BoardRoom Malaysia

E: [email protected]

T: +60 3 7890 4800

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