Registering a company in Malaysia

Registration of a company in Malaysia and obtaining its residency

Registering a company in Malaysia does not mean that foreign investors or the company’s managers can reside in the country for a long time. Managers and investors will need a work permit in Malaysia for a long term residence. Investing in Malaysia will not lead to permanent residence in this country. However, you can obtain temporary residence for yourself, your spouse, and children under 18 years old by registering a company in Malaysia.

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Topics reviewed in this article:

• Registering a company in Malaysia and different types of companies
• Company registration in Malaysia and required expenses
• Company registration in Malaysia and its advantages
• The steps of registering a company in Malaysia
• Company registration in Malaysia and business plan

Registering a company in Malaysia and different types of companies

People who want to invest in Malaysia can register and establish a new company and start a business in this country. However, the registration of this new company by foreigners in certain circumstances depends on the nature of this company’s activities. There are two types of companies that individuals can register in Malaysia:

1. Joint investment with a Malaysian citizen

Individuals can partner with a Malaysian citizen to register a company. Foreigners can own up to 50% of the company’s share.

1. Registration of a company, which entire shares belong to a foreigner

Unlike the previous type, you do not need to have a Malaysian partner.

Company registration in Malaysia and required expenses

Registering a company in Malaysia requires a certain amount of initial capital. We will discuss them in this article:

• Initial cost

Applicants must pay 3,500 Malaysian ringgits to the Malaysian Ministry of Commerce, which may increase depending on the type and use of the company. Investors must pay 500 Malaysian ringgits more for every 100,000 Malaysian ringgits.

The applicants must also pay about 10,000 to 25,000 Malaysian ringgits for matters related to the Malaysian Immigration Office. The residence stamp costs 500 Malaysian ringgits for each passport.

• Minimum required capital

The minimum amount required for companies that partner with Malaysian citizens is at least 350,000 Malaysian ringgits for foreign investors.

The minimum capital required to establish and register these companies (foreigners own all the shares of the companies) is 500,000 Malaysian ringgits. Of course, each request can have a different payment with each program, which is described in the table below:

Company registration in Malaysia and its advantages

There are many benefits to company registration in Malaysia, such as investing, starting a business, etc. The active growth of private sector investment has led to annual growth of 13.9% since the beginning of ETP in 2010. It increased to 146.1 billion ringgits (39.89 billion dollars) in 2014. Malaysia is a country that allows you to start a business because registering a company in this country can provide production, distribution, or technical expertise in the service sector. Investors use this country as a large market and gateway to the CIS (the CIS is made up of 53 independent countries.)

The steps of registering a company in Malaysia

The foreign investors who want to register a company in Malaysia need to go through the steps of registration. Whether their place of business is inside or outside Malaysia, and they must first go to the Malaysian Registry and provide the following documents.

• Application form based on company registration in Malaysia
• Choose a brand name and obtain its confirmation to register
• Official translation of required documents into English or Malaysian
• Confirmation of company document registration
• Official translation of the company’s articles of association
• Introduce at least two managers with a minimum age of 18 years

After registering the company, the applicant must submit annual reports concerning the following:

• The annual profit of the company
• Description of assets, profit, and loss account
• A copy of the general ledger balance sheet
• Submit documents to establish a company in Malaysia

You must send all the necessary documents to establish the company to the relevant institutions for three months after confirming the name of the company.

After attaching the documents and sending it to SSM, the applicants have to pay 100 Malaysian ringgits for the documents’ stamp, which must be approved in the internal revenue affairs.

The following provisions must be mentioned in the company’s articles of association:

• The restrictions on the transfer of company shares
• Limitations on the number of members (Less than 50 people)
• Prohibition to invite the public to participate in the company’s shares
• Prohibition on inviting the public to deposit money in the company
• Managers who intend to set up a company in Malaysia must declare that their business plan will be profitable.
• Provide a criminal background certificate (no criminal background)
• A copy of the administrators’ ID card
• A copy of company name confirmation in Malaysia

Company registration in Malaysia and business plan

Having a business plan is one of the prerequisites for foreign applicants who want to register a company in Malaysia. After understanding the conditions of registering a company in Malaysia (because you need to know the type of business you are starting) and presenting the business plan (approved by the Malaysian government), you can move on to the next steps for registering a company. Foreign investors can set up a foreign company or a local company in Malaysia.

In general, non-Malaysian citizens can invest and register a private company, set up a branch of a foreign company, or a representative office of a foreign company in this country. The foreign applicants can partner with the Malaysian citizens if the company registration is not done with 100% participation of the foreign investors. Joint investments with Malaysian citizens are possible with more than 50% of the company’s shares.

Foreign companies usually set up an office and branch in Malaysia that can operate in a short time. From this point of view, we can say that the branch of a foreign company in Malaysia can no longer conduct its business in wholesale and retail. This foreign branch requires at least one Malaysian manager to carry out the actions and tasks imposed by foreign companies. Note that most foreign companies register a subsidiary in Malaysia instead of establishing a branch or a representative office.

Registering a branch company in Malaysia is not liable for tax purposes. NGOs will not be eligible for tax incentives. Besides, their income tax is 10%. Therefore, most foreign companies prefer to set up a subsidiary company in Malaysia.