Basic Requirements to Set Up a Company in Malaysia
A private limited company is usually identified through the words ‘Sendirian Berhad’ or ‘Sdn Bhd’ and is the most common business vehicle in Malaysia for starting own business.
The basic requirements to set up a locally incorporated company under the Companies Act 1965 are the same for both Malaysian and foreigner setup:
- A minimum of 2 directors
- A minimum of 2 shareholders
- A company secretary who can be either: –
- An individual licensed by the Companies Commission of Malaysia (SSM); or
- An individual who is a member of any professional body prescribed by the Minister of Domestic Trade Cooperative and Consumerism
Both the director and company secretary should have their principal place or residence within Malaysia.
Pros of Setting Up a Company in Malaysia
On a global scale, Malaysia is ranked as one of the easiest places to do business in the world. When it comes to the time, cost and complexity of business registration process, Malaysia is notably one of the ideal destinations for foreigners to start a business.
Besides that, there are no restrictions on the maximum amount of shareholding by foreigners. This means that a private limited company in Malaysia can be owned 100% by foreign shareholders. The only exceptions here are unit trust companies and stock brokerages, which currently have a foreign ownership limit of 70%.
In addition, opening a corporate bank account here is a relatively straightforward and simple as the banking system in Malaysia is reliable. Some of the world’s top retail banks such as Citibank and HSBC are represented in the country.
Also, the business efficiency, infrastructure and the overall economic performance of the country have received good ratings in the past few years and Malaysia has been ranked as having the 16th most competitive economy in the world by the 2011 World Competitiveness Report.
Important Key Points in Setting Up a Company
- If you wish to set up a company that will do business with the local government departments, it must be approved by the Foreign Investment Committee (FIC) beforehand. In this case, at least 30% of the company must be owned by ethnic Malays.
- You will need a minimum of RM500,000 paid-up capital depending on the nature of your business. Do note that only unique businesses, where the local Malaysians do not have the knowledge or skills to do, will be granted. This is to protect the Malaysians’ opportunities and competitions. For certain business nature, a higher amount of paid capital is required to meet the necessary requirement of the relevant authorities to issue the trade license for your company.
- Companies in Malaysia are required to pay a 25% corporate profits tax on all generated incomeand every year, a tax return will need to be submitted to the Malaysian tax authorities and the company’s financial statements must be audited by approved auditors.
- Setting up a company in Malaysia requires a minimum of two directors and shareholders and the directors must have a permanent address in Malaysia, but not necessarily that they be Malaysian citizens.