What’s in this article
- What is a Corporate Bank Account?
- Is it difficult for a foreigner who owns a Company in Malaysia to open a corporate bank account?
- Know-Your-Customer (KYC) practice for bank account opening in Malaysia for foreign business owners
- Local owner vs. foreign owner for KYC checks before corporate bank account opening in Malaysia
- Documents needed to Open a Corporate Bank Account in Malaysia
- Timeline of a Corporate Bank Opening in Malaysia
- Reasons why corporate bank account opening in Malaysia is not successful for foreign-owner Companies
- FAQs
After a successful company incorporation in Malaysia, opening a corporate bank account would be the next step before commencing any business operations. Opening a corporate bank account in Malaysia is not as tough as it is in Singapore.
However, different banks could be more stringent than others. In addition, banks will usually have distinct rules and regulations or open accounts from each other, adding to the complexity.
What is a Corporate Bank Account?
The corporate bank account is also commonly known as a business account. Suppose you’re familiar with the term ‘current account’. In that case, you’ll know that a current account has special facilities that a savings account does not—additionally, a current account assists a business in managing itself and its finances better.
These facilities include:
- Foreign Banking: A valuable feature for frequent-travelling business owners who wish to ensure smooth transactions, regardless of location. With the ever-fluctuating foreign exchange rates, international transactions became much simpler and cheaper by having a business bank account.
- Issuing Cheque: Business owners can write cheques for business payments using a current account, much like a savings account. This feature assists as a method to pay off debtors with high amounts much more easily.
- Overdraft: This feature allows for withdrawals to exceed your account balance within an agreed amount. This facility is great and it is mostly helpful to reduce the possibility of bounced cheques. It also gives flexible access to cash that you do not own. This means you don’t have to worry about your business’s lack of cash.
Is it difficult for a foreigner who owns a Company in Malaysia to open a corporate bank account?
Instead of the recent high-profile fraud case, some banks have tightened their anti-money laundering (AML) compliance. After COVID-19, banks typically require business owners who wish to open corporate accounts to visit their branches.
However, as time goes on and more foreign investors are keen to operate a business in the country, some international banks such as OCBC and HSBC are moving towards online registration. They also can open a corporate bank account while the owners are not physically present in Malaysia.
This whatsoever does not include local banks such as Maybank and CIMB. These banks are normally the favourite ones of the locals due to very low initial deposit requirements. Normally, Malaysians can straight away open a corporate bank account over the counter by presenting:
- Personal ID / NRIC
- Company profile
- Resolutions to open a corporate bank account
The process is more straightforward for local business owners compared to foreign business owners.
Know-Your-Customer (KYC) practice for bank account opening in Malaysia for foreign business owners
On 30 June 2020, the Central Bank of Malaysia otherwise known as “Bank Negara” issued a policy document on electronic know-your-customer (e-KYC). The policy document aims to accelerate and streamline the practices of industry players in their adoption of e-KYC technology, the online process of identifying and verifying individual customers.
The adoption of e-KYC technology by the industry is in line with the Bank’s efforts to facilitate greater digital offerings of financial services. This expectation is about to pave the way for greater innovation in the financial sector, including providing customers with end-to-end digital financial services.
The policy document forms part of a series of measures adopted by the Bank to ensure that regulatory requirements support the country’s agenda on the digital economy.
Moving forward to the statement released by the Central Bank of Malaysia, most international banks has been practicing e-KYC with their clients, especially post Covid-19. If you will engage with the Paul Hype Page & Co., we will normally furnish these documents to the banker of choice:
- Passport/NRIC
- Company profile
The bankers will then do a background check on the stakeholders within the Company. Once it is clear, the banker will personally approach the clients to advance the process further.
Local owner vs. foreign owner for KYC checks before corporate bank account opening in Malaysia
Local Malaysians have an identity card known as “MyKad“. This “MyKad” is an identity card with a unique 12-digit number issued to Malaysian citizens and Permanent Resident (PR). A “MyKad” is normally used for any official business made by the citizen and opening a bank account is one of them.
If a Malaysian wishes to open any bank account, the banker will normally request some documentation which includes a copy of their “MyKad“. This is because the banker will need to run a background check to ensure the individual is not an exposed person as well as their credit score.
A credit score of a Malaysian citizen can be checked in two systems which are:
- Central Credit Reporting System (CCRIS) by the Credit Bureau of Central Bank Malaysia
- Credit Tip-Off Services (CTOS) by CTOS Data Systems Sdn. Bhd.
A CCRIS report presents information regarding outstanding payments, special attention accounts, and the status of a loan application by a Malaysian. Conversely, a CTOS report provides information on legal matters such as bankruptcy status, legal actions, and case status, as well as detailing Malaysian involvement in businesses and corporations. If a Malaysian CCRIS and CTOS report is clean, a corporate bank account opening will be smooth and might only take around 1 to 2 weeks to open.
Foreigner KYF Checks for Bank Account Opening in Malaysia
However, the same cannot be to a foreigner. Bankers normally tap into their international database to ensure that foreign clients have a clean background. Aside from that, there are some nationalities where Malaysia bank policy does not allow to open a bank account. Some of them are:
- Iran
- Israel
- Iraq
- Serbia
The Central Bank of Malaysia (BNM) has issued a direction stating that “no person in Malaysia shall undertake or engage in any dealing or transaction with or involving a Specified Person.” The direction also stated that “no person in Malaysia shall undertake or engage with any person in any dealing or transaction using or involving Restricted Currency.”
The term “Specified Person” and “Restricted Currency” refers to the countries sanctioned as involved with political unrest or civil war or high-risk countries.
However, if your country is not in the list of high-risk country by the central bank of Malaysia (BNM), the procedure should be more straightforward after the bankers ensure your background check is clear and the business plan is encouraging.
Documents needed to Open a Corporate Bank Account in Malaysia
Once the Company is successfully incorporated, the Company Secretary should furnish you with the documents below:
- Section 14 – Superform [Application for registration of a Company]
- Section 15 – Notice of Registration [Certificate by SSM to confirm the Company is successfully under the incorporporation]
- Section 17 – Certificate of Incorporation
- Section 46 – Particular of registered address
- Section 58 – Particular of directors
- Section 58 & 236 (2) – Appointment of first Company Secretary
- Section 78 – Particular of shareholders and shares
These documents are crucial for the banker to initiate a bank account opening in Malaysia. Other support required to open a corporate bank in Malaysia are:
- NRIC/Passport
- Business plan
- Proof of residential address
- Tenancy agreement of business address (if any)
Different banks will have different requirements and steps for e-KYC depending on the bank policy. Malaysian banks still require stakeholders to physically sign bank documents, and subsequently, mail the original signed copies to the appointed Company Secretary for the certified true copy procedure.
The banker only accepts certified documents to initiate the bank account opening process.
The resolution to open a bank account will be prepared by the banker and once signed, the appointed Company Secretary will be required to sign off the document and certify a true copy as well.
Timeline of a Corporate Bank Opening in Malaysia
The estimated timeline given by most banks to successfully open a corporate bank account in Malaysia is normally between 2 to 3 weeks. However, if further investigations are needed, a longer time might take.
For instance, some banks such as HSBC will not accept a Company that has corporate shareholders. This is because the process of KYC is more complex, and the risk is high. This will also drag the estimated timeline to open a corporate bank account to around 2 months due to the compilation of documents relating to corporate shareholders.
For those who are not physically present in Malaysia, Paul Hype Page & Co. banker contacts will normally reach out to the client via online communication such as Skype meetings, Zoom meetings or Google Meet in order to initiate their e-KYC process.
Once that all is ready and all background checks are clear, the longest they might require to open a corporate bank account might be 3 weeks. It depends on the e-KYC progress between the banker and the client.
Reasons why corporate bank account opening in Malaysia is not successful for foreign-owner Companies
Even the bank account openings in Malaysia are slightly easier compared to Singapore, it does not mean all bank account openings will be successful. Some of the reasons why the bank account is not able to open are:
Stakeholder Background is Not Clean
A passport/ID is a must-have for the banker to do a background check. If the stakeholder is deemed as from FATF country risk, politically exposed person (PEP) or special interest person (SIP), then there might be a chance where bank account will not be successful.
Business Plan is Not Convincing
For a Company to open a corporate bank account, one of the items needed is the business plan. If the business plan is deemed shady or not convincing, bankers might have more inquiries, or they might not proceed with the bank account opening altogether.
Failure to Follow Bank Procedures
One of the most crucial procedures when a banker initiates a bank account opening is the e-KYC. If the client keeps on delaying the e-KYC procedure or fails to furnish the supporting documents requested by the banker, there is a possibility where banker will deem the stakeholder not serious in opening the bank account and will stop the procedure altogether.
FAQs
The Director and the Shareholder are responsible for the signing of the company’s Statutory Declaration for a company to be registered. Without their signatures, the company cannot be registered.
Yes. A shareholder can also serve as a director. However, their legal roles are not the same. A director runs the daily company activities while a shareholder is an owner. Where a director is required, the owner though holding both positions, must assume the role of director and forget about his/her capacity as the company’s owner/shareholder.
Yes, they do. Just like local shareholders, foreign shareholders in Malaysia have rights for example in receiving equal shares and equal surplus asset distribution.
Yes. Shareholders may not be direct managers of the company where their shares are, but they are held responsible for the number of unpaid shares. They share the liabilities of the company. Even so, the liabilities are limited in that the company\s debts are the responsibility of the company as an entity.
The local tax incentives on offer are only available to resident companies. Since foreign companies’ branch offices are defined as non-resident companies, they are not allowed to claim any local tax incentives
A company is defined as a tax resident of Malaysia if the management and control of its corporate affairs take place in Malaysia. If at any time during the year, at least one meeting of the board of directors is held in Malaysia, the company will be regarded as a Malaysian tax resident.
Ever since the 2018 year of assessment, Malaysian Sdn Bhd companies which have resident status are taxed at 19% if their net profit is below RM500,000 and 24% otherwise. Non-resident Sdn Bhd companies, which are those with over 50% of their shares owned by foreigners, are taxed at a flat rate of 24%.
