What are the Different Malaysian Company Registration Types?
Types Of Limited Companies
There are 3 types of limited companies:
- Limited by shares
This is where the liability of the shareholders is limited to the amount on the shares they are holding. In the event that the company becomes insolvent and goes into liquidation, the shareholders do not have to pay any of the company’s debts unless there is a personal guarantee for the loan. The shareholders’ personal assets and properties in other business cannot be attached to recover any debts accrued by the company. This is the most popular type of company opened in Malaysia.
- Company limited by guarantee
In this type of company, the shareholders state the amount that they would guarantee to pay in the event that the company becomes insolvent. This is stated in the Memorandum of Understanding signed by all shareholders. This type of company is often registered for non-profit activities, public societies and clubs in Malaysia.
- Unlimited company
This type of company has special articles of association which among other things state that the capital can be returned to the shareholders.
Characteristics Of Companies
The company entity type has some defining characteristics:
- The shareholders are not liable for the debts of the company beyond the amount they hold as shares.
- The shareholders are involved in the management of the financial affairs of the company through the annual general meeting.
- The death or leaving of shareholders does not mean that the company is wound up.
- The company must appoint an auditor to record and verify financial documents, and a company secretary who reports the company’s progress during the annual general meeting.
Foreign owned company
Foreigners are allowed to open private limited (Sdn Bhd) companies in Malaysia. Foreign investors can operate in Malaysia in two ways:
- Incorporating a local company
- Registering a representative office
There are two main forms of foreign-owned incorporated companies:
- 100% foreign owned company
Foreigners are allowed to establish a 100% owned foreign owned company for some allowed sectors such as import/export trade. This type of company must have paid up amount of RM 500,000.
- Joint venture company
This is a company with part foreign shareholding. If the foreign shareholding is over 50%, the paid up capital must be RM 500,000. If the foreign shareholding is over 30%, the paid up capital is RM 350,000.
Steps to Incorporating a Company in Malaysia
Most foreign investors opt to open a Sdn Bhd company. The incorporation process for this company is pretty straightforward and can be completed in as few as 2-9 days.
1. Name Search and Reservation (1 Day)
The application for a name search is done to the companies’ registrar.
2. Preparation of Company Incorporation Documents (3 Days)
Incorporation documents to be submitted to the Companies Commission of Malaysia including memorandum of association and articles of association, a statutory declaration by directors, statutory declaration of compliance by the company secretary, statement of allotment of shares, statement of particulars in registration of managers, directors and secretaries, and any changes of particulars, notice of situation of registered office and of office hours, and particulars of change.
3. Submission of Incorporation Documents (2 Days)
The company secretary must arrange the payment for the registration of the Sdn Bhd within 3 months of approval of the name searched and its reservation, and submit the incorporation documents.
A 100% foreign owned Sdn Bhd must have paid-up capital RM 500,000 in the bank before being issued with a certificate of incorporation. For JV, the amounts can range from RM 1,000-70,000 for nominal share capital ranging from RM 400, 000 to over RM 100 million.
4. Opening a Bank Account (1 Day)
For the Sdn Bhd to operate it must have a Goods and Services Tax (GST) number. The Sdn Bhd must have a bank account to obtain this number.
5. GST Number Registration (14 Days)
The company must obtain a GST number which is obtained from the Royal Malaysian Customs if it projects a turnover exceeding RM 1.5 million. The requirements to register a GST number are the company Registration Number, a valid email address, estimates of total taxable supplies, and Industry codes of the business the Sdn Bhd is operating, and bank account information.
6. Income Tax and PAYE Registration (1 Day)
Application for registration as a taxpayer is submitted to the Inland Revenue Board of Malaysia (LHDN). The application can be done online using the MyCoID on LHDN portal e-daftar.hasil.gov.my or in person. The documents needed are the Certificate of Incorporation (Form 9) and the Particulars of Shareholders, directors, manager and the company secretary (Form 49).
7. Registration for Employees Provident Fund (1 Day)
Within 7 days of hiring the first employee, the Sdn Bhd must register with the EPF. The documents required registration of the EPF are an application Form KWSP 1, a certified copy of identity card or passport of one director or authorized person, a certified copy of Forms 9 and 49, the first month’s contribution in as a cheque or bank draft.
8. Social Security Registration (1 Day)
The Sdn Bhd must register for social security if it is taking on more than 8 employees. The registration is done by the Social Security Organization (SOCSO- Perkeso).