Incorporation in Malaysia

The Malaysia Company Act came into force on the 31st January, 2017 to replace the old Companies Act of 1965. All companies working in Malaysia will have to work under the framework of the new companies act. The new Companies Act (2016) has brought good news to people who want to do business in Malaysia. Among other changes, the new Act allows for a single individual to be the sole director and shareholder of a company. There are many other changes that the new Act has made to make it easier to operate in the current business environment in Malaysia.

Minimum Requirements for Incorporation

While the CA 1965 required a minimum of two directors for incorporation of an Sdn Bhd company in Malaysia, the CA 2016 requires only one resident director who can also be a shareholder.  A public company should have two directors under the new CA.

Want to Start business in Singapore
Want to Start business in Singapore

Incorporation Documents

The CA 1965 had the following requirements in documentation to establish a company in Malaysia:

  • Articles and memorandum of Association
  • A statutory declaration by each director
  • A declaration by the company secretary
  • Payment of registration fees

This has been changed by the CA 2016 to the following:

  • Statement of consent and non-disqualification
  • A statement of compliance from each director
  • Payment of registration fees.

New Forms

When establishing a company in Malaysia under the old CA, there were forms to be filled, each form identified by a number. These forms have been removed and will only refer to specific section numbers in the CA 2016. Some forms can be filled online on the company registrar’s portal, while some can be downloaded and filled manually for submission over the counter.

Company Secretary

While the CA 1965 required appointment of a company secretary at the point of incorporation, this has been left optional in CA 2016. However, the company must appoint a company secretary within 30 days of incorporation.

Certificate of Incorporation

The old CA 1965 required that a certificate of incorporation be issued by the registrar of companies under his seal. The CA 2016 only requires the registrar’s notice of registration as sufficient proof of incorporation. It also requires that the registrar issue the incorporation certificate immediately upon acceptance of the application. The Memorandum of Association shall show the share capital clause. The new CA removes the requirements for a constitution and authorized capital.

Memorandum & Articles of Association

The CA 1965 made it mandatory for these two documents to be included for incorporation. The CA 2016 states that the constitution can serve in lieu of these two, and that too is optional. Where a company fails to avail a constitution, the CA 2016 provides the powers, rights, duties and obligations. Alternatively, these documents can be adopted after company incorporation.

Company Seal

The CA 2016 removes the requirement for a company seal.  If the company decides to adopt a seal, it must follow the requirements of the law.

Capacity to do Business

The CA 1965 requires that anyone who wants to form a company in Malaysia should show they have the capacity to do the business. This was set out in the Memorandum of Association, and the powers of the company were to be set out in the Third Schedule. Any activities out of the defined scope would be Ultra Vires The CA 2017 does not require a company to state its objectives. It allows companies to act with an unlimited scope of activities and carry out any lawful business activities unless the constitution provides otherwise. Third parties doing business with the company do not have to verify the capacity of the company.

Execution of Documents

The old CA 1965 required that any documents executed by a company have the common seal and be counter-signed by an authorized person. The new CA 2016 allows execution of documents by affixing the common seal and having at least one director countersign.

Filing Annual Returns

When starting a business in Malaysia, the originators must be aware that the filing of annual returns has changed. The CA 1965 required that the filing of annual returns be done after the Annual General Meeting (AGM). The CA 2016 requires that filing of Annual returns be done within 30 days of the anniversary of incorporation.

Annual General Meetings

An Annual general Meeting was a requirement under the CA 1965. The new CA 2017 does not require private companies to hold AGMs.  However, public companies must hold an AGM. New matters also need to be discussed under the CA 2016 for example the payment of fees and benefits to the directors.

Audited Accounts

The old CA required that audited accounts be read to the shareholders at the AGM. Since the requirement for an AGM for private companies have been removed by the new CA, shareholders can have the audited accounts shared through whatever means is appropriate. Public companies must reveal audited accounts at the AGM. The new CA allows for more informative content to be included in the audited accounts for example a business review section to outline the state of the business environment.

Shareholder Resolutions

The CA 2016 has a new procedure for written shareholder resolutions. Under the CA 1965 all shareholder had to sign on the Members Circular Resolution.

No Par Value

Under the old CA, directors were prohibited from issuing shares at a discount. The new CA has made it possible for directors to determine appropriate value of shares when they are issued. This is because the new law does not require all shares to have a par value. The new framework also allows the share premium account and the capital redemption reserve account to be merged with the share capital account. However, companies will have 24 months these funds.


The CA 2016 outlines new solvency regulations. A company must meet all its debt obligations within 12 months of paying out dividends. Breaking this regulation will result in the company being declared insolvent plus bring criminal and personal liability suits against the directors. The CA 2016 has brought about big changes for people willing to start a company in Malaysia. The incorporation process has been simplified for quicker business setup.