Company Structures for Incorporation of Company in Malaysia
There are two types of corporate entities usually incorporated in Malaysia: a company limited by shares and an unlimited company. A company limited by shares are categorized into a Private Limited Company and a Public Limited Company.
- A private limited company can only have a maximum of fifty (50) shareholders, whereas a public limited company can have unlimited number of shareholders. In the latter, the public can freely subscribe to shares while in the former, shares are privately issued to individuals and/or corporate bodies. This transfer of shares is usually subject to restrictions embodied in the Constitution or Articles of Association. A private limited company is ideal for new SMEs. This corporate entity shields shareholders from liabilities, while allowing them to raise fund from investors.
- A public limited company, is subjected to higher financial reporting standards. It is required to publicly report its finances and make its financial records accessible to the public. Public limited company is ideal if sourcing from a large group of investors and bigger funding is needed.
Consideration for Foreigners when Incorporating a Company in Malaysia
The incorporation procedures involving Malaysians and foreigners are almost similar. However, foreigners must specifically adhere to the following rules:
- Foreigners can only Incorporate a Private Limited Company
For foreigner investors, a private limited company is the only corporate entity you can incorporate in Malaysia. Foreigners are not permitted to incorporate public companies by nature, whether they be limited by shares or limited by guarantee, as these are reserved only for citizens.
- A Foreign Company must have at least one Resident Director
When incorporating a 100% foreign owned corporation, at least one director must be residing in Malaysia. As Malaysia’s reliable one-stop shop for company incorporation solutions, Bestar Consulting can help you find and appoint a qualified nominee director for your Malaysian company. We provide valuable assistance to foreign clients who are physically unable to submit the necessary paperworks to the Companies Commission.
- A Foreign Company must also Appoint a Corporate Secretary who Principally Resides in Malaysia
Bestar Consulting can act as your corporate secretary. We ensure strict compliance with Malaysia’s statutory pre-incorporation and post incorporation requirements, as seamless as possible. Our corporate secretarial package includes:
- Safe-keeping of company common seal
- Maintenance of corporate minute and register books
- Advisory services on tax/ GST/ secretarial/ statutory/ accounting/ compliance matters
- Monitoring of strict statutory requirements under the Companies Act and Tax Statutes
- Under the Companies Act 2016, every Company in Malaysia must have a Registered Office Address.
Under the Companies Act, this local business address is where you safekeep your corporate records and documents. Bestar Consulting can provide a registered office address for your Malaysian company. Our array of services also include:
- Mail-handling services
- Free scanning letter services, if requested
- Notification of receipt of letters/parcels via email
- Collection of mails of letter and parcels between Monday to Friday, from 9 am to 6 pm (no handling fee)
- Registered bills of normal mails, airmails, parcels (should be below 3 kg), or registered mails
- Mail forwarding with service fee for RM 1 is applied for each forwarding
- Courier arrangement to other local areas or overseas addresses daily, weekly monthly
Malaysia Company Incorporation Package
Our comprehensive package helps entrepreneurs to quickly set-up and incorporate their company in Malaysia.
- Unlimited name searches for availability of proposed names
- Company name reservation (up to two names)
- Company name registration
- Draft of an approval letter with a user name
- Ensure payment of paid-up capital – RM1 to RM1,000
- Completion and submission of incorporation form with the Companies Commission
- Draft resolutions for the first board of directors meeting
- Prepare a resolution to start with the company’s bank account (up to two accounts)
- Arrange 2 sets of certified true copies of incorporation documents
- Complimentary certificate of incorporation
- Free advisory services and incorporation consulting
- Free GST advice and tax planning by our Tax Director
- Free name tag, to be displayed at the registered office
- No charge for domain name registration
- No charges for the G suite email set-up for up to 2 users (but excluding Google G suite subscription charges)
- No lock-in the period and no exit fees for company set-up
- Appointment of nominee director
Attractive Tax Incentives for New Incorporated Company
In 2020, the Malaysian government introduced measures to stimulate economic growth and attract foreign investments. Its latest economic programme, includes the following pro-business incentives:
- New SMEs established between July 2020 and December 2021, can enjoy income tax rebates of RM20,000 annually, for three (3) years of assessments
- Foreign companies that relocate their operations in Malaysia are also granted the following tax holidays:
- Foreign companies that infuse capital investments in Malaysia’s manufacturing industry with capital investments between RM300 to RM 500 million will enjoy 0% tax rate lasting ten (10) years
- Foreign companies that infuse capital investments in Malaysia’s manufacturing sectors with capital investments above RM 500 million will enjoy 0% tax rate for fifteen (15) years
Additional Benefits for Incorporation of Company in Malaysia
Aside from these tax incentives, choosing Malaysia as a venue for company incorporation provides numerous advantages:
- Effective logistics hub strategically located in Asia
- Relatively low labor costs with high levels of productivity (usually $2.31 USD per hour)
- Multicultural, educated and highly skilled workforce
- Lower set up or incorporation costs compared to other Asian countries
- Flexible, reliable banking mechanisms especially for foreign currency accounts
- Lower corporate tax rates
- Lower office rental rates than other Asian countries. In 2012, the average monthly lease per m2 is only $17 USD as opposed to Singapore’s monthly office lease of $68
- Dividends paid outside Malaysia are not subjected to withholding tax
Why Choose Us for Company Incorporation in Malaysia?
We have a team of qualified incorporation specialists, accountants, tax agents who are equipped with the legal know-how and expertise to make your company incorporation convenient, hassle-free, at cost-effective rates. From pre-incorporation to post-incorporation, Bestar Consulting can provide professional support to actualize your goal of having your corporate presence in Malaysia.
FAQs for Company Incorporation
Kuala Lumpur is the best state in Malaysia to incorporate a startup because of its low cost, high-quality life, rapid-tracked visas, talented workforce and robust government support. The Global Startup Ecosystem Report 2020 by Startup Genome ranked Kuala Lumpur as the top twenty emerging ecosystems in talent and top ten emerging ecosystems in performance.
To incorporate a local company, applicants have the following options:
- Direct incorporation: Applicants must complete the application for incorporation and company name via MyCoID 2016 platform with RM 1,000 fee.
- Name reservation: Applicants need to complete the details for company name application via MyCoID 2016 platform with RM 50 fee for every name applied.
Once SSM has approved the proposed company name, the following steps occur:
- Direct incorporation: The company incorporation application will be forwarded to the officer via the system for further verification.
- Name reservation: The approved company name will be reserved for thirty days from the approval date. Applicants can then apply for incorporation with a RM 1,000 fee.
Once the company incorporation application is submitted, the application will be processed within one working day. Applicants will get a notice and registration approval through emails upon successful application. The certificate will be offered upon request with a prescribed fee.
Companies Act 2013’s section 52(2) refers to the usage or application of premium obtained on the issue of shares. The company can apply the securities premium account:
- On the issues of the company’s unissued shares to its members as a fully paid bonus shares
- In writing off the company’s preliminary expenses
- In writing of the company’s expenses, commission paid or discount permitted on, any debentures or issues or shares
- In giving the premium payable on the redemption of any of the company’s redeemable preference shares or debentures; or
For buying its shares or other securities under section 68
ROC requirements for registering a private limited company in Malaysia include:
- At least one director (above 18 years old)
- At least one shareholder
- One qualified company secretary who can either be a person licenses by the SSM or a person who is a member of a professional organisation designated by the Minister of Domestic Trade Cooperative and Consumerism
The director and corporate secretary must live in or have a place of residence in Malaysia.
Business owners have no feasible ways to reduce the penalty caused by ROC late filing. Hence, they need to submit any prescribed returns or forms within the required deadline to avoid the penalty.
The following are the late lodgement fees applied to a private company in Malaysia:
- If more than seven days but does not exceed three months: RM 50
- If more than three months but does not exceed six months: RM 100
- If more than six months but does not exceed one year: RM 150
- If exceeds one year: RM 200
The following are the late lodgement fees applied to a public company in Malaysia:
- If more than seven days but does not exceed three months: RM 100
- If more than three months but does not exceed six months: RM 250
- If more than six months but does not exceed one year: RM 300
If exceed one year: RM 500
A shareholder is an individual or legal entity that owns one or more shares of a private or public company. Shareholders can also be referred to as the company’s members or owner.
Shareholders in Malaysia have the following roles and obligations:
- Issue the company’s additional shares
- Appoint or remove company directors through an ordinary resolution
- Approve director’s remuneration in a public company
- Appoint or remove an auditor in a public company
- Amend or change the company’s constitution
Subject to the shareholders’ agreement and applicable regulations, shareholders have the following rights:
- Receive dividends upon declaration
- Access specific information about the company’s affairs
- Sue the company for fiduciary duty’s violation
- But new shares the company issued
- To whatever assets remain following a liquidation
Companies Act 2016 required a company to have a registered office in Malaysia where all notices and communications may be addressed. The office must be accessible to and open to the public during normal business hours. Nevertheless, no express statutory regulation prohibits business owners from registering their residence as their registered office address. Generally, most private limited companies in Malaysia use their corporate secretary’s office as the registered office address.
At least one director is required to register a business or private company in Malaysia. A minimum of two directors is required to register a public company. The director must be at least 18 years old and ordinarily live in or has an abode in the country.
Foreigners can incorporate a company in Malaysia provided that they are above 18-year-old, and the company’s director must have a principle or place of residence in the country.
While setting up a corporate bank account is not mandatory, it is advisable for a much secure, legal and faster business banking transaction. The required documentation to open a corporate bank varies from one bank to another.