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How to Open a Company in Malaysia

Updated: May 12


How to Open a Company in Malaysia
How to Open a Company in Malaysia


Our team of Malaysia company registration experts provides a wide range of company formation services to local and foreign investors who want to start their business activities here. Our representatives can assist in the formation of any company type required by Malaysian law. With extensive experience in company incorporation process requirements, our specialists in company formation in Malaysia can facilitate business registration in compliance with local laws and regulations.


Quick Facts

Types of company

​Private company limited by shares

Public company limited by shares

Company limited by guarantee Company unlimited

Foreign company

Minimum share capital for LTD companies

​RM1

​Minimum number of shareholders in a limited company

​1

​Time frame for incorporation (approximately)

5 - 10 days

Corporate tax rate

24%

Dividend tax rate

​-

VAT rate

6% SST

Number of double taxation treaties (approximately)

​75

​Do you provide a registered address?

​Yes

​Local director required?

​Yes

​Shelf companies available?

​Yes

Re-domiciliation allowed?

​Yes

Electronic signature?

​Yes

​Are accounting/annual returns required?

​Yes

Foreign ownership allowed?

​Yes

​Are there any tax exemptions?

​Interest income earned by non-residents from deposits placed with designated financial institutions in Malaysia is exempt from corporate income tax.

​Tax incentives

Investment tax allowance


What are the Basic Steps to Open a Company in Malaysia?

Incorporating a company in Malaysia involves drafting the articles of association and registration of the mandatory documents. The company will be registered as a company limited by shares or an unlimited company. Our company incorporation experts can provide you with detailed information on the requirements you must meet to open a company in Malaysia, such as the number of shareholders associated with the business, directors or company secretary, etc.


When opening a company in Malaysia, our company incorporation specialists can apply for a proposed company name by completing a form and paying a fee of RM50 for the company name. Final approval will be received from the Companies Commission of Malaysia, and company registration documents must be submitted to the Commission within one month of receipt of company name approval. Once these documents are approved by the local authorities, the company will be issued a Certificate of Incorporation.


​WHY OPEN A COMPANY IN MALAYSIA

Legal Entity for Corporate Structures

LLCs

Foreign investors can register a Private Limited Company or a Public Limited Company. Other business forms are also available, but these are preferred by local and foreign investors.

​Top Investment Sectors in Malaysia

SERVICE/MANUFACTURING

The Malaysian market offers opportunities in many sectors of the economy - manufacturing, services, tourism, and trade, and has a nascent IT industry.

Advantages for Foreign Investors

GOVERNMENT INCENTIVES

With a liberalized market, Malaysia offers numerous incentives to foreign investors in many investment sectors. It also provides a stable economic market and has a highly developed infrastructure system.

Qualified Workforce

RANKED AMONG THE BEST GLOBALLY

The Malaysian economy ranks highly globally in terms of the productivity of the local workforce, which is also characterized by a high degree of knowledge and qualifications. Malaysia also has a well-developed education system.


What are the Main Types of Companies in Malaysia?

Foreign investors interested in setting up a company in Malaysia can choose one of the several types of legal entities, based on the equity capital that will be invested in the business and the investor's plans in the local market.

A common way of setting up a company in Malaysia is by registering a private limited company, which is the corporate entity of choice to be registered in the case of small and medium-sized companies. This type of company is very popular in Malaysia because the shareholder's liability for the company's debts is limited to its capital investment. Such companies are considered separate legal entities from their founders and have legal personality. A similar business form offered here is the public limited company, which is generally structured the same as a private limited company, except that this entity can offer its shares to the public.

A public limited company is designed for large corporations and can be listed on the stock exchange. This company type can be more expensive to incorporate in Malaysia and can take longer to register than other company types due to its complexity and required approvals.

In contrast to a private limited company which can have up to 50 shareholders, a public limited company has no limit in terms of the number of shareholders. This type of company may also be more advantageous as a way to raise capital, and you can ask our company formation specialists in Malaysia for more information on this legal entity. You can also rely on our advisors on the process of registering this type of company.


Conducting Business through a Branch or Subsidiary in Malaysia

While foreign investors can do business in Malaysia by registering one of the above business forms, they can also do business through a branch or subsidiary. A branch represents an entity that is dependent on its parent company; when choosing a branch for business activities in Malaysia, investors must be aware that they can only enter the business activities carried out by the parent company.

Investors should take into account that certain businesses cannot be conducted through branches.


Other characteristics are mentioned in the list below:

  • The branch office in Malaysia must have the same trade name as the parent company;

  • For registration it is necessary to appoint a representative agent who must be resident in Malaysia;

  • The company's financial documents must be audited, and the company is also obliged to submit an annual financial report;

  • From a tax point of view, the branch is taxed as a non-resident company.


Note that the institution charges a registration fee based on the foreign company's share capital.


Our team of consultants for company formation in Malaysia can advise on how to register a branch and can explain the tax regime applicable to those wishing to incorporate.


Those wishing to benefit from more legal rights and management independence can operate through a subsidiary, which represents a legal entity separate from its parent company. Subsidiaries can be 100% owned by foreign investors, with certain restrictions on specific business activities (education, banking, tourism, agriculture). When registering a Malaysian subsidiary, the registration process will follow the standard incorporation procedure applicable to local businesses and may present different steps depending on the legal entity chosen.

Another legal option for opening a company as a foreign entity in Malaysia is to register a representative office. However, such an office does not represent a vehicle on which commercial activities can be carried out. It can only be used to conduct market research activities or to coordinate various businesses of the parent company (such as maintaining close relations with the company's partners in Malaysia).


Since it does not conduct any commercial activities, the representative office does not have to follow the same accounting and reporting requirements that apply to other local entities. The representative office will only employ employees already employed by the foreign company. If you are interested in opening a company in Malaysia or any other country, we can help you.

What is the Procedure for Opening a Subsidiary Company in Malaysia?

As mentioned above, from a legal point of view, a subsidiary company is considered a separate legal entity and must follow the process of setting up a company in Malaysia. Here, investors who want to register a subsidiary company need to choose a legal entity, but in most cases, a private limited company is the starting point for a subsidiary company registration in Malaysia.

A private limited company in Malaysia allows foreign investors to own 100% of the company, but as mentioned above, the possibility of owning 100% of the company is limited to specific sectors of the economy. In the business fields regulated by the Malaysian government, foreign investors are allowed to invest, but they must associate with local businessmen. As a general rule, foreign companies registering this form of business are required to deposit a minimum of RM500,000 (or US$113,000) in share capital.

The registration process begins with the Companies Commission of Malaysia, where investors propose a suitable company name.


When referring to the structure of a company, it is necessary to know that it can have up to 50 shareholders and it can be formed by a shareholder (either a natural person or a body corporate). The company must be represented by a director who can be a Malaysian citizen. If the appointed director is represented by a foreigner, then he or she must have a residential address in Malaysia or a valid work permit issued by a local authority.

Do you want to start a business in Malaysia? One of our specialists can explain and manage these formalities. Good to know that a LTD company can be formed by one shareholder and capital of RM1. The entire process takes approximately 5 days, and we recommend that you contact our specialists in order to benefit from the simplification of the procedure in this area. If you are interested, we also provide the registered address.


Why Register a Private Limited Company in Malaysia?

Forming a private limited company in Malaysia is a common practice, as this company type represents the most advantageous way to enter the business world for those who want to register a Small and Medium Enterprise (SME). This type of company is actually created to meet the needs of investors looking to start a business under a small and medium enterprise, and its characteristics are specially designed for this purpose.

One of the main advantages is that it represents a separate legal entity, meaning it can own property in its own name, enter into contracts and be sued or sued by other entities. This means that investors are not personally liable for these aspects. People who want to set up this type of company in Malaysia must know that there are not many restrictions on its registration. This type of company offers many advantages, one of which is the separation of the company's liabilities from those of investors. As a general rule, a private limited company is considered an entity with simple compliance procedures, and the costs associated with its registration are considered to be quite cheap (compared to other company types). As mentioned above, companies can be 100% foreign owned, which is an important advantage for foreign investors who want to explore this market. It also offers the possibility to increase capital by issuing more shares to its founders, with the caveat that these shares cannot be sold on the public market.

What types of Services are Available to Foreigners Interested in Setting Up a Company in Malaysia?

Our company formation experts in Malaysia can further assist foreign investors by providing other types of services related to business registration in Malaysia. Foreign investors doing business in Malaysia can also request legal assistance from our experts on the following types of services:

  • Virtual office – this is how businesses can obtain an official business address in Malaysia, which is a legal requirement for all company types;

  • Accounting – our specialists can provide bookkeeping and payroll services, as well as mandatory GST filing;

  • Opening a corporate bank account - this process can be done at any commercial bank in Malaysia;

  • Tax compliance services - applicable to all companies that need to register for tax, including SST;

  • Advice on tax minimization methods or exemptions to which your company may be entitled (if a company incorporated in Malaysia is the beneficiary of a double taxation agreement signed by Malaysian authorities with another partner jurisdiction, the legal entity is entitled to certain tax reliefs, which will be granted under the terms of the respective agreements).

Companies Commission of Malaysia

Established in 2002, the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) is the body that oversees the registration of new companies. The SSM represents an institution from which other investors may gather relevant information about other companies operating in Malaysia that need to provide the public with various details about their business activities.


Services Provided by Companies Registry Malaysia

The Companies Registry of Malaysia (SSM) is the real-time registry for all aspects of corporate life, from incorporation to dissolution, as founders of businesses must always provide up-to-date information on their companies.


A company name must be proposed by the shareholders of the company and registered with the SSM following several rules. For example, company name cannot exceed 50 characters, including spaces between words. It is important to know that there are several business names that are not acceptable under local laws; our team of specialists in Malaysia company formation can provide more information on these company names.


When starting a business in Malaysia, investors should submit a business registration form which contains the following information:


  • company name,

  • place of business,

  • branch address (if applicable),

  • Information about shareholders/partners and business activities and the areas in which the company will operate.


The document must be signed by all shareholders and filed on the institution's online platform.


Why Change Company Type?

The type of business entity set up to carry out business in Malaysia can change due to a number of circumstances.


For example, the corresponding entity does not represent the best interests of the investor, even if it is the most appropriate choice for a period of time. A businessman operating as a sole proprietor in Malaysia may wish to re-register the business under another legal entity, which provides a better legal basis in protecting the investor’s assets. In the case of a sole trader, the investor is personally liable for the sole proprietorship's debts, since there is no legal distinction between a businessman and a sole proprietorship. However, this provision no longer applies to limited liability companies.


Opening a Trading Company in Malaysia

RM 1,000 is the fee required to open a trading company in Malaysia. In addition to this cost, you must also consider staff costs, company name registration costs, and costs associated with necessary licensing. We remind you that all these aspects can be discussed with our team of experts in this field. They can also tell you the price of a business license in Malaysia.


Import and export companies can operate as soon as they obtain a business license in Malaysia. Wholesale Retail Trade or WRT is the type of license that a trading company in Malaysia must obtain before commencing activities in this field. The Ministry of Domestic Trade and Cost of Living Malaysia is the agency that approves license applications for companies wishing to trade in Malaysia. Here’s how to apply to get a business license online in Malaysia:


  • RM1 million is the fee for obtaining this license.

  • Investors must submit a rental agreement as part of the application process for such a license.

  • If the trading company is newly formed, shareholders must provide a copy of the business plan.

  • This type of license is valid for 2 years and can be obtained within a maximum of 4 months.


We remind you that our experts can handle all formalities related to obtaining a WRT license to open a trading company in Malaysia. Please feel free to discuss all these aspects with us in order to initiate the necessary process. Also, you can learn about all the requirements for obtaining a trading license in Malaysia.


There are many programs and grants available to those who want to open a trading company in Malaysia. The Ministry of Finance, and Ministry of Communications and Digital provide opportunities for entrepreneurs to participate in dedicated programs to grow their businesses. You may be eligible for these grants if you meet the required criteria. We invite you to learn more about this topic from our company formation team in Malaysia.


What are the Main Reasons for Investing in Malaysia?

Investors may have many reasons to invest in Malaysia. For example, the country has a highly competitive labor market and benefits from a strategic location with access to other important markets in Asia. Malaysia is one of the most attractive destinations for starting a company because the registration process is very fast (about a week) and consists of only three steps.


In terms of workforce, Malaysia has a high level of productivity, ranking third in ASEAN. The Malaysian workforce is highly knowledgeable and skilled, which can be an attractive advantage for those seeking to expand in Asian markets, as a company's employees are one of a business' most important assets.


What's more, foreign investors can find a suitable market in Malaysia due to the level of investor protection guaranteed by local legislation. Malaysia has so far attracted more than 5,000 foreign companies from more than 40 countries, many of which have diversified in the local market. Regarding the level of foreign investment in Malaysia, the following deserves a mention:


  • Malaysia’s foreign direct investment was RM163,335.4 million in 2022 and RM208,583.5 million in 2021;

  • Malaysia was the largest emerging Southeast Asian destination for greenfield FDI in 2021, with announced projects worth more than US$24.3 billion.

  • One of the main investment sectors of interest to foreign investors is the real estate sector, which accounted for 23.7% of all foreign investments in 2018. Other important investment sectors are petroleum products industry (16.3%), base metals industry (6.5%), electrical and electronic products (5.6%) and mining (5.1%);

  • From January 2022 to September 2022, the People's Republic of China (PRC) dominated foreign investment totaling RM49.2 billion (US$10.6 billion) of the total approved investments. It was followed by the United States (RM16.9 billion) (US$3.6 billion), the Netherlands (RM16.5 billion) (US$3.6 billion), Germany (RM9.2 billion) (US$2 billion) and Singapore (RM8.7 billion) (US$1.9 billion);

  • Malaysia ranks 10th in the FDI Confidence Index, indicating that the country offers appropriate measures to increase the number of foreign investors in the local market.


One of the most important aspects that will aid in the decision-making process of opening a company in Malaysia or elsewhere is the tax regime applicable to new legal entities incorporated in the respective territories. In terms of taxation, Malaysia offers the following benefits:


  • Malaysian companies are not imposed with withholding tax on the transfer of dividends to foreign entities;

  • There are no restrictions on the repatriation of company assets – such as capital, profits, royalties and dividends;

  • Local companies can enjoy tax-free treatment under the free trade agreement signed between the country and ASEAN countries;

  • At the same time, foreign companies can benefit from the provisions of the country’s double taxation treaties, of which more than 70 have been concluded.


Investors should also note that Malaysia is currently considered an expansion hub for startups and is currently the third country in the region to launch this activity. A large number of startups registered in the country have expanded their operations in other countries in the region. Our team of consultants for company formation in Malaysia can assist investors with advice on how to invest in Malaysia.


Businessmen can also invest in the local stock market, the most popular investment vehicles being exchange-traded funds; related investments can also be made in the real estate sector. If you need more information on the company registration services offered here, please contact our Malaysia company registration specialists.




https://companyincorporationmalaysia.com/

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