Share Increment Proof of Funds Malaysia
- Roger Pay
- 5 hours ago
- 7 min read
Share Increment Proof of Funds Malaysia
In Malaysia, increasing a company's paid-up capital is a common strategic move to meet bank loan requirements, secure government tenders (such as Petronas or CIDB), or apply for employment visas (EP/MM2H).
The core requirement for this process is the Proof of Funds (POF)—tangible evidence that the new share capital has actually been injected into the company's bank account.
What is a Share Increment Proof of Funds?
In the context of the Companies Act 2016, an "increment of share capital" refers to the issuance and allotment of new shares to existing or new shareholders.
The Companies Commission of Malaysia (SSM) requires a "Return of Allotment" (formerly Form 24) to be lodged. However, your Company Secretary will not proceed with this lodgement unless you provide a Proof of Funds to verify that the money is physically in the company's possession.
Accepted Forms of Proof of Funds in Malaysia
Bank-in Slip / Transaction Advice: The most common proof. It must clearly show the transfer from the shareholder’s personal account to the company’s corporate account.
Bank Statement: A recent statement showing the credited amount and the current balance reflecting the total paid-up capital.
Audited Financial Statements: For larger increments or capitalization of reserves (converting retained earnings into shares), an auditor’s report is required.
Director’s Resolution: A formal document signed by the board approving the allotment of shares.
Step-by-Step Process for Share Increment
To ensure your share increment is optimized for compliance and optimized for Malaysian regulations, follow these steps:
1. Board & Shareholder Approval
The directors must pass a resolution to issue new shares. If the company's constitution requires it, a general meeting for shareholders must be held to pass an ordinary resolution.
2. Fund Injection (The "Proof")
Shareholders must transfer the exact amount of the share value to the company’s bank account.
Note: Under Section 48 of the Companies Act 2016, a "cheque" is not considered received until it is cleared by the bank. Digital transfers are preferred for instant proof.
3. Verification by Company Secretary
You must submit the Bank-in Slip or Proof of Transfer to your Company Secretary. They will verify:
The sender's name (must match the subscriber/shareholder).
The exact amount (must match the number of shares allotted).
The date of transfer.
4. Lodgement with SSM
Within 14 days of the allotment, the Company Secretary will lodge the "Return of Allotment" via the SSM4U portal.
Why You Need This
Increasing your paid-up capital isn't just a legal formality; it's a conversion tool for your business:
Trust & Credibility: A "RM2 company" often struggles to close B2B deals. High paid-up capital signals financial stability.
Banking & Loans: Banks usually require a debt-to-equity ratio that necessitates a specific capital amount.
Licenses: For example, a travel agency in Malaysia often requires a minimum paid-up capital of RM50,000 to RM200,000 depending on the license type.
Sample Request Letter for Bank Statement (Proof of Funds)
If you need to request a formal verification from your bank for SSM or an audit, use this template:
[Company Letterhead]
To: The Branch Manager, [Bank Name]
Date: [Current Date]
Subject: Request for Confirmation of Funds for Share Capital Increment
Dear Sir/Madam,
We, [Company Name] (Registration No: [12-digit SSM No]), wish to request a formal bank statement/confirmation letter for our Current Account No: [Account Number].
This request is for the purpose of verifying a share capital increment of RM [Amount] recently injected by our shareholders. This proof is required for lodgement with the Companies Commission of Malaysia (SSM).
Please provide the statement covering the period from [Date] to [Date].
Thank you.
Yours faithfully,
[Signature]
[Director Name]
Director's Resolution for Your Share Increment
To finalize your share increment, you need a formal Directors’ Circular Resolution (DCR). Under the Companies Act 2016, this document serves as the official record of the board's decision to issue and allot new shares.
Below is a standard template specifically tailored for a Malaysian Private Limited Company (Sdn. Bhd.).
Directors' Circular Resolution in Writing
PURSUANT TO THE COMPANY’S CONSTITUTION
[COMPANY NAME] (Registration No: [20XXXX-X]) (Incorporated in Malaysia)
1. ALLOTMENT OF SHARES
WHEREAS: The Company has received applications for the subscription of new ordinary shares from the person(s) named below at an issue price of RM [Amount] per share.
IT IS HEREBY RESOLVED: THAT the application(s) for the allotment of [Total Number] new ordinary shares in the capital of the Company be and is hereby accepted.
THAT the said shares be and are hereby allotted to the following person(s) for cash, to rank pari passu in all respects with the existing ordinary shares of the Company:
Name of Allottee | NRIC / Passport / Reg No. | No. of Shares Allotted | Total Consideration (RM) |
[Shareholder Name A] | [ID Number] | [Quantity] | [Total RM] |
[Shareholder Name B] | [ID Number] | [Quantity] | [Total RM] |
TOTAL | [Sum] | RM [Total Sum] |
2. FILING WITH THE REGISTRAR (SSM)
IT IS FURTHER RESOLVED: THAT the Company Secretary be and is hereby authorized to lodge the Return of Allotment (Section 78) with the Companies Commission of Malaysia (SSM) and to update the Register of Members accordingly.
3. EXECUTION OF SHARE CERTIFICATES
IT IS FURTHER RESOLVED: THAT the Directors and/or Company Secretary be authorized to sign and issue the new share certificates to the allottees in accordance with the Company’s Constitution.
BOARD OF DIRECTORS:
Director Name | Signature | Date |
[Director Name A] | ____________________ | [Date] |
[Director Name B] | ____________________ | [Date] |
Crucial Filing Requirements
To move from "Draft" to "Approved," ensure you complete the following:
Check Constitution: Ensure your Company Constitution (if any) doesn't have specific restrictions on share issuance. If you don't have a Constitution, the Companies Act 2016 defaults apply.
Section 75/76 Authority: Ensure the directors have a standing authority from the shareholders (via an Ordinary Resolution) to allot shares. This is usually passed during the Annual General Meeting (AGM).
The 14-Day Clock: You must lodge the Return of Allotment (formerly Form 24) with SSM within 14 days from the date of this resolution to avoid late filing penalties.
Ordinary Resolution for your Shareholders
In Malaysia, under Section 75 and 76 of the Companies Act 2016, directors cannot issue shares without the prior approval of the shareholders. This is done through an Ordinary Resolution.
If your company has multiple shareholders, you can pass this via a Circular Resolution (signed by all members) or at a General Meeting (passed by a simple majority of >50%).
Shareholders' Ordinary Resolution in Writing
(Pursuant to Section 290 of the Companies Act 2016)
[COMPANY NAME]
(Registration No: [20XXXX-X])
(Incorporated in Malaysia)
AUTHORITY TO ALLOT AND ISSUE SHARES
IT IS HEREBY RESOLVED:
"THAT pursuant to Sections 75 and 76 of the Companies Act 2016, the Directors be and are hereby authorized to allot and issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit PROVIDED THAT the aggregate number of shares to be issued does not exceed the total number of issued shares of the Company for the time being."
"AND THAT the Directors be and are hereby authorized to take all such steps as are necessary to give effect to the allotment and issuance of such shares, including but not limited to the execution of all relevant documents and the lodgement of the Return of Allotment with the Companies Commission of Malaysia (SSM)."
SHAREHOLDERS' SIGNATURES:
Name of Shareholder | Signature | Date |
[Shareholder Name A] | ____________________ | [Date] |
[Shareholder Name B] | ____________________ | [Date] |
Essential Comparison: Director vs. Shareholder Roles
To help you visualize the workflow and ensure compliance, here is how the responsibilities are split:
Action | Authority | Legal Basis |
Giving Permission to issue shares | Shareholders | Section 75/76 |
Executing the specific allotment | Directors | Board Resolution |
Lodging the update with SSM | Company Secretary | Section 78 |
Important Compliance Reminders:
The 14-Day Deadline: Once the Directors' Resolution (from the previous step) is signed, you have exactly 14 days to lodge the Return of Allotment (formerly Form 24) with SSM.
Pre-emptive Rights (Section 85): Unless your Company Constitution says otherwise, Section 85 of the Act requires that new shares must first be offered to existing shareholders in proportion to their current holdings before being offered to outsiders.
Stamping: While the resolution itself doesn't require stamping, the Share Certificates issued afterward may be subject to nominal stamp duty.
How Bestar can Help
Share Increment Proof of Funds Malaysia
When it comes to increasing your company’s paid-up capital in Malaysia, the process involves more than just a bank transfer—it requires meticulous documentation and strict adherence to the Companies Act 2016.
Bestar provides end-to-end corporate secretarial and financial advisory services to ensure your share increment is executed legally, swiftly, and in full compliance with SSM regulations.
How Bestar Simplifies the Share Increment Process
1. Expert Advisory on Capital Structure
Before you inject funds, Bestar’s consultants analyze your business needs (e.g., EP applications, CIDB licenses, or bank loan requirements) to recommend the optimal paid-up capital amount. This prevents unnecessary over-capitalization or multiple filings.
2. Preparation of Statutory Documents
Bestar handles the heavy lifting of corporate governance by drafting:
Directors’ Circular Resolutions (DCR) to approve the allotment.
Shareholders’ Ordinary Resolutions to grant the authority to issue shares.
Letters of Offer to comply with Section 85 pre-emptive rights.
3. Verification of Proof of Funds (POF)
To protect your company from the RM5 million fine associated with "paper-only" capital increases, Bestar’s licensed company secretaries meticulously verify your bank-in slips or transaction advices. They ensure the narrative on the bank statement matches the allotment details before certifying the documents.
4. Seamless SSM Lodgement
Using the SSM4U and MyCoID portals, Bestar ensures that your Return of Allotment (Section 78) is lodged within the mandatory 14-day window. This digital-first approach guarantees that your updated company profile (showing the new capital) is available almost immediately.
The Bestar Advantage: Why Choose Us?
Feature | How Bestar Helps |
Compliance First | We ensure all filings follow the Companies Act 2016 to avoid late penalties and director disqualification. |
One-Stop Hub | From secretarial work and audit to tax planning and payroll, we handle all facets of your business growth. |
Transparent Pricing | Competitive rates with no hidden fees for name reservations or certificate issuance. |
Global Reach | With headquarters in Singapore and a strong presence in Kuala Lumpur, we are the preferred partner for foreign investors and MNCs. |
Take the Next Step with Bestar
Increasing your paid-up capital is a sign of business maturity and financial strength. Let Bestar Malaysia manage the technicalities while you focus on scaling your operations.
Would you like to schedule a consultation with a Bestar expert for your specific capital target?
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