Starting Company Limited by Shares Malaysia - SSM
- Roger Pay
- 3 hours ago
- 15 min read
Starting a company limited by shares in Malaysia, commonly known as a Sdn Bhd (Sendirian Berhad), involves registration with the Suruhanjaya Syarikat Malaysia (SSM), which is the Companies Commission of Malaysia. The process has been streamlined, largely due to the Companies Act 2016 and the availability of online portals like MyCoID.
Here's a breakdown of the key aspects:
1. What is a Company Limited by Shares (Sdn Bhd)?
It's a private limited company where the liability of its members (shareholders) is limited to the amount, if any, unpaid on their shares. This means personal assets are generally protected if the company faces financial difficulties.
It's the most common business structure in Malaysia for both local and foreign entrepreneurs due to its limited liability and flexibility.
A Sdn Bhd can have a minimum of one shareholder and one director (who can be the same person), with a maximum of 50 shareholders.
It cannot offer shares to the public.
2. Key Requirements for Setting Up a Sdn Bhd:
Directors:
Minimum of one director who is at least 18 years old and ordinarily resides in Malaysia (having a principal place of residence in Malaysia).
Must not be a bankrupt or have a criminal record (conviction within the past five years).
Shareholders:
Minimum of one shareholder. Foreigners are generally allowed to hold 100% ownership in most sectors, though some industries may have restrictions on foreign equity.
Company Secretary:
Mandatory appointment of a qualified company secretary within 30 days of incorporation. The secretary must be licensed by SSM or a member of a prescribed professional body (e.g., MAICSA).
Registered Office:
Must have a registered office address in Malaysia, which serves as the official address for legal notices. A P.O. Box is not acceptable. Often, the company secretary's office serves as the registered office.
Paid-up Capital:
While there's generally no minimum paid-up capital requirement (it can be as low as RM1), some specific industries might have higher requirements.
Company Name:
Must be unique and comply with SSM guidelines. A name search and reservation are required.
Business Activities:
A clear description of the company's nature of business is needed. The Companies Act 2016 provides greater flexibility, and the company can generally conduct any legal business unless stated otherwise in its constitution.
3. SSM Registration Process (Using MyCoID Portal):
The process has been largely digitized through the MyCoID portal:
Account Registration on MyCoID: First-time users need to create an account on the SSM MyCoID portal.
ID Verification: A one-time ID verification at the nearest SSM office is typically required after creating the online account.
Login & Name Search: Once the account is activated, log in to the MyCoID portal.
Use the "Direct Incorporation Application" and search for your proposed company name to check availability.
Pay the name reservation fee (RM50 per name).
Name approval usually takes 1-2 business days, and the name is reserved for 30 days (renewable up to 180 days).
Document Preparation: Gather necessary details of directors and shareholders (MyKad/passport copies, residential addresses, contact details) and the registered office address.
Fill in "Super Form": Complete the required company information in the online "Super Form." This includes details about the proposed company name, business activities, directors, and shareholders.
Declaration & Submission: Tick the declaration section and submit the application.
Payment of Fees: Pay the incorporation fee (RM1,000 for companies limited by shares). Payment can be made through the online portal.
Application Review & Approval: SSM reviews the submitted information. Be prepared to respond promptly to any queries.
Notice of Registration: Upon approval, SSM will email the Notice of Registration (Section 15 of the Companies Act 2016), which serves as proof of incorporation.
Certificate of Registration: You can purchase the Certificate of Registration (Section 17) from SSM.
4. Fees and Costs:
SSM Fees:
Name Reservation: RM50 per name.
Incorporation Fee: RM1,000 (for companies limited by shares).
CTC Certificate of Incorporation: RM30.
Professional Services (if engaging a firm):
Company Secretary Fees: RM720 – RM1,200 per year (retainer).
Incorporation Service Fees: RM500 – RM2,000 (varies by provider, often includes SSM fees).
Auditing Services: RM1,500 – RM2,500 (first year).
Accounting Services: RM500 – RM7,000 per year (depends on transaction volume).
Tax Agent Fees: RM1,000 – RM1,500 per year.
Other One-Time Costs:
Company seal: RM50 – RM100.
Business license fees: Varies by industry and location.
Bank account opening: Usually free, but a minimum deposit is required.
5. Post-Registration Compliance:
Once your Sdn Bhd is registered, you must adhere to ongoing compliance requirements under the Companies Act 2016 and other relevant legislation:
Appointment of Company Secretary: Must be done within 30 days of incorporation.
Annual Return Filing: Must be lodged with SSM within 30 days of the company's anniversary of incorporation.
Financial Statement Preparation and Submission: Annual financial statements must be prepared and submitted to SSM within six months of the financial year-end.
Maintaining Records: Accurate accounting and other records must be kept.
Board Meeting Minutes and Resolutions: Proper minutes of board meetings and resolutions must be maintained.
Updating SSM: Notify SSM of any changes in company details (e.g., directors, shareholders, registered address).
Tax Registration: Register with the Inland Revenue Board (LHDN) for corporate tax.
Other Licenses: Obtain any specific business licenses required for your industry and location.
Important Notes:
The Companies Act 2016 has modernized company law in Malaysia, simplifying the incorporation process and emphasizing good corporate governance.
While it is possible to register a company yourself, many entrepreneurs opt to engage professional company secretaries or incorporation service providers to ensure compliance and a smooth process.
Processing time for company registration can vary, but generally, if all documents are complete and accurate, it can take 1-3 business days after submission and payment.
It is always advisable to consult with a professional company secretary or legal advisor in Malaysia to ensure full compliance with all relevant laws and regulations for your specific business.
Company Features
When establishing a Sdn Bhd in Malaysia, several key features distinguish it from other business structures like sole proprietorships or partnerships. These features offer various advantages but also come with certain obligations:
Here are the key features of a company limited by shares (Sdn Bhd):
1. Separate Legal Entity (Corporate Personality):
Distinct Identity: A Sdn Bhd is a legal entity distinct and separate from its owners (shareholders) and managers (directors). This means the company can own assets, incur debts, enter into contracts, sue, and be sued in its own name, rather than the names of its individual members.
Independent Existence: The company's existence is not tied to the lifespan or changes in its shareholders or directors. It continues to exist ("perpetual succession") until it is formally wound up or dissolved.
2. Limited Liability:
Protection of Personal Assets: This is one of the most significant features. The liability of the shareholders is limited to the amount, if any, unpaid on their shares. If the company incurs debts or faces financial difficulties, the personal assets of the shareholders (e.g., their homes, cars, savings) are generally protected and cannot be used to settle the company's liabilities.
Risk Management: This feature encourages investment and entrepreneurship by reducing the personal financial risk for investors.
3. Share Capital and Ownership:
Shares as Ownership Units: The ownership of the company is divided into shares, and shareholders are the owners of these shares. Each share represents a portion of the company's capital and ownership.
Capital Formation: Companies can raise capital by issuing shares to investors.
Transferability of Shares: Shares in a Sdn Bhd are generally transferable, meaning shareholders can sell or transfer their ownership to others, subject to any restrictions in the company's constitution (articles of association) or shareholders' agreements. This makes it easier to bring in new investors or for existing shareholders to exit.
Minimum Share Capital: While the Companies Act 2016 allows for a minimum paid-up capital of RM1, specific industries or activities might require a higher minimum.
4. Management by Directors:
Separation of Ownership and Management: While shareholders own the company, its day-to-day operations are managed by a board of directors appointed by the shareholders.
Statutory Duties: Directors have statutory duties and responsibilities under the Companies Act 2016 to act in the best interests of the company.
Minimum Directors: A Sdn Bhd in Malaysia requires a minimum of one director who ordinarily resides in Malaysia.
5. Mandatory Company Secretary:
Compliance Role: A Sdn Bhd must appoint a qualified company secretary within 30 days of incorporation. The company secretary is crucial for ensuring the company complies with the Companies Act 2016 and other relevant regulations. They manage statutory filings, board meeting minutes, and other corporate governance matters.
6. Registered Office:
Official Address: Every Sdn Bhd must have a registered office in Malaysia, which is the official address for all communications and legal notices from SSM and other authorities.
7. Regulatory Compliance and Reporting:
Annual Returns: Sdn Bhd companies are required to file annual returns with SSM to keep their records up-to-date.
Audited Financial Statements: They must prepare and submit audited financial statements to SSM annually (with some exemptions for dormant or small companies under certain conditions).
Taxation: Sdn Bhd companies are subject to corporate income tax in Malaysia. They may also be eligible for certain tax incentives.
Higher Compliance Burden: Compared to sole proprietorships or partnerships, Sdn Bhd companies have more stringent compliance requirements and higher recurring costs (e.g., for secretarial, accounting, and audit services).
8. Professional Image and Credibility:
Enhanced Reputation: Operating as a Sdn Bhd often lends a more professional and credible image to the business, which can be beneficial when dealing with banks, investors, suppliers, and customers.
9. Fundraising Capabilities:
Easier Access to Capital: Due to its separate legal entity status and formal structure, a Sdn Bhd typically finds it easier to raise capital through equity (issuing more shares) or debt financing (loans from banks), often at more favorable terms.
10. Restrictions (for Private Companies - Sdn Bhd):
No Public Share Offers: A Sdn Bhd cannot offer its shares to the public. This distinguishes it from a Public Limited Company (Berhad), which can be listed on a stock exchange.
Limited Number of Shareholders: A private company (Sdn Bhd) is generally limited to a maximum of 50 shareholders.
These features collectively make the Sdn Bhd structure a popular choice for businesses in Malaysia, offering a balance of limited liability protection, growth potential, and a formal corporate framework.
Requirements for Company Incorporation
Incorporating a company limited by shares (Sdn Bhd) in Malaysia requires meeting specific criteria set out by the Companies Act 2016 and the Companies Commission of Malaysia (SSM). Here's a detailed breakdown of the essential requirements:
1. Company Name:
Availability: The proposed company name must be unique and available. A name search and reservation are mandatory steps through the MyCoID portal or directly with SSM.
Compliance: The name must comply with SSM's guidelines, avoiding offensive, misleading, or restricted words.
2. Directors:
Minimum Number: A private company (Sdn Bhd) must have a minimum of one director.
Residency Requirement: At least one director must ordinarily reside in Malaysia. This means having a principal place of residence in Malaysia. This director can be a Malaysian citizen, a permanent resident, or a foreigner holding a valid work permit (Employment Pass) in Malaysia.
Age: Directors must be at least 18 years old.
Natural Person: Directors must be natural persons (individuals), not corporate entities.
Disqualifications: A person is disqualified from being a director if they:
Are an undischarged bankrupt (in Malaysia or overseas).
Have been convicted of certain offenses (e.g., related to promotion, formation, or management of a corporation; bribery, fraud, or dishonesty; breach of directors' duties) within the past five years.
Have been disqualified by a court order.
Note: The sole director can also be the sole shareholder.
3. Shareholders:
Minimum Number: A Sdn Bhd must have a minimum of one shareholder.
Maximum Number: A private company cannot have more than 50 shareholders.
Ownership: Shareholders can be individuals or corporate bodies (local or foreign). Malaysia generally allows 100% foreign ownership in most sectors, though some strategic industries may have restrictions or require specific local shareholder percentages.
4. Company Secretary:
Mandatory Appointment: A qualified company secretary must be appointed within 30 days of incorporation.
Qualifications: The company secretary must be:
Licensed by SSM, OR
A member of a professional body prescribed by the Minister (e.g., Malaysian Institute of Accountants, Malaysian Institute of Chartered Secretaries and Administrators - MAICSA).
Residency: The company secretary must ordinarily reside in Malaysia.
5. Registered Office:
Physical Address: The company must have a registered office address in Malaysia. This must be a physical address, not a P.O. Box.
Official Communications: This address is where all official communications and notices from SSM and other government authorities will be sent. Often, the company secretary's office serves as the registered office.
6. Share Capital:
Minimum Paid-up Capital: Under the Companies Act 2016, there is no longer a prescribed minimum paid-up capital requirement for general Sdn Bhd companies; it can be as low as RM1.
Industry-Specific Requirements: However, it's crucial to note that certain industries or business activities may still have specific, higher minimum paid-up capital requirements imposed by their respective regulatory bodies (e.g., for financial services, real estate agencies, etc.).
Practical Consideration: While RM1 is legally sufficient, a higher paid-up capital might be advisable for practical reasons like building credibility with banks and suppliers, and for financing initial operations.
7. Business Activities:
Description: A clear and concise description of the company's principal business activities is required for SSM registration.
General Purpose: The Companies Act 2016 generally allows a company to engage in any lawful business activity, unless specifically restricted in its constitution.
8. Constitution (Optional, but Recommended):
Default Position: The Companies Act 2016 makes the adoption of a company constitution (previously known as Memorandum and Articles of Association) optional for private companies. If no constitution is adopted, the company is governed by the provisions of the Companies Act 2016.
Customization: While optional, it is highly recommended to adopt a constitution to tailor internal rules, define specific rights and responsibilities of shareholders and directors, and outline procedures that may differ from the default Act provisions. This can help prevent future disputes.
Required Information and Documents for Application:
When submitting the incorporation application, you will typically need to provide:
Proposed company name(s).
Details of all proposed directors (full name, NRIC/passport number, residential address, nationality, occupation, email, contact number).
Details of all proposed shareholders (full name, NRIC/passport number, residential address, nationality, occupation, email, contact number).
Share capital structure (number of shares, nominal value of each share, total paid-up capital).
Proposed registered office address.
Brief description of the principal business activities.
Consent to act as director from each proposed director.
Consent to act as company secretary from the proposed company secretary.
The incorporation process is largely conducted online via the SSM's MyCoID portal. It involves name reservation, filling out the "Super Form" with the company details, and payment of the prescribed fees.
Company Incorporation Procedures
The company incorporation procedures in Malaysia, primarily managed by the Suruhanjaya Syarikat Malaysia (SSM), have been significantly streamlined through the MyCoID portal. This online system allows for a largely paperless and efficient registration process.
Here's a step-by-step guide to the company incorporation procedures:
Phase 1: Pre-Incorporation (Preparation)
Meet Eligibility Criteria:
Directors: Minimum one director, aged 18 or above, ordinarily residing in Malaysia (principal place of residence). Must not be an undischarged bankrupt or convicted of certain offenses.
Shareholders: Minimum one shareholder (can be the same person as the director). Maximum 50 for a private limited company (Sdn Bhd).
Company Secretary (Post-incorporation requirement): While not required at the point of incorporation, a qualified company secretary must be appointed within 30 days of incorporation.
Registered Office: Must have a valid physical address in Malaysia.
Gather Necessary Information and Documents:
Proposed Company Name(s): Have a few options ready in case your first choice is unavailable.
Business Activities: A clear description of the company's nature of business, typically identified by MSIC (Malaysian Standard Industrial Classification) codes. You can choose up to three principal activities.
Director Details: Full name, NRIC (for Malaysians) or passport number (for foreigners), residential address, nationality, occupation, email, and contact number for each proposed director.
Shareholder Details: Same as directors' details. For corporate shareholders, you'll need their company registration number and registered office address.
Share Capital: The proposed paid-up capital (can be RM1, but consider practical needs).
Registered Office Address: The physical address in Malaysia.
Consent: Directors' consent to act (this is typically embedded in the "Super Form" declaration).
Phase 2: SSM Online Registration (MyCoID Portal)
The entire incorporation application is primarily done through the MyCoID portal.
User Account Registration (MyCoID):
If you don't have one, register for a new user account on the MyCoID 2016 portal.
Identity Verification: After online registration, you will usually receive an email prompting you to visit an SSM counter within 14 days for a one-time identity verification (MyKad for Malaysians, passport for foreigners). This activates your user account.
Login to MyCoID Portal & Initiate "Direct Incorporation":
Once your account is activated, log in.
Select the "Direct Incorporation" option. This combines the name reservation and incorporation application into one process.
Company Name Search and Reservation:
On the MyCoID platform, enter your proposed company name to check its availability.
If available, you will proceed to reserve the name.
Pay the name reservation fee (USD12 per name).
Name approval typically takes 1-2 business days, and the name is reserved for 30 days (renewable up to 180 days if needed).
Fill in the "Super Form" (Section 14):
This is the core of the online application, consolidating various details previously submitted in separate forms.
Section A: Particulars of Application: Basic company details, purpose (new incorporation), type (limited by shares), and subtype (Sdn Bhd).
Section B: Clarification: For specific name clarifications, if any.
Section C: Application Details:
Business Code/Description: Select relevant MSIC codes (up to 3) and provide a textual description of your business activities (up to 200 words).
Registered Address & Business Address: Input the company's official registered office and primary business address (can be the same).
Directors: Enter all required details for each director, including their consent to act and declaration of no disqualifications.
Members/Shareholders: Enter details for each shareholder, including their proposed shareholding.
Information to Agency: Details related to employees (if any) and their start date.
Declaration Section: Confirm that all information provided is true and accurate.
Lodger Information: Details of the person submitting the application.
Review and Submit Application:
Carefully review all the information entered in the Super Form for accuracy.
Submit the application electronically.
Payment of Fees:
You will be redirected to an online payment gateway.
Pay the incorporation fee (USD237 for a company limited by shares).
The payment usually includes a small transaction fee.
Application Review by SSM:
SSM will review your application. This usually takes 1-3 business days.
If there are any issues or further information required, SSM may issue a query, which you will need to respond to promptly through the portal.
Receive Notice of Registration:
Upon successful approval, SSM will email the Notice of Registration (Section 15 of the Companies Act 2016). This document officially confirms your company's incorporation.
The Certificate of Registration (Section 17) can be purchased separately if needed (it's often requested by banks).
Phase 3: Post-Incorporation Compliance
Incorporation is just the beginning. Several critical steps must be taken immediately after your company is registered:
Appoint Company Secretary:
Within 30 days of incorporation, formally appoint a qualified company secretary. This is a mandatory requirement.
Open a Corporate Bank Account:
Open a business bank account in the company's name. You'll typically need the Notice of Registration (Section 15), Super Form (Section 14), and often the company's Constitution (if adopted), along with board resolutions authorizing the account opening and director/signatory identification.
Register with Inland Revenue Board (LHDN):
Register your company for corporate income tax with the LHDN (Lembaga Hasil Dalam Negeri / Inland Revenue Board of Malaysia).
Register with EPF, SOCSO, and EIS (if hiring employees):
If you plan to hire employees, register your company as an employer with the Employees Provident Fund (EPF), Social Security Organization (SOCSO), and Employment Insurance System (EIS).
Obtain Business Licenses and Permits:
Depending on your industry and specific business activities, you will need to apply for various business licenses and permits from relevant local councils and government bodies (e.g., local council business license, industry-specific licenses, Halal certification if applicable, etc.). This step is crucial before commencing operations.
Set Up Accounting Records:
Establish proper accounting records and systems to track all financial transactions.
Maintain Statutory Records:
The company secretary will help maintain statutory registers (e.g., Register of Members, Register of Directors) and minutes of board meetings and shareholder resolutions.
Tips for a Smooth Process:
Professional Assistance: While DIY incorporation via MyCoID is possible, many choose to engage professional company secretarial firms or legal advisors. They can guide you through the process, ensure accuracy, handle queries from SSM, and provide ongoing compliance services.
MSIC Codes: Ensure your selected MSIC codes accurately reflect your business activities, as this impacts licensing and regulatory requirements.
By following these procedures, you can successfully incorporate your Sdn Bhd in Malaysia and lay the groundwork for your business operations.
Registration Fee
When incorporating a company limited by shares (Sdn Bhd) in Malaysia, there are several fees payable to the Companies Commission of Malaysia (SSM). These are the official government fees and are relatively straightforward:
Company Name Reservation Fee:
USD 12 per name.
This fee is paid when you apply to reserve your proposed company name. The name, if approved, is reserved for 30 days, which can be extended up to a maximum of 180 days.
Company Incorporation Fee:
USD 237.
This is the flat fee for incorporating a company limited by shares (Sdn Bhd), regardless of the amount of paid-up capital. This fee is paid when you submit the "Super Form" application for incorporation.
Total Minimum SSM Fees for Incorporation:
USD 12 (Name Reservation) + USD 237 (Incorporation) = USD 249
Other SSM Fees You Might Encounter (Post-Incorporation or for Specific Actions):
While the above are the primary incorporation fees, it's good to be aware of other common SSM fees that a company will incur during its lifetime:
Certificate of Incorporation (Section 17): RM 25.40 (for a Certified True Copy - CTC) or RM 40.80 (for a certified copy from SSM's e-Info portal). While the Notice of Registration (Section 15) is issued by email and confirms incorporation, banks or other entities might sometimes request the Certificate of Incorporation.
Lodgement of Annual Return (Private Company): RM 150
Lodgement of Audited Financial Statements and Reports (Private Company): RM 50
Change of Company Name: RM 100
Lodgement of Alteration or Amendment of Constitution: RM 30
Important Considerations Beyond SSM Fees:
It's crucial to understand that the SSM fees are just one part of the overall cost of setting up and maintaining a company in Malaysia. You will also need to budget for:
Company Secretarial Fees: This is a recurring annual fee (typically RM 800 - RM 1,200 per year) for a professional company secretary who handles statutory compliance. Bestar offers incorporation packages that bundle the SSM fees with our secretarial services for the first year.
Accounting and Auditing Fees: Mandatory annual costs for preparing and auditing financial statements (can range from USD 360 upwards depending on company activity).
Tax Agent Fees: For filing corporate income tax returns.
Business Licenses and Permits: Fees vary significantly based on your industry and location (local council, specific regulatory bodies).
Other Administrative Costs: Such as company seal, bank account opening (though usually free for the account itself, minimum deposits are required), etc.
Professional Assistance: While DIY incorporation via MyCoID is possible, many choose to engage professional company secretarial firms or legal advisors. They can guide you through the process, ensure accuracy, handle queries from SSM, and provide ongoing compliance services.
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