Incorporation Of Company In Malaysia
How To Register A Company in Malaysia?
How to register a company in Malaysia? What are the requirements to form a company in Malaysia?
What are documents needed to register a Malaysia company?
Here are some basic facts and useful information for setting up and forming a limited company (Sdn Bhd) in Malaysia.
[This page is updated on 31/10/2019 to include the effect of the new Companies Act 2016 that came into effect on 31 January 2017.]
What documents do you need to register a company in Malaysia?
- Copy of your identity card (IC)
- Copy of your passport (for foreign director)
What is the difference between Sdn Bhd & Sole Propietorship in Malaysia?
Malaysia private limited company or “Sdn Bhd” is the most common and popular type of business type where investors or entrepreneurs seek to setup. Refer to below table on the pros and cons for setting up Sdn Bhd.
| Details | Sdn Bhd | Sole Proprietorship |
|---|---|---|
| Legal status | Separate legal entity from Company | Not a separate legal entity from Company |
| Person who is liable for the Company’s debts | Company | Solo Proprietor (the owner) |
| Legal Liability | Limited. Shareholders would be protected by the corporate veil. Personal assets & wealth are protected. | Unlimited. Owner’s personal assets & wealth will be jeopardized due to risks exposed in the business. |
| Raising Capital & funds | Easier to obtain funds and raise capital compared to solo proprietor due to account is being audited and certified. Therefore the account it is more reliable and trustworthy | Relatively harder to raise capital and funds compared to Sdn Bhd |
| Income tax rate | First RM 500,000 at 17%, After – 24% | From 0% to 28% |
| Cost of maintaining | Higher compare to sole proprietor as Sdn Bhd has to incur yearly fixed fee like Audit, Tax and Secretary | Low |
| Continuity | Ownership transferable to spouse and second generation or saleable to any parties for a price | Anything happen to the owner or partner, the business will be legally considered ceased operations immediately, as the owner is company and company is owner. |
What are the benefits to register a company (Sdn Bhd) in Malaysia?
- Separate legal entity and owner’s wealth will be protected
- Easier to expand the business and raising funds in future
- Exposed to lower income tax risk (enjoy lower tax rate)
- Able to transfer the ownership and saleable
What are the disadvantages to register a company (Sdn Bhd) in Malaysia?
Higher maintenance cost compare to other business vehicle. However, it will worth every penny and effort spend due to the lower income tax risk and separate legal entity which able to protect the owner of the business if business goes wrong (ie: get sued or bankrupt).
Who can register a company in Malaysia?
The person need to be
- Natural Person
- Minimum aged of 18 and above
- He or she is not bankrupt and imprisoned
- He or she is not convicted whether within or outside Malaysia of any offence
Any requirements to be a Shareholder in Sdn Bhd
- Every company needs at least 1 shareholder who is at least 18 years of age.
Company Secretary requirements
- A company must have at least one Company Secretary.
- Company secretary must be a member of any one of the prescribed professional bodies or licensed by the SSM.
Registered office requirements
- Every company must have a registered office in Malaysia to which all communications and notices may be addressed.
- It is normal practice in Malaysia to have the secretarial office as registered office of the company.
Annual General Meeting (AGM)
- A Sdn Bhd company, of which was incorporated prior to 31 January 2017 and has not adopted new Constitution under the new Companies Act 2016, is required to hold its Annual General Meeting (AGM) within 6 months from the accounting year end.
- All Sdn Bhd companies that incorporated on or after 31 January 2017 do not need to hold AGM.
Annual Returns
- Every company is required to lodge the Annual Return (AR) within 30 days from the anniversary of its incorporation date. (For example, a company incorporated on 1 May 2018 must submit AR within 30 days from 1 May 2019)
- Annual return is a snapshot of general information about a company’s directors, secretary, registered office, shareholders, share capital, principal business activities, etc.
Accounts and Audit
- An active company is required to prepare its accounts and to be audited by approved auditors in Malaysia every year.
- A company must appoint one or more auditors who must be approved auditors in Malaysia.
- The audited accounts must be circulated to all the shareholders of the company within 6 months from the date of financial year end.
- This audited accounts is required to be lodged with SSM within 30 days from the date of circulation to shareholders.