Guide to Setting Up a Company in Malaysia for Foreign Investors
- SB
- Feb 15
- 5 min read
Contents
Overview of Setting Up a Company in Malaysia
Why Malaysia?
Benefits of Incorporating in Malaysia
Key Advantages for Foreign Investors
Incorporation of a Company by Foreign Shareholder in Malaysia
. Understanding Legal Entity Options
Required Documentation and Approvals
Step-by-Step Incorporation Process
Timeframe and Cost Considerations
Naming a Company
Business Structure and Registration
Types of Business Structures
Post-Incorporation Compliance
Key Post-Incorporation Activities
Key Post-Incorporation Activities
Malaysia's strategic location in the heart of Southeast Asia, business-friendly policies, and robust economic infrastructure make it an attractive destination for foreign investors. This comprehensive guide will walk you through the process of incorporating a company in Malaysia, linking you to relevant Malaysian resources for deeper insights.
Introduction
Malaysia presents numerous opportunities for foreign investors aiming to tap into the ASEAN region's growing markets. With government policies that encourage economic growth, inclusivity, and innovation, Malaysia is a welcoming environment for international businesses. Key agencies like the Companies Commission of Malaysia (SSM) and Malaysian Investment Development Authority (MIDA) provide valuable resources to simplify this journey.
1. Overview of Setting Up a Company in Malaysia
Why Malaysia?
Malaysia’s government actively supports foreign direct investment (FDI) through initiatives like tax incentives, streamlined business regulations, and support for digital infrastructure. Its proximity to growing ASEAN economies further bolsters its appeal.
Useful links for business incorporation:
2. Benefits of Incorporating in Malaysia
Key Advantages for Foreign Investors
Strategic Location: Gateway to a 650-million-strong ASEAN market.
Pro-Business Policies: Incentives like Pioneer Status and tax exemptions under the Principal Hub Incentive.
Digital Economy Support: The Digital Free Trade Zone (DFTZ) is designed to transform Malaysia into a hub for global e-commerce by integrating three key components, rolled out in phases: a physical e-fulfilment hub, a satellite hub, and a virtual e-services platform.
Ease of Doing Business: Malaysia ranks high in the World Bank’s Ease of Doing Business Index.
Explore further with InvestKL, which caters specifically to international investors.
Incorporation of a Company by Foreign Shareholder in Malaysia
1. Understanding Legal Entity Options
Foreign investors can choose from several types of business structures:
Private Limited Company (Sdn Bhd): Best suited for small and medium enterprises (SMEs).
Limited Company (Berhad): Ideal for larger corporations with ambitions of public shareholding.
Branch Office: For foreign companies expanding locally.
Limited Liability Partnership (LLP): A hybrid structure offering flexibility and liability protection.
For more detailed descriptions on SMEs, visit SME Corp’s Business Guide.
2. Required Documentation and Approvals
The essential documents include:
The company's constitution (formerly known as the memorandum and articles of association).
Proof of identification and address for shareholder(s) and director(s).
Foreign equity approvals from MIDA.
For a comprehensive checklist, refer to the SSM Incorporation Guide.
3. Step-by-Step Incorporation Process
Name Reservation: Use SSM’s Name Search portal as a guide to ensure your company name is distinct from other businesses.
Document Submission: Submit necessary forms and fees online via MyCoID.
Licensing and Compliance: Depending on the sector, apply for additional permits via MIDA’s Licensing Hub.
4. Timeframe and Cost Considerations
The incorporation process typically takes 5 to 15 working days.
The cost ranges from RM1,000 to RM3,000 for registration, with additional licensing fees.
Naming a Company
1. Availability and Reservation of Name
It is important to choose a unique company name and reserve it following the guidelines provided by SSM Guidelines. The name will be used across all business transactions, marketing materials, and official dealings.
2. Pre-Lodgement Information
Before submitting the name, you will need to provide:
Business objectives.
Justification for the proposed name.
Confirmation that the name complies with Malaysia's naming regulations.
3. Summary Process
The process involves reserving the company name, submitting relevant documents, and obtaining approval from SSM.
4. Publication of Name
Once approved, the company name will be officially published in business directories.
5. Change of Name
After incorporation, changing the company name is a straightforward process through SSM, requiring minimal documentation and fees.
Business Structure and Registration
1. Types of Business Structures
1.1 Private Limited Company (Sdn Bhd)
1.1.1 Pre-Incorporation Information: Malaysia’s Companies Act 2016 governs the incorporation of companies. Many processes have been simplified, transitioning from manual methods to online systems. The first step is to select a company name and reserve it online through the MyCoID portal.
1.1.2 Requirements to Register At least one shareholder and one resident director are required.
1.1.3 Summary Process (Registration of Sdn Bhd): Once your proposed company name receives approval, the SSM will provide an application form to proceed with the registration process. This can conveniently be completed online via the MyCoID Portal, ensuring a seamless experience.
Recent reforms under the Companies Act 2016 have further streamlined the incorporation process. Key updates include reducing the requirement for resident directors from two to one and eliminating the previous par value system for share capital, offering greater flexibility.
After filling in the necessary details, you will need to submit the form along with the applicable registration fees. Upon successful review and approval, the SSM will issue a formal Notice of Registration, officially marking the establishment of your company in Malaysia.
1.2 Limited Company (Berhad)
1.2.1 Summary Process (Registration of Berhad): A Berhad company is for larger businesses intending to go public. It requires higher capital and compliance with listing regulations.
Ideal For: Larger corporations with public shareholding ambitions.
1.3 Foreign Company
1.3.1 Summary Process (Registration of Foreign Company)
Submit documents to SSM.
Maintain a local representative or branch.
1.4 Limited Liability Partnership (LLP)
1.4.1 Summary Process (Registration of LLP) Easy registration and fewer compliance obligations.
Flexibility: LLPs combine the benefits of partnerships and companies. The registration process is simple, with fewer compliance obligations.
Visit SSM’s Guide for more insights into selecting the right structure.
Post-Incorporation Compliance
1. Key Post-Incorporation Activities
After incorporation, a company secretary must be appointed within 30 days. Company secretaries are responsible for ensuring legal compliance, managing corporate records, and facilitating resolutions and financial year-end decisions.
2. Statutory Obligations and Reporting Requirements by the Company
File annual returns with SSM.
Maintain accurate records following Malaysian accounting standards.
Financial statement preparation.
Tax filings via the Inland Revenue Board (LHDN).
Conclusion
Malaysia’s efficient regulatory environment, coupled with its pro-business initiatives, offers foreign investors a gateway to Southeast Asia’s thriving markets. By leveraging resources like SSM, MIDA, and SME Corp, businesses can seamlessly establish operations and ensure compliance.
Whether launching a new venture or expanding an existing one, Malaysia presents the ideal environment for business success. Explore, incorporate, and thrive!
Disclaimer: This guide provides general information. Always consult with local legal professionals for personalised advice tailored to your specific business needs.