How to Incorporate a Company in Malaysia?

Establishing a business is a thrilling experience, and Malaysia is a fantastic location to incorporate your company. Due to its strategic location, Malaysia has emerged as a preferred destination for entrepreneurs wishing to build a business in the region. Setting up an incorporated company in Malaysia is straightforward and the Malaysian government encourages international investment, permitting most foreign ownership in specific industries. 

In Malaysia, setting up a business entity is governed by the registrar of business, commonly known as the Suruhanjaya Syarikat Malaysia (SSM) or Companies Commission of Malaysia. The Malaysian Business Commission (SSM) oversees company registration, administration, and regulation, including establishing new businesses, registering business names, and maintaining company records. It guarantees that the Companies Act of 2016 and other relevant legislations are followed.

This blog will provide a detailed guide on incorporating a company in Malaysia, including choosing a business structure, registration, and post-incorporation compliances.

Why incorporate a company in Malaysia?

Malaysia is quickly becoming a business go-to destination, and it’s easy to see why. Its economy is taking off, and the government is actively working to attract both local and foreign investment. Strategically located in Southeast Asia, it’s a perfect jumping-off point for reaching a vast market.

Some of the key factors are:

Organization-friendly environment: 

Establishing and expanding a business is simple in Malaysia. The government assists both domestic and foreign investors through grants, tax advantages, and simple establishment procedures. Conducting market research is essential to knowing local consumers and competitors, which can help businesses prosper in the long run.

Extensive Government Support:

The government provides substantial incentives, such as tax holidays, grants, and subsidies, particularly for sectors like services, IT, and manufacturing. Because of these advantages, Malaysia is a desirable location for employment and investment.

Ideal Location: 

Malaysia is a gateway to regional and international markets in the centre of Southeast Asia. Businesses can easily trade and grow with a robust transportation network, modern ports, and airports.

High-Growth Industries: 

Manufacturing, particularly electronics and electrical products, which continue to enjoy high demand, is one of the finest industries to invest in Malaysia. With increasing software development and innovation prospects, the IT sector is growing quickly. Malaysia is becoming popular for corporate expansion due to the developing services sector, particularly in finance and tourism.

Ease of doing business: 

Malaysia has been increasingly developing to make establishing businesses for residents and non-residents easier. Malaysia offers a business-friendly environment with straightforward company registration and government support for investors.

Cost-effective: 

The new Companies Act 2016 simplifies and reduces the cost of establishing a company in Malaysia. The registration procedure is more convenient, and Malaysian corporations are subject to additional adjustments.

Incorporation Journey: Step-by-Step guide

Understanding the procedures involved in business registration is beneficial and crucial for individuals launching new businesses in Malaysia. In this blog, we will learn the incorporation procedure step-by-step.

Starting a business in Malaysia involves three steps:

• Step 1:  Preparation for Registration

• Step 2: Registration

• Step 3: Post-registration.

 

Step 1: Registration preparation

The first and foremost step in registering a company is deciding on the basic requirements, which include choosing a business structure that works for your firm, naming the company, selecting and appointing qualified officials, and finalizing registration and capital needs.

The steps below will guide you through the preparation steps for registering a company.

Choosing a business structure

The first thing you need to do when establishing a company in Malaysia is choose a suitable business entity. When choosing the best business structures, business owners should consider how each form aligns with their strategic goals and operational needs. Key factors include limited liability protection, safeguarding personal assets from business debts, and legal issues.

Please read our guide on 5 Types of Business Entities in Malaysia to learn how to choose the correct entity.

Malaysian business entities include:

• Sole proprietorship: A sole proprietorship is a one-person business that’s easy to set up. Registration with SSM is required if using a business name. The owner has full control but also unlimited liability, risking personal assets for business debts.
• Partnership: Partnership in Malaysia, like a sole proprietorship, requires all partners to be Malaysian citizens or permanent residents, ensuring local ownership and management.
• Limited liability Partnership (LLP): An LLP in Malaysia combines features of partnerships and companies. Foreigners can establish one, but the compliance officer must be a Malaysian citizen, permanent resident, or resident.
• Private limited company (Sdn Bhd)—Also known as Sendirian Berhad, this option is the most common and extensively utilised type of business entity in Malaysia.It must have a minimum of one director and a shareholder and has a distinct legal character. Why foreigners choose Sdn Bhd is discussed in FAQ 1.
• Public limited company (Berhad): Also Known as “Berhad,” this entity allows public share trading in Malaysia and is governed by the Company Act 2016. Mostly preferable by large businesses, it is for its capital-raising capabilities, but it requires strict regulatory compliance and transparency.

Choose a company name.

Next step is to select a company name once you have chosen a suitable business entity.

After you have decided on a name, you should run a name check with the Companies Commission of Malaysia (SSM). When the name check is completed, you can register the name with the SSM. Upon approval, the name will be reserved for your company.

Characteristics of Malaysian company names can be checked according to the Guidelines on companies name . 

Key Requirements for Setting Up a Company

• Directors: At least one, no maximum limit. Must be 18+ and a natural person.
• Shareholders: Minimum one, up to 50 for private companies. It can be an individual (18+) or a corporate entity.
• Company Secretary: Must appoint at least one SSM-licensed or professional body member.
• Registered Address: A physical office address is required.
• Share Capital: Starts from RM 1, with no   maximum limit.Foreign-owned companies may need higher capital depending on the industry 

Step 2: Registration

Once you have completed the preparation stage, the next step is to register your company with the relevant authorities in Malaysia.

Registering your company

The company name must be registered with the SSM.

When the name is approved, it will be reserved for 30 days from the day of confirmation and can be extended for another 30 days for RM 50.00.

The documents needed to incorporate your company include the following:

• Constitution (optional)
• Declaration by a director or promoter before appointment
• Declaration of compliance (Form 201)
• Copy of the identity card of every director (Form 48A & 49)

 Submit the Application

Register your company via the portal. MyCold portal The standard registration fee is RM1,010.

Receive Your Incorporation Certificate

If everything checks out, SSM will issue your Certificate of Incorporation within 1–3 days.

 

Step 3: Post-registration

The final step involves the requirements and obligations you must satisfy after successfully registering your company with the SSM.

This stage will mainly focus on opening the business bank account, learning which business licenses you need, registering for the provident fund, appointing auditors and determining your tax liabilities.

Opening a corporate bank account

You can open a corporate bank account once your company is registered in Malaysia. Different banks offer various benefits and fees, so it’s essential to research before choosing. To open an account, you’ll typically need to submit the bank’s application forms, your company’s rubber stamp, copies of directors’ and signatories’ IDs, and certified copies of incorporation documents, including a board resolution. Some banks may also require a letter of introduction. Requirements vary, so check with your chosen bank for details.

Register for tax and other compliances

Your tax obligations will differ based on the scope of charge, exemption, deductions and more.

Malaysia does not charge international sales tax except for banks, insurance companies, airlines and shipping companies.

Register for the Sales and Services Tax (SST) and other relevant taxes. Sign up with the Inland Revenue Board (LHDN) for corporate tax. If you plan to hire employees, register for EPF, SOCSO, and EIS.

Appoint auditors

Every company must appoint an auditor before the first annual general meeting. However, annual general meetings are not mandatory for private limited companies.

In the case of newly incorporated companies, the board of directors shall appoint the first auditor at least 30 days before the end of the period for submitting the first financial statements.

Appoint company secretary

Make sure to formally appoint a licensed company secretary within 30 days of registration. If the person is an individual then he/she must reside in Malaysia and if the person is a corporate body then it must have its registered office or place of business in Malaysia.

Submit Annual Returns & Keep Financial Records

Submit your Annual Return to SSM within 30 days of your incorporation anniversary to keep company details, including directors and shareholders, up to date. Maintain proper financial records and ensure financial statements are audited unless your company qualifies for an exemption. To remain compliant, financial statements must be filed with SSM within 7 months after your financial year-end. Additionally, all financial records should be retained for at least 7 years for regulatory purposes and future reference.

Obtain business licenses and permits

Companies in Malaysia are required to register for licenses and permits related to the nature of their business.

There are three types of business licenses:

1. General licenses are the necessary licenses you need when you establish a business in Malaysia. 
2. Sector/industry-specific licenses are needed for a specific industry or sector specified by the Malaysian government.
3. Activity-specific licenses regulate specific activities and can be applied to multiple industries or sectors.

Conclusion

Incorporating a business in Malaysia is a straightforward process that requires careful attention to detail. With proper preparation, a company can become operational within a few days. Establishing a business in Malaysia marks the beginning of a journey toward building a profitable and sustainable enterprise in the country’s dynamic economy.

The Malaysia government actively encourages foreign investment by allowing majority foreign ownership in certain industries. This strategic approach enhances foreign capital inflow and positions Malaysia as an attractive destination for international businesses.

At 3E Accounting, we understand the complexities of business registration, compliance, and taxation in Malaysia. With our cost-effective, efficient, and results-driven approach, we provide expert guidance to help you make informed decisions and ensure seamless business incorporation.

Frequently Asked Questions