A Guide To Setting Up A Company in Malaysia

Are you considering setting up a company in Malaysia and need assistance with the procedure of forming a company? You are in the right place. 

There are 3 types of business entity registration:

• Limited Liability Partnership (LLP)
• Limited Liability Company (LC)
• Registration of Business (ROB) 

There are seven company entities to select from (only selected ones are presented in this article), all having different laws.

However, this should begin with the registration of the business entity at Suruhanjaya Syarikat Malaysia (SSM) as the first step of setting up a company in Malaysia , which is responsible for all corporate and business activities in Malaysia.

Why Set Up A Company In Malaysia?

Ease of business registration

The Companies Act 2016 makes it easier and cheaper to register a company in Malaysia.

There are some of the changes that significantly reduce time, cost and administrative burden for startups and SMEs. 

• Starting a company with one shareholder and one director.
• Companies with no revenue, very little activity, or that meet other specific criteria can be exempt from audits.
• Not required to hold annual general meetings for private companies.
• Written resolutions can be passed without the need for physical meetings. 

Low taxes for corporations

Malaysia’s corporate tax rate is lower than most other countries in Asia. 

• 17% corporate tax for resident companies with:
  • Paid-up capital below RM 2.5 million
  • Annual revenue not exceeding RM 50 million
  • No ownership by larger companies
    
• 24% corporate tax on income above RM 600,000 or for companies that don’t meet the criteria

This tiered system makes Malaysia particularly attractive to startups and growing businesses.

Affordable and Skilled Workforce 

The Malaysian government supports developing human resources within every sector, and it is reflected by the number of highly educated workers in Malaysia. Malaysia is an excellent place for outsourcing and regional operations. Not only are the workers extremely skilled, but the costs of living and working in Malaysia are lower than other countries in Asia. 

The Malaysian government recently built more public training institutions like technical schools, polytechnics, industrial training institutes and skill development centres to answer the demands of an increasingly qualified workforce.

No language barrier

Malaysia is home to many languages, with Bahasa Malaysia or Malay being the official language. However, other common languages spoken in Malaysia include English, Mandarin and Tamil. In Malaysia, the ability to speak multiple languages fluently is common, especially among younger people.

Strategic location

Malaysia is strategically located at the gateway to ASEAN, giving it access to a huge population of 667.3 million across Southeast Asia. Malaysia has an abundance of seaports which makes it the perfect location for businesses that are heavily reliant on sea route trading. The major shipping and logistics hubs are located in Port Klang, Johor Port, Port of Tanjung Pelepas, Kuantan Port, Penang Port, Bintulu Port and Kemaman Ports.

Ease of doing business

In the 2025 Index of Economic Freedom by The Heritage Foundation, Malaysia is ranked 7th among 39 countries in the Asia-Pacific region. This reflects a moderately free economy with a resilient policy framework. According to the World Economic Forum’s Global Competitiveness Report, Malaysia holds the 27th position globally, indicating a strong and competitive economy.  Malaysia has been recognized for its strong legal framework protecting minority investors, ranking 12th globally in this category in the World Bank’s Doing Business 2020 report. These rankings highlight Malaysia’s commitment to creating a conducive environment for both local and foreign investors, characterized by economic freedom, competitiveness, and strong legal protections.

Which Malaysian Business Entity is Best for Your Business?

While setting up a company in Malaysia, choosing a business entity depending on the business goal is a crucial step. Here is a comparison of the various Malaysian business entities:

1. Private Limited Company (Sdn. Bhd.)

A Private Limited Company, or Sendirian Berhad (Sdn. Bhd.), is the most popular and flexible business structure in Malaysia, especially for SMEs and foreign investors. It is a separate legal entity, meaning shareholders’ personal assets are protected in case of company debt or insolvency. This structure is ideal for local businesses, startups, and foreign companies looking for scalability and investor confidence.

Key Features 

• Can be owned by 1 to 50 shareholders
• Limited liability protection
• Suitable for foreign ownership (100% allowed in most sectors)
• Can enter contracts, acquire assets, and sue or be sued
• Must appoint at least one resident director
• Subject to corporate income tax
• Must perform annual filings and audits

2. Sole Proprietorship

A Sole Proprietorship is the simplest and most affordable type of business to set up. However, it offers no legal separation between the owner and the business. This is ideal for freelancers, small business owners, and individuals running low-risk businesses.

Key Features:

• Owned by a single individual
• Owner has unlimited liability
• Only available to Malaysian citizens or permanent residents
• No audit or annual filing required
• Must be renewed annually with the Companies Commission of Malaysia (SSM)

3. Partnership

A Partnership involves 2 to 20 individuals working together for profit. Like a sole proprietorship, it is not a separate legal entity, and partners have unlimited liability. This structure is ideal for professional firms such as law, audit, or consultancy practices.

Key Features:

• Shared liability and profit among partners
• Only available to Malaysian citizens or permanent residents
• Profits taxed at the personal income level
• A partnership agreement is recommended to outline responsibilities

4. Public Limited Company (Berhad / Bhd.)

A Public Limited Company (Berhad or Bhd.) is suitable for larger businesses seeking to raise capital from the public or list on the stock exchangeKey Features:

• Minimum of 2 shareholders, no maximum limit
• Can offer shares to the public
• Must comply with regulations from the Securities Commission of Malaysia
• Subject to stringent compliance, auditing, and disclosure standards
• Must hold Annual General Meetings (AGMs)

5. Limited Liability Partnership (LLP)

An LLP combines the benefits of a partnership and a private limited company. It is a separate legal entity that offers limited liability to partners. This is ideal for professional firms and startups looking for low-cost incorporation with liability protection.

Key Features:

• Minimum of 2 partners, no maximum limit
• Partners are not personally liable for business debts
• Fewer compliance requirements compared to Sdn. Bhd.
• Must submit annual declaration of solvency
• Can own property, sue, or be sued under its own name

6. Representative Office / Branch Office

These are options available for foreign companies seeking a presence in Malaysia without incorporating a separate Malaysian entity.

Representative Office

• Non-commercial entity
• Cannot generate revenue or sign contracts
• Used for market research, liaison, or brand presence
• Valid for up to 2 years, subject to renewal
• Must register with MIDA (Malaysian Investment Development Authority)
• Representative office is suitable for foreign companies exploring the Malaysian market before full entry.

Branch Office

• Extension of the foreign parent company
• Not a separate legal entity
• Parent company is fully liable for all debts
• Must carry out the same activities as the parent
• Requires one local agent and SSM registration
• Branch office structure is suitable for foreign businesses operating in Malaysia temporarily or as an extension of overseas operations.

What do you Need to Start a Company in Malaysia

These are the requirements for Malaysia company registration:

• Minimum of 1 director and must be at least 18 years old
• Minimum of 1 shareholder and must be at least 18 years old
• Minimum of RM1 in paid-up capital
• Appoint a local company secretary who is licensed by SSM or a member of any professional body
• A local registered address

After you have completed the preparation of fulfilling the above requirements, either register your company with SSM online or use a professional filing agent.

Step-by-Step Guide to Registering a Company in Malaysia

Step 1: Name Search via MyCoID

Choose and reserve a unique company name through MyCoID, the official online portal provided by SSM. Avoid names with prohibited or sensitive words unless you have approval from relevant authorities.

Steps:

• Visit MyCoID Portal
• Create an account (if not already registered)
• Perform a name search to ensure your proposed company name is available and not similar to existing entities
• Submit a Name Reservation Application (RM50 fee per name)
• Once approved, the name will be reserved for 30 days (with the option to extend)

Step 2: Preparation of Incorporation Documents

Once your name is reserved, prepare the necessary incorporation documents for submission. These documents are required under Section 14 of the Companies Act 2016. You must appoint at least one resident director and one licensed company secretary within 30 days of incorporation.

Required Documents:

• Superform (Section 14) – A consolidated form that includes:
  • Company name
  • Nature of business
  • Details of directors, shareholders, and company secretary
  • Registered business address
    
• Constitution (optional) – If your company chooses to adopt a custom constitution instead of relying on the default provisions under the Act
• Statutory declaration by director and promoter (Form 48A equivalent)
• Consent to act as director (Section 201)

Step 3: Submission to SSM (Companies Commission of Malaysia)

After completing your incorporation documents, submit them through the MyCoID portal. SSM typically processes company registrations within 1 to 3 working days, provided all documents are in order. The registration fee for a private limited company (Sdn. Bhd.) is RM1,000. 

Step 4: Getting the Certificate of Incorporation

Once your application is approved, SSM will issue the Notice of Registration (equivalent to the Certificate of Incorporation). This is your official proof that your company is legally registered in Malaysia. You will receive the followings: 

• Certificate of Incorporation (Section 15)
• Company registration number
• Company profile accessible via SSM e-info

At this stage, your company is officially established and can:

• Open a corporate bank account
• Register for relevant tax numbers (e.g., Income Tax, SST)
• Apply for licenses and permits (if applicable)
• Begin business operations

While it is possible to register a company independently, many entrepreneurs prefer to engage a licensed corporate service provider to handle documentation, compliance, and post-incorporation requirements. This helps avoid delays and ensures full regulatory compliance.

Post-Incorporation Obligations 

After successfully registering your company with the Companies Commission of Malaysia (SSM), the next crucial step is to complete several post-incorporation formalities to ensure your business can operate legally and efficiently.

Choosing Auditors

Under the Companies Act 2016, private limited companies (Sdn. Bhd.) must appoint an auditor within 30 days from the date of incorporation unless exempted. Auditors must be approved by the Ministry of Finance Malaysia and listed in the register of approved company auditors.

• Appointed by the Board of Directors
• Required for the preparation and audit of annual financial statements
• Exemption applies to dormant companies or those meeting specific thresholds under the Act

Applying Business Permits and Licences

Depending on the nature of your business, specific licenses or permits may be required. There are three main categories:

1. General Licenses

• Company registration with SSM
• Business premise and signboard license from the local authority
• EPF, SOCSO, and Inland Revenue registration

2. Activity-Specific Licenses
These are licenses required for particular business operations and may include:

• Approval to hire foreign workers
• Environmental impact approvals (e.g. for machinery or emissions)
• Sales tax exemptions

3. Sector-Specific Licenses
Mandatory for industries such as:

• Banking and Finance
• Oil and Gas
• Telecommunications
• Education
• Manufacturing
  These are issued by bodies like MIDA, Ministry of Domestic Trade, DOSH, and SPAN.
  

5.3 Registering with the EPF and SOCSO

If you hire employees, you’re required to register with both the Employees Provident Fund (EPF) and the Social Security Organisation (SOCSO / PERKESO) within 7 days of employing your first staff.

Documents for EPF Registration:

• Section 14 or 15 company registration documents
• Form KWSP 1 (Employer Registration Form)
• IC or Passport of company directors
• Form 49 (for company particulars)

Employee registration methods:

• MyKad verification at EPF counter
• i-Akaun (online)
• Auto-registration through Form A
• Manual registration with KWSP 3 (EPF Form)

For SOCSO:

• Employer Registration (Form 1)
• Employee Registration (Form 2)
• Copy of SSM Certificate
• Directors and employees’ identification documents
  

Opening a Corporate Bank Account

A corporate bank account is essential for managing company finances, receiving payments, and maintaining financial transparency. While the exact requirements may vary by bank, most institutions will request the following requirements:

• Board Resolution to open an account
• Certified true copies of incorporation documents (Form 9, 24, 49 / Section 14, 15, 17)
• Directors and authorised signatories’ IC/passports
• Company stamp/chop

Setting Up Accounting & Payroll Systems

A solid accounting and payroll system helps ensure legal compliance and financial efficiency.

What to set up:

• Chart of accounts
• Monthly bookkeeping procedures
• Invoicing and expense tracking
• Payroll software to manage EPF, SOCSO, and EIS deductions
• Integration with tax filing and audit reporting tools

It’s recommended to work with an accountant or outsource to a corporate service provider familiar with Malaysian regulatory requirements.

Understanding Your Tax Obligations

Once your business is operational, it’s vital to understand and comply with Malaysia’s tax regime. Corporate taxes are administered by the Inland Revenue Board (LHDN) and apply to both resident and non-resident companies.

1. Corporate Income Tax Rates

Corporate tax is charged on chargeable income derived from Malaysia. To qualify as an SME, the company must have paid-up capital of RM2.5 million or less and annual gross income not exceeding RM50 million.

2. SST (Sales & Service Tax)

Malaysia implements a Sales and Service Tax (SST) regime:

• Sales Tax (5% or 10%): Applied to manufacturers or importers of taxable goods.
• Service Tax (6%): Applied to selected service providers (e.g., restaurants, hotels, professional services).

Businesses with taxable turnover exceeding RM500,000 in 12 months must register with the Royal Malaysian Customs Department.

3. Withholding Tax and Other Relevant Taxes

If your company makes certain payments to non-resident individuals or companies, you must deduct withholding tax before remittance. Rates may be different based on Double Taxation Agreements (DTAs) with other countries.

4. Annual Filing Requirements and Deadlines

 Late submission or failure to comply with filing requirements can lead to penalties and audits.

Conclusion 

Setting up a company in Malaysia in 2025 is a strategic move for entrepreneurs and investors seeking growth in a stable, business-friendly environment. By understanding the available business structures, following the proper incorporation steps, meeting tax obligations, and complying with post-registration requirements, you can confidently establish and operate your business in Malaysia. With the right guidance and local expertise, the process can be efficient and rewarding.

How FastLane Can Help You?

FastLane offers professional company incorporation service that can aid you in all aspects of the process of setting up a company in Malaysia including but not limited to picking the right business entity as well as post-registration filing. FastLane also provides other business services that include accounting, bookkeeping and payroll. Contact FastLane Group for a seamless Sdn Bhd incorporation.