Set Up Company in Malaysia Guide

Are you ready to set up company in Malaysia and need assistance with the procedure forming a company? You are in the right place. Read on!

There are 3 types of business entity registration:

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

There are eight 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 set up company in Malaysia , which is responsible for all corporate and business activities in Malaysia.

Key Takeaways on set up company in Malaysia

• Consider various organizational structures to find the one which fits best with your business needs.
• Allow one person to act as both the director and stakeholder whereby they meet at least 18 years of age.
• Ownership of private limited firms is restricted to no more than 50 shareholders; any increase in numbers requires conversion into a public listing company.
• Select a distinctive company name and verify its status with the SSM.
• Specify that the licensed SSM Company Secretary or a member of an approved professional body should be appointed to at least deal with compliance problems.
• The post-registration duties include opening a business bank account, acquiring relevant licenses, joining the EPF program, appointing auditors and establishing tax liabilities.

Which Malaysian Business Entity is Best for Your Business?

In the set up company in Malaysia , a crucial stage is choosing from company entity options in Malaysia. There should be a proper decision on the form of an organization that suits your business goals before setting up your enterprise officially. Here is a comparison of the various Malaysian business entities:

Step 1: Registration Preparation & Choosing a Business Entity

According to Section 2: A few conditions are necessary under the Business Registration Act 1956 and Command of Business Registration in 1957 to register a business.

• the business owner has to be at least eighteen (18) years.
• a citizen or lawful permanent resident of Malaysia.

As you get ready for the registration process, consider the following checklist of necessary steps:

• Opting for an appropriate business entity,
• Selecting a company name,
• Appointing qualified officials like company secretary, auditor and tax agent,
• Fulfilling office registration requirements, and
• Providing details on the structure of share capital.

After identifying the most appropriate business form to set up company in Malaysia, you need to select a company name. Potential names must be verified with the Companies Commission of Malaysia, as to their availability. After the approval, you can register the name and it will be held for your business upon verification.

Choose the officers and form of shares for your company. At least one of the directors has to be at least 18 years old. The second requirement is that there should be one shareholder who must at least 18 years of age. Shareholder can be either human being or corporation. All business entities except for private limited companies with a limit of 50 shareholders have no limit in the number of shareholders.

Moreover, at least one company secretary should be either licensed by SSM or a member of an approved professional association. To get official mails and documents from the government, one has to have an accountable office address. Postal boxes are not permitted. Second, there has to be a minimum share capital of RM1.

Step 2: Registration

In the SSM, the company name should register. If approved, the name will be reserved for 30 days effective on the date of confirmation and may then be extended up to another 30 days by RM50.

It would be advisable for your firm to include in the documents of incorporation constitution (optional), a statement by either director or promoter before their appointment, declaration of compliance and an identity card copy belonging to each director for set up company in Malaysia.

Step 3: Post-registration

With this post-registration stage of set up company in Malaysia , the main focuses will nevertheless be on opening the business account bank, understanding what permits one needs to have in place for their business, enrolling for a provident fund scheme and appointing an auditor and tax agent and understanding your tax obligation.

In the opening of a business bank account, particular documents must be provided.

• introduction and recommendation letter from a bank customer in good standing (a few banks need this).
• Company chop
• Filled application forms of banks.
• Board resolution approving the opening of an account, list of authorised signatories and all incorporation paperwork certified true copies by the company secretary.
• Directors IC and authorised signatories

Given the wide range of benefits and prices offered by many banks, we highly advise to do in-depth research before choosing a certain bank. It is critical to analyze in detail the services each bank provides, comparing its products, advantages, and associated costs so as to determine whether the chosen bank meets your financial requirements. Based on thorough research, you can make a sound decision that fits your needs perfectly and enables convenient banking.

Selecting Auditors

Every company has to select an auditor prior to its first general meeting. For newly incorporated firms, the board of directors should appoint the first auditor at least 30 days before the submission date for their first set of financial reports. Private limited firms do not need annual general meetings.

Discovering Business Permits and Licences

There are three different kinds of company licences:

• Activity-specific licenses for specific activities.
• General licences.
• Sector-specific licenses.

In Malaysia, companies are required to register for licences and permissions depending on their activity.

Licences that control particular activities and apply to several industries or sectors are known as activity-specific licences. This licence comes with the following:

• Granting positions to foreign individuals
• Certification of fitness for endorsed machinery
• Endorsement of the architectural blueprint or building plan
• Installation, relocation, or alteration of air pollution control equipment
• Exemption from sales tax

The required licences for starting a business in Malaysia include general licences consisting of:

• Commercial property licenses and signboard permits
• Company registration with Human Resources Development Fund
• Business and employee income tax registration
• Employees’ Provident Fund (EPF)
• SOCSO (Social Security Organization)/PERKESO (Social Security Organization)

Sector or industry specific licenses refer to licences that are mandatory in Malaysia for a given sector or industry. These would include the following:

• Licences in the construction, banking, telecommunications, broadcasting and oil exploration, wholesale and retail trade, manufacturing industries.
• Licenses given by the National Water Service Commission (SPAN), Department of Occupational Safety and Health Malaysia (DOSH) and BLESS, Ministry of Entrepreneur Development (MED).

Enrolling in Provident Fund

An employer has to register within seven days after hiring a new employee. The following documents are required for private sector employers:

• Form 49,
• Form KWSP 1,
• Director’s identification (MyKad or passport), and
• Copy of certification of company or business registration issued by the Suruhanjaya Syarikat Malaysia (SSM).

Instead, employers have the option to provide an alternative to the business registration copy from SSM.

• Section 14 – Application For Registration Of A Company
• Section 15 – Notice of Registration
• Section 17 – Certificate Of Incorporation Of Private Company

Private employers under the private sector include SSM-registered Sdn Bhd, other firms registered with SSM, government link companies or investment companies and banks approved by Bank Negara.

Before the first contribution, the employer must do employee registration. Four methods of employee registration are MyKad, i-Akaun, auto register and form.

1. MyKad
The employees are required to visit the EPF counter in person with their MyKad and use the chip to complete registration.

2. i-Akaun
If an employee has an i-Akaun account, the latter can also register his or her employees online. This method can be utilized by Malaysian citizens and non-Malaysian lawful permanent residents with both 7-digit and 12-digit identification numbers.

3. Auto register
You may also auto-register through the monthly contribution form (Form A). Employees will immediately be enrolled with the EPF once form A, which requires information like the MyKad number and employee’s name, is completed. Only citizens and permanent residents of Malaysia who have MyKad are affected by this.

4. Form
You will need your MyKad and the KWSP 3 form for permanent residents and Malaysian citizens. Non-Malaysian citizens must present their legitimate work visa/permit or passport, KWSP 3, and KWSP 16B forms.

Figuring Out Tax Obligations

Assessing your tax obligations in Malaysia is mainly based on the nature of your charges, availability of exemptions and deductions as well as residency. Even though all companies pay a level 24% of tax rate, individuals are subject to progressive tax rates, which can be altered depending on their earnings. Recall that the overseas sales tax rarely applies, unless specific industries such as oil and gas are involved. You should consult a tax specialist who will give you personalized advice based on your specific situation.

How FastLane Can Help You?

FastLane offers professional company incorporation service that can aid you in all aspects of the process of set up 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.