Start Up Business in Malaysia- Forming a Company

1. ESTABLISHING A SOLE PROPRIETORSHIP OR PARTNERSHIP FIRMS(MALAYSIAN CITIZENS ONLY)

The law permits the establishment of a sole proprietorship and partnership (for 2 or more persons but not more than 20 persons) for Malaysian citizens only.

The individual who wishes to practice a business activity may apply to the Companies Commission of Malaysia on the specified form (PNA.42) with the following documents and information:

a. Photocopy of Identity Card

b. Address of individual (to be filled in specified form)

c. Type of business (to be filled in specified form)

d. Partnership agreement (if any)

Estimated charges by management companies/ company secretarial firms:

Sole Proprietorship : RM200-300

Partnership               : RM200-300

2. ESTABLISHING BRANCH OFFICE OF FOREIGN FIRMS.

The foreign company that chooses to open a branch in Malaysia to carry on business within Malaysia shall register with the Companies Commission of Malaysia.

The reason foreign companies are required to register with the Companies Commission of Malaysia is to exert some degree of control over the affairs of the foreign company in Malaysia. The foreign company that is registered has power to hold immovable property in Malaysia.

The application shall be submitted to the Companies Commission of Malaysia (applications can be submitted via management companies that offer incorporation and company secretarial services) and should include the following:

A. Name search

Lodge Form 13A for approval to use the foreign company's name. Filing fee of RM30 and a copy of the Certificate of Incorporation (or document of a similar effect) must be included.

B. Registration documents

If the name of the foreign company is available for registration, the company must lodge with the Companies Commission of Malaysia the following documents within a period of 3 months from the date of approval:

i. A certified copy of the certificate of incorporation or registration in its place of origin or a document of a similar effect.

ii. A certified copy of the company's Charter, Statute or Memorandum and Articles of Association (or any documents defining constitution).

Certified copy means a copy of document that has been certified within a period of 3 months by:

- a Notary Public

- Registrar of Companies of the place of origin

- Director, manager or secretary of the foreign company by affidavit or, in the case of foreign company formed in a Commonwealth company, by statutory declaration.

If the Certificate of Incorporation and the company's Charter are not in English, a translation in English must be done. The translation must be duly certified by:

If translation is performed outside Malaysia:

- notary public

- registrar of companies of the place of origin

- a Malaysian consular officer in the place of origin of the foreign company

If translation is performed within Malaysia:
- a person approved by Companies Commission of Malaysia

iii. A list of directors of the foreign company and their particulars (Form 79).

iv. A Memorandum of Appointment or Power of Attorney (under seal of foreign company or executed in a manner binding on the company) authorizing one or more persons resident in Malaysia to accept on behalf of the company, service of process and any notices require to be served on the company.

v. A statutory declaration by agent of foreign company (Form 80).

vi. Fees payable (in the form of a bankers cheque) to the Companies Commission of Malaysia, depending of the authorized share capital of the foreign company.

The following is the scale of fees payable:

Amount of nominal authorized share capital
(RM)
Registration Fees
(RM)
Not exceeding 100,000
1,000
100,001-500,000
3,000
500,001 - 1.0million
5,000
1,000,001 - 5.0 million
8,000
5,000,001 - 10.0 million
10,000
10,000,001 - 25.0 million
20,000
25,000,001 - 50.0 million
40,000
50,000,001 - 100.0 million
50,000
Exceeding RM100.0 million
70,000

Estimated charges by management companies/ company secretarial firms:

- RM1600-1,800 for services rendered (Not including fees paid to the companies commission of Malaysia 5% service tax)

Example of charges if authorized share capital is less than RM100,000:

RM
Payment to Companies Commission of Malaysia 1,000
Payment to Management Firms for services rendered 1,800
Total fees 2,800

C. Approval of registration

The Companies Commission of Malaysia upon receipt of the above information and payment shall issue an approval of registration document - Form 83.

The foreign company must establish a registered office within Malaysia after it established a place of business or commences to carry on business.

D. Other obligations

i. File a copy of the annual return each year within one month of the foreign company's annual general meeting.

ii. File a copy of the balance sheet of the head office, a duly audited statement of assets used and liabilities arising out of its operations in Malaysia, and a duly audited profit and loss account within two months of its annual general meeting.

3. INCORPORATING COMPANIES LIMITED BY SHARES

Companies limited by shares (Sendirian Berhad or Sdn. Bhd) is the most common company structure in Malaysia. A company limited by shares is formed on the principle that the members' liability is limited to the amount of unpaid on the shares taken up by members.

This form of company can have foreign directors but at least 2 of the directors need to be principally residing in Malaysia; and it can be 100% foreign owned for industries such as the manufacturing, trading, and information technology sector.

The application shall be submitted to the Companies Commission of Malaysia (applications can be submitted via management companies that offer incorporation and company secretarial services) and should include the following:

A. Name search

Lodge form 13A together with a payment of RM30 for approval to use the proposed name of the intended company. If the application is approved, the proposed name will be reserved for the applicant for 3 months.

B. Incorporation documents

Lodge the following documents with the CCM within the three months to secure the use of the proposed name:

i. Memorandum and Articles of Association. The Memorandum of Association documents the company's name, objects, amount of authorized capital proposed for registration and its division into shares of a fixed amount. The Articles of Association describes the regulations governing the internal management of the affairs of the company and the conduct of its business.

ii. Declaration of Compliance Form (Form 6)

iii. Statutory Declaration by a person before appointment as a director

C. Estimated fees

Fees payable (in the form of a bankers cheque) to the Companies Commission of Malaysia is depending of the proposed authorized share capital of the company.

The following is the scale of fees payable:

Amount of nominal authorized share capital
(RM)
Registration Fees
(RM)
Not exceeding 100,000
1,000
100,001-500,000
3,000
500,001 - 1.0million
5,000
1,000,001 - 5.0 million
8,000
5,000,001 - 10.0 million
10,000
10,000,001 - 25.0 million
20,000
25,000,001 - 50.0 million
40,000
50,000,001 - 100.0 million
50,000
Exceeding RM100.0 million
70,000

Estimated charges by management companies/ company secretarial firms:
- RM 1600 - 1800 for services rendered (not including fees paid to the companies commission of Malaysia and 5% service tax)

An example of the charges if the company's authorized share capital is less than RM100,000 is as follows:

Example of charges if authorized share capital is less than RM100,000:

RM
Payment to Companies Commission of Malaysia
1,000
Payment to Management Firms for services rendered

1,800

Total fees 1,800

D. Certificate of Incorporation

A Certificate of Incorporation will be issued by the CCM as proof of registration.