Company Registration Process in Malaysia

Malaysia provides the broadest prospects for business registration in the Asian region. Its unique potential makes it equally interesting for both local and foreign entrepreneurs. In this article, we will explore the key considerations and prospects for company registration in Malaysia in 2023.

Prospects for Company Registration in Malaysia in 2023

Strategic Geographic Location and Labor Market

Foreign investors have access to diverse markets due to the country's favorable geographical location. Malaysia is situated at the crossroads of key trade routes in Southeast Asia. It's important to note the high level of competitiveness in the Malaysian labor market as well. The combination of these factors makes the country an ideal location for manufacturing and service provision.

Favorable Legislative Conditions

Malaysia is among the top twenty countries in the world in which it is easiest to do business thanks to business-friendly environment, transparent registration procedures in this jurisdiction, and minimized administrative barriers.

Attractive Investment Opportunities

The interest of foreign investors in Malaysia is supported by a robust legal framework that ensures financial system stability. Businesspeople can always receive support for investment promotion from national, regional, and municipal agencies at all levels.

Developed Infrastructure and Telecommunications

Malaysia boasts the broad telecommunications and transport system infrastructure in the region. It provides connections to world economic and trade centers.

Fast Registration Procedure

An investor needs to spend about a week to legalize the company in the country. This is the minimum time frame for such a procedure in the region. This is the fundamental difference between such a procedure and other countries in the region, and entrepreneurs can swiftly commence their commercial activities.

Financial Benefits

Financial benefits for businesses in Malaysian jurisdiction:

No dividend tax for foreign organizations.
No restrictions on asset repatriation.
The ability to utilize tax incentives according to the free trade agreement between Malaysia and ASEAN countries.
Double taxation avoidance agreements with over 60 countries.

Government Support

Supporting businesses through tax incentives and creating favorable conditions for investors are key objectives of the country's government. Stable economic policies and a well-developed financial sector contribute to entrepreneurs' interest and confidence.

Interesting Business Directions for Non-Residents

The healthy investment climate makes Malaysia as an appealing choice for establishing companies. Non-Malaysian citizens have ample opportunities, but also some restrictions.

What is important to know when starting a business in Malaysia

The most promising sectors:

Manufacturing. This industry has excellent growth prospects.
Financial Institutions. The robust support for fintech innovation makes Malaysia an attractive destination for fintech entrepreneurs.
Insurance and Pharmaceuticals: With a stable market and increasing demand for medical services and products, these sectors offer promising opportunities for business growth.
Medical Technologies: Demand for modern medical technologies in Malaysia creates the necessary conditions for successful investment in innovative medical solutions.
Oil and Energy: As a significant player in the oil and gas market, Malaysia provides abundant investment opportunities in oil extraction and refining within the energy sector.
High-Tech Industries: The Malaysian government's proactive support for high-tech sectors like aerospace, medical, maritime, and biotechnology offers compelling investment opportunities. Embracing innovation and new technologies can lead to substantial outcomes.
E-Commerce: The Malaysian well-developed digital market can unlock fresh avenues for entrepreneurial success.

How to start registering a company in Malaysia

Suruhanjaya Syarikat Malaysia (SSM) is the authority that issues certificates to companies. The founder must provide certain information regarding the organizational and legal structure of the future company:

Proposed name
Articles of Association
Key activities
Address
Authorized capital
Information about directors and shareholders
Statements from shareholders supporting the establishment of the Malaysian company
Documents confirming the authority of individuals responsible for registration
Any additional necessary documents

Upon successfully completing the registration process, the entrepreneur receives a certificate of company registration within the Malaysian jurisdiction from the SSM.

Organizational and Legal Forms of Enterprises in Malaysia: Options for Investors

When establishing a business in Malaysia, investors have various organizational and legal forms to choose from, each with its own advantages and features. In this article, we will explore the main forms available to investors for company registration in Malaysia.

Partnership

A partnership constitutes a business structure comprising no less than 2 and no more than 20 partners. Partners within a partnership share obligations and tax responsibilities through personal income tax, yet they also assume personal liability for obligations stemming from the partnership's activities.

Private Limited Liability Company (Sdn Bhd)

Sdn Bhd stands as a distinct legal entity endowed with the capacity to own property, enter into contracts, and engage in commercial operations. As of 2016, Sdn Bhd can be registered with a solitary director (who must be a resident of Malaysia) and shareholder. In select sectors, the establishment of a Malaysian company with complete foreign ownership is feasible. If foreign capital surpasses 50%, the minimum authorized capital must amount to no less than USD 122,000. Should foreign capital exceed 30%, the minimum authorized capital is set at USD 85,000.

Company Limited by Guarantee (CLG)

CLG represents a publicly-held enterprise devoid of share capital, designed to serve non-profit objectives. Participants in CLG function as guarantors during operations and bear responsibility for the company's obligations. Following the culmination of the CLG registration process in Malaysia, the entity is eligible to petition for exemption from corporate taxes.

Unlimited Company

An unlimited company Sdn can be enlisted to oversee a unit trust fund and supervise assets for investment purposes, rather than commercial undertakings.

Public Company with Shares (Berhad)

Berhad (Bhd) possesses the ability to issue shares to the public without a cap on the number of shareholders, albeit necessitating a minimum of 2 directors and strict adherence to corporate standards.

Foreign Company

This structure is tailored for non-residents desiring to establish a branch in Malaysia for operational or client service activities. It affords the opportunity to conduct business within the country sans the requisite of a Malaysian resident as a director.

Moreover, Malaysia extends the avenue for company registration within specialized economic zones, such as the Multimedia Super Corridor (MSC) and Labuan. Companies registered within these zones are eligible for a range of tax incentives and assorted benefits.

Company Registration in Malaysia: Key Steps

Name Reservation: Your first step is to choose a unique company name and reserve it to avoid conflicts with other companies.
Preparation of Incorporation Documents: Prepare all necessary incorporation documents, including articles of association, which outline the structure and activities of your company.
Confirmation of Registered Address: Ensure you have a physical address in Malaysia where your company's office will be located.
Opening a Bank Account and Capital Injection: Open a bank account for your Malaysian company and inject the required capital, the amount of which depends on ownership structure and industry.
GST Registration: If your company's turnover is expected to exceed USD 365,000, obtain a Goods and Services Tax (GST) number from the Royal Malaysian Customs.
Registration for Income Tax and PAYE: Apply for registration as a taxpayer and for the Pay As You Earn (PAYE) system with the Inland Revenue Board of Malaysia (LHDN).
Registration with Employee Provident Fund and Social Security System: Ensure registration with the Employee Provident Fund and Social Security System to provide social benefits to your employees.

Procedures Regarding Foreign Investments

When registering a company in Malaysia, foreign investors can establish and own commercial enterprises. However, there are restrictions in the following sectors:

Logistics;
Trading;
Insurance;
Financial services;
Communications;
National telecommunications network;
Security agencies;
Banking activities for investment in financial markets;
Professional services;
Oil and gas sector, and others.

Taxation Framework

Preparing for remotely registering a company in Malaysia, it is prudent to acquaint oneself with the nation's taxation system. Pertinent tax rates include:

Corporate Profit Tax: 24%.
Goods and Services Tax (GST): 6%.
Taxation on Dividend Income, Interest, and Royalties: Ranging from 0% to 15%.

Malaysia stands out as an attractive destination for company registration in 2023, offering a strategic geographic location and a competitive labor market. With favorable legislative conditions, robust investment opportunities, and well-developed infrastructure, both local and foreign entrepreneurs can find a conducive environment for business growth. The diverse range of business sectors, from manufacturing and finance to technology and e-commerce, presents enticing prospects for investors.

Establishing a Business in Malaysia: Your Path to Success

Embarking on your business journey in Malaysia presents a golden opportunity to tap into the thriving Southeast Asian market. The team of experts at YB Case is primed to support you throughout every stage of your company registration journey in Malaysia. Our comprehensive suite of services includes company registration and the opening of a bank account for your Malaysian enterprise. Reach out through your preferred method, and we'll work alongside you to successfully and effectively bring your business plan to fruition in Malaysia. Get all the services you need for seamlessly registering and launching your company.

Frequently Asked Questions

What Documents Are Required?

To facilitate the registration of your company in Malaysia, you will need the following documents:

Proposed company name.
Description of primary business activities.
Copies of identification or passports for all directors and shareholders.
Proof of address for the aforementioned individuals.
Information regarding the minimum paid-up capital.
Percentage of shareholding for each participating shareholder.
Confirmation of the registered address.

Can a Non-Resident Establish a Company?

Absolutely, a non-resident can establish a company in Malaysia with 100% foreign capital. This grants you the ability to conduct business within the country, even if you aren't a Malaysian citizen.

Registration Timeline

The company registration process in Malaysia typically spans approximately 7 days, assuming all necessary documents are promptly submitted. We stand ready to furnish you with consultations and guidance, streamlining the steps for a quicker and more efficient registration procedure.