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Registration of a Local Malaysian Company

Incorporation of a local company in Malaysia is subject to the provision of the Companies Act 1965. There are three types of companies that can be incorporated: a company limited by shares, a company limited by guarantee and unlimited company. A company limited by shares is the usual company incorporated for business activity in Malaysia. 
 
A limited liability company (LLC) is a legal entity, separate and distinct from its shareholders or members. There are two types of limited liability company, namely a company limited by shares (in which the personal liability of member is limited to the nominal value of the shares they hold in the company) and a company limited by guarantee, in which the extent of the personal liability of members is fixed by the amount specified in the Memorandum and Articles of Association. The members respectively undertake to contribute a fixed sum to the liabilities of the Company in the event of its liquidation).
The most common type of company that foreign investors may incorporate for business is a company limited by shares which can be either a private limited company or a public limited company. 

1. Private Limited Company
 
A private limited company is identified by the words “Sendirian Berhad” or the abbreviation “Sdn Bhd” as part of the Company’s name. A Sdn Bhd will have the following five characteristics:

  • A share capital of at least RM2 with at least two subscribers ;
  • Memorandum and Articles of Association ;
  • No more than 50 members, and
  • Minimum two local directors.
A members’ ordinary resolution may be passed by a simple majority (i.e. 51%) of those present and voting at the meeting. A special resolution requires approval of 75% of members who are entitled to vote and voting in person or by proxy at the meeting.
 
2. Public Limited Company
 
A public limited company is identified by “Berhad” or its abbreviation “Bhd” as part of the company’s name. A Bhd may offer shares and debentures for public subscription. The shares are freely transferable. A Bhd listed in the Kuala Lumpur Stock Exchange (KLSE) is required to comply with all guidelines and requirements issued by the Securities Commission Malaysia (SC) and the Bursa Malaysia Securities Berhad (Bursa Malaysia). 

Limited Liability Partnership

A limited liability partnership (LLP) is an alternative business vehicle combining the advantages of both a limited liability company and a partnership. An LLP gives to small businesses and professional practices the flexibility and freedom to select the best business structure to suit the needs and requirements of their business model.

An LLP may be formed by two or more individuals or corporate entities. The partners of an LLP enjoy limited personal liability and conduct the business activity through an independent legal entity. Furthermore, there may be certain tax planning advantages, as an LLP is not in Malaysia an assessable entity for tax purposes and its profits are treated as each partner’s personal income and taxed as such.

An LLP may be registered on application to the SSM. The application is required to provide the LLP name, nature of proposed business, the registered address, details of the partners and other relevant documents. The registration fee is RM500 (approx. USD 115).

Unlimited Liability Business 

A sole proprietor and a partner t will be subject to unlimited personal liability of all the debts and liabilities of the business. However, only Malaysian citizens and permanent residents are allowed under the Malaysian laws to operate as a sole proprietor or a partnership.

​January 2016
Any further inquiries, please contact us.