STARTING – My Business in Malaysia



RBA Services – Malaysia

RBA can help you to start your business in Malaysia.

RBA can assist you with:

  • The right choice of Malaysian business entity
  • Malaysian company/entity set up
  • Bookkeeping and accounting
  • Xero accounting services
  • Payroll
  • Malaysian visa and Malaysian work pass

Any further inquiries, please contact us.

Starting my business in Malaysia

Malaysia provides a vibrant business environment to foreign individuals and companies to conduct business in a strategic location with a developed infrastructure and business friendly Government policies. The procedures to set up in Malaysia are fast and simple.

A foreign parent company has a number of options open to it to conduct business in Malaysia. It can either register a branch of the foreign parent company, incorporate a local Malay company or form a limited liability partnership in Malaysia.

If, however, a foreign company’s only objective is  to conduct research and development, evaluate the Malaysian market, pursue promotion and marketing on behalf of the parent the foreign parent can register with the Malay authorities a representative or regional office to conduct these limited activities. 

Register a representative office in Malaysia

The activity of a representative office is, as the name suggests, an office to represent the foreign parent company (especially in the manufacturing and services sector) to undertake designated functions, including investment research, develop bilateral trade, marketing and promotion of the parent outside Malaysia and research and development in Malaysia. A representative office is not permitted to conduct trade or other commercial activities, enter into contracts on behalf of the parent company or provide services for a fee in Malaysia. It is required to be funded by the parent company from its resources outside of Malaysia.

The procedure to establish a representative office is fast and relatively straightforward. An application with the required supporting documentation must be submitted to the Malaysian Investment Development Authority (MIDA) which will issue authorisation if the legal requirements are met. The process generally takes an average of six weeks and when issued the authorisation is usually valid for two years depending on the merits of the application. There is no requirement for the representative office to be incorporated under the Companies Act 1965.

Employees are generally limited to one expatriate, who is subject to income tax at the usual rates in Malaysia. Application may be made to MIDA for additional work permits for other expat employees, should additional employees be required. 

Register of a Subsidiary or a Branch in Malaysia

A foreign company wishing to establish a place of business to conduct trading and commercial activity directly in Malaysia is required to register a branch office or a subsidiary.

1. Branch Office

A Branch Office does  not  constitute  incorporating  an  entirely  new company  and  does not create a separate legal entity in Malaysia.

It is a form of business operation for a foreign company which is only operating on a short-term basis compared to the incorporation of a local company.

A foreign company is not allowed to register a Branch Office to carry out wholesale and retail  trade  business. All  wholesale  and  retail trade  business  with  foreign interests must operate  through a locally incorporated company.

2. Subsidiary

A foreign company can establish a Sendirian Berhad (private company limited) in Malaysia.

A Sendirian Berhad (aka. Sdn Bhd) may be 100% owned by a foreign parent company.

Generally, a foreign company is required to have minimum issued paid-up capital of at least RM500,000 (approximately USD115,000) before applying for work visas. Certain industries including education, petroleum, banking and finance, tourism, agriculture and certain trades are regulated and cannot be wholly foreign owned.

The registration of a Sdn Bhd is a two stage process. Initial application is made to the Companies Commission Malaysia (CCM) to check the availability of the business name. On making the application for name approval the parent company is required to provide various documentation, including a consent letter and certified copy of the parent’s certificate of incorporation).

When name approval has been granted, application may be made for incorporation. The application is submitted with supporting documentation. The processing time is usually two weeks from the name search of the company to the issuance of the Certificate of Incorporation by the registrar.

The registration fees payable to the CCM are based on the authorized capital (between RM1,000 to RM70,000 – approximately USD230 to USD16,000). 

For  the purpose  of  incorporation,  the  company would require to provide  two  (2) resident directors  and two (2) shareholders (which can be two (2) individuals or two  (2)  corporations  or  an  individual  with  a  corporation).  A  resident  director could be a Malaysian or foreigner who has a residential address in Malaysia.
SSM  will  usually  require  two  (2)  weeks  to  approve  and  issue the Certificate  of Incorporation  (Form  9)  and  the  company  can commence  business  immediately with the Certificate.

A company with paid-up capital of RM2.5 million or less, is taxed at the following rates:

  • 20 % on the first RM500,000
  • 25% above RM500,000

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.

Formation procedure and business registration in Malaysia

The incorporation of a public limited company in Malaysia follows a similar two stage process to the registration of the registration of a foreign company or branch office in Malaysia. First, name approval must be obtained before submission to the SSM of the following documents (within three months of name approval):

  • Memorandum and Articles of Association, translated into English and certified;
  • Form 6 (Declaration of Conformity); Form 48A (certificate of the person designated administrator) before incorporation of the company;
  • Documents provided by the SSM duly completed;
  • Copy of the identity card (or passport for a non-Malaysian) of each director and company secretary.

When approved the SSM will issue the certificate of incorporation. A non-listed company can start business immediately or after the completion of a few additional formalities for a listed company.
The registration fee depends on the value of the company’s share capital from RM 1,000 (for a share capital of RM 100, 000 and less) (approx. USD230 and USD23,000 to RM 70,000 (for a registered capital of RM 100 million or more – approx. USD16,000 and USD 23million).

The incorporation procedure is usually complete in two to three weeks.