Setting up a business often gets tricky for foreign investors in many countries, but set up a company in Malaysia is way more convenient in this case. Company formation in Malaysia is made quite straightforward for all investors who want to start their commercial venture here.
The credit goes to the Malaysian government and policy makers who worked relentlessly to liberalize the incorporation process in this nation. The country is now one of the ranked destinations for starting business and this trend seems to be getting bolder in 2020 and onward.
When this is the scenario, you must be wondering that you will simply come into this country and just start your business. Well, things are not that easy either. The registration process is convenient but the stages have to be complied with to avoid legal jeopardy during company activities.
Therefore, to enjoy all the benefits, a new investor needs to unknot few steps of company registration barriers. Here in this article we have provided detailed information and requisitions of company formation in Malaysia to make things convenient for new investors.
Steps of LLC registration in Malaysia
Now, as it is the matter of company registration in Malaysia, as an entrepreneur, you have to undertake several governmental steps to complete the business incorporation in Malaysia, let’s have a look on these steps:
- At the very beginning, you have to appoint a company secretary for your business. It is mandatory according to the corporate ACT of Malaysia. A secretary will carry out important company tasks, such as arranging statutory meetings, and incorporation paper preparation and submissions etc.
- Complete forms related to trade name proposal and company incorporation registration, and submit those along with recommended papers to the SSM for approval. During this phase, a mandatory governmental fee will be charged.
- The next step is to come up with the paid-up capital, which should be a minimum of RM5000 at the beginning stage of the company. You can later on increase this amount to any limit as per your company expansion rate.
- Once issued, collect the name, approval and incorporation certificate from the SSM office.
- Following the completion of the registration process, you need to have a business bank account. This has to be opened to make the company’s monetary transactions.
- Meanwhile, the company secretary has to arrange and manage meetings on company board resolutions and filing of statutory forms.
- A tenancy agreement has to be made to ensure right premises for your new company.
- Once you have a company registration certificate on hand, you can run your company in Malaysia. But there are some licenses and approval without which your business will face legal deficiencies. To avoid that you have to arrange some compulsory licenses such as signboard license, Halal certificates etc. In some cases, liquor, export import license, medical license will also be mandatory.
- Recheck your company requirements with ESD and equip with SOCSO schemes.
- At the end, you have to apply for a proper business visa and permits to get hold with your newly formed business in Malaysia.
Cost evaluation of company registration in Malaysia
When the registration process is underway, you will be upfront with various compulsory expenses. Let’s have a look at major expenses during setting up a company in Malaysia.
An application of company registration in Malaysia asks for a fee of RM1200. Under the new Companies Act 2016, an applicant has to pay this to the SSM. However, under the old Companies Act 1965, each incorporation application accompanied by the payment as per the following schedule:
|Process of company formation in Malaysia||Cost in Ringgit (Aprox.)|
|Trade name registration and approval fee||60|
|Government fees for company incorporation by SSM||1010|
|Minimum company secretary fees||4000|
|Minimum paid up capital||5000|
|LLC company registration fees||4000|
|Signboard, trademark and premises license fees||8000|
|Document preparation for WRT license (For foreign investors)||4000|
|Company seals, documents and other accessories||500|
The costing table mentioned above varies largely. Although government charges are fixed, there are flexibilities in expenses. Attributes such as company secretary fees, tenancy agreement charges etc. often have negotiable prices.
For detail information: check the cost evaluation of company registration.
Required licenses for business setup in Malaysia
Company registration certificate can validate your business path in Malaysia. But to carry out business without any authoritative complexities you need to arrange several licenses and certifications. Having those licenses for the company keeps your business running smoothly in Malaysia.
Below are some typical licenses necessary to have during company formation in Malaysia:
- Company registration certificate
- TIN and VAT certificate
- Tenancy agreement certificate
- SOCSO approvals
- HRDF certificate
- Signboard license
- Halal certificate
- License for Liquor (If alcohol beverage has to be served)
- Export import license
- Medical license
Requirements of licenses and certificates vary with the company categories and niche in Malaysia. Not all certificates and licenses are necessarily needed at once for a single business in Malaysia.
Related Article: Business License in Malaysia – Apply For Your License
Company formation timeline in Malaysia
For company incorporation in Malaysia, you must undergo several government procedures. This is time-consuming. Each approval and legal government procedures allocate a certain timeline.
However, the whole company registration process takes a minimum of 8 and maximum of 11 working days, excluding the period of bank account opening. Below is a table that evaluated a timeline for each company formation procedure.
|Company incorporation steps||Approximate time required|
|Company name proposal, registration||1 day|
|Company registration approval||2-3 days|
|Documents signups and Filing the Statutory||1 days|
|Lodging incorporation documents to SSM||3-5 days|
|Bank account opening||7-14 days|
|Company Premises registration||1-2 days|
Fields for investment opportunities in Malaysia
When it is about business opportunities, Malaysia has already surpassed many developed countries of present days. Here is a list of business sectors that has fabulous opportunities to work with in Malaysia:
- Fashion and apparel
- Commercial services
- Natural resource mining
- Processed food manufacturing
- Chemical goods manufacturing
- Tourism and online hotel booking
- Medical equipment manufacturing
- Electronic machinery manufacturing
- Smartphone, and computer repairing
- Rubber farming and rubber goods manufacturing
Related Article: Which are the best types of investment to try in Malaysia?
Disadvantages of company formation in Malaysia
With lots of advantages on the way, there are few drawbacks of company formation in Malaysia as well. Although the aspects mentioned below are mostly regular company maintenance formalities, those often get bothersome for most of the company owners. Here are some of these disadvantages regarding company incorporation in Malaysia:
- This country has one of the highest corporate income tax rates among South Asian nations. This is about 24%.
- Several encounter of corruptions and bureaucracy in corporate level may defer you from incorporating a company in Malaysia.
- The high paid up capital often discourages budding investors in Malaysia.
Why invest in Malaysia?
It is obvious that Investors pulled towards a destination that has a future perspective for their business. For instance, you would not like to set your business in any place that has no demand, supply or trade prospectus.
Below are some highlighted reasons why thousands of local and foreign investors are so interested to set up a company in Malaysia:
- Liberal government policies for startup companies and foreign investors
- The nation has improved infrastructure that facilitate better business environment
- The nation has a multicultural environment. This makes both living and working comfortable for all types of investors.
- Flexible banking facilities.
Some local and foreign banks that deal with investors in Malaysia
We have listed out top 10 domestic and international banks which are constantly assisting and serving thousands of investors from all company niches every day. These banks are conducting their operations in Malaysia to constantly facilities investors and companies in this nation.
Top 10 Domestic Banks
- Maybank Berhad
- Public Bank Berhad
- Ambank Malaysia Berhad
- CIMB Bank Berhad
- Malaysian Bank Berhad
- RHB Bank Berhad
- ALLIANCE Bank Malaysia Berhad
- Hong Leong Bank Berhad
- Affin Bank Berhad
- SME Bank Malaysia Berhad
10 International Banks
- Standard Chartered Bank
- HSBC Bank
- UOB Bank
- City Bank
- OCBC Bank
- JPMorgan Chase bank
- Bank of America
- Deutsche Bank
- Bank of China
- MUFG Bank
When profiling Malaysia as a business destination, it has major advantages with some minimal glitches for setting up business. These glitches can easily be overlooked if you are aware of local trends, culture and lifestyle.
The end suggestion is that, Malaysia is a land of opportunity, and if you are looking to set up a business venture outside of your native land, keeps Malaysia in your craigslist.
So, when you have decided to set up a company in Malaysia, the right investments at the right time will bring you immense corporate successes in a short time.
Can a foreigner investor set up a company in Malaysia?
Yes. Other than sole proprietorship business, which is reserved only for Malaysian citizen only, foreign investors can set any type of company. Even they can own 100% ownership in LLC (Sdn Bhd) companies in Malaysia.
Why should I hire a company secretary?
Hiring a company secretary during the company registration process is made mandatory by the corporate law of Malaysia. A company secretary ensures compulsory statutory requirements as well as other necessary compliance and advisory services for the company.
Which banks are good for foreigners?
Foreign banks have more flexibility for foreigners and offer faster service. Some top foreign banks operating in Malaysia are:
- Standard Chartered Bank
- HSBC Bank
- UOB Bank
- City Bank
- OCBC Bank
However, national banks like Maybank Berhad, Public Bank Berhad, Ambank Malaysia Berhad, CIMB Bank Berhad etcetera are at the top position as far as investors’ service is concerned.
What is the percentage rate of corporate income tax in Malaysia?
Corporate income tax in Malaysia is pretty high among other neighboring nations, which is about 24%.