Company Registration in Malaysia
Malaysia is a south-east Asian island nation surrounded by the South China sea from all sides. After independence from British Colonial Rule in 1957, Malaysia gained independence. Since then, the Island Nation has grown continuously at a growth rate of 6.3% and above. It is one of the most industrialized and technologically-advanced nations in all of South East Asia. With the economy seeing an upward trend, the number of investments has gone up in Malaysia. With a multi-ethnical and multi-cultural liberalized market, it offers many business opportunities to foreign investors.
The procedure of company registration in Malaysia is seamlessly straightforward. In Malaysia, companies registered as Public Limited must end their name with the suffix- Berhad or Bhd. For a company registered as Private Limited, it must end its name with the suffix- Sendirian Berhad or Sdn Bhd. Also, to go through the company registration process in Malaysia, the applicant must conform to the eligibility and documentation requirements and the prescribed procedure.
As per the company registration procedure of Malaysia, the applicant must also ensure the requirements prescribed by the Malaysian Local Law. In Malaysia, the primary Corporate Legislation for company regulations is its Companies Act of 2016. Let us look at them in detail.
Corporate Structures types for Company Registration in Malaysia
The Malaysian Corporate Legislation guarantees an array of corporate legal structures to its nationals as well as foreigners. The business person can choose the suitable corporate system for himself per his business requirements. Let us look at them in detail one by one.
Sole Proprietorship
- It is the easiest corporate entity to set up in Malaysia.
- Sole Proprietorship in Malaysia requires only one owner
- The sole owner or the Proprietor's liability is unlimited.
- In this setup, the personal income and assets of the Proprietor can be compromised to settle the debts and obligations of the Proprietorship.
- The Proprietorship will be declared bankrupt at the cost of the owner.
Private Limited Company
- A Private Limited Company in Malaysia is a separate legal entity from its owners
- The Company or the PLC can accomplish any of the following tasks as a separate legal entity:
- Sell-Purchase Property
- Enter into Legal Agreements
- Sue someone or get sued by someone in the Courts of Law
- In a PLC structure, the owners will be liable for the amount they have contributed to the PLC.
- Personal assets of the shareholders will not be confiscated in case of insolvency/bankruptcy.
Public Limited Company
- The Company can offer shares to the general public in a Public Limited setup.
- Public Limited Companies in Malaysia are listed on its Stock Exchanges.
- The Securities Commission of Malaysia governs such entities.
Foreign Company's Branch Office and Representative Offices
- As a Foreign Company, wanting to understand the business environment of Malaysia, you can set up your representative office(s) in any of the Malay cities.
- An R.O. is not granted an independent legal stature in Malaysia.
- The Malaysian Authority will hold the Parent Company responsible for the debts and liabilities of the Representative Offices.
- A Branch Office is also an extension of its parent company in Foreign Lands.
- The Parent Company is liable for all the debts of its branch in Malaysia.
Unlimited Company
- In an Unlimited Company setup, members and shareholders of the Company have unlimited liability.
- In case of a loss or debt situation, the members and shareholders will be personally responsible for the misfortunes.
Limited Liability Partnership
- A Limited Liability Partnership is a combination of both partnership and a registered company.
- An LLC is a corporate body.
- LLPs in Malaysia have a separate legal entity from their member partners.
- You can set up an LLP in Malaysia as per the regulations of the Limited Liability Partnership Act of 2012.
Partnership
- In a Partnership, two or more persons come together to earn revenue from their commercial activities in the market.
- The Malaysian Legislation restricts a Partnership to have more than 20 partners.
- Each partner must be a Malaysian citizen or a permanent citizen of Malaysia.
- Usually, auditors and lawyers prefer such a form of corporate structure.
- Members partners of a Partnership have unlimited liability against its debts and obligations.
- Partnership in Malaysia is exempted from paying any corporate taxes.
- But each member partner must pay their individual taxes.
Industries for starting a Business in Malaysia
There are multiple economic sectors thriving in Malaysia. The Malaysian Government offers various incentives to Foreign Establishments to set up their businesses in Malaysia:
- Primary Sector, such as Agriculture and Farming
- Finance Industry
- Education Sector
- Petroleum, Natural Gas, and Oil Industry
- Manufacturing Hub
- Tourism
Who regulates Corporate Bodies in Malaysia?
The Regulatory Authority for Corporate Registration of the Malaysian Federation is the SSM, i.e., Suruhanjaya Syarikat Malaysia. It is the nodal agency for corporate registrations in Malaysia, also known as the CCM or Companies Commission of Malaysia. As mentioned earlier, the corporate Legislation which regulates corporate entities in Malaysia is the Companies Act of 2016.
Benefits of Company Registration in Malaysia
There are various benefits of company registration in Malaysia, such as:
Low Operational Cost
The cost to register and run a company in Malaysia is relatively low in comparison to other Asian countries.
Cheap Office Space Rents & Leases
You can easily avail of cheap office space on a rent or lease basis in Malaysia. Office spaces are well structured and available in prime business locations in Malaysia.
Overall Minimal Labour Wages
Companies can hire skilled and professional employees in Malaysia on comparatively lower wages or Cost-to-Companies. It is lesser than the average wages compared with other countries.
No Double Taxation scenario
The Malaysian Government is a signatory to a number of double taxation treaties with other trading countries. Therefore, there is no issue with paying the Double Taxes on revenue generated by Companies in Malaysia. Also, the Malaysian Corporate Authority levies no withholding taxes on dividends paid outside the country.
No restriction on Repatriation
Malaysian Authority puts no restrictions on its Corporations upon Repatriation of any of the following:
- Capital earned
- Profits generated
- Dividends granted
- Royalties issued
Various Incentives and Subsidies from the Malay Government
The Government offers strong incentives and subsidies to registered Corporations in Malaysia to encourage business registration and capital investment.
More Investors to raise Funds
Many Foreign Investors and Establishments prefer Malaysia as their business destination because their local Legislation guarantees a high level of investor protection.