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  • Form of entity

    To start a business in Malaysia, the 1st step is to set up a business entity with the Companies Commission of Malaysia. There are 2 types of business entities:

    • The unincorporated entity and
    • The incorporated separate legal entity.

    The unincorporated entities are:

    • Sole proprietorship and
    • Partnership.

    A sole proprietorship is an entity with 1 person, whereas a partnership is a business entity that is owned by at least 2 persons but not more than 20 persons. Both the sole proprietorship and partnership do not constitute separate legal entities, and the business partners can sue and be sued in their personal names. A business owner or partners are exposed to personal risks and liabilities.

    The incorporated separate legal entities are:

    • A company limited by shares or private limited company
    • A company limited by guarantee
    • Unlimited company and
    • Limited liability partnership.

    Private limited companies are the most established business entities as the shareholders of private limited companies are not exposed to personal risks and liabilities; their liabilities are limited to the number of shares that are owned by them.

    Last modified 26 Jun 2024

  • Entity set up

    Private Limited Company (Sendirian Berhad)

    • Liability of shareholders is limited to the amount of shares held by the shareholder.
    • The minimum number of shareholders is 1 and the maximum number of shareholders is 50. If the number of shareholders exceeds 50, a private limited company will have to convert its status to a public company, which is an unlimited public company.
    • Director will be appointed by the shareholders of a private limited company to manage such company. A director may or may not be a shareholder of the company.
    • A private limited company is restricted from offering any of its shares to the public.
    • The Companies Act 2016, Malaysia, largely regulates the power and duties of a private limited company.

    Last modified 26 Jun 2024

  • Minimum capital requirement

    The minimum capital requirement is 1 share. 

    Last modified 26 Jun 2024

  • Legal liability

    Shareholders of a private limited company are generally not liable for the debts of the company, aside from their financial contribution to the company.

    Last modified 26 Jun 2024

  • Tax presence

    A private limited company pays a corporate tax on its profits. These profits may then be distributed to their shareholders as dividends.

    Last modified 26 Jun 2024

  • Incorporation process

    A private limited company must be registered with the Companies Commission of Malaysia, and the promoter of such company must file the necessary incorporation documents to the Companies Commission of Malaysia.

    Digitalized process for company registration:

    Instead of manually filling in the required forms downloaded from the SSM website, entrepreneurs can now register their Sdn Bhd online by filling in the Super Form on the MyCoID 2016 portal.

    Last modified 26 Jun 2024

  • Business recognition

    A private limited company is a well-established and widely recognized business entity.

    Last modified 26 Jun 2024

  • Shareholder meeting requirements

    A resolution of shareholders of a private limited company can be approved by way of written resolutions or shareholders' meeting.

    Last modified 26 Jun 2024

  • Board of director meeting requirements

    A resolution of directors of a private limited company can be approved by way of written resolutions, or directors may hold a board of directors' meeting as required.

    Last modified 26 Jun 2024

  • Annual company tax returns

    A private limited company must annually file its annual tax returns with the relevant tax authorities.

    Last modified 26 Jun 2024

  • Business registration filing requirements

    A private limited company is required to file initial registration as well as annual filings.

    Last modified 26 Jun 2024

  • Business expansion

    If number of shareholders of a private limited company exceeds 50, it must be converted to a public company.

    Last modified 26 Jun 2024

  • Exit strategy

    There are 4 types:

    • Shareholders' voluntary winding up: the company is solvent, but the shareholders of the company decide to wind up the company
    • Creditors' voluntary winding up: the company is insolvent, and the creditors choose to wind up the company to realize the company's assets
    • Compulsory winding up by the court of Malaysia: the court finds that a particular company is unable to pay its debts and
    • Striking off by the Companies Commission of Malaysia: the Companies Commission of Malaysia can strike off a company if such company is not carrying on a business, has contravened with the Companies Act 2016, is being used for unlawful purpose or has been wound up.

    Last modified 26 Jun 2024

  • Annual corporate maintenance requirements

    Annual return and financial statement of a private limited company are filed annually to the Companies Commission of Malaysia. 

    Last modified 26 Jun 2024

  • Director / officer requirements

    • Must be a natural person and at least 18 years of age

    • Must be of sound mind

    • Must ordinarily reside in Malaysia by having a principal place of residence in Malaysia

    • Not an undischarged bankrupt under the Insolvency Act 1967

    • Not disqualified under the Companies Act 2016

    • Has not been convicted, whether inside or outside of Malaysia, of any offense and

    • Has not been imprisoned for any offenses prescribed under the Companies Act 2016 within 5 years immediately preceding their appointment.

    For more information on directors’ duties, see our Global Guide to Directors’ Duties.

    Last modified 26 Jun 2024

  • Local corporate secretary requirement

    • Must be a natural person and at least 18 years of age.

    • Must be a citizen or permanent resident of Malaysia who ordinarily resides in Malaysia and has a principal place of residence in Malaysia.

    • Must be a member of a body prescribed in the 4th Schedule of the Companies Act 2016 or a person licensed by the Companies Commission of Malaysia.

    • Must be an undischarged bankrupt under the Insolvency Act 1967.

    • Not convicted, whether in or outside Malaysia, of any offences prescribed under the Companies Act 2016.

    Last modified 26 Jun 2024

  • Local legal or admin representative requirement

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Local office lease requirement

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Other physical presence requirements

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Sufficiency of virtual office

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Provision of local registered address by law firm or third-party service provider

    Local registered address with the corporate secretary is required.

    Last modified 26 Jun 2024

  • Provision of local director or corporate secretary by law firm or third-party service provider

    Corporate secretary is required to be a resident of Malaysia and have a principal place of residence in Malaysia.

    Last modified 26 Jun 2024

  • Nationality or residency requirements for shareholders, directors and officers

    At least 1 director of a private limited company is required to be a resident of Malaysia and have a principal place of residence in Malaysia.

    Last modified 26 Jun 2024

  • Restrictions regarding appointment of nominee shareholders or directors

    Same requirements as for a director of a private limited company.

    Last modified 26 Jun 2024

  • Summary of director's, officer's and shareholder's authority and limitations thereof

    Not applicable for this jurisdiction.

     

    Last modified 26 Jun 2024

  • Public disclosure of identity of directors, officers and shareholders

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Minimum and maximum number of directors and shareholders

    A private limited company can have a minimum of 1 director. A private limited company can have a minimum of 1 shareholder and a maximum of 50 shareholders.

    Last modified 26 Jun 2024

  • Minimum number of shareholders required

    A minimum of 1 shareholder.

    Last modified 26 Jun 2024

  • Removal of directors or officers

    Subject to a constitution of a private limited company, a director may be removed by ordinary resolution subject to a special notice prescribed under the Companies Act 2016. The ordinary resolution for the removal of a director must be passed at a physical shareholders’ general meeting and cannot be passed by way of a written resolution.

    Last modified 26 Jun 2024

  • Required and optional officers

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Board meeting requirements

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Quorum requirements for shareholder and board meetings

    Quorum for shareholders meeting is not fewer than 2 members for a company that has more than 1 shareholder.

    Quorum for board of directors meeting is fixed to the total number of directors and, if not fixed, it is a majority of directors. Quorum for board meeting is not fewer than 2 directors for a company that has more than 1 director.

    Last modified 26 Jun 2024

  • Must a bank account be opened prior to incorporation, and must the bank account be local?

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Auditing of local financials. If so, must the auditor be located in local jurisdiction, and must the company's books be kept locally?

    Yes.

    Last modified 26 Jun 2024

  • Requirement regarding par value of stock

    Not applicable for this jurisdiction.

    Last modified 26 Jun 2024

  • Increasing of capitalization if needed

    A 100-percent foreign-owned private limited company must increase its paid-up capital to RM500,000 for advisory and consultancy businesses and RM1 million for import, export, restaurant, and trading businesses.

    Last modified 26 Jun 2024

  • Summary of how funds can be repatriated from your jurisdiction (ie dividends or redemption)

    The common methods of profit repatriation in Malaysia are through dividends, interest, and royalties. Repatriation of profits may be done without restrictions, but withholding tax rates may be applied to dividends, interest, and royalties.

    Last modified 26 Jun 2024

  • Restrictions on transferability of shares

    Shareholders of a private limited company is subject to pre-emptive rights.

    Last modified 26 Jun 2024

  • Obtaining a name and naming requirements

    The Companies Commission of Malaysia first approves the company name. A company name is unlikely to be approved if it is:

    • Undesirable or unacceptable
    • Identical to an existing company, corporation or business
    • Identical to a name that is being reserved under the Companies Act 2016 or
    • A name that the Companies Commission of Malaysia is ordered not to accept for registration by the Minister of Malaysia.

    Last modified 26 Jun 2024

  • Summary of "know your client" requirements

    Electronic Know-Your-Customer (e-KYC) is mandatory in the financial sector (banks and financial institutions) to verify the identities and suitability of customers as well as the risks involved in maintaining a business relationship with them. The policy document regarding the guidelines for e-KYC is published by the Central Bank of Malaysia (BNM).

    Last modified 26 Jun 2024

  • Approval requirements for amending charter document

    Any amendment is passed by a majority of not less than 3/4 of the shareholders at a general meeting.

    Last modified 26 Jun 2024

  • Licenses required to conduct business in jurisdiction

    Relevant licenses are required to conduct business depending on the nature of business.

    Last modified 26 Jun 2024

  • Process of purchasing and utilizing a shelf company
    • The shelf company’s existing board of directors shall resign as the company directors. Investor’s nominated directors shall be appointed as the shelf company’s new directors.
    • The shares of the existing shareholder in the shelf company will be transferred to the investor.
    • The local company secretary will lodge all essential fillings to the Companies Commission of Malaysia once all applicable documents have been signed.
    • A copy of the letter of indemnity signed by the shelf company’s former directors, indicating that the shelf company was dormant, had no obligations and had not begun any operations, will be provided to the investor.
    • Any further changes to the company name, corporate structure, director, and share capital will be lodged to Companies Commission of Malaysia. 

    Last modified 26 Jun 2024

  • Key contacts
    Peter Ling
    Peter Ling
    Partner Peter Ling & Van Geyzel [email protected] T +603 2282 3080
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Process of purchasing and utilizing a shelf company

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Malaysia

  • The shelf company’s existing board of directors shall resign as the company directors. Investor’s nominated directors shall be appointed as the shelf company’s new directors.
  • The shares of the existing shareholder in the shelf company will be transferred to the investor.
  • The local company secretary will lodge all essential fillings to the Companies Commission of Malaysia once all applicable documents have been signed.
  • A copy of the letter of indemnity signed by the shelf company’s former directors, indicating that the shelf company was dormant, had no obligations and had not begun any operations, will be provided to the investor.
  • Any further changes to the company name, corporate structure, director, and share capital will be lodged to Companies Commission of Malaysia. 

Last modified 26 Jun 2024

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