How to register a private limited company in Malaysia
A private limited company is limited by shares and has a separate legal entity from its shareholders. It is recognised as a taxable entity in its own right. As a result, shareholders of a Malaysia private limited company are not liable for its debts and losses beyond their amount of share capital.
Requirements to register a company in Malaysia
- At least 1 Shareholder (individual or corporate entity)
- 1 Resident Director
- 1 Company Secretary
- Initial paid-up share capital of at least S$1
- A physical Malaysia office address
Registering a Private Limited Company: Key Issues to Note
Company Name: The company name must be approved by ACRA before the Company can be incorporated. ACRA will reject a proposed company name for the purpose of incorporation if:
- It is identical to an existing Company Name
- It is undesirable
- It is similar to established Names or trademarks such as Coca Cola and Temasek
Shareholders: A person or a corporate entity can become a Shareholder either by subscribing for shares in the company or by purchasing the company’s shares. At least one corporate or individual shareholding is required. A director and shareholder can be the same or different person. 100% local or foreign shareholding is allowed. The Companies Act allows a minimum of one and a maximum of 50 shareholders for a Malaysia Private Limited Company. Details of shareholders will appear on public records.
Resident Directors: A Malaysia Private Limited Company must have at least one director who is “ordinarily” resident in Malaysia i.e. Malaysia citizen, a Malaysia permanent resident or a person who holds an Employment Pass/EntrePass or a Dependant’s Pass with a residential address in Malaysia. There is no limit on the number of additional local or foreign directors a Malaysia Private Limited Company can appoint. The director must be at least 18 years old, and must not be bankrupt or convicted for any criminal malpractice in the past. Information of the directors will appear on public records. Directors can also be shareholders or vice versa.
Company Secretary: All Malaysia Companies must also appoint a competent Company Secretary whose main responsibility is to ensure regulatory compliance. The company secretary must be “ordinarily” resident in Malaysia. Malaysia Companies Act requires companies to each appoint a company secretary within six months from the date of incorporation.
Share Capital/Paid-up Capital: The minimum paid-up capital for registration of a Malaysia company is S$1 or its equivalent in any currency. The minimum issued capital is one share of par value. “Bearer” shares or “No par value” shares are not permitted. The Share or paid-up capital can be increased anytime after incorporation of the company.
Registered Address: Every company in the republic is required to have a registered office address so that all official documents and letters can be sent. The registered address must be a physical address and cannot be a P.O. Box. Use of residential address is allowed for certain types of business.
Governance Structure: The relationship between the company and its shareholders is governed by the company’s constitutional documents (the Memorandum of Association and the Articles of Association) as well as by the provisions of the Companies Act. It is not uncommon to find the members of companies (usually in joint venture arrangements) entering into ‘shareholder agreements’ among themselves to capture some of their rights and obligations in relation to how the company is to be structured and managed.
Opening a Corporate Bank Account in Malaysia
Once the company has been incorporated, you may open a corporate bank account with any of the local or international banks based in Malaysia.
Most banks require that the account signatories and directors be physically present in Malaysia for paperwork signing when opening the company bank account. If you are unable to come to Malaysia, some banks may accept the signing of documents at one of their overseas branches or at a Notary Public.
Certificate of Good Standing for Malaysia Companies
The Certificate of Good Standing proves the existence of a company registered in Malaysia, and that it is still live on ACRA corporate register. It bears the electronic signature of the Assistant Registrar of ACRA, and is available for companies only. The name of the company, its incorporation date, status and activities will be stated on the certificate.
Things to do after incorporation
Depending on the nature of your business, you will have to see to the following after you’ve incorporated your company.
Licenses and Permits: Some business activities in Malaysia are subject to regulation by government authorities. Even if your business firm has been registered you cannot begin operation unless you have the necessary approval or license from the relevant government authorities.
Private schools, video companies, travel agencies, liquor distributors, moneylenders, banks, Financial advisers, childcare centres and importers, wholesales and retailers of liquor licenses are some examples of businesses that need permits to operate.
Registered Office Hours: You must have a registered office address and the office must be open to public for minimum of three hours per day during normal business hours on weekdays.
Registration Number: Business registration number issued by ACRA must be on all letterheads, invoices, billings or other documents used for official business communications.
Customs Registration: If your business activities involve import, export and transhipments in and out of Malaysia, you will need to register your company with the Malaysia Customs and obtain a CR (Customs Registration) Number. The central registration number is mandatory for Malaysia companies or organizations engaged in trading activities.
Malaysia Goods and Services Tax Registration: Goods and Services Tax (GST) is a tax on the supply of goods and services in Malaysia and on the import of goods into Malaysia. Goods exported from Malaysia and international services provided from Malaysia are exempt from GST. The current rate is 7%.
All Malaysia businesses must register for GST if their annual taxable revenue is more than S$1 million, or currently making taxable supplies and the annual taxable revenue is expected to be more than S$1 million. The business is expected to register for GST within thirty days from the time it is deemed liable.
You may also choose to register for GST voluntarily. Approval for voluntary registration is at the discretion of the Comptroller in IRAS. Once approval is given, you must remain registered for at least two years.
Registration of Malaysia Central Provident Fund (CPF): The Central Provident Fund or CPF is a compulsory pension fund in which the employer and employee contribute a percentage of the monthly salary to the fund. CPF contribution by the employer is mandatory for all local employees who are Malaysia citizens or permanent residents earning more than S$50 a month. The maximum CPF contribution rate for employer and employee is 14.5% and 20% respectively and can be lower depending on certain factors such as employee age, permanent resident status, etc. CPF contribution for foreign employees is not required.
Ongoing Malaysia Company Statutory Compliance Considerations
Once your Malaysia Company is incorporated, you must comply with the statutory requirements set by Accounting and Corporate Regulatory Authority (ACRA) and Inland Revenue Authority of Malaysia (IRAS).