If you are a foreigner looking to set up a company in Malaysia, you need to know about the types of business entities that allow foreign ownership. This is because not all business entities permit foreign ownership.
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Foreigner Company Set Up Options in Malaysia
Below is a list of some of the company registration options in Malaysia that permit foreign ownership.
1. Branch Office
A branch office refers to a legal entity that is an extension of a parent company that may be of foreign ownership. Usually, in such a setup, the parent company will be responsible for all the debts incurred by the branch office based in Malaysia. All activities carried out under the branch office should be similar to the activities carried out by the foreign parent company. This registration option may be best suited for foreign companies that are looking to expand their business into Malaysia. However, this option requires that at least one Malaysian resident be involved in setting up the branch office in Malaysia.
2. Representative Office
A Representative Office is almost similar to the branch office set up and does not have an independent legal standing based in Malaysia. Under this option, the foreign parent company will be held responsible for all the liabilities and debts. The activities performed under this option are restricted only to liaison and promotional activities, coordinating activities for the foreign parent company, and conducting market research.
3. Subsidiary Company
Foreigners can also set up subsidiary companies within Malaysia. This type of business entity is run as a separate legal entity from its parent company. This means that the company can conduct all business activities and be liable for its liabilities and debts.
A subsidiary company is suitable for foreign companies that may be looking into expanding their business into Malaysia. The company name can be different from the name of the foreign parent company.
4. Private Limited Company
A Private Limited Company, also known as Sdn Bhd in Malaysia, is the most preferred option for foreign investors. It is a separate legal entity, and it allows for up to 100% foreign ownership. However, if this private limited company operates in banking, agriculture, oil and gas, and education, it is required that there be a Malay co-ownership (at least 30% of the capital).
5. Labuan Offshore Company
Simply put, a Labuan Offshore Company is a business entity that is registered or incorporated under the Labuan Companies Act of 1990. This company can be 100% foreign owned, and can start up with a capital as low as 1 USD.
Malaysia company registration requirements
To start up a company in Malaysia, several documents will be required. These include:
- The certificate of incorporation
- The company’s articles of association and memorandum
- A listing of all local and foreign directors and their specific powers within the company
- The memorandum of understanding of the foreign company
- A copy of the reservation and application of the names of the company
- A copy of the email indicating the approval of the reservation of the name of the company
- A statutory declaration of the agent of the company
- Registration Fees
Related Read: Quick Infographic on How to Set Up A Malaysia Company »
Malaysia Company Registration Process
The first step to a foreign company set up in Malaysia should be to identify the company name and submit that name through the online system of the Companies Commission of Malaysia (SSM), together with a fee of RM50. Once this name is approved, it will be reserved for 30 days counting from the date the name was approved.
During this period of 30 days, you will be required to submit to the Companies Commission of Malaysia (SSM) the following information:
- Name, nationality, identification, and the place of residence of all shareholders. For corporate bodies, the information required will be the corporate name, the registration number, registered office, and place of incorporation
- Name, nationality, identification, and place of residence of all company directors
- The list of company members or shareholders
- For foreign companies with share capital, information on the number of shares and details of the class will be required. If it is a foreign company without share capital, the information required will be the amount up to which every member will contribute to the assets of the company
- The name address of the company’s agent, who should be of Malaysian descent
- The application for the foreign company registration, in addition to the statement of the company’s agent confirming his consent for the appointment.
Engaging a professional team, such as WeCorporate, for a foreign company set up in Malaysia will help you start your business smoothly and cost-effectively.
- It is considerably easy to start up and run a company in Malaysia. It is also possible for foreigners to own 100% of the business. In addition, foreigners are not required to be physically present within the country to set up a company. Malaysia also offers a wide variety of tax incentives to business owners.
The fact that Malaysia is a central business hub within Southeast Asia makes it possible for business owners to tap into the demands of consumers across several countries.
- The first step will be to open a bank account for the business. This bank account will be used for all business finances and will also get a Sales and Services Tax Number.
The next step will be to apply for a license for the business. However, the kind of license you will apply for will depend on the industry under which your business falls.
- Branch Office
- Representative Office
- Subsidiary Company
- Private Limited Company
- Labuan Offshore Company
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