Branch office in Malaysia.

A branch office is another type of foreign business option available, and if you are considering to explore a new market, you should consider setting up a branch office in Malaysia.

Let’s jump right in.

What is a branch office of a foreign company?

A branch office is not a separate legal entity. It is an extension of the foreign parent company and must conduct the same business activities as the parent company.

The foreign parent company is liable and responsible for all the debts of the branch in Malaysia. The activities of a branch office must be the same as the foreign parent company, and a branch is suitable for foreign companies that want to expand their business to Malaysia for a short-term basis.

There must be at least one Malaysian resident agent to set up the branch in Malaysia.

Advantages of setting up a branch office in Malaysia

Access to a new market

Opening a branch office is a common method used to expand businesses in different countries.

Control of management

The foreign parent company has full control over the activities of the branch office in Malaysia.

Easy registration

There are fewer registration requirements as a branch office is not a separate legal entity, and does not have its own articles of incorporation. This makes the registration process shorter.

Tax benefits

The branch is taxed on income that is produced inside of Malaysia, and is also subject to the double taxation agreements.

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Requirements for setting up a branch office

Name

The company name must be the same as the foreign parent company, and the name should be lodged through the SSM online system.

Officers

There must be at least one resident agent to set up the branch office.

Staff

There are no restrictions on hiring foreign or local staff for a branch office.

Documents required

• Certified copy of the certificate of incorporation or registration of foreign company
• Certified copy of memorandum and articles or other instruments defining its constitution, if available
• Copy of application and reservation for availability of names
• Copy of email for approval notification of reservation of name
• Certified translation of documents in Bahasa Malaysia or English if the documents are in other languages
• Form 79 – Return by foreign company giving particulars of directors and changes of particulars
• The power of attorney that can prove that the parent company has appointed an individual living in Malaysia to accept documents on behalf of the parent company

Steps of setting up a branch office in Malaysia

Company name registration

The company name must be registered with the SSM with a fee of RM50.00. When the name is approved, it will be reserved for 30 days from the day of confirmation and can be extended every 30 days with a maximum of 180 days for RM 50.00.

The registered company name should be the same as the foreign company name.

Registration with the SSM

Within 30 days after the confirmation of the company name, you must submit the following information to the SSM along with the required documents:

• The name, identification, nationality and the ordinary place of residence of every shareholder in Malaysia
• If the shareholder is a body corporate: the corporate name, place of incorporation or place of origin, registration number and the registered office of the body corporate
• The name, identification, nationality and the ordinary place of residence of every person who is appointed as a director of the foreigner company in Malaysia
• List of shareholder or members at the place of origin
• The name and address of a person who is a resident in Malaysia

The registration fee will depend on how much your share capital is.

Post-registration requirements and compliance

Opening a bank account

When you have registered your company in Malaysia, you can open a corporate bank account. We recommend researching for a suitable bank as different banks provide different benefits and fees.

There are many local and international banks you can choose from, some are:

• Maybank
• CIMB Bank
• Public Bank Berhad
• RHB Bank
• Hong Leong Bank Berhad
• UOB Bank
• HSBC Bank

What are the requirements for opening a corporate bank account in Malaysia?

The following documents are required to open a corporate bank account, but may differ according to the bank’s requirement:

• Completed application forms from the bank
• Letter of introduction and recommendation from an existing customer of the bank (some banks require this, some do not)
• Photocopy of directors and authorised signatory’s identification cards
• Certified true copy by the company secretary of:
  • Company’s constitution
  • Return of allotment of shares (section 78)
  • List of directors (section 58)
  • Registered office address (section 46)
  • Certification of incorporation (section 17)
  • Resolution from the board of directors to open an account and the list of authorised signatories

Conclusion

Setting up a branch office in Malaysia has been a common choice for foreign investors because it increases the company’s business presence in the country and the parent company is liable for the branch’s debts.

If setting up a branch office in Malaysia is in line with your company’s desire to expand, do not hesitate to contact Acclime to support you through the registration process.