How to start a business in Malaysia.

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How to start a business in Malaysia

It is useful, and sometimes important, for those starting new businesses in Malaysia to understand the steps involved in registering a business.  This article will take you through the steps, but know that Acclime’s team is ready to perform all tasks for you.

There are three steps to starting a business in Malaysia:

  • Step 1: Registration preparation
  • Step 2: Registration
  • Step 3: Post-registration

If you are planning to open a company soon, this guide is just for you.

Step 1: Registration preparation

The first step for registering a company consists of deciding the basic requirements, which are choosing the suitable business structure for your desired company, selecting a company name, deciding and appointing qualified officers, registered office and capital requirements.

Below will guide you through the preparation steps of registering a company.

Choosing a business structure

The first thing you need to do when establishing a company in Malaysia is choosing the suitable business entity.

You should do research on each entity to decide which entity matches your goals and objectives the most.

Malaysian business entities include:

  • Sole proprietorship
  • Partnership
  • Limited liability partnership
  • Private limited company
  • Public limited company
  • Branch office
  • Representative office
  • Subsidiary company

To register a foreign company, there may be a different set of requirements needed.

Choose a company name

Once you have chosen a suitable business entity, the next thing to do is to select a company name. Acclime will help conduct a name search for your company based on the information provided.

After you have decided on a name, you should run a name check with the Companies Commission of Malaysia (SSM). When the name check is completed, you can register the name with the SSM. Upon approval, the name will be reserved for your company.

Characteristics of Malaysian company names according to the guideline on company names are:

  • The name shall use correct spelling and language.
  • If the name has words that are not in Malay or English, the meaning of the words must be given.
  • The mixture of Bahasa Malaysia and English is allowed if the use is to describe the type of business and must follow proper grammar.
  • Names that are not blasphemous or likely to be offensive to members of the public.
  • Names do not resemble elements of religion.
  • Refrain from using names which are too general such as Technology Sdn. Bhd or International Sdn. Bhd.
  • Only the names of directors who are specified at the application form for incorporation can be used as the company names.
  • The meaning of created or coined words must be given.
  • Symbols that are allowed to be used in the name of the company is limited to five symbols:
    • & (including dan, and and N)
    • . (dot symbol)
    •  (hyphen symbol)
    • ( ) (bracket symbol)
    • ‘ (apostrophe symbol)
  • The name is not an acronym that can be confused with names that are associated with:
    • Names of institutions for higher learning
    • Name stands for federal government agencies or state and government-owned companies

Decide on officers and shares of your company

Directors

  • Minimum: one director
  • Maximum: unlimited
  • Must be a natural person
  • Aged 18 years and above

Shareholders

  • Minimum: one shareholder
  • Maximum: unlimited (limited to 50 for private limited company)
  • Can be an individual or body corporate
  • Individual must be aged 18 years and above

Company secretary

  • Minimum of one company secretary who is a member of any professional body or licensed by the SSM.

Registered address

  • It is required to have a registered office address to receive formal communication and documents from the government. P.O boxes are not allowed.

Share capital

  • Minimum: RM 1
  • Maximum: unlimited

Step 2: Registration

Once you have completed the preparation stage, the next step will be registering your company with the related authorities in Malaysia.

This step will walk you through what you need to do to register your company and what documents you will need.

Registering your company

The company name must be registered with the SSM.

When the name is approved, it will be reserved for 30 days from the day of confirmation and can be extended for another 30 days for RM 50.00.

The documents needed to incorporate your company include:

  • Constitution (optional)
  • Declaration by a director or promoter before appointment
  • Declaration of compliance
  • Copy of the identity card of every director

Step 3: Post-registration

The final step involves the requirements and obligations you must satisfy after you have successfully registered your company with the SSM.

This stage will mainly focus on opening the business bank account, learning which business licenses you will need, registering for the provident fund, appointing auditors and determining your tax liabilities.

Opening a corporate 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

The following documents are required to open a corporate bank account:

  • 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)
  • Incorporated company’s rubber stamp
  • Photocopy of directors and authorised signatory’s identification cards
  • Certified true copy by the company secretary of:
    • Resolution from the board of directors to open an account and the list of authorised signatories
    • All company incorporation forms

Obtain business licenses and permits

Companies in Malaysia are required to register for licenses and permits related to their nature of business.

There are three types of business licenses:

  1. General licenses
  2. Sector/industry-specific licenses
  3. Activity specific licenses

General licenses are the necessary licenses you need when you establish a business in Malaysia. The licenses include:

  • Company registration
  • Company and employee’s income tax registration
  • Employees provident fund (EPF)
  • Social security organisation (PERKESO)
  • Human resources development fund
  • Business premise licenses and signboard licenses

Sector/industry-specific licenses are licenses that are needed for a specific industry or sector specified by the Malaysian government.

  • Licenses related to the manufacturing sector
  • Licenses related to the wholesale and retail trade
  • Licenses related to the telecommunication sector
  • Licenses related to the broadcasting sector
  • Licenses related to the oil exploration sector
  • Licenses related to the construction sector
  • Licenses related to the banking sector
  • Licenses under Department BLESS, Ministry of Entrepreneur Development (MED)
  • Licenses under the Department of Occupation Safety and Health Malaysia (DOSH)
  • Licenses under the National Water Services Commission (SPAN)

Activity-specific licenses are licenses that regulate specific activities and can be applied to more than one industry or sector. This license includes:

  • Certificate of fitness for certified machinery
  • Approval of expatriate posts
  • Approval to install, resite or alter air pollution control equipment
  • Building plan approval
  • Sales tax approval

Determine your tax obligations

Your tax obligations will be different based on the scope of charge, exemption, deductions and more.

Malaysia does not charge tax on international sales, except for banks, insurance companies, airlines and shipping companies.

The current corporate tax rate for both Malaysian residents and non-residents is 24%. Residents with more than RM 1 million of taxable income are subjected to 28% personal income tax, and non-residents are subjected to a rate of 30%.

Appoint auditors

Every company must appoint an auditor before the first annual general meeting. For private limited companies, annual general meetings are not mandatory.

In the case of newly incorporated companies, the board of directors shall appoint the first auditor at least 30 days before the end of the period for the submission of the first financial statements.

Registering the employee provident fund

Registration for employers

Employers must register at the EPF within seven days from the day an employee is employed.

Documents needed for private sector employers (SSM registered Sdn Bhd, SSM registered businesses, government-linked companies or government-linked investment companies and Bank Negara approved banks) are:

  • Form KWSP 1
  • Form 49
  • Copy of certification of company/business registration from SSM, or
    • Section 15 – notice of registration
    • Section 14 – Application for registration of a company
    • Section 17 – certificate of incorporation of private company
  • Copy of the sole proprietor/partner/director’s identification (MyKad or passport)

Registration for employees

The employer will have to register employees before the first contribution is made.

There are four ways you can register your employees.

  1. Employee registration via i-Akuan
    • Employees who have i-Akuan accounts can register their employees online.
    • Only Malaysian citizens and permanent residents who have 7- and 12-digit identifications cards can apply through this method.
  2. Auto register via monthly contribution form (Form A)
    • Once the form A is completed, which includes details such as the MyKad number and employee’s name, employees will be automatically registered with the EPF.
    • Only applies to Malaysian citizens and permanent residents with MyKad.
  3. Form
  • Malaysian and permanent residents:
    • MyKad
    • Form KWSP 3 (if required)
  • Non-Malaysian residents
  1. Employee with MyKad
  • Employee must be present at the EPF counter and need to give their MyKad and registration will be processed using the MyKad chip.

Malaysian company registration fees

Reservation of company nameRM 50 for every 30 days with a maximum of 180 days
Application for changing the company nameRM 100
Application for information relating to the company:

· Through electronic means

· Through other than electronic means

· RM 20

· RM 30

Application for issuance of any certificate or copy of certificate relating to the companyRM 20
Application for any confirmation by the Registrar relating to the company’s informationRM 50
Application for change of foreign company nameRM 250

For more information on the fees for companies in Malaysia, please refer to the SSM’s fee schedule.

Conclusion

This guide on steps to starting a business in Malaysia will help prepare you in advance of setting up a company.

Acclime is an expert in making your business establishments hassle-free, so feel free to contact us to support you throughout the registration process.

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