Malaysia Entity Setup

Sdn Bhd is a company that is also known as a Private Limited Company. Foreigners can own 100% of their business if registered under Sdn Bhd. Because of this reason, it is the most popular amongst foreign Investors. Sdn Bhd companies can have from 2 Shareholders up-to 50 shareholders. It does not issue shares to the public. This type of entity does not extend an invitation to the public to invest money in their organization.

For entrepreneurs only planning to trade with overseas customers, the Malaysia regulations provide an attractive legally tax exempt business vehicle: the Labuan company, registered with the Labuan International Business and Financial Center. Unlike mainland Malaysia companies, such entity does not require the appointment of resident director. A Labuan company is a legally tax exempt way to trade with overseas customers. Under some conditions, it can also be a good entity to open a marketing office in Labuan, Kuala Lumpur or Johor Bahru.

Entrepreneurs establishing a limited liability company in Malaysia can apply for Bumiputera status if at least 30% of the shares are held by native Malay individuals or other Bumiputera corporations. If this requirement is met, the company is then eligible for special grants, discounts, and incentives such as cheaper business licenses, special bank agreements, native reservation of land, and discounts when purchasing or renting land.

A limited liability partnership can be registered in Malaysia by a minimum of two partners, who both can be foreigners and are not required to be living in Malaysia and one resident compliance officer. There is no minimum contribution to form such entity in Malaysia and all partners can benefit from limited liability, in accordance with the Malaysia Limited Liability Partnership Act of 2012. While the limited liability partnership can sign contracts and issue invoices in its own names, such entity is tax transparent and is henceforth not required to submit financial statements to the only an annual return must be filed annually. However, the partners are required to declare the earnings channeled through the partnership in their personal income tax statements.

Foreigners willing to start export-oriented manufacturing and service businesses can register their entity in an export processing zone. While there is no official minimum paid-up capital requirement, the free zone authority w take such amount as a criterion to assess the application so we usually recommend our Clients to invest a minimum of US$125,000. Best Use: thanks to the tax incentives provided by the Malaysian Government, a Malaysian EPZ company is an attractive vehicle to manufacture products re-exported overseas.

A representative office is an appropriate way for a team to explore the Malaysian market. This business entity is not subject to corporate tax but it also cannot generate revenue, so cannot be involved in any form of trading, business or commercial activity. Instead, it can be used for representing the head office with support activities, such as market research and product development, planning or coordination, brand building and after-sales support.

Depending on the entity type and need for immigration a standard paid up capital requirement is RM 1.

100% ownership is allowable.

A local Malaysia Director is required. 

A corporate secretary is required and must be a citizen and resident of Malaysia.

Must have a registered office in Malaysia. Corporate records are generally required to be kept and  maintained at the registered office. The provision of a local registered address by a law firm for third party service provider is allowed.

Navigate to the Direct Incorporation Application to perform the Name Search procedure. To initiate this procedure, you need to provide the three proposed names for the company.

In order to register a company a legal firm, corporate secretary or corporate service provider will assist with the preparation of company incorporation paperwork. This will include articles of incorporation, constitution, first AGM meeting, share certificate, member consent forms, consent to act as director and other legal documents to support the incorporation. The provider will then continue to manage any new company resolutions that are required over the course of the company lifecycle.

Generally, it takes 1 to 2 weeks to get your Sdn Bhd Company registered. Below is the estimated time that each process might take for its completion. It takes 1 working day to compete account registration & activation, as well as the “Company Name Search” procedure. You require 2-3 days for preparing the registration documents. The signing of all the relevant documents by shareholders and directors can take 1 working day.  You need 3-5 days for the submission of documents to SSM. Obtaining the Digital incorporation certificate by SSM takes only 1 day.

Upon execution of legal paperwork, the service provider engaged will provide a copy of the official certificate of incorporation issued by the Companies Commission of Malaysia (SSM). In Malaysia, SSM maintains a system of corporate records via an online platform called the My CoID 2016 that can be accessed by directors or your corporate secretary. The Companies Registration System profile will include a company number which is used for a number of the following registrations.

The Employee Provident Fund (EPF) is a mandatory requirement for Malaysian citizens and voluntary for non-citizens, and both employers and employees must contribute monthly. There are four main ways you can register to be an EPF member. The first method is automatically being registered as a member once the EPF receives the first contribution from your employer.

Malaysia’s Social Security Organization (SOCSO), also known as Pertubuhan Keselamatan Sosial (PERKESO), is a government agency that aims to provide social security and protections to employees in Malaysia as per the Employee’s Social Security Act 1969. Contribution to SOCSO is compulsory for all Malaysian citizens and permanent residents who are under a contract or apprenticeship in the private sector, as well as contractual or temp staff in the public sector. The rate of contribution is capped at RM 4,000.

EIS stands for Employment Insurance System. It was first implemented in January 2018 in Malaysia as social safety insurance to protect employees, mainly to safeguard employee retrenchment from the private sector. It is a financial scheme aimed to provide insured employees with financial assistance for up to 6 months until they find new employment. EIS is paid by both employers and employees every month.

The Inland Revenue Board of Malaysia (IRBM), also known as Lembaga Hasil Dalam Negeri (LHDN) is one of Malaysia’s most important agencies when it comes to tax and revenue matters. The IRBM was established on the 1st of March 1996 (formerly known as the Department of Inland Revenue Malaysia) and is one of the primary agencies for revenue collection in Malaysia. IRBM’s responsibility includes collecting revenue on behalf of the Ministry of Finance (MOF).