Malaysia is rapidly establishing itself as an economic hotspot in Southeast Asia, characterized by a vibrant interplay between government initiatives and private sector dynamism. According to the World Bank's Ease of Doing Business Survey, Malaysia consistently ranks among the most business-friendly countries globally, reflecting its supportive regulatory environment and commitment to fostering entrepreneurship.
Over the last few decades, Malaysia's economy has undergone a remarkable transformation. In the 1970s, it transitioned from a largely resource-based economy to one of the most resilient and diverse economies in the region. This shift has been fuelled by a focus on industrialization, innovation, and the development of various sectors, including manufacturing, services, and technology.
One of Malaysia's significant advantages is its wealth of natural resources, which play a crucial role in boosting the nation's GDP. From palm oil and rubber to minerals and petroleum, these resources not only support the domestic economy but also position Malaysia as a key player in global markets.
These elements—combined with a strategic location, a skilled workforce, and a commitment to infrastructure development—make Malaysia an attractive destination for entrepreneurs looking to establish and grow their businesses. The country’s pro-business policies, along with ongoing investment in education and technology, further enhance its appeal as a place to launch new ventures.
Why Register a Company in Malaysia?
- Strategic Location: Malaysia’s geographical position in Southeast Asia provides easy access to regional markets, making it an ideal base for international trade.
- Strong Economy: With a diverse economic landscape, Malaysia offers opportunities in various sectors, including manufacturing, services, technology, and finance.
- Supportive Government Policies: The Malaysian government actively promotes entrepreneurship through incentives, grants, and favorable regulatory frameworks.
- Skilled Workforce: Malaysia has a young, educated, and multilingual workforce, enhancing the potential for business success.
- Modern Infrastructure: The country boasts excellent transportation, communication, and logistics infrastructure, facilitating efficient business operations.
Types of Companies in Malaysia
When registering a company in Malaysia, it’s essential to understand the different types of business entities available:
- Private Limited Company (Sendirian Berhad - Sdn Bhd)
The most common type of company in Malaysia, a Sdn Bhd, offers limited liability protection to its shareholders. It can have a minimum of one and a maximum of 50 shareholders.
- Public Limited Company (Berhad - Bhd)
A Bhd can offer shares to the public and must comply with more stringent regulatory requirements. It is suitable for larger businesses intending to raise capital from the public.
- Sole Proprietorship
This is the simplest business structure, where an individual owns and manages the business. However, the owner has unlimited liability for business debts.
- Partnership
A partnership consists of two or more individuals who share profits and liabilities. There are general partnerships and limited partnerships, each with different liability implications.
- Limited Liability Partnership (LLP)
An LLP combines the benefits of a partnership and a company, offering limited liability to its partners while allowing flexible management.
Benefits of Registering a Company in Malaysia
- Limited Liability: Shareholders’ liabilities are limited to their shares, protecting personal assets from business debts.
- Legal Entity: A registered company is a separate legal entity, allowing it to enter contracts, own property, and sue or be sued in its own name.
- Access to Funding: Registered companies can raise capital through loans, investments, or by issuing shares, facilitating growth and expansion.
- Credibility: Being a registered entity enhances your business's credibility with customers, suppliers, and financial institutions.
- Tax Incentives: The Malaysian government offers various tax incentives and exemptions to encourage investment in certain sectors.
Requirements for Company Registration in Malaysia
- Directors and Shareholders
- Minimum Directors: At least one director must be a resident of Malaysia. The director must be over 18 years old and not disqualified from holding directorship.
- Shareholders: A minimum of one shareholder is required, and they can be individuals or corporate entities. Foreigners can be shareholders in a Sdn Bhd.
- Company Name
You must choose a unique name for your company that complies with SSM guidelines. The name should not be identical or similar to existing registered companies.
- Registered Office Address
A registered office address in Malaysia is required for all companies. This address will be used for official correspondence.
Documents Required for Company Registration in Malaysia
- Company Registration Application (Form 1)
This form includes basic information about the company, such as the name, type of company, and registered office address.
- Directors’ and Shareholders’ Identification
Copies of identification documents (e.g., NRIC for Malaysians or passports for foreigners) are required for all directors and shareholders.
Although it is not mandatory, having a company constitution (previously known as Memorandum and Articles of Association) is recommended to outline the company’s internal regulations.
- Consent to Act as Director
A consent form signed by each director confirming their willingness to serve as a director.
- Declaration of Compliance
A declaration confirming that all requirements of the Companies Act have been met.
Documentation to prove the registered office address, such as a utility bill or tenancy agreement.
Procedure for Company Registration in Malaysia
Following is the procedure for Company Registration in Malaysia:
- Name Reservation
- Conduct a name search on the SSM website to ensure that your chosen company name is available.
- Submit a name reservation application. Once approved, the name is reserved for 30 days.
- Preparation of Documents
- Prepare all required documents, including Form 1, identification documents, and the company constitution if applicable.
- Submit Application
- Submit the completed registration application and documents to the SSM. This can be done online through the SSM's MyCoID portal or at their offices.
- Pay Registration Fees
- Pay the required registration fees, which vary based on the type of company and share capital.
- Obtain Certificate of Incorporation
- Once your application is approved, you will receive a Certificate of Incorporation, confirming your company’s legal status.
Tax Structure for Companies in Malaysia
Malaysia offers a competitive tax regime for businesses. Here are the key aspects of the tax structure for registered companies:
- Corporate Income Tax Rate
- The standard corporate income tax rate is 24%. However, small and medium-sized enterprises (SMEs) may enjoy a lower tax rate of 17% on the first MYR 600,000 of chargeable income.
- Tax Incentives
- Various tax incentives are available for companies engaged in specific sectors, such as manufacturing, tourism, and research and development. These may include tax holidays and investment tax allowances.
- Goods and Services Tax (GST)
- Malaysia implemented GST in 2015 but reverted to Sales and Service Tax (SST) in 2018. Companies with a turnover exceeding MYR 500,000 are required to register for SST.
- Withholding Tax
- Certain payments, such as dividends, interest, and royalties, may be subject to withholding tax at varying rates.
Post-Incorporation Compliance
Once your company is registered, it’s essential to adhere to ongoing compliance requirements to maintain your business's good standing. These include:
Annual Returns
Companies are required to file annual returns with the SSM, detailing financial information and company changes. This must be done within 30 days of the anniversary of incorporation.
Financial Statements
Maintain accurate financial records and prepare annual financial statements. Certain companies may be required to have their accounts audited.
Company Meetings
Hold annual general meetings (AGMs) to discuss financial performance, elect directors, and make important decisions. The first AGM must be held within 18 months of incorporation.
Tax Returns
Submit annual tax returns to the Inland Revenue Board of Malaysia (IRBM) and pay any due taxes.
Updating Company Information
Notify SSM of any changes to company details, such as changes in directors, registered office address, or share capital.
Compliance Calendar ®