How to Open a Company in Malaysia – The Complete Guide

The pros of opening a company in Malaysia

Malaysia is among the most dynamic business hubs in the South East Asian region, with equal amounts of active participation from both the public and the private sector. It is a fast-growing state-oriented and newly-industrialized economy with liberal market policies aimed at promoting trade, entrepreneurship, and industrial and economic development.

Initiatives undertaken by the government and the private sector are investor-centric and business-friendly with the primary aim of encouraging market development. Being a multi-ethnic, multilingual, and multicultural country certainly has its benefits. Among the benefits of registering a company in Malaysia are:

• The ease of registering a business. If all your paperwork is in order, it can be done in as quickly as a week.
• Its strategic location makes it easily accessible to other ASEAN economies.
• There’s no restriction on foreign shareholding, which means businesses in Malaysia can be 100% foreign-owned.
• Malaysia is a much more cost-effective alternative compared to its neighbor, Singapore. Especially if you’re considering the cost of labor.
• English is widely spoken as a business language, so communicating locally is not a problem.
• Malaysia has several liberalization programs which welcome foreign investment into the country in several large sectors.
• It has a highly developed infrastructure in both transport and telecommunications.
• Opening a bank account in Malaysia for corporate use is a relatively straightforward process. Plus, Malaysia is home to some of the world’s major banks.
• It has a sound political environment and legal framework which governs the country.
• It has attractive tax incentives.
• It has an excellent healthcare system which is affordable.

The cons of opening a company in Malaysia

In Malaysia, corporate income tax rates are slightly higher in ASEAN countries. The tax rate is around 17% and 24%.

How to incorporate a Malaysia company without living or even go there

You do not need to be physically present in Malaysia in order to set up a company in the country. All Malaysian company’s incorporation processes can be handled without you having to visit.

You will just need to engage a professional agency and discuss all the details by email or phone with them and send all the necessary documents (see below for details) via email and pay by PayPal or bank transfer.

You can then receive the final documents at any place and send back the original signed documents by any international courier service to the agency.

The only exception case in which you may need to visit Malaysia will be for opening a bank account, depending on the bank you choose.

Foreigners who wish to incorporate a Malaysia company may take into consideration the following points:

• For greater ease, you can consider engaging a corporate services firm to help you to set up a company in Malaysia while you are in your home country.
• There is no requirement for you to obtain any special Malaysia visa if you just merely want to incorporate a private limited company but have no intention or plan to relocate to Malaysia. You are free to operate your company from overseas as well as free to visit Malaysia on a visitor visa whenever you are required to attend to any company matters on a short-term basis.

  However, please bear in mind that in such circumstances, you will need to find a local director since it is mandatory that each company must have at least one director who ordinarily resides in Malaysia. Most of the professional agencies offering Malaysia incorporation services often offer the services of a nominee local resident director for this purpose.

• Foreigners who are planning to be physically present in Malaysia to run their company may need to first fulfill certain visa/pass requirements.
• The company must have a registered office in Malaysia. If you don’t have any, you may request the service of registered office from the agent.

All the documents you need to register a company in Malaysia and the procedure for opening it

The procedures to register a company in Malaysia are as follows:

1. Pay the incorporation fee to the professional agency.
2. Choose a name for your new company.
3. The agency will check the name availability in Malaysia.
4. Fill up the questionnaire form with the information such as business nature and description, registered office & business address, directors, shareholders, paid-up capital and etc.
5. Provide an identity card/passport for the verification process.
6. An authorization letter is required if your proposed company name contains controlled words or trademarks.

For a simple company structure, unless you have special requirements, the above-mentioned required documents shall be sufficient for your agency to prepare the necessary company incorporation paperwork and send it to you via email for signature.

Upon receiving all the original signed incorporation documents, the agency will proceed to incorporate the company online.

The timeline for the whole process of incorporation (from collecting documents until online incorporation) should be approximately 5 working days.

The total cost of registering and maintaining a company in Malaysia

Firstly, choose a Malaysia company formation package:

Company with a director ordinarily resides in Malaysia: This package is suitable for entrepreneurs who wish to set up a Malaysia company and have their own local Malaysia Director.

Company without a director ordinarily resides in Malaysia: This package is suitable for foreign entrepreneurs or professionals who wish to form a company and relocate to Malaysia to run their company’s operations.

For a client who will like to engage nominee director services, it is important to appoint a competent person to act as the local director of your Malaysia company. A wrong choice in the appointment may bring dire consequences to the company. Most of the professional agencies offering Malaysia incorporation services often offer the services of a nominee local resident director as well.

Below you can find the package fees for Malaysia Company Incorporation / Malaysia Subsidiary Incorporation (in Malaysia Ringgit, MYR).

Note that at the moment of writing this article, 1 USD is worth around 4.35 MYR.

Here are the package fees (exclude disbursement and service tax of 6%):

The maintenance costs for Malaysia company from the second year onwards are as follows (exclude tax and disbursements):

Besides this, a Malaysia Company is required to prepare management accounts and submit the audited report (certain companies’ status are exempted from audit, check with your agency) to the Companies of Commission Malaysia (“CCM”) once a year.

The first audited financial statement is required to be submitted within 18 months from the incorporation date. A decent agency will also offer you accounting, auditing, and taxation services. This does not come for free and prices may vary as they are based on the number of invoices you produce.

You can easily get the quotation from your agency, agreed to the price, make your payment, and email all your business transaction documents to the agency. The agency accountant will take care of all the accounting work, arrangements for the audit, and tax filing for you.

How to open a corporate bank account in Malaysia

Foreign businessmen who set up companies in Malaysia can open bank accounts if they provide the following set of documents, which are compulsory for most the banks:

1. Complete a bank account application form;
2. Recommendation of an introducer;
3. Company’s stamp;
4. Copies of the passports of the company’s directors.

The directors will also have to provide several documents of the company which has to be presented in the form of certified true copies provided by the company’s secretary.

The following documents are required by all banks in Malaysia:

1. Resolution from the Board of Directors for the opening of the bank account;
2. List of directors;
3. Registered office address;
4. Constitution of Company (if any);
5. Certificate of incorporation;
6. Proof of the fact the company’s directors is not bankrupt.

After submitting all the documents to the bank, all directors and authorized persons are required to be physically present at the bank at the time of opening of bank account at the bank. This is to avoid rampant cases of money laundering in Malaysia. To ease the process of opening the bank account, you may appoint an agent to assist in the opening of a bank account in Malaysia.

FAQ (Frequently Asked Questions)

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Photo Credits: Photo by Walkerssk on Pixabay