Malaysia's economic boom in the latter part of the 20th century propelled the country into rapid development as an industrialized country. The Gross Domestic Product (GDP) has faithfully increased at a rate of 6.5% over the last 50 years and steadily climbed to its current GDP per capita of $18,509.
Though Malaysia is deemed as a newly industrialized zone, the country is ranked third in Southeast Asia and ranked 29th worldwide, which is quite impressive for a small country with a population of just over 30 million. Today, Malaysia's tourism has reached new heights and is a major contributor to the country's thriving economy. In this connection, local and international investors are keen on opening a business venture or a company in Malaysia.
Types of Business Registration
There are three types of registration in Malaysia: sole proprietorship, limited liability partnership (LLP) and company Sdn Bhd (Sendirian Bedhad) or private limited by shares.
The Companies Commission of Malaysia or the Suruhanjaya Syarikat Malaysia (SSM) is the government agency that accommodates the registration of businesses and incorporation of companies. A business registration could either be a sole proprietorship or partnership whereas an LLP is ideal for startups and small to medium enterprises. It may also be the business structure of choice by professionals such as chartered secretaries, lawyers, chartered accountants for facilitating group practice.
A foreigner cannot register a business under the sole proprietorship / partnership and LLP as these are for Malaysians only unless a foreigner has availed Malaysian citizenship or is a permanent resident. A foreigner can only register a company Sdn Bhd, which could be 100% owned by him. However, there are certain types of industries (e.g. education, banking and finance, agriculture, tourism and more) that have to be at least 30% owned by local Malaysians.
Sole Proprietor/Partnership Business Registration
Registering a sole proprietor/partnership enterprise is quite straightforward. Allowable business names are personal names and trade names. An applicant could download Form A from SSM's website with information on the approved business names, location of the business, date of start of business, information on the owner(s) and/or partners and type of business.
Attached to the application form is a photocopy of the applicants/partner's identification card, permit or license from the concerned government agency such as the Department of Education (for schools and colleges). Even if a business is registered with SSM, it is necessary for the owner or partners to obtain the approval letters or permits and licenses from other concerned authorities for the business to be fully operational.
Foreign Company Registration
A foreign company is allowed to put up a firm in Malaysia by either registering the company with the Companies Commission of Malaysia (SSM) or by incorporating a new or existing local enterprise with SSM. Though foreigners are now allowed to own their company Sdn Bhd 100%, it is still mandatory for companies aiming to do business with any government department, to seek approval from the Foreign Investment Committee or FIC. In this case, 30% of the capital must come from local ethnic Malaysians.
An applicant must first conduct a name search to ensure against duplication. The name of the foreign company must be the same registered one in its country of origin. Approved name by SSM will be reserved for a maximum of three months from the date of approval.
The required documents for registration must be presented to SSM within three months from the date the company name was approved.
The required registration documents are: a certified copy of the certificate of registration or incorporation of the foreign company, a certified copy of the foreign company's stature, charter and articles of association and Form 79 (which gives particulars and changes in particulars of directors. It is also required that the foreign applicant issues out a power of attorney authorizing a person to act on behalf of the foreign firm. The representative or agent of the foreign company must submit Form 80. The other requirements could be asked for submission by the SSM.
Registration fees are based on the nominal share capital of the company converted to Ringgit Malaysia is necessary. When the applicant has complied with all the requirements, fees, permits and licenses, SSM will then issue a certificate of registration to the foreign company.
This process could take a minimum of 21 days, but the preparation of the required documents could take months. Many entrepreneurs opt for a shelf company so they could immediately start the business. The name of the shelf company could be changed is approved by the Registrar of Companies.
It is more convenient to hire the services of Servcorp when registering a business in Malaysia. The little details entailed in the registration process, e.g. work permit, liabilities of the directors and shareholders, MOA, AOA, bank resolutions to open an account and more need to be thoroughly understood. Servcorp has the exact solutions at the right cost.
Published by: Valerie Wong