Things to consider when opening business in Malaysia

1. What is a Sendirian Berhad and why should I select this option?

Sendirian Berhad is the local term for “Private Limited” in Malaysia. A private limited company is the most popular business entity in Malaysia. It has a separate legal status from that of its shareholders. Directors have limited liability for the debts and losses of the company. It usually has the abbreviation “Sdn Bhd” as part of its name.

2. Can a Private Limited Company go public and publicly raise funds?

Please take note that a private company is strictly prohibited to offer shares or debentures or invite the public to deposit money pursuant to Section 43 CA 2016 unless the private company converts into a public company and has obtained approval from SSM.

3. What are the requirements to incorporate a Private Limited Company?

The requirements to form a private limited company (identified through the words ‘Sendirian Berhad’ or ‘Sdn. Bhd.’ appearing together with the company’s name) are:

1. A minimum of one subscriber to the shares of the company (Section 14 CA);
2. A minimum of one resident director (Section 196 CA 2016); and
3. A company secretary who can be either:

• An individual who is a member of a professional body prescribes by the Minister of Domestic Trade Cooperative and Consumerism; or
• An individual licensed by the Companies Commission of Malaysia (SSM)

1. a minimum paid-up capital of RM1 only
2. a minimum of one (1) subscriber to the share(s) of the company
3. a minimum of one director who are at least 18 years of age and are residing in Malaysia.
4. He/she is not a bankrupt and has not been convicted for any of the offences prescribed under Section 198 of the Companies Act 2016.
5. a minimum of one (1) Company Secretary. (Company Secretary must be a member of any one of the prescribed professional bodies or licensed by the SSM). Company Secretarial services can be provided to you at a fee.
6. must have a registered office in Malaysia to which all communications and notices may be addressed. It is normal practice in Malaysia to have the secretarial office as the registered office. (This is included as part of our trusted Company Secretary’s Services)

4. How long does it take to incorporate a Private Limited Company in Malaysia?

Based on Pros & Cons Advisory’s past experiences with SSM, the entire incorporation process will take 5-10 working days* from the date that directors and shareholders sign the incorporation documents at our office.

*Please note that the incorporation timeline is dependent on the accuracy and completeness of information, documents and also subject to the availability and stability of SSM’s MyCoID online system.

5. What the requirements to act as Director for a Private Limited Company?

• Natural person.
• Minimum age of 18 years and above.
• He or she is not a bankrupt and has not been convicted any offence prescribed under Section 198 of the Companies Act 2016

6. Can a foreigner become a Company Director of a Private Limited Company?

Any person aged above 18 years old can be appointed as director and before a person can be appointed as a director, he has to consent in writing to be a director and make a declaration that he is not disqualified from being a director due to:-

1. being an undischarged bankrupt;
2. being convicted of any offence (whether in or outside Malaysia)

• in connection with the promotion, formation or management of a corporation;
• involving bribery, fraud and dishonesty or;
• under section 213, 217, 218, 228 or 539, within a period of five years preceding the date of this declaration;
• disqualified by the Court under section 199 (Section 198 of the CA 2016)

Being imprisoned for any offence referred to above within the period of five years immediately preceding the date of this declaration

That he consents to act as a director of the company

In summary, a foreigner can be appointed as a director provided, he is not disqualified from being a director and company has fulfilled the requirements under Section 196 of the Companies Act, 2016, i.e. must have at least one (1) director who each has his principal place or only place of residence within Malaysia.

Please note that a foreigner would be considered as resident director if his principal place or only place of residence is within Malaysia i.e., he holds a valid employment pass or permanent resident pass in Malaysia.

Fulfilment of a Resident Director

Pursuant to Section 196 (1) of the Companies Act 2016, a company must at least have one (1) director who has his principal place or only place of residence within Malaysia. The requirement of residency is mainly to ensure that there is a point of contact in Malaysia and for purposes of enforcement.

Malaysia Resident refers to a citizen or permanent resident of Malaysia or a person with an employment pass.

7. What are incorporation services of Pros & Cons consist of?

• Submission of company name for approval
• Preparation of pre and post incorporation documents and other required forms
• Submission of incorporation documents to Companies Commission of Malaysia
• Submission of post-incorporation documents (super form)
• Resolution for opening of bank account
• Provision of 5 sets of documents duly certified true copies
• Provision of company’s share certificate for shareholders
• Updating the company’s register and minutes books

8. What information is needed for bank account opening?

Different bank(s) will have different requirements as to the opening of bank account and some banks may even impose requirement on presence of physical office before processing your application for bank opening.

You are advised to visit the Bank to understand the bank account opening requirements and procedures. We will help to prepare the resolution for bank account opening. Please furnish us with the following information:-

• Bank name, branch and address.
• Type of account – e.g. current account, internet banking, foreign currency account etc.
• Sample/Format of opening account resolution as provided by the bank.
• Certified True Copies will be provided by the Company Secretary
• Authorised signatories’ details (name as per IC, IC number, designation (if not Company Director)
• Mode of operation (sole or joint or others)

9. When can a new company proceed with bank account opening?

Once the company has been successfully incorporated (issuance of Notice of Registration (Sec 15) by SSM), you can proceed with the application for bank account opening together with all the relevant documents required such as resolution for bank account opening, certified true copy of authorisers’ IC/Passport and statutory forms.

10. Can a corporate bank account be opened without a physical presence in Malaysia and how long does it take?

Generally, banks in Malaysia require all the Directors/ Authorised Signatories to be physically present in Malaysia for the signing of official documentation at the time of opening of Bank account.

However, some banks accept documents that are signed in–person at one of their overseas branches or witnessed by a notary public. Additionally, the banks may require additional documents on a case-by-case basis.

Be forewarned that all banks in Malaysia must comply with stringent laws and regulations. The banks will carry out a comprehensive series of checks and investigations on their potential clients before opening a new account for a company. This is not only to safeguard their risks against any potential default, but also are a part of their regulatory compliance and stringent anti-money-laundering policies. Thus, a company involved in dealings that are not above-board will not find it easy to engage in such transactions.

A bank always reserves the right to request the beneficial owner to be physically present prior to the approval of a bank account.

11. When should the Annual General Meeting (“AGM”) be held after the company is established?

Section 248 CA 2016 states that the directors of every company shall prepare financial statements within 18 months from the date of its incorporation; and subsequently, within 6 months of its financial year end.

The circulation of financial statements and reports for a private company, shall be within 6 months of its financial year end and shall lodge with the Registrar within 30 days from the financial statements and reports are circulated to its members pursuant to Section 258 & 259 CA 2016.

Pros & Cons trusted Company Secretary will handle all this for you. We will also send you email alert(s) to remind you on the key deadlines and advise you on the actions required.

12. What is an Annual Return?

Pursuant to Section 68 of the Companies Act 2018, all companies are required to lodge an annual return with the SSM every calendar year no later than 30 days from the anniversary of its incorporation date.

What is the information content in an Annual Return?

The annual return of a company shall contain the following particulars:-

• The address of the registered office;
• The nature of its business;
• The address of the places where its business is carried on including branch, if any;
• The address at which its register of members are kept, if not kept at the registered office;
• The address at which its financial records are kept, if not kept at the registered office;
• In the case of a company with a share capital, the summary of its shareholding structure, including debentures;
• The total amount of its indebtedness;
• The particulars of directors, managers, secretaries and auditors;
• The list of its members; and
• Such other information as the Registrar may require

Pros & Cons’s appointed Company Secretary will handle the Annual Returns on behalf of your company.

Should you require more information on how to incorporate a private limited company in Malaysia and its formation cost, please fill in the contact form