SFM CONSULTING FIRM SDN. BHD.

Start a New Business Which is Allowed For Foreigners in Malaysia

Company Registration in Malaysia and Business Entities for Foreigner 

Start Your New Business in Malaysia! 

There are governing bodies in every country that oversee the business registration and in Malaysia, Suruhanjaya Syarikat Malaysia (SSM) is responsible to oversee business registration in Malaysia. When you are ready to start your own business then you must be familiar with the business model in Malaysia. There are 8 different business entities to choose from. Depending on your residency status, you are limited to the entities you can register. For example, if you hold local residency then you can register most of the business entities. However, foreigners are limited to only 2 business entities. We will be going in-depth about the business registration process in Malaysia with all the guidelines you will need. 

The Governing Body in Malaysia 

Suruhanjaya Syarikat Malaysia or SSM in short regulates all the companies and businesses in Malaysia. There are some strict guidelines you must follow to get your company registration in Malaysia. This statutory body was formed in a merge between the Act of Parliament and Business Affairs in Malaysia. 

Register Your Business 

SSM regulates the business models and following the guidelines you must submit the necessary documents to SSM. The main steps to register your company in Malaysia are provided below: 

Business Entities Available for Registration in Malaysia 

We have briefly said about the entities in Malaysia before, there are 8 different types which you can register. Knowing the entity that best suits you can benefit you in the long run. Reading this article, you will have a clear idea about all the business entities available in Malaysia and which one suits you best. The business entities are provided below: 

  1. Sole Proprietorship 
  1. Partnership 
  1. Private Limited Company (Sdn Bhd) 
  1. Company Limited by Guarantee (CLG) 
  1. Unlimited Company (Sdn) 
  1. Public Limited Company (Bhd) 
  1. Foreign Company 
  1. Limited Liability Partnership (LLP) 

Among the business entities, foreigners can register a Private Limited Company and Foreign Company in Malaysia. Although registering a Private Limited Company is enough for a foreigner as they can hold 100% ownership of the company. These 8 business entities can be categorized into 3 types as we will elaborate in the table below: 

Business Categorized Registration of Business (ROB) Registration of Company (ROC) Limited Liability of Partnership (LLP) 
Entities Sole Proprietorship Partnership Private Limited Company Company Limited by Guarantee Unlimited Company Public Limited Company Foreign Company Limited Liability Partnership 
Governing Act Registration of Business Act 1956 Companies Act 2016 Limited Liability Partnerships Act 2012 
Liabilities Unlimited liability of business owner Company’s liability separates from Owner’s liability Partnership and private Limited Company combined liabilities 
Contributions Own or partner Share capital Contribution from partner 
Tax Category Personal income tax Corporate tax Corporate tax 

Sole Proprietorship 

As an entrepreneur, you might want to start a small to medium-size business in Malaysia. The sole proprietorship is one of the simplest and easiest forms of business. A single person can easily run this business. This business entity is the best for an entrepreneur who wants a startup with small to medium size business planning. The positive side is he/she can easily transform his sole proprietorship to a Private Limited Company when his/her business starts to grow. The conversion process is simple. Read the table below to see the advantages and disadvantages of a sole proprietorship in Malaysia

Advantages Disadvantages Suggested Person 
Cheaper to register Simple registration process compared to other business models fewer formalities to follow Renewal time is annual All liabilities must be handled by a single person/owner Personal income tax can get expensive to bear Permanent resident or citizen of Malaysia 

Partnership 

As an entrepreneur, you might want to start a business with a partner. As the name suggests, a partnership requires at least 2 partners to register. The difference being the liabilities will be shared between the partners instead of a single person/owner like a sole proprietorship. The liabilities are divided so the risk is less compared to sole proprietorship. The minimum partners required is 2 and a maximum of 20. This type of business entity is common among lawyers, accountants, doctors, etc. The downside to this business entity is that not all foreigners can register this. If you are a citizen in Malaysia or hold a permanent residency, you are eligible to register a Partnership business in Malaysia. The Pros and cons are provided below: 

Advantages Disadvantages Suggested Person 
Cheaper to register Simple process of registration Less formalities to follow Renewal time is annual All liabilities must be handled by a single person/owner Personal income tax can get expensive to bear Permanent resident or citizen of Malaysia 

Private Limited Company (Sdn Bhd) 

A private company limited by shares is called Sdn Bhd Company in Malaysia. This business model is registered as a separate legal entity that can own properties, able to earn revenue. As this is completely a separate entity, your personal capital is not at risk. You are able to incorporate Sdn Bhd being the only director and shareholder of the company without the necessity of a partner. The benefits are provided below with the disadvantages in the table: 

Advantages Disadvantages Suggested Person 
Relatively cheaper to incorporate Separated liabilities Scalability possible by increasing the paid-up capital Foreigner can hold 100% ownership Limitation of 50 shareholders Not able to raise public funds Restrictions on share transfer At least 1 director must-have Malaysian residency People looking to start a small to medium-size business in Malaysia 

Company Limited by Guarantee (CLG) 

This is a public company. This company consists of guarantors with no shareholders. The members are not liable to contribute capital into the company. However, they are liable to pay debts if the company closes for any reason. The profits made in this type of company are strictly purposed for the activities stated in the constitution. The advantages, with some disadvantages, are provided below: 

Advantages Disadvantages Suggested Person 
No capital contributions are required by the member’s Promotion of charity, religion, etc. is possible in this business entity Exemption from paying corporate tax is possible Expensive and difficult to incorporate Strict rules and formalities Profits earned must be used for the purpose of the organization Inability to transform into other business entity Members are liable to pay the debt if the company faces loss or closes down Non-Profit organizations (NGO) 

Unlimited Company (Sdn) 

You can register an unlimited company for the formation of a mutual fund for holding assets for investment purposes. This business entity has unlimited liability among the shareholders. Like in Partnership, unlimited company has liabilities with the difference being that the shares are free to sell back to the company. Unlimited company has some advantages as well as disadvantages which we will show in the table below: 

Advantages Disadvantages Suggested Person 
Ownership of share is flexible Choice of both private and publicly available Expensive to setup and registration complications Strict laws to follow Shareholders are liable for the company’s debt Mutual Funds 

Public Limited Company (Bhd) 

This company is limited by shares just like Sdn Bhd company. The key difference being the shares can be offered to the public and there is no limit to shareholders. 2 directors are required as a minimum for a public limited company. It can easily take a long time to register this business entity because there are strict laws and formalities. The key advantages and disadvantages are provided below: 

Advantages Disadvantages Suggested Person 
Easiest to raise funds from the mass public Flexible to shares for owners Expensive and hard to register Strict laws and processes to follow Anyone with large business plans 

Foreign Company 

If you are a foreigner with an already established business in another country, then this business entity will best fit you. Through this business incorporation, you can set up a branch office in Malaysia without any permanent residency or citizenship. In Malaysia, foreigners are limited to Sdn Bhd Company and Foreign Company in Malaysia. There are advantages as well as disadvantages incorporating this type of company which we will provide below in the table: 

Advantages Disadvantages Suggested Person 
Can conduct business in Malaysia without a permanent residency or citizenship Can be expensive and difficult to register Strict laws and formalities to follow Not possible to raise public fund Already established business owners planning to expand business in Malaysia 

Limited Liability Partnership 

This business entity is overseen by the Limited Liability Partnerships Act 2012. This business entity is comparatively new. As a result, the registration of this company is not common. This business entity is a combination of Sdn Bhd and Partnership. The differences are there must be 2 partners minimum and has no limit of the maximum number. The advantages and disadvantages are provided below: 

Advantages Disadvantages Suggested Person 
No limit on the number of partners Comparatively cheap to incorporate Flexibility among partners Public fundraising is not possible As this business entity is overseen by a comparatively new law, it can be confusing to understand Citizen or permanent residency holders with small business plan in mind and want to start with partners 

Registration of Company in Malaysia 

Reading this article should give you the knowledge of the companies available for you to register and choose the entity that best suits you. Now, knowing all the differences and benefits of the business entities, you want to incorporate your company in Malaysia. There are certain processes and requirements to register a company in Malaysia. These requirements must be met for successful company registration. 

Conclusion 

With continuous economic growth in Malaysia, entrepreneurs are choosing Malaysia as their new business startup. Even the already established companies are registering companies in Malaysia to expand into the Malaysian market. We here at S & F Consulting Firm are experts in company registration. Please feel free to contact us regarding any issue or consultancy regarding business registration in Malaysia. 

FAQ

Can a foreigner register a company in Malaysia?

Yes can, nonresidents can register 100 percent shareholding company. No local, Malaysian need unless the nature of business is timber. There are some advantages, speak with a secretary, if local partner holds majority shares. Foreigners can not do some business unless a local person holds company shares.

How long to register a company in Malaysia?

Name approval: 1-2 days. Incorporation: 2 days. Sometimes takes longer when proposed names reject as no available. So, we suggest proposing 3-4 names to check in SSM.

How much does it cost to register a company in Malaysia?

Government fees:
1) Name submission and approval and Incorporation: RM 1010/-.
2) Signboard and Premise Licenses fees RM 2000.
3). EPF and SOCSO- RM 200-400 (anyone can submit online and collect PIN).

How to register a company in Malaysia?

1. Contact the expert.
2. Sit with Company Secretary (expert) and discuss legal responsibilities.
3. Provide needful basic information of directors and business.
4. Sdn Bhd company is the right format for foreigners.
5. Appoint Secretary to process the incorporation papers.
6. Apply for signboard and premise license after company incorporation.
7. SSM is a government authority where applies for incorporation.

Can a foreign shareholding company open a bank account?

Yes, can. But never try to a local bank for wasting time. You can try HSBC, Standard Chartered, OCBC, and UOB Bank.

About company

Since 2012 S & F Consulting Firm, sister concern SFM CONSULTING FIRM SDN. BHD. (Company No. 1179732-P) and S & F CONSULTING FIRM ASIA SDN. BHD. ( Company No. 1298464­-H)

Address: A-03-13 Tropicana Avenue, No 12 Persiaran Tropicana, Tropicana Golf & Country Resort PJU3, 47410 Petaling Jaya, Selangor, Malaysia,
Contact: +6011-3690-1890 and +6011-31234372 (Available WhatsApp) , Email: info at sfconsultingbd dot com

Call Us For Following Licenses:

1). Company Incorporation

2). Signboard & Premise License

3). WRT License

4). Export and Import

5). EPF and SOCSO

6). Long Time Visa and MM2H

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