Located in Southeast Asia, Malaysia is a tropical country with a population of 27.3 million featuring a unique multi-racial society comprising of Malay, Chinese, Indian, as well as indigenous races like the Iban, Dayak, Kadazan, Dusun and others. Being a country of rich cultural heritage, Malaysia boasts a unique blend of both modern and traditional.
Malaysia has transformed herself from a commodity-based economy to an advanced export-driven economy. The current diverse and robust economic activities comprise of manufacturing, construction, information and communication technology, maritime, oil and gas, biotechnology, agriculture, retail, tourism, banking and financial, healthcare and services. Towards achieving the status of being a developed nation, Malaysia is guided by the national framework known as the Vision 2020.
Due to her strategic location, developed infrastructure, productive workforce, and various other factors, Malaysia provides for a vibrant and conducive business environment. Supportive Government policies ensure that the country’s market-driven economy is facilitative for conducting business.
Malaysia offers abundant opportunities for those who wish to pursue business in the country. In doing so, there are fourways of carrying out business in Malaysia, namely:
- Incorporating a local company;
- Registering a foreign company;
- Registering a sole proprietorship; or
- Registering a partnership.
The Companies Commission of Malaysia (SSM), established on 16 April 2002, serves as an agency to incorporate companies and register businesses. SSM also ensures compliance with business and corporate legislations through comprehensive enforcement and monitoring activities. SSM offers efficient and fast service for the incorporation of companies, registration of businesses and lodgement of statutory documents. SSM has nationwide presence through its headquarters located in Kuala Lumpur as well as branch offices in all the states in Malaysia. SSM also serves as a depository and custodian of corporate and business information. Such information is vital to enable the business community to make informed business decisions and to enable members of the public to carry out verifications.
INCORPORATION OF A LOCAL COMPANY IN MALAYSIA
Incorporation of a local company is carried out pursuant to the provisions of the Companies Act 1965 (‘CA’). There are three (3) types of companies that can be incorporated under the CA namely:
- A company limited by shares;
- A company limited by guarantee; or
- An unlimited company.
COMPANY LIMITED BY SHARES
The most common type of company incorporated for purposes of carrying on business is a company limited by shares. A company limited by shares may be incorporated as a:
- Private Limited Company – identified through the words ‘Sendirian Berhad’ or abbreviation ‘Sdn. Bhd’ as part of the company’s name.
- Public Limited Company – identified through the words ‘Berhad’ or abbreviation ‘Bhd’ as part of the company’s name.
The requirements to form a local company are:
- A minimum of two (2) subscribers to the shares of the company (section 14 of the CA);
- A minimum of two (2) directors (section of the 122 CA); and
- A company secretary who can either be:
- an individual who is a member of a professional body prescribed by the Minister of Domestic Trade and Consumer Affairs; or
- an individual licensed by SSM.
Both the director and company secretary shall have their principal or only place of residence within Malaysia (sections 122 and 139 of the CA respectively).
1. Name Search and Application for Name
A name search must be conducted to determine whether the proposed name of the company is available. The steps involved are:
- Completion and submission of Form 13A of the CA (Request for Availability of Name) to SSM; and
- Payment of RM30.00 fee for each name applied.
When the proposed company’s name is approved by SSM, it shall be valid for three (3) months from the date of approval.
2. Lodgement of Incorporation Documents
Incorporation Documents (as explained below) must be submitted to SSM within three (3) months from the date of the approval of the company’s name, failing which a fresh application for a name search must be done.
Incorporation Documents to be Lodged with SSM
1. Memorandum and Articles of Association
- An original copy of the Memorandum and Articles of Association shall each be stamped at a fee of RM100.00. Stamps are affixed at the stamp office of the Inland Revenue Board.
- The first directors and secretaries shall be named in the Memorandum and Articles of Association.
- The subscribers to the company’s shares shall sign the Memorandum and Articles of Association in front of a witness.
- Table A of the Fourth Schedule in the CA may be adopted as the Articles of Association of the company (section 30 of the CA).
For the incorporation of a private company, the Articles of Association (section 15 of the CA) shall contain the following stipulations:
- Restriction on the right to transfer the company’s shares;
- Limitation on the number of members not to exceed 50;
- Prohibition on any invitation to the public to subscribe the shares/debentures of the company; and
- Prohibition on any invitation to the public to deposit money with the company.
2. Form 48A (Statutory Declaration by a Director or Promoter before Appointment)
The director or promoter declares under oath that:
- he/she is not a bankrupt; and
- he/she has not been convicted and imprisoned.
3. Form 6 (Declaration of Compliance)
This declaration states that all the requirements of the CA have been complied with. It must be signed by the company secretary handling the registration and who is named as the first secretary in the Memorandum and Articles of Association.
4. Additional documents:
- Original Form 13A of the CA.
- A copy of the letter from SSM approving the name of the company.
- A copy of the identity card of each director and company secretary or a copy of the passport where a foreign director is appointed.
Each application for the incorporation of a company shall be accompanied with payment as per the schedule below:
|AUTHORISED SHARE CAPITAL (RM)
|Up to 100,000
|100,001 – 500,000
|500,001 – 1 million
|1,000,001 – 5 million
|5,000,001 – 10 million
|10,000,001 – 25 million
|25,000,001 – 50 million
|50,000,001 – 100 million
|100,000,001 and above
Certificate of Incorporation
A Certificate of Incorporation will be issued by SSM upon compliance with the incorporation procedures and submission of the duly completed incorporation documents.
Generally, a local company is required to:
- Convene an annual general meeting (AGM) yearly;
- Lodge the annual return and audited accounts yearly;
- Lodge statutory documents when there are changes in the registered particulars [Form 49- Return Giving Particulars in Register of Directors, Managers and Secretaries and Changes of Particulars], registered office [Form 44 - Notice of Situation of Registered Office and Office Hours and Particulars of Changes] or matter relating to share capital of the company [Form 24 - Return of Allotment of Shares], and
- Lodge various other statutory documents that need to be notified or registered with SSM (e.g. Form 11 (Notice of Resolution), Form 25 (Statement Containing Particulars of Shares Allotted Otherwise Than For Cash), Form 27 (Notice of Redemption of Redeemable Preference Shares), Form 28 (Notice of Increase in Share Capital) etc).
Section 143(1) of the CA requires a company to hold its first AGM within 18 months of its incorporation. The subsequent AGM must be held once in every calendar year and not more than 15 months after the holding of the last preceding AGM. If the company holds its first AGM within 18 months after the date of its incorporation, the company need not hold an AGM for the year of incorporation or the following year.
Section 165 of the CA requires all companies to lodge the annual return within one (1) month of the AGM. The annual return of a company shall be in accordance with the Eighth Schedule of the CA. The annual return must include:
- a copy of the last audited accounts comprising the balance sheet and profit and loss accounts certified by a director, manager or secretary of the company (including every document required to be attached thereto); and
- a certified copy of the auditor’s report.
For an exempt private company which is solvent, the attachment of the audited accounts may be substituted by a certificate signed by a director, a company secretary and auditor stating that:
- the company is an exempt private company;
- the audited accounts in compliance with the provisions of the CA, has been tabled in the company’s AGM; and
- the company is able to meet it liabilities as and when they fall due as at the date of the audited profit and loss account.
The certificate must either be in Bahasa Malaysia or English and if it is in any other languages, the translation in Bahasa Malaysia or English must be provided.
* NOTE: An exempt private company is a private company having not more than 20 members, none of whom are corporations having direct or indirect interest in its shares.
The lodgement fee for an annual return is as follows:
- a public company – RM350.00.
- any other company – RM150.00.
Section 167 of the CA requires every company and the directors and managers thereof to keep such accounting and other records that would enable true and fair profit and loss accounts and balance sheets to be prepared from time to time. These accounts must be prepared in accordance with the approved accounting standards.
As required under section 169 of the CA, these accounts must be tabled at the AGM. For the company’s first accounts, it must be laid within 18 months after its incorporation. Subsequent accounts must be tabled in every calendar year at an interval of not more than 15 months. The accounts must be made up for the period since the preceding account to a date of not more than six (6) months before the date of the AGM.
The accounts shall include:
- a profit and loss account;
- a balance sheet;
- a directors’ report;
- an auditors’ report;
- accompanying notes and statements to the accounts; and
- group accounts (if applicable).
The audited accounts must be certified by a director or a manager or a company secretary to be a true copy of such documents. The audited accounts lodged must either be in Bahasa Malaysia or English.
Notice of Change of Directors, Managers and Secretaries or Changes of their Details
Section 141(6) of the CA requires a company to, within one (1) month after it is incorporated, lodge the Return Giving Particulars in Register of Directors, Managers and Secretaries and Changes of Particulars (Form 49) containing details of its directors, managers and secretaries. Whenever there is any change in the officers of the company, details of the change must also be lodged with SSM using Form 49 within one (1) month from the date of such change.
Notice of Change of Registered Office
Section 119 of the CA requires every company to have a registered office within Malaysia to which all communications and notices may be addressed. The registered office must be established from the day the company begins to carry on business or from 14 days after the date of its incorporation, whichever is earlier. A Notice of Situation of Registered Office and Office Hours and Particulars of Change (Form 44) must be lodged with SSM within one (1) month after the date of incorporation or date of any such change.