Setting Up a Foreign Owned Company in Malaysia

What Is the Process to Register a Foreign-Owned Company in Malaysia?

Malaysia continues to solidify its position as one of Southeast Asia’s most attractive investment destinations. Last year in 2024, the country achieved a historic milestone with RM378.5 billion in approved investments, marking a 14.9% year-on-year increase and the highest in the nation’s history.

These investments spanned 6,700 projects across key sectors, generating over 207,000 new jobs and reinforcing Malaysia’s economic resilience and growth trajectory.

The services sector attracted the majority of investments, receiving RM252.7 billion or 66.8% of the total approved investments.
Foreign investments accounted for RM170.4 billion, with the United States leading at RM32.8 billion, followed by significant contributions from Germany, China, and Singapore.

This robust investment performance underscores Malaysia’s strategic initiatives to foster a conducive business environment, leveraging its skilled workforce, strategic location, and pro-business policies.

Find out the Key Considerations Before a Foreigner Starts a Business in Malaysia

The following guide provides information about setting up a company setup company in Malaysia, how to do business and how to start your own business in Malaysia.

What are the Basic Requirements to Set Up a Company in Malaysia?

A Private Limited Company, denoted as ‘Sendirian Berhad’ or ‘Sdn. Bhd. remains Malaysia’s most common business structure for local and foreign entrepreneurs.

Company Incorporation Requirements (as per Companies Act 2016):

1. Minimum Number of Directors:
   
   • At least one (1) director who is ordinarily resident in Malaysia (i.e., has a principal place of residence in Malaysia).
     
   • The director must be at least 18 and not disqualified under the Act. 
2. Company Secretary:
   
   • Must appoint a qualified company secretary who is either:
     
     • A member of a professional body prescribed by the Minister of Domestic Trade and Consumer Affairs; or
       
     • Licensed by the Companies Commission of Malaysia (SSM). 
3. Minimum Paid-Up Capital:
   
   • The minimum paid-up capital is RM1. However, depending on the industry and licensing requirements, higher capital may be required. 
4. Registered Office:
   
   • A registered office in Malaysia must be established to address all communications and notices. 
5. Company Name:
   
   • SSM must approve the proposed company name and should not be identical to existing company names or contain prohibited words.

Learn more about – Foreign Company set up options in Malaysia

 

What Are the Steps to Set Up a Foreign-Owned Company in Malaysia?

1. Choose the Appropriate Business Structure

Foreign investors can select from several business entities:

• Private Limited Company (Sdn. Bhd.): Allows up to 100% foreign ownership in most sectors.
  
• Branch Office: An extension of the parent company; suitable for activities aligned with the parent company’s operations.
  
• Representative Office: For market research or liaison activities; not permitted to generate income.
  

Note: Certain sectors, such as banking, education, and telecommunications, may have specific equity restrictions.

 

2. Conduct a Company Name Search and Reservation

• Platform: Use the MyCoID portal to search and reserve your company name.
  
• Fee: RM50 per name application.
  
• Validity: Once approved, the name is reserved for 30 days, extendable for another 30 days at no additional cost. 

3. Prepare and Submit Incorporation Documents

Within three months of name approval, submit the following to SSM:

• Form 13A: Application for company name search.
  
• Constitution (if any): Optional; if not adopted, the company will operate under the provisions of the Companies Act 2016.
  
• Details of Directors and Shareholders: Including identification and residential addresses.
  
• Declaration by a Director: Stating compliance with the Companies Act 2016.
  
• Statutory Declaration: This is made by a person before appointment as a director.
  

Note: All documents must be in Bahasa Malaysia or English. If in another language, a certified translation is required.

 

4. Pay the Registration Fee

The registration fee is based on the company’s authorised share capital:

Share Capital (RM)	Registration Fee (RM)
Not more than 1 million	5,000
Over 1 million up to 10 million	20,000
Over 10 million to 50 million	40,000
Over 50 million to 100 million	60,000
Over 100 million	70,000

 

5. Obtain Certificate of Incorporation

Upon successful submission and payment, SSM will issue:

• Notice of Registration: Typically, within one working day.
  
• Certificate of Incorporation: Upon request and payment of the prescribed fee. 

6. Post-Incorporation Compliance

After incorporation, ensure the following:

• Registered Office: Maintain a physical office in Malaysia.
  
• Company Secretary: Appoint a qualified company secretary within 30 days.
  
• Business Licenses: Obtain necessary licenses based on business activities (e.g., WRT license for wholesale/retail trade).
  
• Tax Registration: Register with the Inland Revenue Board (LHDN) for corporate tax purposes.
  
• Social Security: Register with the Employees Provident Fund (EPF) and Social Security Organisation (SOCSO) for employee contributions.

 

7. Open a Corporate Bank Account

Choose a Malaysian bank (e.g., Maybank, CIMB, HSBC) to open a corporate account. Requirements typically include:

• Certificate of Incorporation
  
• Company Constitution (if any)
  
• Board Resolution to Open an Account
  
• Identification Documents of Directors and Signatories 

8. Annual Compliance Obligations

Ensure ongoing compliance by:

• Filing Annual Returns: Within 30 days of the anniversary of incorporation.
  
• Holding Annual General Meetings (AGMs): Not mandatory for private companies unless stipulated in the constitution.
  
• Audited Financial Statements: Prepare and submit annually.

 

Equity Policy

The Companies Act, 1965, does not stipulate any equity conditions on Malaysian incorporated companies. However, to increase local participation in business, the government encourages joint ventures between Malaysian and foreign investors. Depending on the activities undertaken, specific equity conditions may be imposed for particular approvals, operating licences, permits or registrations by the regulating Ministries/Agencies.

With the liberalisation in equity policy for setting up a company in Malaysia, foreign investors generally could hold 100% equity in majority industries except for strategic sectors of national interest, such as water, telecommunications, ports, energy, etc. Nevertheless, foreigners are advised to confirm whether the proposed business activities are permitted and the requirements for a foreign set-up in Malaysia.

For the manufacturing sector, please refer to the Equity Policy in the Manufacturing Sector

For the Services sector, please refer to Liberalisation of the Services Sector in Malaysia

 

Business Licenses

For every industry, there are specific sector regulations issued by the relevant governmental departments. These include rules that could restrict a company’s foreign equity ownership, requiring higher paid-up capital requirements and prior regulatory approval before business operations (i.e. specific approvals, business licences, permits or registrations).

Business licences can be categorised into three different logical groups, namely:

(For further details, please refer to Business Licences in Malaysia)

1. General licences
   • Company registration with SSM.
   • Income tax registration.
   • Employees Provident Fund (EPF) registration.
   • Social Security Organisation (SOCSO) registration.
2.  Sector Industry Specific licences

Applicable to businesses in regulated sectors such as:

• Manufacturing.
• Construction.
• Banking and finance.
• Education.
• Healthcare.

1. Activity-Specific licences

Required based on specific business activities, such as:

• Import/export licenses.
• Halal certification.
• Food and beverage licenses.

 

Wholesale, Retail Trade (WRT) License

The most common license required for a foreign-owned company is the WRT license.

This WRT license applies to any Foreign Participation (i.e. foreign equity at 51% and above) in the Malaysian Distributive Trade Services, include wholesalers, retailers, franchise practitioners, direct sellers, suppliers, who channel their goods in the domestic market, and commission agents or other representatives including those of international trading companies. The business sector requires WRT licenses before they can apply for a professional work permit. 

For WRT, the minimum paid-up capital requirement is RM 1 million, with the company’s complete set-up, i.e., business premises supported with a valid tenancy agreement, phone line, etc.

 

Visa / Pass to Stay in Malaysia

Incorporating a company in Malaysia does not automatically grant foreign directors or investors the right to reside there. They must obtain the appropriate work visa or pass to stay and work in Malaysia.

Employment Pass (EP):

• Eligibility: Foreign nationals employed in managerial, executive, or technical positions.
• Validity: Typically issued for 1 to 5 years, depending on the contract.
• Requirements: Include a valid employment contract, company registration documents, and proof of the applicant’s qualifications and experience.

For further information on how to do business and how to start your own business, please refer to the articles below:-

• Visa Requirements in Malaysia
• Passes Requirements in Malaysia
• Employment of Expatriates in Malaysia
• Summary of Immigration Process
• Company’s Paid Up Capital Requirements for Employment of Expatriate
• Requirements to Apply for Expatriate Employment Pass
• Approvals Required from Agencies/ Regulatory Bodies for Employment Pass Application
• List of Positions Not Applicable for Expatriate Positions

 

To engage with the reliable services of a setup Company in Malaysia, please contact us via email.

Starting a business in Malaysia requires careful planning—from selecting the appropriate business structure to meeting regulatory and compliance requirements. While the process can seem complex, it becomes significantly more seamless with the right expertise. Partnering with a trusted corporate service provider like 3E Accounting Malaysia ensures a smooth and compliant incorporation journey. With their in-depth local knowledge and end-to-end support, you can focus on building your business while they handle the formalities.

Frequently Asked Questions