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What is a Malaysia Company?

What is a Malaysia Company? In Malaysia, there are three common types of business entities if you want to register for a company; they are Sole Proprietorship (i.e. Enterprise or Trading), Partnership (e.g. Evelyn and Partners), and Sendirian Berhad (i.e. Sdn Bhd or Private Limited). The first two business types, Sole Proprietorship and Partnership, are the popular business options among the entrepreneurs because they are easy to setup and affordable.

Definition of a Malaysia company

The private limited company, on the other hand, is another popular option if you wanted to setup a company that is a separate legal entity (i.e. a company that can acquire assets, go into debt, enter into agreements, as well as to sue or be sued in its own name).

According to the Companies Act, a private limited company is defined as:

A company that is incorporated as a private company pursuant to sec 15;
Any company that is incorporated as a private company pursuant to sec 26(1);
Any company that was a private company under the repealed written law (before the commencement of the Companies Act)

Under Companies Act 2016, a private company must fulfil the following characteristics:

A company limited by shares (s42(1))
Its maximum number of shareholders is 50 (s42(1))
There is a restriction of the transfer of its shares (s42(2))
It must not offer its shares or debentures to the public (s43(1)).
No share allotment or debentures with a view of offering them to the public (s43(1)).
It is not allowed to invite the public to deposit money with the company (s43(1)).

General Info

1. Legal Entity

It is a legal entity separate and distinct from its shareholders and directors.
It is a taxable entity in its own right

2. Language

Main language: Malay
Secondary language: English, Chinese

3. Authority

Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, SSM)
- A statutory body in Malaysia that governs and regulates companies and businesses.
- It is the leading authority in Malaysia for the improvement of corporate governance.
- SSM was formed because of a merger between the Registrar of Companies (“ROC”) and the Registrar of Businesses (“ROB”) in Malaysia and came into operation on 16 April 2002.
- SSM is an agency to incorporate companies and register business.
- It provides company and business information to the public.
- It ensures compliance with business registration and corporate legislation in Malaysia.
- Legislations under SSM’s purview (administration and enforcement):
  - Companies Commission of Malaysia Act 2001
  - Companies Act 2016 (Act 777)
  - Interest Schemes Act 2016 (Act 778)
  - Registration of Businesses Act 1956 (Act 197)
  - Limited Liability Partnerships Act 2012
  - Trust Companies Act 1949 (Act 100)
  - Kootu Funds (Prohibition) Act 1971 (Act 28)
  - Companies Regulations 2017
  - Interest Scheme Regulations 2017
  - Registration of Businesses Rules 1957
  - Companies Commission of Malaysia (Licensing of Secretaries) Regulations 2017
  - Limited Liability Partnership Regulations 2012
Inland Revenue Board Of Malaysia (“IRBM”)
- The statutory board under the Ministry of Finance of Malaysia.
- One of the main revenue collecting agencies of the Ministry of Finance in Malaysia.
- It was established in accordance with the Inland Revenue Board of Malaysia Act 1995.
- IRBM is responsible for the administration of direct taxes under the following Acts :
  - Income Tax Act 1967,
  - Petroleum (Income Tax) Act 1967,
  - Real Property Gains Tax Act 1976,
  - Promotion of Investments Act 1986,
  - Stamp Act 1949,
  - Labuan Business Activity Tax Act 1990.

Members

1. Directors

It is a mandatory requirement for every company to have at least one director (must be Malaysian or a Permanent Resident in Malaysia).
Minimum age limit: 18 years
Cannot be someone declared bankrupt or convicted a criminal offence before.
Must not be jailed for any offences prescribed under the Companies Act 2016 within 5 years immediately preceding his or her appointment as

2. Shareholders

All companies must have a minimum of one shareholder and a maximum of 50 shareholders.
Shareholders could either be or not be appointed as a Director of the Company.
In general, shareholders are not liable for company debts.

3. Company Secretary

Every company is mandated to appoint one company secretary.
The company secretary must be a citizen or permanent resident of Malaysia.
Must be residing locally in Malaysia.
Must be at least 18 years old and a natural person.
Must be a member of a body as prescribed in the Fourth Schedule of the Companies Act 2016 or a person licensed by the Companies Commission of Malaysia
Cannot be declared bankrupt
Must not convicted, whether in or outside Malaysia, of any offences prescribed under the Companies Act 2016

Company Name

According to the Companies Act, a company must obtain the approval from the Minister of Domestic Trade and Consumer Affairs or the Registrar of Companies before the registration of its new company name or its change of name is registered.
a) SSM’s Guidelines on Company Names
SSM has published a Complete Guideline on company name’s selection so that the public can have a reference when deciding on their company names.

b) Company Name Search with SSM Online

Go to: ssm-einfo.my
Click on the icon “Register” for new user / Click on the icon “Login” for existing user
Fill in the “e-Registration Form“ and submit
Upon successful login/registration, you can start your name search process.

c) Name reservation

Each applicant has to complete the information for the company name online
Fee: RM50 for every name applied (note: the process of company incorporation is a separate process).
The approved name will be reserved for 30 days or any longer date as allowed by the Registrar (not more than 180 days) from the date of approval.

Registered office address

Every company must have a registered office within Malaysia within 14 days after the date of its incorporation, or the day it commences its business (whichever earlier).
Please note that a registered office is not a business office. The business office is a place where business activities are conducted.
All statutory records, registers, minute books, and common seal must be kept in the registered office.

Paid-up Capital

Companies must have at least RM1 in paid-up capital for company incorporation.

Incorporation Process and Documents Needed
1. Documents/Information Needed

Particulars of directors
Particulars of shareholder
The company’s business activities
Share’s structure
Registered office address
Constitutions

2. Constitutions

The Constitutions supersedes the former Memorandum and Article of Association. It is optional upon shareholders’ approval.
For all companies were incorporated prior to January 2017, their Memorandum and Article of Association of companies remain valid unless otherwise resolved by the said companies.

3. Incorporation Process

Step 1: Company Name Reserve Application
- Name Reserve Application need to be submitted to SSM for approval of the new company’s name.
- The approved name will be reserved for 30 days from the date of lodgement of the application upon payment of the fee.
Step 2: Registering the company with SSM
- Under the new Companies Act 2016, electronic form was introduced for lodging incorporation documents.
- The new electronic form is accessible through SSM’s online MyCoID portal in which the form has replaced various forms that were previously required for incorporation (i.e. Form 6, Form 48A and M&A under the previous Companies Act 1965).
Step 3: Notice of Registration and Certificate of Incorporation
- The issuance of Notice of Registration will be done via email by SSM within 1-3 working days. It is a notice to indicate that a new company has been successfully incorporated with SSM.
- There will be no issuance of “certificate of incorporation” unless this is applied for separately and on payment of the prescribed fee.

4. Registration Fee

Name Application Fee: RM50
Registration Fee: RM 1,000

5. After Incorporation Process
a) Registration with Agencies in Malaysia
Director(s) of a company will need to register with the relevant agencies in Malaysia after the incorporation:

Royal Malaysian Customs (RMCD): Compulsory if the annual taxable turnover exceeds the RM500,000 threshold
Inland Revenue Board of Malaysia (IRBM)
Employee Provident Fund (EPF) & Social Security Organisation (SOCSO): Compulsory when first employee is hired

b) Corporate Bank Accounts
After the incorporation, a company can open a corporate account at any of the local banks in Malaysia or an foreign banks in Malaysia.

Documents needed:

Certificate of Incorporation or Notice of Incorporation;
Other statutory forms (e.g. constitution, if any); and
Board Resolutions to open banking account and internet banking services.

Compliance Requirements

1. Fiscal year determination

Every Malaysia’s company must determine its financial year-end (“FYE”), which is not necessarily to be on 31^st of December.
It is a mandatory requirement that each company must prepare its financial statements. The financial statement has to be audited by approved auditors in Malaysia within eighteen months from the date of its incorporation (and in subsequent years – within six months of its financial year-end).
The Company must lodge the financial statements with SSM within 30 days from the date of circulation of financial statements and reports.

2. Annual general meeting (“AGM”)
Only public limited companies are required to hold AGM while private limited companies are exempted from this requirement.

3. Annual returns (“AR”)

A Malaysian is obliged any is compulsory to lodge the AR within 30 days from the anniversary of the date of its incorporation.
An AR entails company information including registered office address, nature of its business, particulars of indebtedness, company’s directors and secretary, auditors and list of its members.

4. Tax filing
The filing of company’s tax return has to be done to IRB within seven months from the financial year end.

Closing the Business

1. Striking off

A company can apply to SSM to strike off the company.
Requirements:
- The company has not commenced any business since its incorporation.
- The company does not have any business activities.
- The company has no intention to commence or carry on any business.
- The company does not have any assets or outstanding liabilities (there should be no entries at the registrar of charges).
- The company does not have outstanding penalties incurred under the Companies Act.
- The company has no tax liabilities.
- The company is free of debt of any Malaysian government department or agency.
- The company is yet to make any dividends to the shareholders.
- The company information is up to date.
- The company is free from any legal proceedings in or out of Malaysia.
- The company cannot be a holding company or subsidiary of another company.
- The company is not a guarantor corporation.

2. Winding up (Members’ Liquidation)

This option involves selling off the assets of the company, paying off its liabilities as well as distributing the remainder to the shareholders.
A company can opt to wind up voluntarily or compulsorily.
A voluntary winding up is done on a basis of mutual agreement of the shareholders and the shareholders.
A compulsory winding up is where the life of a company is brought to an end because it failed to meet its obligations.