Types of company formations in Malaysia
Company establishment by non-Malaysian citizens
Types of companies that can be established in Malaysia
Companies registered in Malaysia have a validity period of one year, and each renewal cannot exceed five years
The company must first obtain the necessary licenses, permits, or approval letters from the relevant authorities, depending on the nature of the business
Under the Companies Act 2016, two types of companies can be established: limited liability companies and unlimited liability companies
Limited liability company
A company with share capital can be a private company (with ‘Sendirian Berhad’ or ‘Sdn. Bhd.’ after its name) or a public company (with ‘Berhad’ or ‘Bhd.’ after its name)
Conditions for setting up a company
- At least one person must subscribe to the company’s shares (Section 14 of the Companies Act);
- At least one director is required (Section 122);
- There must be a company secretary;
- A member of a professional body prescribed by the Ministry of Domestic Trade, Cooperatives, and Consumerism; or
- A person licensed by the Companies Commission of Malaysia (SSM).
Both the director and the company secretary must have their principal or only place of residence in Malaysia
Process for setting up a company
1. Submit a company name search application
A name search must be conducted to determine if the proposed company name is available. Refer to the “Guidelines for Naming a Company and Applying for a Company Name“:
- Complete and submit the form (requesting name availability) to SSM;
- Pay a fee of RM100 for each company name application.
If the proposed company name is approved by SSM, it can be reserved for three months from the date of approval.
2. Company registration documents
The documents required for company registration must be submitted to SSM within three months from the date of approval of the company name. Otherwise, a new name search application must be conducted.
Submission of company documents to SSM
1. Constitution (Memorandum/Articles of Association)
The original constitution must be stamped with a stamp duty of RM100, which can be done at the Inland Revenue Board.
- Names of the first directors and secretary;
- Subscribers to the company shares must sign the constitution in the presence of a witness;
- Form A of the Fourth Schedule of the Companies Act can be used as the company’s constitution (Section 30 of the Companies Act).
*Note: To establish a private company, the constitution must include the following provisions:
- Restrictions on the transfer of shares;
- Limit on the number of members — not exceeding fifty;
- Prohibition on inviting the public to subscribe for shares/debentures of the company;
Prohibition on public invitations to deposit with the company.
2. Statutory Declaration Before Appointment of Directors or Promoters
The directors or promoters must declare:
- They are not an undischarged bankrupt;
- They have not been convicted of any offense and imprisoned.
3. Compliance Declaration
This declaration states that all requirements of the Companies Act have been met. This document must be signed by the company secretary handling the registration of the private limited company (SDN BHD), whose name must be listed in the company’s constitution.
4. Other Documents:
- Original of Form 13A
- A copy of the letter from SSM approving the company name
- A copy of the identification card of each director and company secretary
Registration fees
According to the new Companies Act 2016, every company is required to pay a registration fee of RM1,000 to SSM upon application for registration. Under the old Companies Act 1965, each company was required to pay according to the following payment schedule:
Registration notification
SSM will issue a registration notification once the applying company complies with the registration procedures and submits the properly completed company documents
Unlimited company
The procedures for establishing an unlimited company and the required company documents, as well as basic information, are the same as those for a limited company.
The only difference: the liability of the members of an unlimited company must be stipulated as “UNLIMITED” in the articles of association.
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