Company Incorporation is a process by which a company becomes a legal entity. In this article, learn about the procedure for the Bispoint Group is a platform to help you start your company. We facilitate the setup of your business through services like company incorporation, formation, registration, and licensing.
Company formation and incorporation in Malaysia
A sole proprietorship business entity in Malaysia is owned only by 1 individual, as his/her liability is limitless. This indicates that if the business collapses or is declared bankrupt, creditors can sue the sole proprietor’s owner for all debts owed to respective merchants. The owner’s private assets, personal income, and employment income are all liable. It is the easiest and the least expensive to incorporate
A partnership is an extensive form of a sole proprietorship, with the difference that a partnership has 2 to 20 members as against 1 in a sole proprietorship. This form of company is usually set up for professional firms like lawyers and auditors.
Private Limited company
A private limited company, also known as Sendirian Berhad (Sdn Bhd), is a company that doesn’t extend an invitation to the public to subscribe to any of its shares, deposit cash with the company for investment or subscription.
Public Limited company
A public limited company, is similar to a private limited company, except that it may offer its shares to the public. Although not necessarily so, Berhads are normally listed companies. A Berhad is administered by the Securities Commission of Malaysia. Large businesses prefer to operate with a Berhad.
A Bumiputera company is a limited liability company whose at least 30% of the shares are owned by native Malay citizens or other Bumiputera companies. Such a company is qualified for special privileges and incentives like commissions on buying or leasing land, less costly business licenses, special bank agreements, etc.
A foreign company can set up its branch office in Malaysia. Such an office can engage in business ventures involving invoicing, contract signing or trade, and is required to appoint 2 resident representatives in Malaysia.
Setting up a business in Malaysia is simple, time-bound, and cheaper. Company Registration in Malaysia is cheaper than in Singapore. Various investment incentives are available for entrepreneurs looking to launch services in Malaysia.
Small manufacturing companies with manufacturing high-tech goods are eligible for Pioneer Status & Investment Tax Allowance incentives. A company that is given Pioneer Status (PS) will enjoy various levels of tax exemption depending on the types of promoted products/activities as follows-
1. Promoted product/activity
The company will be granted a tax exclusion of 70% of the statutory income for 5 years. The balance of 30% of that statutory income will be taxed at the current company tax rate.
2. Promoted product/activity in the promoted area
Companies established in Sabah, Sarawak, the Federal Territory of Labuan, and the designated Eastern Corridor of Peninsular Malaysia will be granted tax release on 85% of the lawful income for 5 years.
The balance of 15% of that statutory income will be taxed at the current company tax rate.
3. Promoted product/activity for leading technology companies
The company will be given full tax exemption on 100% of the statutory income for 5 years.
4. Promoted product in an authorized industrial linkage scheme (SMIs producing intermediate assets)
The company will be conferred a full tax exclusion on 100% of the statutory income for 5 years.
5. Contract research and development company (R&D)
A company that gives R&D services in Malaysia to a company other than its related Company. The company will be conferred a full tax exclusion on 100% of the statutory income for 5 years.
Terms and conditions for companies enjoying PS-
Company granted PS must within 6 months request for a pioneer certificate, defining among others the date of production from which the partial exemption/full exemption will be granted.
Capital allowances have to be used during the pioneer period and will not be permitted to be carried forward to the post pioneer period.
Perdition unabsorbed during the pioneer period will not be entitled to be carried forward to the post pioneer period except for PS for Contract Research and Development Company.
Dividends paid out of tax-exempt income to shareholders will also be exempted from tax.
The procedure of company formation and incorporation in Malaysia
The company limited by shares may be incorporated as a private company (Sendirian Berhad or Sdn. Bhd.) or public company (Berhad or Bhd.) The company incorporation could be made by people who want to establish a company. The basic requirements to incorporate a company are-
A private company (Sdn. Bhd.)
One director who is resides in Malaysia by having a principal place of residence in Malaysia and a minimum of one promoter.
Public company (Bhd.)
At least two directors who reside in Malaysia by having a principal place of residence in Malaysia and a minimum of one promoter.
Name search and application of the name
A name search must be done to ensure that the proposed name is available. There are two methods to apply for a name of a company-
1. Application for the name and incorporation of a company (Direct Incorporation); or
2. Name reservation.
1. The applicant needs to fulfill the information throughout the application for the name and incorporation of a company by online and incorporation fees of RM1, 000.00; and
2. If the intended name is approved by SSM, the application to company incorporation would be directly transferred to the officer to be processed.
1. The applicant needs to fulfill the information for the name of the company online and the fee is RM50.00 for each name applied. Incorporation of a company is a separate process; and
2. If the name is approved by SSM, the name is reserved for 30 days or any longer date as allotted by the Registrar (maximum 180 days) from the date of approval. The applicant can then apply for incorporation with a fee of RM1, 000.00.
Lodgment of application to incorporate the company
Details needed to incorporate a company- Under section 14 of the Companies Act 2016, the applicant must complete the information required as follows-
- The proposed name of the company
- The status of a private or public company
- The proposed type of business
- The address of the registered office
- The business address
- Full detail of director(s) and promoter(s)
Declaration from the director(s) or promoter(s) that he/she- is not an undischarged bankrupt either in or outside Malaysia; and has not been condemned of any crime whether in or outside Malaysia.
Declaration of compliance
This declaration affirms that the applicant has complied with all requirements of the Companies Act 2016. The declaration should be made by the individual who is accountable for the incorporation.
Each application to incorporate the company should remain together with a fee as follows-
- Company limited by shares – RM1,000
- Company limited by guarantee – RM3,000
Verification of company incorporation
If the registrar is convinced that all information presented is complete and complied with the required procedure-
A notification of approval and registration will be issued; and A certificate of incorporation will be issued by SSM upon request together with the designated fee.
Post incorporation procedures
The company can appoint a company secretary within 30 days after incorporation. The company secretary should be registered with SSM and owned a legitimate practicing certificate assigned by SSM.
If needed by the company, it may file the constitution after the incorporation of the company.
Malaysia is a culturally vibrant and ecologically diverse country offering cutting-edge business development opportunities at a competitive price landscape.
For comprehensive business and financial solutions for small and medium-sized enterprises (SMEs) in Malaysia, including company incorporation, accounting, tax compliance and financial due diligence, Bispoint Group is here to help. Our team of highly skilled professionals can swiftly and expertly implement solutions to meet your business needs. Currently, we have over 70 dedicated teams, including Chartered Accountants, managers, supervisors, and junior associates in our offices serving over 1,000 private companies. Speak to us to explore how we can provide long-term support for your business growth.