How to Set Up a Company in Malaysia (Sdn Bhd)

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Malaysia offers good infrastructure, a multilingual workforce and a legal system based on English common law. The usual vehicle for foreign investors is the private limited company (Sdn Bhd), incorporated under the Companies Act 2016.

1. Basic requirements

• At least one shareholder, who can be foreign, and 100% foreign ownership is allowed in many sectors.
• At least one director who ordinarily resides in Malaysia.
• A licensed company secretary, appointed within 30 days of incorporation.
• A registered office address in Malaysia.

2. Main steps

1. Name search and reservation with the Companies Commission of Malaysia (SSM).
2. Online incorporation with SSM; with complete documents this can take only a few days.
3. Opening a corporate bank account, which often takes longer because of due diligence on foreign shareholders.
4. Tax registration, local business licences and, where relevant, sector licences.

3. Points to watch

• Sector rules: some activities, such as distribution and retail trade, require specific licences and may set higher capital or local participation conditions for foreign-owned companies.
• Work passes: to hire foreign managers, the company usually needs a minimum paid-up capital set by the immigration and sector authorities. Plan the capital with your staffing needs in mind.
• Incentives: manufacturing, regional hub and technology activities may qualify for tax incentives through the investment authority (MIDA).
• Labuan: the Labuan international business centre has its own regime, which may suit certain holding and financing activities, subject to substance requirements.

4. Tax and ongoing compliance

The standard corporate income tax rate is 24%, with reduced rates for qualifying small and medium companies. The company must keep accounts, have them audited, file annual returns and financial statements with SSM, file tax returns and maintain its register of beneficial owners.

The views expressed are personal and do not necessarily represent the position of NET CRAMAN. This article is for general information only and does not constitute legal or tax advice. Rules change over time; seek specific advice before acting.