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Doing Business in Malaysia
 
 
 

General

In Malaysia the most common types of businesses are sole proprietorships, partnerships and private limited companies. The Registrar of Companies Malaysia (ROC) enforces and administers the Companies Act 1965. The Act enables an association of persons to form various types of corporate organisation known as registered company. In addition to protecting the right and interests of shareholders in particular and investors in general, this Act also provides facilities for the incorporation of companies, its constitution, its relation with members and creditors, management and winding-up. Every company intending to carry on business in Malaysia must register with the ROC before conducting any business activity.

Incorporation of a company requires an application to be made to the ROC to approve the proposed name by submitting the following forms:

• Memorandum and Articles of Association;
• Statutory Declaration of Compliance with the Companies Act;
• Certificate of Identity;
• Consent to act as director;
• Statutory Declaration by persons before appointments as directors

Forms of Business Organisation

Sole Proprietorship

Individuals of different nationality but residents in Malaysia can register this type of company in the Companies Commission. Personal names or trade names can be used as business names. The Application of Business Name Form must be filled in before a business can be registered.

Partnership

Two or more residents (maximum 20) of Malaysia come together to work under the common name of a partnership. A partnership agreement is usually drawn up by legal counsel, which outlines the responsibilities of each partner, conditions of termination and means of resolving intra-partner disputes. Personal names or trade names can be used as business names and the Application of Business Name Form must be filled in before a business can be registered.

Limited Company

A company in Malaysia may be limited by shares, guarantee or it may be unlimited – company limited by shares is where the members' personal liabilities are limited to the par value of their shares; a company limited by guarantee is where the liabilities of the members will be restricted to the amount each agrees to contribute to the assets of the company in the event of dissolution or liquidation; and an unlimited company where there is no limit to the members liabilities. Company limited by shares is the most common type of company structure in Malaysia. Companies limited by shares falls into two categories – public limited companies and private limited companies.

A private limited company (Sendirian Berhad; Sdn Bhd) cannot sell shares to the general public. A public limited company (Berhad; Bhd) raises its capital by selling shares and is run by a board of directors elected by shareholders. A public limited company can only offer shares to the public if a prospectus which complies with the requirements of the Companies Act 1965 has been registered with the ROC. Before a prospectus can be accepted for registration, the proposal for the issue or offer of shares to the public have to be submitted to the Securities Commission for approval.

A company must have a minimum of two members. However, a private limited company is limited to have only 50 members whilst a public limited company has no limit. The 50 members limit for a private company does not include the employee or its subsidiaries.

Public limited company requires to have an issued and paid-up capital of not less than RM60 million comprising ordinary shares of not less than 10 sen per share if it is seeking listing of and quotation for its securities on the Main Board of the KL Stock Exchange or a minimum issued an paid-up capital of RM40 million but less than RM60 million comprising ordinary shares with a per value of not less than 10 sen per share for listing on the Second Board of the stock exchange.

Every company must be registered with the Companies Commission not later than one month after it has started operating; it must have a registered office in the jurisdiction. Directors must be private persons, residents in Malaysia. All the books and documents must be kept in the registered office. Audited annual returns must be submitted by all companies, except exempted entities.

Branch of a Foreign Company

A company incorporated in a foreign country that wishes to conduct a business activity in Malaysia must be registered with local authorities by submitting all the required documents. It may apply to establish a representative office, which however does not have any legal status and cannot be involved in trading activities. It may only serve as a promotion base, liaison and a place for market research which acts on behalf of a company’s head office.

 

 
 

 


 

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