Creating a Joint Venture in Malaysia

Updated on Friday 19th October 2018

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A joint venture in Malaysia can only be registered under a company limited by shares or as a partnership. Malaysian authorities have recently changed many of their regulations referring to the foreign capital and it is important to know that the company limited by shares can now be fully owned by foreigners.

However, the regulation is not applicable to all business fields available in Malaysia, but our team of company formation representatives in Malaysia can offer more details on this matter; our consultants may also offer advice on the registration procedure available for the joint venture

What is a joint venture? 

A joint venture is a type of business which requires the association of two different companies that will work on a common project for a specified period of time. This type of company is very useful when accessing a new market, but investors of the two associated companies should decide upon important matters referring to the company’s operations and the distribution of profits. 

An important aspect of the joint venture is that once the company reached the goals for which it was incorporated, the partnership can end. In this case, the business will be closed down, but investors can also sell it; our team of company incorporation agents in Malaysia can provide more details on the characteristics of a joint venture

What are the main regulations for joint ventures in Malaysia?

A foreign businessman can access the Malaysian market through several options. He or she can open a company in Malaysia with 100% foreign ownership. The other option would be to set up a joint venture with a Malaysian partner, in which case the local company will have at least 50% ownership over the respective company.

In this particular case, the company should have a paid up capital of at least RM 350,000, while the minimum authorized capital should be RM 500,000Joint ventures in Malaysia can also be set up as partnerships, in which the purpose will also be a common business goal

Important aspects when opening a Malaysian joint venture

Businessmen who want to open a company in Malaysia through a joint venture should know that under this business structure, they will be entitled to obtain government grants. At the same time, it will also be necessary to appoint a director, who must be a resident in Malaysia. Once the company is registered with the local authorities, the investors will be able to perform the following: 
  • sign sales agreements and business contracts – such documents can be enforced in two weeks since the company was registered;
  • hiring employees – the same period of time applies in this case;
  • signing a lease agreement for the premises in which the company will perform its commercial activities (two weeks);
  • obtaining a tax identification number – the same period is applicable. 

What are the main tax and accounting requirements for Malaysian joint ventures? 

When opening a Malaysian joint venture, the business will be liable for taxation, including for corporate income tax. This type of legal entity is exempted from paying the withholding tax on payments addressed to foreign shareholders and it can also benefit from the provisions of the double taxation treaties signed here.  

In terms of accounting requirements, the joint venture is legally required to submit annual tax returns and financial statements. It is also relevant to know that the joint venture has to be audited by an accredited auditor. Businessmen interested in receiving further details on how to create a joint venture in Malaysia can address to our team of company formation consultants in Malaysia