Open a Recruitment Company in Malaysia

Updated on Thursday 14th February 2019

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Recruitment companies are crucial when searching for a suitable candidate for a job opening, as they have the know-how and the infrastructure to identify such candidates. Those who open a company in Malaysia and who are searching for employees in this country can request the assistance of recruitment companies, which are established to provide specific services related to this matter.

When opening a recruitment agency in Malaysia, the investor should follow the registration procedure applicable under the local legislation and our team of company incorporation representatives in Malaysia can offer guidance on each step referring to the registration of a new company. 
 

Registration procedure of a recruitment company in Malaysia  


According to the rules and regulations applied by the Companies Commission of Malaysia (SSM), a foreign investor has two options when entering the Malaysian business market. He or she can incorporate a new company with the SSM or register an existing foreign company at the same institution. 

The following video offers a short presentation on how to set up a recruitment company in Malaysia:



However, it is recommended to open a company in Malaysia, so that the investor can benefit from various tax exemptions or deductions applicable to local companies. One of the necessary procedures that have to be completed when starting a recruitment company in Malaysia is to verify if the proposed company name is available for registration. The company’s trading name has to be unique on the country’s territory and this procedure can be handled through the SSM

After the institution approved the trading name, the investor should present the incorporation documents (the articles of association and the memorandum), stating the legal entity of the company at the SSM within three months from the date the businessman received the above mentioned approval.  

The investor will have to pay various taxes at the SSM for the registration procedure, which are established in accordance with the share capital of the new company; our team of company formation agents in Malaysia can assist in this matter and may advice on the minimum share capital requirements available for each business form prescribed by the national legislation.  
 

Recruitment services in Malaysia  


Companies established in Malaysia as recruitment agencies provide various services, available for both natural persons seeking for a job in this country, but also for legal entities which are in need of employees. The recruitment services are performed by recruitment agents, persons who have an extensive experience in the field of human resources. Such companies offer online platforms in which persons seeking for employment can submit their CVs. At the same time, these agencies can offer career consulting services and job placements established by industry/specialization, or by region.  
 

Does a recruitment company need a license in Malaysia? 
 

Yes, companies in Malaysia that operate as recruitment agencies need to apply for specific business permits, that will allow them to perform their business operations. In order to properly register a recruitment company in Malaysia, its founders have to apply for a general business license, known as Wholesale Retail Trade license.  
 
The company will also need an Employment Agency License, which is a special type of license available for businesses that develop recruitment activities. This type of license has to be obtained prior to engaging in commercial activities and some of the most important highlights of the procedure are presented below: 
 
  • this is a compulsory license for all types of companies that have as their object of activity the recruitment of personnel;
  • in order to obtain the license, the applicant company has to address to the Ministry of Human Resources;
  • the license is also necessary when starting business activities related to headhunting (the term is officially known as executive search firm);
  • the license can only be granted if the person developing the business is a Malaysian citizen or if the majority of shares of the company is held by Malaysian citizens
     
The first mentioned type of license also grants the right to develop consulting services, which are generally provided by recruitment companies. At the same time, the company’s representatives may also apply for a human resources license; our team of specialists in company registration in Malaysia can offer more details on the procedure of applying for a local business permit or license. 
 

Is there a specific rule of law for recruitment companies in Malaysia? 


Recruitment companies in Malaysia have to follow a set of rules of law that are prescribed for all types of business activities carried out on the country’s territory. However, starting with 1st of February 2018, Malaysia enforced the Private Employment Agencies (Amendment) Act 2017, which was created in order to protect the rights of employees and to regulate the activities of recruitment businesses

The Private Employment Agencies (Amendment) Act 2017 aims at the protection of local employees who have obtained a job outside the country through the assistance of a private employment agencies, amongst many other regulations. The legislation is enforced by the Human Resources Ministry, which, through this act, wants to better regulate recruitment activities that are carried out in this country. 

Under the new regulations of the law, the Malaysian authorities have created three new types of licenses, referring to the destination of the recruitment procedures. Thus, a License A is necessary for recruitment activities related to Malaysian persons seeking to get employed in this country, while a License B is required for any recruitment activity related to Malaysian persons seeking employment in and outside the country. The legislation prescribes another type of license, the License C, which is required for the recruitment of Malaysian and foreigners for job openings available in this country or in other jurisdictions. 
 
 

What are the main requirements for recruitment business in Malaysia under the new law? 


Prior to the legislation that was passed in 2017, any recruitment company in Malaysia was regulated under the Private Employment Agencies Act 1981. Under the amended legislation, it is compulsory for a recruitment company to be incorporated in Malaysia following the regulations of the Companies Act 2016

As mentioned above, the majority of the company’s shares has to be held by Malaysian citizens, and this is a new regulation prescribed under the 2017 legislation. More importantly, it is also necessary to incorporate the recruitment company with a paid-up share capital. It is also compulsory to add the words “Employment Agency” in the name of the company (in Malay, “Agensi Pekerjaan”). 

Businessmen who want to open a company in Malaysia as a recruitment business must know that the company’s capital will vary depending on the above mentioned licenses (A, B or C), ranging between RM 50,000 – RM 250,000; compared to the stipulations of the previous legislation, the licenses are now available for a period of two years (the old act prescribed that recruitment licenses are grated for a period of one year). 

Entrepreneurs who are interested in finding out more details on how to open a recruitment company can address to our team of company incorporation consultants in MalaysiaOur representatives can also assist with further advice on the business permits that are necessary for this field of activity and may provide information on the taxation scheme applicable for this type of company.