Set up a Limited Liability Company in Malaysia
|Who can register an LLC in Malaysia?|| |
Domestic or international investors
Best use for an LLC in Malaysia
- import & export,
Number of shareholders
|At least 2 shareholders|
|Minimum share capital|| |
|Formalities and documents|| |
- name verification and reservation,
- Articles of Association,
- licenses and permits application,
- tax registration
|Local corporate bank account required|| |
|Resident director required (YES/NO)|| |
|Legal representative required (YES/NO)|| |
|Local office required (YES/NO)||Yes|
|Government approval for foreign investors (YES/NO)|| |
|Time frame for company registration|| |
Around 4 months
|Time frame for tax registration|| |
Around 1 month
|Possibility of hiring foreign employees|| |
|Investment incentives offered (YES/NO)|| |
|We provide support for business registration (YES/NO)||Yes|
It is advisable to register a company limited by shares as the shareholders are liable only in respect to their shares owned in the company. Our team of company formation specialists in Malaysia can offer assistance for the incorporation of a limited company.
What are the legal requirements for starting a company limited by shares in Malaysia in 2022?
The Malaysian company limited by shares may take two main forms: the public limited company (Berhad) and the private limited company (Sendirian Berhad).The difference is given by the rights related to the ownership; a public company allows the investors to own shares in the company, while for the other type of legal entity this procedure is prohibited. As a general rule, the private limited company is selected for medium-sized companies, while the public company is employed for larger businesses operating in Malaysia.
The registration of a company limited by shares in Malaysia is done in accordance with the stipulations prescribed by the Companies Act. The company’s trading name should include the words “Sendirian Berhad” in the case of a private company, while the public company should include “Berhad” in its trading name. Besides these requirements, the company limited by shares must also include the following:
- according to the Section 14 of the Companies Act, the company must have minimum two shareholders;
- it is also necessary to appoint minimum two directors, as required under the Section 122 of the Act;
- it is required to appoint a company secretary, who can be represented by an individual licensed by the Companies Commission of Malaysia;
- the company’s secretary can also be represented by a member of a professional body prescribed by the Minister of Domestic Trade Cooperative and Consumerism.
When registering a limited liability company in Malaysia, the investors should prepare information on matters such as: the company’s proposed name, the types of business activities developed by the company, the location where the company’s registered office is situated (a compulsory requirement during the procedure of opening a company in Malaysia) and also declarations signed by the company’s directors (they have to provide evidence on the fact that they are not bankrupt in this country, nor outside of it, and they have not been convicted of any criminal office).
Which are the main advantages of a Malaysian private company limited by shares?
What are the main post-incorporation aspects that should be handled by investors in Malaysia?
- register for the employee’s retirement fund, social security and human developing and training;
- establish the company’s Annual General Meeting (AGM), which is completed in accordance with the type of company chosen for registration (private or public);
- lodgment of the annual return, which has to be sent no later than 30 days since the anniversary of the incorporation date;
- filing tax returns – the company is required to register with the Inland Revenue Board once the business has become operational.
What are the main taxes for companies in Malaysia?
All companies registered in Malaysia, including the limited liability company, are required to pay a set of corporate taxes. As long as the company is incorporated in Malaysia, and thus, it has its residency registered in this country, it will become liable for taxation, following the tax principles available here. The regulation is also applicable to sub-divisions of foreign companies, which must pay taxes in accordance with their commercial activities developed on the Malaysian territory.
The taxable income of a company in Malaysia refers to incomes such as: the income obtained from commercial activities, profits, dividends, royalties, interest or rent. However, the taxation of the company’s dividends can be avoided under specific circumstances, which can be presented by our team of consultants in company formation in Malaysia.
The standard corporate tax rate in Malaysia is 24%, but a lower rate - 17% - is applicable to small and medium sized companies, provided that certain conditions are met. Companies can also be liable for the payment of the capital duty, the payroll tax, the real estate tax or the social security, to name just a few.
Taxes paid by limited liability companies in Malaysia
All companies operating in Malaysia must register for tax purposes. If a company's management and control are in Malaysia, the company is considered a tax resident of this country. Chargeable income from Malaysian LLPs is taxed at a 24% rate generally. Any LLP with a capital contribution of RM 2.5 million or less enjoys a lower tax rate of 19%. The entire profit of this LLP is exempt from taxation. The Income Tax Rules 2003 and the Income Tax Amendment 2005 offer the rules and regulations for taxation of LLPs in Malaysia. There are certain LLPs that can benefit from a deduction of taxes paid in Malaysia; their eligibility for tax deduction is provided in the Public Ruling on Taxation of LLPs. Businessmen interested in receiving more details about taxes paid by LLPs can address to our team of company incorporation agents in Malaysia.
The limited liability partnership, a type of company that reunites the characteristics of a private limited company with the ones of a partnership, is seen as a separate legal entity that is suitable for small businesses and professionals who want to work in their own name. It must have, however, two partners who must obtain a certificate of registration for this entity from the Companies Commission of Malaysia.
Partners or clients can obtain from this institution information on any LLP registered by it, by requesting current data on the LLP (an LLP profile) or the LLP’s registration certificate, which, in 2022, can be issued for a fee of RM20 each.
What is the duration of the registration process in Malaysia in 2022?
|Proposing a corporate name for the company||The procedure can be completed in approximately 24 hours|
|Gathering the documents necessary for the registration||It can last approximately 2-3 days|
|Submitting the registration forms||This can also last approximately 1 day|
|The issuance of the digital incorporation certificate||It can be issued in 1 day|
What are the main company types used in Malaysia (by size)?
- in 2016, 2.3% of the Malaysian SMEs were represented by medium companies (accounting for 20,612 companies);
- SMEs in Malaysia operating as small companies represented 21.2% of all the companies (more exactly, 192,783 businesses);
- the largest share of Malaysian SMEs is available in the case of microenterprises, which account for 76.5% of all SMEs;
- in 2016, there were 693,670 microenterprises and the total number of SMEs stood at 907,065 companies;
- out of these, 20.6% were owned by women (referring to legal entities in which women hold more than 51% of the company’s ownership);
- the majority of the Malaysian SMEs were incorporated in the services sector (89.2% of all companies);
- the other top economic sectors in which SMEs activate are the manufacturing industry (5.3%) and the construction sector (4.3%).