Streamline your company incorporation in Malaysia
Investment opportunities in Malaysia are appearing more viable and attractive to foreign commerce in the past few years. Malaysia is well-connected and can provide a practical foundation to build a company or to branch out in this location, specifically in areas of manufacturing, service industries, and mass exports. The companies that are more accessible in Malaysia include manufacturing, various service industries and exports. Our comprehensive end-to-end solution will help your company establish a legal entity in Malaysia. We provide a strategic approach by enabling our clients the ability to retain the same quality of legal compliance as their own in-country subsidiaries. Horizons is Malaysia’s most trusted incorporation partner to foreign clients. This expertise allows businesses to establish local entities efficiently, reliably, and compliantly.
Streamline your entity setup
Our approach to company incorporation in Malaysia
Malaysia offers a promising opportunity to create and manage a local company of your own. We can work with you to identify a company structure that best aligns with your in-country strategy and long-term development plans.
By partnering with Horizons , we’ll help you manage your company’s end-to-end incorporation. This includes:
- Handling payroll setup and registration. Once incorporation is complete, we transition employees from their current employment status – under our PEO – into that of your company.
- Overseeing the same benefits your company has been providing to your foreign employees under the ownership of your new subsidiary.
- Gathering local employment contracts and legally mandated materials for the establishment of your new entity.
- Strategic guidance in matters concerning contract negotiations with employees.
Types of business in Malaysia
One of the most common business types in Malaysia is the limited liability company or LLC. In Malaysia, this is the most common company formed by foreign investors. The Malaysia free company is another type of business created for export commerce. An international trading company is for a business owner seeking to only trade with overseas clients and customers. A Bumiputera company is possible if 30 percent or more of the stocks or interest is held by Malaysia nationals or another Bumiputra corporation.
A limited liability partnership requires no less than two partners. A branch office is an extension of the parent company, but it can act independently provided the branch acts within the scope that the parent business establishes. A representative office is a market research and promoter of the parent company.
The LLC in Malaysia
As the most commonly created company by someone either living in Malaysia or wanting to take advantage of business in the country, an LLC can remain private or open to the public. The owner will limit the business through shares.
The company must have no less than two shareholders. The owner must also appoint at least two directors. A company secretary is necessary who can represent the company as a licensed professional per the Companies Commission of Malaysia. The shareholders can remain foreign parties, but the company secretary and the directors should have a primary residence in Malaysia. Residency requirements may vary and could require the owner to have a main home in the country as well based on changing regulations by year.
The investors in an LLC in Malaysia need to consider the name proposed for the business, the enterprise activities either to develop the company or to do business and where the office will reside. Registration may require an office in the country rather than overseas. The company directors will need to sign declarations and provide them when registering the corporation. These investors must provide the country with valid proof that the business is not bankrupt either in or out of the nation and that these parties have not received any criminal convictions in the past.
The public form
This is known as a Berhad in Malaysia. This type of LLC is usually larger and may even appear like a corporation. Shares of the company are owned by investors and may even be sold to the public.
The private form
This is a Sendirian Berhad in Malaysia. The private limited liability company is usually a medium or small-sized business with the shares held closely with private individuals. There is possible public ownership of shares of this business, but there is more regulation of these shares. The owner may have more freedom with how the business interacts on a private and personal level.
Foreign created companies
A foreign investor wanting to create a company in Malaysia can do so even if there are no Malaysian nationals as part of the corporation. The company must line up with only certain industries and then register in the country. The commercial enterprise can involve the following industries:
- Educational purposes
- Banking or finance
- Tourism outbound
These industries can change based on the country’s needs.
The process of creating a company
The first steps to creating the business in Malaysia is planning the enterprise, determining how to conduct business and then getting a foothold in the country. The owner will need to identify shareholders and directors within the business.
Additionally, they will need to determine which business entity to form and register the business name with authorities. The owner will need to submit paperwork to register the business, including articles of incorporation, registration certificates and any notes for meetings and other official documentation.
Registering the company
To incorporate and register the business, the owner will need to contact the Companies Commission of Malaysia. The name search is the first step to ensure it is available. However, this should remain the same as the business name in the country of origin if the owner already has a business registered elsewhere. This requires a Form 13A and a fee to apply. After approval of this step, the owner has three months to submit registration documents.
The owner will need to submit the following documents:
- A certified copy of the registration of the company or a certificate of incorporation
- A certified copy of the charter, a statute, or the Memorandum and Articles of Association which should include a defining constitution of the business
- Form 79 which provides details about the directors
- A power of attorney that will authorize someone in Malaysia to accept any notices served while in the country or a memorandum of appointment which accomplishes the same
- Form 80 or a declaration that states the company is a foreign one
- The original copy of the filed Form 13A as well as a copy of the approval of the registered name
Keeping the business private
By limiting the company through a private aspect, the business owner can provide additional protection to shareholders and ensure they are not liable for the debts of the business. The company can also initiate a procedure to transfer shares if necessary in the future for new shareholders. Private LLCs cannot have more than 50 members at the same time. There are also restrictions that should exist in the bylaws about public participation with these shares.
Opening the company
The owner will need to fulfill other aspects of the business, including opening a business bank account, registering the company with relevant Malaysian authorities and reporting its setup to tax authorities. The owner will often need documentation and processes in place to transfer the company and to have insurance in case of liability concerns. The owner will also need to schedule meetings, shareholder conferences and the Annual General Meeting as necessary based on a private or public LLC.
The owner will also need to file tax returns, ensure employees receive payment for their services and withhold the proper amount of taxes out of hourly or salary pay. If there are Malaysian nationals working in the business, the owner may need to consider having a translator service and hiring additional personnel for various new tasks that may be necessary.
Taxation becomes a serious concern that the owner must understand as well because each location of the business may use different taxation rules. Working with a local PEO can allow businesses to delegate payroll and benefit administration to a trusted third party like Horizons.
Malaysia benefit management
To successfully oversee benefits management, employers should not only identify guaranteed benefits, but also supplemental benefits that employees may expect. As an example, whilst a 13th month bonus is not mandatory in Malaysia, a large section of employers offer one. Performance-based bonuses (such as sales commissions) are also expected by many employees – but are not compulsory.
Malaysia’s public health system often has long wait times, leading many people to pay higher premiums for private health insurance. As an incentive to their employees, some employers offer group private health insurance, group life insurance, and group accident insurance. This is often distributed as a monthly allowance for employees.
Corporate taxes in Malaysia
The business will need to pay corporate taxes. If the company is incorporated in Malaysia, it will have residency in the country and is liable for taxes here. However, if the owner has a subdivision or a different type of company in the country, the owner may need to pay taxes at a different rate. Taxes on income come from any revenue earned from the activities in the company, profits from sales, dividends given, royalties for items, interest and even rent. Dividends may not require taxation if certain circumstances are present.
The standard tax rate for corporations in Malaysia is 24 percent. Small and medium-sized businesses in this country have a tax rate of seventeen percent if certain conditions are set and met by the owner. Liability for payment on capital duty, payroll taxes, real estate taxes and social security are all possible.
Pre & post-incorporation services
Horizons provides companies with both pre and post-incorporation services as part of our entity setup solution.
With pre-incorporation, you can use our PEO service to immediately establish a global workforce in Malaysia while you await the completion of your company incorporation. Once the setup is complete, we will seamlessly transition your foreign employees from our international PEO directly to your company’s new subsidiary.
Our post-incorporation experts support ongoing monthly and annual compliance services in order for our clients to continue operating compliantly on-site, giving you the ability to primarily focus on local operations.
By partnering with Horizons for your company incorporation in Malaysia, you can save time and money while ensuring that the entire process will be handled efficiently, reliably, and with full compliance to local laws.