Guidelines Doing Business in Malaysia- Part 1(Company)

INCORPORATION OF A LOCAL COMPANY IN MALAYSIA There are three types of companies that can be incorporated under the Companies Act 1965 (“CA”). They are:

• A company limited by shares
• An unlimited company
• A company limited by guarantee

For the purpose of conducting business in Malaysia, the most common type is a company limited by shares.

COMPANY LIMITED BY SHARES A company having a share capital may be incorporated as a private company (identified through the words ‘Sendirian Berhad’ or ‘Sdn. Bhd.’ appearing together with the company’s name) or public company (identified through the words ‘Berhad’ or ‘Bhd.’ appearing together with the company’s name).

The requirements to form a company are:

i. A minimum of two subscribers to the shares of the company (Section 14 CA);

ii. A minimum of two directors (Section 122 CA); and

iii. A company secretary who can be either:

a. an individual who is a member of a professional body prescribed by the Minister of Domestic Trade and Consumer Affairs; or

b. an individual licensed by the Companies Commission of Malaysia (“SSM”).

Both the director and company secretary shall have their principal or only place of residence within Malaysia.

Incorporation Procedures

1. Name Search With SSM And Application For Name A name search must be conducted to determine whether the proposed name of the company is available. The steps involved are:

i. Completion and submission of Form 13 A CA (Request For Availability Of Name) to SSM; and

ii. Payment of a RM30.00 fee for each name applied.

When the proposed company’s name is approved by SSM, it shall be valid for three months from the date of approval.

2. Lodgement of Incorporation Documents Incorporation Documents (as further explained below) must be submitted to SSM within three months from the date of approval of the company’s name by SSM, failing which a fresh application for a name search must be done. [Steps (i) and (ii) above shall have to be repeated].

Incorporation Documents To Be Lodged With SSM

1. Memorandum and Articles of Association

• An original copy of the Memorandum and Articles of Association shall each be stamped at RM100.00. Stamps are affixed at the Inland Revenue Board’s stamp office.
• The directors and secretaries shall be named in the Memorandum and Articles of Association.
• The subscribers to the company’s shares shall sign the Memorandum and Articles of Association in front of a witness.
• Table A of the Fourth Schedule in the CA can be adopted as the Articles of Association of the company (Section 30 CA).

NOTE: For incorporation of a private company, the Articles of Association shall contain the following stipulations:

i. Restriction on the right to transfer the company’s shares; ii. Limitation on the number of members to not exceed fifty; iii. Prohibition on any invitation to the public to subscribe the shares/debentures of the company; and iv. Prohibition on public invitation to the public to deposit money with the company.

2. Form 48A (Statutory Declaration By A Director Or Promoter Before Appointment)

The director or promoter declares under oath that:

• he/she is not a bankrupt; and
• he/she has not been convicted and imprisoned for the prescribed offences.

3. Form 6 (Declaration of Compliance) This declaration states that all the requirements of the CA have been complied with. It must be signed by the company secretary who handles the registration and is named in the Memorandum and Articles of Association.

4. Additional documents:

• Original Form 13 A.
• A copy of the letter from SSM approving the name of the company.
• A copy of the identity card of each director and company secretary.

Registration Fees Each application for the incorporation of a company shall be accompanied with payment as per the schedule below:

AUTHORISED SHARE CAPITAL (RM) FEES (RM)

Up to 100,000 1 ,000

1 00,001 – 500,000 3 ,000

500,001 – 1 million 5,000

1 ,000,001 – 5 million 8,000

5,000,001 – 10 million 1 0,000

1 0,000,001 – 25 million 20,000

25,000,001 – 50 million 40,000

50,000,001 – 100 million 50,000

1 00,000,001 and above 70,000

Certificate of Incorporation A Certificate of Incorporation will be issued by SSM upon compliance with the incorporation procedures and submission of duly completed incorporation documents.

Source: http://www.ssm.com.my/

Companies Commission of Malaysia