Date: Sunday 19-May-13


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Invest in Malaysia

Getting Started

2. Incorporating A Company

2.1 Methods of Conducting Business in Malaysia

In Malaysia, a business may be conducted:

i.
By an individual operating as a sole proprietor, or
ii. By two or more (but not more than 20) persons in partnership, or
iii. By a locally incorporated company or by a foreign company registered under the provisions of the CA 1965.

All sole proprietorships and partnerships in Malaysia must be registered with the Companies Commission of Malaysia (SSM) under the Registration of Businesses Act 1956. In the case of partnerships, partners are both jointly and severally liable for the debts and obligations of the partnership should its assets be insufficient. Formal partnership deeds may be drawn up governing the rights and obligations of each partner but this is not obligatory.

2.1.1 Company Structure

The CA 1965 governs all companies in Malaysia. The Act stipulates that a a company must be registered with the SSM in order to engage in any business activity.
There are three (3) types of companies that can be incorporated under the CA 1965:

i. A company limited by shares is a company formed on the principle that the members’ liability is limited by the memorandum of association to the amount, if any, unpaid on the shares taken up by them
ii. In a company limited by guarantee the liability of the members is limited by the Memorandum and Articles of Association to the amount which the members have undertaken to contribute to the assets of the company in the event the company is wound up.
iii. An unlimited company is a company formed on the principle of having no limit placed on the liability of its members

2.1.2 Company Limited by Shares

The most common company structure in Malaysia is a company limited by shares. Such limited companies may be incorporated either as a Private Limited Company (identified through the words “Sendirian Berhad” or “Sdn Bhd” as part of the company’s name) or a Public Limited Company (identified through the words “Berhad” or “Bhd” as part of the company’s name).

A company having a share capital may be incorporated as a private company if its Memorandum and Articles of Association:

i. Restricts the right to transfer its shares
ii. Limits the number of its members to 50, excluding employees in the employment of the company or its subsidiary and some former employees of the company or its subsidiary.
iii. Prohibits any invitation to the public to subscribe for its shares and debentures
iv. Prohibits any invitationto the public to deposit money with the company for fixed periods of payable at call, whether interest-bearing or interest-free.

A public company can be formed or, alternatively, a private company can be converted into a public company subject to Section 26 of the Companies Act 1965. Such a company can offer shares to the public provided:

i. It has registered a prospectus with the Securities Commission
ii. It has lodged a copy of the prospectus with the SSM on or before the date of its issue.

A public company can apply to have its shares quoted on the Bursa Malaysia subject to compliance with the requirements laid down by the exchange. Any subsequent issue of securities (e.g. issue by way of rights or bonus, or issue arising from an acquisition, etc.) requires the approval of the Securities Commission.

2.2 Procedure for Incorporation

To incorporate a company, an application must be made to the SSM using Form 13A together with a payment of RM30(for each name applied) in order to determine if the proposed name of the intended company is available. The application will be approved if name is available and the proposed name will be reserved for the applicant for three months.

The following incorporation documents are to be submitted to the SSM within the three months from the date of the approval of the company's name:

i. Memorandum and Articles of Association
ii. Declaration of Compliance (Form 6)
iii. Statutory Declaration by a person before appointment as a director, or by a promoter before incorporation of a company (Form 48A)
iv. Additional documents which would include:
• The original Form 13A
• 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 or a copy of the passport where a foreign director is appointed.

The Memorandum of Association documents the company's name, the objectives, the amount of its authorised capital (if any) proposed for registration and its division into shares of a fixed amount.

The Articles of Association describes the regulations governing the internal management of the affairs of the company and the conduct of its business.

Once the Certificate of Incorporation is issued, the company shall be a body corporate, capable of exercising the functions of an incorporated company and of suing and being sued. It has a perpetual succession under common seal with power to hold land, but with such liability on the part of the members to contribute to its assets in the event of it being wound up, as provided for in the CA 1965.

At present, the incorporation of local companies can be completed within one (1) day through the introduction of the single interaction counter which was introduced since 1 April 2010.

SSM undertakes to process, approve and register a complete application in a speedy and efficient manner within the time period stated as follows:

SSM's Client Charter as at 1 April 2010
Company Registration Activity
Time
Incorporation of a company
1 day

Conversion of status

1 day

Change of company name

1 day

Commencement of business for public companies

1 day

Registration of charge

2 days

Approval of a trust deed

5 days

Registration of prospectus

3 days

Uncertified copy of company documents

30 mins

Certified copy of company documents

1 hour

* Application for the approval of company name only, may be made without incorporating the company.
** Time taken begins from the moment payment is received until the certificate is issued.

2.2.2 Requirements of a Locally Incorporated Company

A company must maintain a registered office in Malaysia where all books and documents required under the provisions of the Act are kept. The name of the company shall appear in legible romanised letters, together with the company number, on its seal and documents.

A company cannot deal with its own shares or hold shares in its holding company. Each equity share of a public company carries only one vote at a poll at any general meeting of the company. A private company may, however, provide for varying voting rights for its shareholders.

The secretary of a company must be a natural person of full age who has his principal or only place of residence in Malaysia. He must be a member of a prescribed body or is licensed by the Registrar of Companies. The company must also appoint an approved company auditor to be the company auditor in Malaysia.

In addition, the company shall have at least two directors who each has his principal or only place of residence within Malaysia. Directors of public companies or subsidiaries of public companies normally must not exceed 70 years of age. A director of the company need not necessarily be a shareholder of the company.

2.3 Registration of Foreign Companies

A foreign company may carry on business in Malaysia by either:

i. incorporating a local company; or
ii. registering a branch in Malaysia.

Foreign company is defined under the CA 1965 as:

i.
a company, corporation, society, association or other body incorporated outside Malaysia; or
ii.
an unincorporated society, association, or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia.

2.3.1 Registration Procedures

i. Applicant must first conduct a name search in order to determine if the proposed name for the intended company is available. The name to be used to register the foreign company should be the same as registered in its country of origin.

Applications should be submitted to the SSM using Form 13A with a payment of RM30 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.
ii.
Upon approval, applicants must submit the following registration documents to the SSM within three months from the date of approval:
a.
A certified copy of the certificate of incorporation or registration of the foreign company;
b.
A certified copy of the foreign company’s charter, statute or Memorandum and Articles of Association or other instrument defining its constitution;
c.
Form 79 (Return by Foreign Company Giving Particulars of Directors and Change of Particulars)
If the list includes directors residing in Malaysia who are members of the local board of directors of the foreign company, a memorandum stating their powers that are executed by or on behalf of the foreign company, should be submitted to SSM.
d.
A memorandum of appointment or power of attorney authorising the person(s) residing in Malaysia, to accept on behalf of the foreign company any notices required to be served on such foreign company;
e.
Form 80 (Statutory Declaration by Agent of Foreign Company); and additional documents consisting of the original Form 13A as well as a copy of the letter from SSM approving the name of the foreign company.

Note: If any of the described registration documents are in languages other than Bahasa Malaysia or English, a certified translation of such documents in Bahasa Malaysia or English shall be required.
ii.
Registration fees shall be made to the SSM as per the following schedule:
Authorised Share Capital (RM)
Fees Payable (RM)
Up to 100,000
1,000
100,001 - 500,000
3,000
500,001 - 1,000,000
5,000
1,000,001 - 5,000,000
8,000
5,000,001 - 10,000,000
10,000

In determining the amount of registration fees, the nominal share capital of the foreign company should first be converted to the Malaysian currency (Ringgit Malaysia) at the prevailing exchange rate.

In the event a foreign company does not prescribe any share capital, a flat rate of RM1,000 shall be paid to SSM.

iv.
 A Certificate of Registration will be issued by SSM upon compliance with the registration procedures and submission of duly completed registration documents.
v.
 Upon approval, the company or its agent is responsible for ensuring compliance of the Companies Act 1965. Any change in the particulars of the company or in the company’s name or authorised capital must be filed with SSM within one month from the date of change together with the appropriate fees. Every company is required to keep proper accounting records. Annual return must be lodged with SSM once in every calendar year.

Note: Foreigners are advised to seek the services of an advocate and solicitor, an accountant or a practising company secretary for further assistance.

2.4 E-Services

E-Services were introduced as an alternative to the traditional method of conducting business with SSM i.e. via counter services. It allows for the lodgement of documents (e-Lodgment Service) and the procurement of corporate and business information (e-Info Service). Payments can be made via credit card, direct debit or prepaid accounts.

E-lodgment or also known as e-filing would enable companies, business or their authorised personnel to lodge selected statutory required documents over the Internet through the myGovernment portal/Public Service Portal (PSP). Whereas e-Info service enables for the online purchase of corporate and business information.

For further information please visit the SSM website at www.ssm.com.my or www.ssm-einfo.com.my



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