COMPANY FORMATION MALAYSIA | SETUP NEW COMPANY IN MALAYSIA

Malaysia Company Formation An overseas business wanting to carry out business or set up a location for one in Malaysia must register with the Companies Commission (SSM). You must submit an application to the SSM in Kuala Lumpur (or any of its branch offices in Malaysia). The charge is RM30. If the proposed name of the business is available, the application will be warranted and put by for a period of no longer than three months.

If your request is approved, you will then be required to submit:

• A copy of your Certificate of Incorporation from the country of origin • A copy of its Charter, Statute or Memorandum and Articles of Association or other document which defines its constitution • A list of the company directors and statutory specifics regarding them • If there are Malaysian directors, a notation stating the powers of those directors • A memo of designation or Power of Attorney permitting one or more persons resident in Malaysia to accept on behalf of the company, service of process and any notices required to be served on the company

• A declaration made by the agent of the company. A delegated agent deals with all the acts required under the Companies Act. If the company decides to replace an existing agent, it must be reported to the SSM • An alien business must submit a copy of the annual return each year within one month of its annual general meeting. Within two months of its annual general meeting, the company must file a copy of the balance sheet of the head office, a duly audited statement of assets used and liabilities arising out of its operations in Malaysia, and a duly audited profit and loss account.

• In full, the company formation process in Malaysia follows 9-stages: • Apply to the Companies Commission of Malaysia to ensure the proposed company name. This takes 2 days and costs approximately 30 MYR per name search.

• ave the company documents stamped. This takes one day and costs approximately 100 MYR. • Within 3 months after the name registration, file the necessary documents with the Companies Commission of Malaysia. This takes about 3 days and costs approximately 3000 MYR. • Create the company seal. This takes one day and costs approximately 150 MYR. • Purchase the company books. This process takes 2 days and costs approximately 200 MYR.

• Obtain a tax file number from the Income Tax Department upon registration. This takes one day.

• Complete an application for the Employment Provident Fund. This takes a day.

• Registration with the Social Security Organisation. This takes a day.

• Send notification of the employment of staff to the Director General of the Inland Revenue Board.

• A company can be formulated in Malaysia taking one of the following forms:

Sole Proprietorship • A sole proprietorship is the easiest structure of business in Malaysia.

A sole proprietorship is owned by a single person, but it that does not imply it must run by that person alone. This form of business can happily employ a vast amount of workers • Obviously, there are benefits and disadvantages to running this kind of company. Remember to employ erudition to your decisions; explore the legal implications before deciding the best option.

Advantages:

• As a sole proprietor, you have complete liberality when making decisions • All profits will be solely yours

• No audits or reports accounts are needed • You are only required to pay personal income tax and not corporate tax Disadvantages: • You are solely liable for the debts and dangerous of the company

• Officially, there is no disparity between your personal and your business property. Your liability is infinite, which means any risks or failures in the business may jeopardise your personal wealth

Partnership • With this structure of business, you and your partner(s) are joint-owners of the company and consequently will distribute profits and risks. As always, there are advantages and restrictions to operating a partnership venture.

• Here are some advantages: • A partnership could result in having more knowledge and more resources for money • A partnership means business responsibility and risk can be shared among the owners

• And some disadvantages are: • Each partner withholds the same liability. Therefore, you are responsible for risks and debts of the company, regardless if it is caused by the actions of you or your partners. In an unlimited liability, each partner is also responsible to employ their private resources to meet any deficits • Disagreements and arguments naturally happen in partnerships, and this may overshadow of hinder business plans or operations • A partnership's longevity is generally finite. It could cease if either of the partners has is ill, becomes bankrupt, resigns or dies

Companies • All companies formation in Malaysia are ruled and overseen by the Companies Act. Companies are registered legal entities created by several persons.

Companies can own property, draw contracts and employ people.

• A company and its owners are acknowledged as different entities despite the percentage of shareholding in the company. There are three types of limited companies: • Limited by shares, where the owners' personal liabilities are limited to the equal value of their shares.

• Limited by guarantee, where the members' liabilities will be restricted to the value each person provides as company asset • Unlimited company, where there is no restriction to the members' liabilities

A company limited by shares can be: • A private limited company, which is not permitted to sell shares to the general public

• A public limited company, which fundraises by selling shares and is overseen by a board of directors, who are chosen by the shareholders Rights and liabilities of a company: • It has disparate rights and liabilities from those of the members and shareholders • It can take be initiate litigation and can, conversely, have legal action taken against it

• Shareholders are not responsible for business management • Shareholders are immune from losing more than the nominal amount of their capital • Operations are overseen by the Companies Commission.

• It must pay various taxes.

• It must publish financial reports, inspected by official auditors

Offshore Companies • By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations.

Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

• The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to: • Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions • Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent • Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation • Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability

Characteristics of an offshore company:

• Memorandum and Articles of Association • Certificate of Incorporation • Registered Office/Agent • Shareholders / Members • Directors / Managers

• Company secretary • Statutory Register • Bookkeeping

• Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

Content Source: https://www.startupoverseas.co.uk/starting-a-businessin-malaysia/company-formation.html

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