Registering a Company in Malaysia Updated July 2010 There are many wrong beliefs among expats about the dangers involved in registering a business, such as the ‘one has to have a…
Registering a Company in Malaysia
Updated July 2010
There are many wrong beliefs among expats about the dangers involved in registering a business, such as the ‘one has to have a Bumiputra Partner and he will have the majority of shares, and can then command over the company’ and things like that.
This is not true. You can register your Company by having full control over it and ownership, with no risk at all. See more below.
If you are a foreigner, and live in Langkawi you have to register a Sdn. Bhd.
To register a LOC (Labuan Offshore Company) is not possible anymore (since June 2010).
You can not register a simple “Enterprise” like a Local can.
The ‘Sendirian Berhad’ Company (Sdn. Bhd.)
Sdn. Bhd. means ‘Incorporated’ in Malay.
It’s the normal kind of Comopany registered by foreigners in Malaysia.
It differs by the amount of “Paid Up Capital” (RM 250,000.00 / RM 350,000.00 / RM 500,000.00 and more).
(Paid up means “Money paid in to the Company Account”. It does not have to be paid in one sum. The total amount on the Company Acct and the traffic will normally not be checked).
A Sdn. Bhd. with “Paid up capital” of RM 250,000.00 must be fully Malaysian owned to be able to get a Work Permit for a Foreigner.
A Sdn. Bhd. with “Paid up capital” of RM 350,000.00 must have one Co-Director beside yourself. By law this can be just any other person (including a foreigner) who has a permanent address in Malaysia. In practice this has to be a Bumiputra (a native Malay, not Chinese or Indian). Otherwise, you could and probably would have difficulties to get a License or/and a work permit later.
A Sdn. Bhd. with :”Paid up Capital” of RM 500,000.00 needs no Co-Director.
The Labuan Offshore Company (LOC)
Labuan is an Island in Malaysia and earns revenue by being a low tax heaven.
If this company is possible for your business, it probably is the ideal form of company because of many reasons. The most important are:
– very little paid up capital
– no co-director
– no audit
– max. of 3% corporate tax ( Sdn. Bhd. 26%).
BUT: The LOC does NOT permit you to deal with Locals and
you are NOT allowed to deal in Ringgit Malaysia.
But the new restrictions and regulations make it impossible to register such a company if you live on Langkawi.
You need to have a “Chartered Accountant” or a special Agent
You can not register your Company yourself.
Find some companies who can do this under ‘Company Registration’
in the Directory.
Initial Costs
The whole process of registering a business will cost you (today, April 2008)
– about RM 5,500 to RM 7,500 all included for a Sdn.Bhd. and
– about RM 1,200 to RM 15,000 for an LOC.
But with an LOC you will save more than the difference in the long run.
Ongoing Costs for a Sdn. Bhd.:
Book-keeping: depends on your business and preparation.
Company Secretary (obligatory) RM 75.00 per month, = RM 900.00 per year
Audit ?
“Taxreturn” ?
To get a work permit you have to give yourself a salary of RM 5,000.00 a month (or at least RM 3,000.00 and pay a fee) – which means, you will have to pay taxes for your income, of about RM 4,000.00 a year.
(I haven’t looked at the possibility of claiming a reduction for personal expenses).
I estimate my costs for a company with little business, including everything plus personal taxes to be about RM 10,000.00 per year (without corporate tax).
A LOC does not need an audit and the tax on the salary is 50% less. But the maintaining of the Company costst at least RM 6,000. So, all together might cost about the same.
First, your Company needs to have a Name
Names can be complete fantasy names, as long as they are not yet used.
As the approval for a Business name can take some time, you can go for a so-called ‘Shelf Business’. This is a ‘Business’ that has been created (the name approved in advance) but has never done any business and is waiting for someone to take over. This normally costs an additional fee of a few hundreds RM. You will not find any intelligent name under the Shelf Companies.
Then you need to have a Co-Director
(If you have a Sdn. Bhd. with paid up Capital of RM 350,000.00)
As mentioned above, it should be a Bumiputra.
How to make sure that the business is YOURS and the Co-Director will not take over or start to tell you what he expects you to do?
One way that can be carried out is: before the shares of the company are assigned to the Director and Co-Director (e.g. 50/50 IS possible), the Co-Director signs a ‘Letter of Resignation’, which is not dated, and which can be presented to him when necessary.
You would then be free to choose another Co-Director.
A Co-Director normally gets between RM 3,000 to RM 5,000 a year. But if you have a Bumiputra friend, he might do it for free. It normally is a ‘sleeping’ state and the Co-Director has to sign a few forms per year (and that is all he expected to do).
