guide to foreign company registration in malaysia

12 FAQs On Company Registration In Malaysia For Foreigners

According to statistics from the Malaysian Companies Comission (SSM), as of December 2023, there are  4,996 foreign companies registered and operating in Malaysia, a number set to grow as the country remains a top spot for conducting business in the Asia Pacific region

TRX exchange new business and financial district in malaysia for foreign businesses
The Tun Razak Exchange (TRX), Malaysia’s latest business hub.

In fact, the MISHU team is proud to say we helped some of those 4,996 companies!

Given the international spotlight on Malaysia as a business spot, we thought it would be useful to compile our answers to the twelve most frequent questions we get from foreign prospects on registering a company in Malaysia.

Let’s begin!

1. What business entities are available to foreigners in Malaysia?

Assuming you’re not just a foreigner but also a non-resident (meaning not a Malaysian taxpayer), you have four options for business entities: a Private Limited Company (Sdn Bhd), Limited Liability Partnership (LLP). branch office, and representative office,

1. Private Limited Company (Sdn Bhd)

When foreigners speak of setting up a company, this is the business entity most have in mind. 

A Private Limited Company, known in Malaysia as a Sendirian Berhad (Sdn Bhd), is recognised as a separate legal entity whose ownership is based on shareholding. Here are some key details:

  • generally, 100% foreign ownership of a company is permitted
  • some industries require 50% Malaysian ownership
  • it offers all the usual benefits of a Private Limited Company, namely limited liability and ease of rasiing funds through issuance of shares
  • it requires at least one shareholder and local director
  • it can have a maximum of 50 shareholders
  • it requires the appointment of a certified Company Secretary who advises the director on matters of statutory compliance

2. Limited Liability Partnership (LLP)

For the purposes of answering this question, a Limited Liability Partnership can be thought of as a watered down version of a Sdn Bhd. Here are the key details:

  • there must be a minimum of two partners with no upper limit
  • an LLP also offers limited liability protection
  • An LLP can also be 100% foreign-owned
  • ownership is direct instead of through shareholding (no getting investors by issuing shares)
  • far more relaxed compliance requirements than a Sdn Bhd
  • where a Sdn Bhd needs a Company Secretary, an LLP must appoint a resident Compliance Officer to serve a similar advisory role

Deciding between a Sdn Bhd or LLP ultimately hinges on the growth you want for your business. If you have big plans, a Sdn Bhd is the better option.

3. Representative Office

A Representative Office is what establsihed foreign organisation set up in Malaysia to gather essential data on investment prospects within the country, particularly within manufacturing and services. 

Its primary objectives include:

  • bolstering bilateral trade relations,
  • fostering the export of Malaysian products and services, and 
  • conducting key research activities

However, it is important to note that representative offices cannot engage in revenue-generating operations within Malaysia, including trading, leasing of property, or charging for signing documents on behalf of the parent organisation.

For a more in depth look into Representative Offices, check out the official guidelines by the Malaysian Investment Development Authoritiy, which regulates their operations.

4. Branch Office

Malaysia defines a branch office as an extension (or perhaps ‘clone’ would be more accurate) of a foreign organisation that operates within her borders. 

Branch offices must conduct business activities similar to their parent companies, offering similar services or products to Malaysian consumers. Crucially, the parent organisation is fully liable for any debts of its branch office in Malaysia.

While creating a subsidiary (in the form of a Sdn Bhd) offers more autonomy, a branch office is much simpler to set up. 

2. Can foreigners register their company online?

Well, yes and no. 

It’s technically possible to register your own company online, but in practice, navigating the process and personel from Malaysian authorities from the other side of the world is…hard, to put it mildly.

Consultants like MISHU make a living helping foreigners register their businesses in Malaysia, and we’d encourage you to engage a reliable service provider to enjoy the benefits of online company registration without its accompanying frustrations!

3. Are there prohibited industries for foreigners?

No to prohibited industries, but yes to restricted industries.

While no Malaysian sector outright bars any foreign participation, certain industries require at least 50% local ownership, including:

  • Professional Services
  • Repair & maintenance
  • Transportation
  • Creative services
  • Rental services
  • Non-profit organizations, and
  • Manufacturing & packaging

To our knowledge, there is no official list from the Malaysian government and It would be practically impossible for us to prepare an exhaustive list, so get in touch with us to find out if your business idea is subject to equity conditions. 

4. Can foreigners apply for SSM?

This is a slightly odd question, but one we frequently get asked, so we’ll include it verbatim!

We say it’s an odd question as SSM is the acronym for the Companies Comission of Malaysia, the governing body that regulates the operations of all businesses in Malaysia.

So forgive us for being pedantic, since one doesn’t exactly apply for SSM – but the answer is yes.

With the exception of Representative Offices, every other business entity in Malaysia must be registered through official SSM channels and will be entered into their records, including foreign-owned companies.

5. Does Malaysia allow 100% foreign ownership of a company?

Yes, Sdn Bhds and Llps can be fully owned by foreigners, with the exception of the aforementioned restricted and prohibited sectors.

However, public listed Berhad companies are generally subject to the Bumiputera Equity Requirement  where 12.5% of the enlarged number of issued shares must be allocated to Bumiputera investors.

6. How much does it cost to register a company in Malaysia for foreigners?

The table below shows the brakdown of registration fees for the registration of a foreign Sdn Bhd.

Not more than RM1 million5,000.00
Exceeds RM1 million but not exceeding RM10 million20,000.00
Exceeds RM10 million but not exceeding RM50 million40,000.00
Exceeds RM50 million but not exceeding RM100 million60,000.00
Exceeds RM100 million70,000.00
  • the share capital should first be converted to MYR
  • in the event no share capital is prescribed a flat rate of RM70,000 will apply

The registration fees for a foreign owned Limited Liability Partnership is RM500, the same rate for locally owned LLPs.

NOTE: These are business registration costs by the Malaysian government and do not account for third party professional services that will likely need to be engaged.

7. Can a foreigner be the sole director?

Yes, a foreigner can be both sole director and sole shareholder of a Sdn Bhd in Malaysia.

If you have more questions about company directorship as a foreigner, check out our guide to company Directors in Malaysia.

8. What’s the tax rate for foreign companies in Malaysia?

Foreign companies are given the same 24% corporate tax rate as local companies.

9. What’s the difference between Berhad and Sdn Bhd?

A Berhad (Bhd) is a Public Limited Company while a Sendirian Berhad (Sdn Bhd) is a Private Limited Company. The defining difference is that a Berhad company’s shares are listed on stock exchanges and publicly traded, while a Sdn Bhd’s shares are privately traded.

Here are some other key differences:

AspectBerhadSendirian Berhad (Sdn Bhd)
Ownership StructureUnlimited shareholdersLimited to 50 shareholders
Capital RequirementsMinimum issued capital of RM100,000No specific minimum capital requirement
Disclosure RequirementsExtremely strict reporting requirementsStrict requirements but less than Berhad companies
Share TransferabilityShares freely transferable, traded on stock exchangeShare transfers restricted, typically requiring approval from other shareholders

Bascailly, unless you are setting up a company worth hundreds of millions, a Sdn Bhd is good enough!

10. How long does it take to register a company in Malaysia?

We wish we could give you a definitive answer, but the best we can offer is a range – expect the business registration itself to take about 3 – 5 business days.

However, registration is just the beginning and other crucial steps must be taken before you can begin operating, namely applying for business licenses and opening a business bank account – and this is assuming you’ve already found your business premises!

All in all, expect it to take anywhere from 30 – 60 working days if all goes well.

11. What’s the process of registering a company in Malaysia for foreigners?

We’ve condensed the following four-step list from official SSM guidelines

Step 1: Name Search and Application of Name

  • Lodge proposed company name via SSM online system with a fee of RM50.
  • If approved, name will be reserved for 30 days from approval date.
  • Option to extend reservation period with RM50 fee for every 30 days, up to 180 days.
  • Foreign company name in Malaysia must match name registered in its country of origin.

Step 2: Submit Application to Register a Foreign Company

  • Submit required information to SSM within 30 days of name approval, including:
    1. Shareholder details.
    2. Director details.
    3. List of shareholders/members at origin.
    4. Share capital details.
    5. Details of appointed Malaysian agent.
    6. Additional information as required by Registrar.
    7. Accompany application with statement confirming agent’s consent.
    8. Provide additional documents, including:
      • Certified copy of certificate of incorporation/registration.
      • Certified copy of Memorandum and Articles or similar.
      • Copy of name reservation application.
      • Copy of email notification for name reservation approval.
    9. If documents are not in Bahasa Malaysia or English, provide certified translations.

Step 3: Pay Registration Fees

  • Determine registration fees based on foreign company’s share capital converted to Malaysian Ringgit at prevailing exchange rate.
  • If foreign company doesn’t have a prescribed share capital, pay a flat rate of RM70,000 to SSM.

Step 4: Receive Verification of Incorporation

  • SSM issues notice of registration of foreign company within one working day upon compliance and submission of completed documents.
  • Certificate of registration of foreign company is issued by SSM upon request with prescribed fee.

12. Should foreigners use company incorporation services?

Remember how Sam and Frodo took forever and almost died on the way to Mordor?

Then at the end those giant birds just swooped down and flew them to safety in five minutes?

Well, in this case, SSM is Mordor and you’re Frodo.

lord of the rings scene to show difficulty of registering a business in malaysia as a foreigner without the help of a professional consultant
Typical Monday morning for a startup founder.

We’re obviously speaking from a position of vested interest, but a reliable Malaysian business consultant is that giant bird sent down from heaven to save you from a world of trouble.

We’re not even saying you have to engage us, but you know, since you’re already here, you might as well!

Let MISHU help register your business in Malaysia

Co sec Manager Fenny

MISHU’s team of licensed Company Secretaries, business license experts, and Employment Pass consultants regularly assists foreigners from all parts of the world open new businesses in Malaysia. Get in touch – we’d love to help with yours!

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