Minimum Paid Up Capital For Foreign-Owned Companies In Malaysia
Here’s our short answer on minimum paid up capital for a foreign-owned company in Malaysia:
Generally, RM2,500, or around USD600, the same as a local company.
If you’re satisfied and would like to incorporate, get in touch with us today!
However, for a full understanding, read on as we explain:
- why RM2,500 in the first place
- two common situations where much higher paid up capital is needed, and
- how to lower them
Let’s begin.
Note: We’d like to clarify that this guide applies to foreign-owned companies which are private companies (Sdn Bhd) incorporated in Malaysia with 100% foreign shareholding. It does not apply to foreign companies, which are entities incorporated outside Malaysia establishing a local branch, subsidiary, or regional office here.
Why RM2,500 in paid up capital?
Legally, a paid-up capital of RM1 is enough to incorporate a company in Malaysia, regardless of foreign or local share ownership.
However, you’ll need to open a company bank account, and it’s extremely unlikely that any bank will approve an application from an entity whose shares are worth RM1, again, regardless of whether it’s foreign or locally-owned.
MISHU is partnered with several banks, and in our experience, even the most foreigner-friendly only feel comfortable with a paid-up capital of RM2,500 and above.
Situations requiring higher paid up capital
There are two common situations with foreign-owned companies were RM2,500 isn’t enough:
- Hiring a foreigner to be local director (Category 1 Employment Pass)
- Dealing in distributive trade with end consumers (WRT license)
Let us elaborate a little on both.
Hiring a foreigner to be local director
Most commonly, this is when the company is owned by a single foreigner who wants to move to Malaysia to run their company (and meet SSM’s requirement for a locally residing director).
Essentially, the company is hiring an expatriate for a director-level position, and it must apply for a Category 1 Employment Pass.
A foreign-owned company must have at least RM1 million in paid up capital to qualify.
Dealing in distributive trade with end consumers
If your business sells products or services to end consumers, it likely falls under distributive trade and needs either a Wholesale, Retail and Trade (WRT) or Unregulated Services Sector (USS) license.
Common businesses that fall under this definition include:
- F&B outlets
- consultancies
- retail outlets
- hypermarkets and department stores, and
- franchises
Among other requirements, a fully foreign-owned company needs RM1 million in paid up capital to apply for this license.
If either one of these situations applies to you and the paid up capital requirements are too high, here is one way to reduce them quite significantly.
Lower paid-up capital with a local partner
Both the RM1 million paid up capital requirements for a Category 1 Employment Pass and WRT / USS license are for 100% foreign-owned companies.
If you can find a local partner shareholder to set up a joint venture (50-50 split), the paid up capital for a Category 1 Employment Pass drops to RM350,000.
Meanwhile, if you can give the local partner 51% of the company, it may be entirely exempt from having to apply for a WRT license.
Of course, finding business partners is not easy, but we thought we’d let you know 🙂.
Register a foreign-owned company in Malaysia with MISHU
MISHU makes the process of private limited company registration in Malaysia easy, fast, and fully compliant with SSM regulations so you can focus on growing your business without the hassle of paperwork and legal complexities.