All businesses that operate in Malaysia are required to register with the Companies Commission Malaysia known as Suruhanjaya Syarikat Malaysia or SSM, under the terms of the Companies Act 2016. Through MyCoID 2016 online portal, it enables the digital integration of a business where the directors or promoters of a company that is yet to be incorporated can commence this process. However, a compulsory one-off validation process has to be conducted at the nearby SSM counter face-to-face. In order to make this process easier and simpler, many business owners prefer to hire a company secretarial service.
For the private limited companies, at least one director is needed who has a Malaysian residential address of a principal place of residence and not disqualified from being appointed as director under section 196 of the Companies Act 2016. For public limited companies, they must furnish a minimum of two directors who are non-disqualified under the Companies Act 2016.
There should be at least a shareholder (either person or corporate) up to 50 shareholders for private limited corporations. For public limited companies, at least two shareholders are needed.
All business entities have to engage a Company Secretary not later than 30 days after their incorporation. A company secretary is a person who has been given the duty to see that the Companies Act 2016 is observed, ensure implementation of directors’ decisions and also file an annual return for the company.
However, if the principal place of business differs from the address for registration then this address should be included. Your company address is highly recommended.
No documents have to be shown during the application process unless SSM has asked for them. Nevertheless, all the facts and statements presented or submitted during this stage should be true.
When applying through an agent on behalf of the company, scanned copies of the shareholders’ and directors’ identification cards such as NRICs or passports for individuals, incorporation documents for body corporations together with other proof of documents are usually required to be verified.
Where the name is available but one is not sure of going ahead with incorporation, you can pay RM50 to secure a name for a maximum of 30 days and an additional RM50 at every subsequent 30-day extension.
Once a proposed company name has been approved, the following form that needs to be filled out is called “Super Form,” which requires information about the business such as; proposed company name, type of company and planned trade.
Secondly, details of the directors, shareholders and promoters of the proposed company have to be provided together with a declaration by the directors or promoters that they are not undischarged bankrupt either in Malaysia or elsewhere and have not been convicted of any offences either in Malaysia or elsewhere.
After the review of information that you have filled and declared that all requirements under the Companies Act are met, you can then proceed to pay for your incorporation fee.
Once the SSM does not give any rejections, or inquiries, the review process generally takes one to two business days and you are done with incorporation!
This will be followed by issuance of a registration notice to the company upon successful incorporation and allocation with unique number as evidence for incorporation.
After registration, corporations must apply for additional required documents first before opening an account with any bank and follow all the rules as per the Companies Act 2016. It is recommended that before you commence your operation as a business person, sought the necessary advice from the relevant authorities and acquire any other additional license, permit or approval which may be required depending on the nature of business in question.
The business environment in Malaysia is quite versatile, there are diverse types of structures that can accommodate different kind of businesses. According to the provisions in the Companies Act 2016, there are three main categories of companies suitable for incorporation based on some distinct aspects and functions.
When a company is considered to be “limited by shares”, its shareholders or members (who are in fact the owners of the company) have legal liability for the debts of the companies up to their unpaid amount of share capital. This principle is referred to as limited liability. The two cases are however similar to limited liability framework in which shareholders are unable to receive personal culpability that is beyond the subject of investment. In the case of private limited companies, share transfer is restricted with a maximum number of shareholders while public ones are at liberty to offer the shares in stock exchanges for sale to members of the public.
In Bahasa Malaysia, a private limited company is known as ‘Sendirian Berhad,’ which is commonly abbreviated as ‘Sdn Bhd’. This kind of company formation is the only available option for non-Malaysian individuals to incorporate in Malaysia. Public companies limited by share or guarantee which essentially are public companies foreigners are not allowed to form.
Shares in the private limited companies are used to sell shares privately to natural persons or juridical entities. The number of shareholders allowed is a minimum of 1 and a maximum of 50. All the directors of a private limited company must be Malay citizens only having some degree their principal residence in Malaysia. In the case of public companies too, it is not company’s requirement to publicly disclose its financial statement but there is no mandatory annual general meeting in such corporations.
Private limited companies can also be used for strategic purposes as joint ventures and the management of holding and subsidiary company relations. Exempt private companies, which are those companied owned by not less than twenty individuals’ according to the Companies Act would be exempted from filing for financial statements with CCM after getting a certificate that confirms the company is an exempt private company. Nevertheless, they must still compile reports of financial statements on an annual basis for internal books.
Hong Kong Company SecretaryIn addition, the private company may change to registration as a public company and conversely on passing of a special resolution and after filling in notice indicating the conversion from PDT ‘RBEB’ to CBSA ‘BESA’ with Companies Commission of Malaysia.
A public limited liability company in Bahasa Malaysia is referred to as ‘Berhad’ which is often abbreviated as Bhd placed after its name. Public limited companies may or may not be listed in the stock exchange but most of them go for listing so that they can enjoy all the features as a public entity, like accepting equity investments from the latter.
It does not have any maximum limit for public limited company unlike private limited companies. Annual general meetings and annual reports, regarding their financial performance, are mandatory aspects for public limited companies. As public companies, they are required to meet higher accountability and listing standards regulated by the Companies Commission of Malaysia and the Malaysian Securities Commission.
Public Limited Company is mandated to require at least 2 directors who typically live in Malaysia with a dominantly resident address. Some of the well-known public limited companies include major banks, telecommunication companies, construction firms property development companies and many more are listed on the stock exchange.
A Company Limited by Guarantee (CLBG) as discussed previously is one form of a limited company and the word ‘Berhad’ or its abbreviation ‘Bhd’ appears in most CLBG names although this derivative can be left off by having an application submitted for it to be omitted.
CLBGs are widely used for non-profit organizations, such as charities, community projects, clubs and societies etc. No sharing of profits or dividends to the company’s members.
CLBGs are different from other company types in that they cannot be endowed with a share capital and must have a company constitution following incorporation. This document sets the important specifics such as the company’s limited guarantee position, its objects powers and liabilities, rights and privileges of officers, as well as a proposed number of members.
CLBGs are different from other company types in that they cannot be endowed with a share capital and must have a company constitution following incorporation. This document sets the important specifics such as the company’s limited guarantee position, its objects powers and liabilities, rights and privileges of officers, as well as a proposed number of members.
It should be noted that there is the provision in the Companies Act which prohibits unincorporated associations and therefore, any charity organization consisting of more than 20 people must be registered with the CCM.