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How to Set Up a Company in Malaysia

As one of Southeast Asia’s most vibrant and successful economies, Malaysia has long stood out to investors and businesspeople as an ideal place to register a company.

Incorporating a company in Malaysia has several benefits. Malaysian companies can easily do business with other ASEAN member states, providing access to hundreds of millions of people in rapidly developing economies.

Malaysia also offers a variety of interesting tax incentives for entrepreneurs. For example, many companies in the Malaysian federal territory of Labuan are subject to a 3% tax on net profits — a significantly lower profits tax rate than in most other countries.

Companies in offshore business areas such as Labuan can also be 100% foreign owned, letting you retain complete control over your business.

Add a reliable, familiar legal system that’s partially based on English Common Law and a simple incorporation process into the equation and Malaysia stands out as an ideal country in which to open a company.

 

Opening a Shn Bhd Company (Private Limited Company)

The most common type of company in Malaysia is a Sendirian Berhad — better known to people outside Malaysia as a Private Limited company (“Pte Ltd”). This type of company is subject to a range of limitations, including restrictions on the industries in which it can operate.

For example, some Malaysian Shn Bhd companies must have at least 50% local ownership in order to operate within Malaysia. Companies in the agriculture, energy and education sectors, for example, require a 50% Malaysian ownership share in order to comply with the law.

Shn Bhd companies in other industries may be eligible for 100% foreign ownership. Shn Bhd companies also need to have two shareholders and two directors, limiting their value for solo entrepreneurs.

For this reason, Shn Bhd companies are relatively uncommon amongst foreign entrepreneurs interested in doing business through a Malaysian company.

 

Opening a Labuan International Company (LIC)

A far more popular option for non-Malaysian entrepreneurs and businesspeople interested in doing business in Malaysia is to open a Labuan International Company, or LIC.

This type of company is registered in the Federal Territory of Labuan. Labuan companies can legally be 100% foreign owned. They also only require a single director and shareholder, with both of these positions allowed to be filled by the same individual.

LICs have a low minimum paid-up capital requirement of just $1 USD. They also have a very low 3% net profit tax for trading activities that occur outside of Malaysia, and a relatively low 24% profits tax for trading activity within Malaysia.

 

The Malaysian Company Registration Process

Opening a company in Malaysia is a relatively simple process. It begins by doing a trademark search to check that the company’s name is available. Your Malaysian company must have a unique name, which you can secure via the Companies Commission of Malaysia.

From here, the company registration process involves notarising and sending the Articles of Association and Memorandum, filling in several forms (including Form 48A, 6 and 13A) and providing identification documents for all of the company’s directors and secretaries.

Most entrepreneurs interested in opening a company in Malaysia do so through a company incorporation agency, which can complete the process far more efficiently than a non-local individual.

 

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