In the recent years, Malaysia has been developing and growing fast. Many people decided to start their business in Malaysia due to the lower tax rate, attractive tax incentive and great potential within the nation. If you are one of the entrepreneurs, looking out for what need be done to incorporate a local company, here are some tips for you as follows :
Firstly, Choose what kind of company you would like to incorporate (Private limited liability company or Public company)
The company incorporation could be made by individuals who wish to form a company. The basic requirements to incorporate a company are:
(a) Private company (Sendirian Berhad or Sdn. Bhd.)
- At least one (1) director who ordinarily resides in Malaysia by having a principal place of residence in Malaysia and minimum of one (1) promoter.
(b) Public company (Berhad or Bhd.)
- At least two (2) directors who ordinarily reside in Malaysia by having a principal place of residence in Malaysia and minimum of one (1) promoter.
Then, Choose a name!
Choosing name is never easy! There is lots of considerations to decide a perfect name for your company, like branding, relating to principal activities, easy to remember, etc. We would not touch base on how to decide a perfect name for your company, you just need to know what you need to do for an application of name with The Companies Commission of Malaysia (“SSM”).
First, run a name search!
A name search must be made to ensure that the proposed name is available. You can apply for your desired name via 2 methods:
Application for the name and incorporation of a company (Direct Incorporation); or The applicant must complete the information during the application for the name and incorporation of a company via online and incorporation fees of RM1,000.00; and if the proposed name is approved by SSM, the application to incorporate the company would be directly sent to the officer to be processed.
Name reservation.
The applicant must complete the information for the name of the company online and the fee is RM50.00 for each name applied while incorporation of company is a separate process. If the name is approved by SSM, the name is reserved for 30 days or any longer date as allowed by the Registrar (maximum 180 days) from the date of approval. The applicant can then apply for incorporation with a fee of RM1,000.00.
Tips: You can submit the name search/ application of company personally via online portal. Alternatively, you can engage a company secretarial firm to help you with the administrative work.
So, what are the required information for the lodgement of application?
(a) Under section 14(1) of the Companies Act 2016, the applicant must complete the information required as follows:
• The proposed name of the company
• The status of private or public company
• The proposed type of business
• The address of registered office
Every company must have a registered office in Malaysia to which all communications and notices may be addressed. It is normal practice in Malaysia to have the secretarial office as registered office of the company.
• The business address (not a compulsory field and can be updated subsequently when available)
• Complete detail of director(s) and promoter(s)
• Declaration from the director(s) or promoter(s) that he/she:
- is not an undischarged bankrupt either in or outside Malaysia;
- is not an undischarged bankrupt either in or outside Malaysia; and
- has not been imprisonment within five years immediately preceding the date of declaration
(b) Declaration of Compliance
This declaration states that the applicant has complied with all requirements of the Companies Act 2016. The declaration should be made by the individual who is responsible for the incorporation.
(c) Additional Document(s)
(i) a copy of consent letter from the corporate body named as the member of the company.
(ii) a copy of certificate of director’s qualification, if required.
(d) a consent letter from relevant agency, if any.
And, you would ask, how much it would cost $$ to incorporate a company?
Each application to incorporate the company should be lodged together with a fee as follows:
(a) Company limited by shares - RM1,000
(b) Company limited by guarantee - RM3,000.
Of course, if you are engaging a company secretarial firm to assist you with the application, do expect additional charges for the administrative work performed on behalf.
What happens next?
If the Registrar is satisfied that all information provided is complete and complied with the required procedures, a notice of approval and registration will be issued; as well as a certificate of incorporation will only be issued by SSM upon request together with the prescribed fee.
Once incorporated, the company is advised to obtain the necessary license/permit/approval from the relevant authorities before commencing business.
DANG! You have successfully incorporated a company!
However, don’t forget you need to be compliant to the Companies Act 2016 and the following is some basic requirements:
Statutorily, the company is required to appoint a company secretary within 30 days after incorporation. The company secretary shall be registered with SSM and possessed a valid practising certificate issued by SSM. If required by the company, it may file the constitution (previously known as memorandum of articles/ M&A) of the company after the incorporation of the company.
To be in compliance with the Companies Act 2016, all companies are required to lodge the Annual Return (AR) within 30 days from the anniversary of its incorporation date. Annual return is a snapshot of general information about a company’s directors, secretary, registered office, shareholders, share capital,principal business activities, etc.
The Companies Act 2016 (Subsection 248) also requires the directors of every company to prepare financial statements within eighteen months from the date of incorporation and subsequently, within six months of its financial year end. The financial statements shall be duly audited before the financial statements are sent to every member. Thus, every private company is required to appoint an auditor for each financial year of the company for purposes of auditing its financial statements.
However, the Registrar may exempt any private company from having to appoint an auditor according to the criteria set out below:
(a) Dormant companies
- dormant from time of incorporation; or
- dormant throughout current year and immediate preceding year
(b) Zero-Revenue Companies
- does not have any revenue during the year and immediate past two years; and
- total assets does not exceed RM300,000 during the year and immediate past two years.
(c) Threshold-Qualifies Companies
- revenue not exceeding RM100,000 during current year and immediate past two years;
- total assets does not exceed RM300,000 during the year and immediate past two years; and
- not have more than five employees at end of the year and immediate past two years.
Any company that elects to be exempted from audit must lodge its unaudited financial statements with the Registrar within the stipulated time.
Hope the above information helps to clear some of your doubts!
For more information or audit enquiries, please email us @ ta.partner.kl@gmail.com or audit@ta-partnersplt.com / Whatsapp us @ +6011-35016778 / Call us @ +603-77331688 (Business hours: 8-5pm only)
