Why incorporating a company?
You’re thinking of forming a company. This is known as incorporation. However, you’re lost in the subject and you aren’t sure of how to approach it. Incorporating a company simply means forming an entity that is a legally separate from you as the owner.
If you’re a Malaysian, you could set up as a sole proprietor or a general partnership instead. They’re relatively easier to form. However, they do not offer the same advantages as incorporating a company.
By incorporating your company, you could enjoy the following benefits:
What are the common issues among newly-formed Start-ups?
We understand being newly-formed start-ups, you have many questions about incorporation, including the following:
We Can Help You To Incorporate
private limited company
public limited company
Perkongsian Liabiliti Terhad
Limited Liability Partnership
To incorporate your business, we’d help you with getting all necessary tasks done for your newly-formed company, including the following:
All registrations and all other paperwork done quickly, with incorporation can be done in a day, provided that all relevant documentations are submitted on time
An entity form most suited to your needs
Swift onboarding of directors and shareholders, within 48 hours
You just relax at the helm and let us do all the work for you
Service is people. Excellent services are led by excellent people. Our people are qualified company secretaries, experienced, in addition to secretarial works, in helping clients to start their business in Malaysia. In summary, we’re at our best because we have the following:
Head of Corporate Secretarial Services
Mr. Samuel Tiew Sze Hann
FCIS (CS) (CGP)
Mr. Tiew has been with us for over a decade, since 2011. He is in charge of all corporate secretarial services in Malaysia (excluding Labuan) provided to our clients. Prior to joining us, Mr. Tiew had worked as a company secretary for various companies, with a majority of those years spent in managerial roles. His specialities include:
Manager of Secretarial Listed Division
Ms. Sow Xin Yee
Ms. Sow has been with us since 2019. She is in charge of company secretarial services provided to listed companies in Malaysia. Prior to joining Cheng & Co, Ms. Sow had served in various companies in her field for over 7 years. Her specialities include advising clients on all rules and regulations related to Companies Act 2016 as well as Listing Requirements.
Frequently Asked Questions
How to name a company?
Naming your company is done by submitting a proposed name to SSM. SSM will then check the proposed name against criteria set forth in SSM’s Guidelines on Company Names.
In the event that the proposed name is accepted or available for registration, SSM will reserve it for you alone for up to 30 days (or longer if SSM deems it appropriate), and within that time, you are to register the name and pay the fees applicable.
On the criteria set forth by SSM, you should refer to SSM’s Guidelines on Company Names for more details. However, in general, the criteria can be summarised into the following:
– the name has to end with Sdn. Bhd or Berhad.
– the name has to be in the alphabet (English, Malay, or Pinyin).
– If it is not English nor Malay, the meaning of the words need to be provided.
– If the name is close to any other of your corporation, it needs to be proven by an agreement.
– If the name is a trademark, need to hand in the agreement and certificate from the trademark’s holder.
– Not offensive to anyone;
– No association with any religion;
– No association with Royalty;
– No association with any government, or intragovernmental organisations (e.g., UN);
– Not identical any name(s) already registered or being reserved;
– Must be approved by all relevant parties (e.g., Bank Negara Malaysia) if it contains a word(s) associated with regulated industries (e.g., bank or banking);
– Use correct spelling and grammar;
– Use only approved symbols; and
– Not use any words prohibited in the Guidelines.
Which is the best recommended tax structure for my business?
The essence of taxation of different entities relates to the form as well as the concept of legal person. For sole proprietorships and general partnerships, owner(s) and entities are legally one and the same persons. Therefore, your business tax liability will be bunched up together with your personal tax liability. On the other hand, companies are legally separate from their owners. Hence, their income are not calculated together with their owners’ income. Because of that, the tax rates applicable may be higher or lower for your company, as tax rates usually increases as the chargeable income increase. There is no way for certain to say which entity is best for you. It may seem that companies offer the best tax advantages for your business. However, bear in mind that there are always strings attached. For example, whilst tax rates may be advantageous to your company, there are also tax incentives that your company may apply for in order to reduce its tax liability. However, these incentives individually come with their own set of pre-requisites. The pre-requisites may be based on industries, number of employees, and paid-up share capital. Therefore, in order to answer the question which entity offers the best tax advantage to your business, you need to factor in the kind of business that your company is in, its size , and capital.
What licenses shall I get and how I can get the trade license for my business?
Licenses are legal permits that allows to do something. What licenses you need depends on the business that you’re running and what are the legal requirements for operating such a business.
Let’s take an example of a person opening and running a convenience store in Kuala Lumpur, selling packaged food items, beverages (including alcoholic beverages), magazines, and cigarettes. Based on the example, we can see that at the very least there are laws governing:
– your premise;
– your sales tax; and
– your merchandises.
With regards to your premise, you’d at least need a premise and a signboard license; and you’d need to apply for them from DBKL. For sales tax, there is a sales tax license that you must apply for from Royal Malaysian Customs Department. Lastly, controlled merchandises such alcoholic beverages and cigarettes each requires the seller to hold a special license.
Therefore, to answer what license you need to get and how to get them, we first need to establish precisely the business that you’re in or that you’re thinking of venturing into. From there, we may list out the permits and licenses that you need and the organizations that you submit your applications to.
However, we understand that you’d prefer to do your research first in order to see if you can get them yourself. You may refer to our licenses and permits resource page for your reference.
What kind of set-up is suitable for my application of licenses and work visa in future?
Work visas are applied for to Expatriate Service Division (ESD) of Immigration Department of Malaysia. According their website, only the following types of entities may register with ESD to make visa applications for its foreign employees:
Any company incorporated by Companies Commission of Malaysia (SSM)
Any entity registered with Registry of Societies Malaysia (ROS); and
Any entity registered with Malaysia Cooperative Societies Commission (SKM).
If you’re in business, then you ought to consider incorporating your business into a company, in order to hire foreign labour directly.
How do I renew my premise licenses?
Premise licenses are issued and revoked by municipal councils. You may visit the relevant municipal council for the exact conditions for renewal. However, for illustration purpose, let’s take the example of premise licenses issued by DBKL (Kuala Lumpur Municipal Hall). Premises license are issued when applicants meet specified conditions, and may be revoked by DBKL for violations of conditions set forth for the license. DBKL sets different conditions for different type of business. For example, if you wish to apply or renew your premise license and you’re running a hypermarket, you are to: have the approval of KHEPDNP (Ministry of Domestic Trade and Consumer Affairs) to run the hypermarket; it must be within its own free standing building; its floor is no less than 5000 square metre; it has planning approval from a valid Development Order; it operates less than 24 hours a day; only businesses specified in the license be carried out in the premise; the license must be displayed on the premise where it can be seen by the public; its business is carried out within the premise only and not anywhere else, not even empty spaces outside; any modification to the premise that is licensed must first obtain approvals from DBKL; the premise, in an out, must be clean; the business being carried out does not disturb or pollute the environment; the premise must have adequate garbage cans with the garbage being packed in plastic bags before being put in the garbage cans; no live animals allowed on the premise; and no sale of any items that offends the sensitivities of Malaysian society. If you comply with the above and pay the appropriate renewal fee, your premise license should be renewed.
What must I do to renew work visas for my employees?
Applications for Employment Passes are managed by ESD (Expatriates Service Division) of Immigration Department of Malaysia. They regulate the process for applications and renewals of work visas. In order to renew your employees’ employment passes, you need to submit the following documents with each employees’ applications online: pay slips from the last 3 months; income tax file number; and e-BE latest tax filing submission. In addition, at the time of renewal submission, the employee(s) must still have passports valid for another 6 months minimum and also that their current employment passes are still valid for another month.
What are the compliance I need to meet to maintain the company status every year?
As stated in SS68(8) of Companies Act 2016, any company that fails to lodge its annual return for three consecutive years or more may be stricken off the registry by SSM. Therefore, in order to ensure that your company remains registered with SSM and allowed to continue operations, you should lodge your annual returns, specified under SS68(3) of Companies Act 2016, and also your company’s audited annual financial statements with SSM every year.
Shall I comply with any legal obligation to hire Malaysians and Expatriates?
Technically, there are no statutory acts or case laws that forbid the hiring of foreign workers in Malaysia. However, the law does grant the Government of Malaysia, including its agencies such as Immigration Department, the power and authority to regulate the number of work visa to be approved and also which applications may be approved. Therefore, you are obliged to comply with policies set forth by government agencies, particularly on which industries may hire foreign workers, and also on the procedures set on employment pass application, whereby you may have to justify to the authorities why the employee that you are applying for should be hired by you.
Do I need to be in Malaysia to incorporate the company?
No, you don’t necessarily have to be in Malaysia to incorporate a company in Malaysia. However, in the case of the person appointed director of your company, there is a minimum number of directors that must reside in Malaysia (one for private companies, two for public companies).
Can I incorporate my business by my own?
Yes, you can incorporate your company on your own. Although having a qualified company secretary to handle it would facilitate the process better, it is not a requirement. As far as hiring a company secretary is concerned, it becomes mandatory to do so only once your company is incorporated, and you’d have 30 days to name your company secretary for your company.