An Overview of Company Registration in Malaysia

Section 8 enterprises are non-governmental organizations that are established to support various interests such as commerce, sports, science, the arts, and charitable activities.

Malaysia is an economic hotspot in Southeast Asia where both the governmental and private sectors participate equally. According to the World Bank's Ease of Doing Business Survey, Malaysia ranks among the most business-friendly countries in the world.Over the course of the 1970s, Malaysia's economy saw a significant transformation, emerging from a predominantly resource-based economy to one of the most resilient, diverse, and quickly growing economies in Southeast Asia. Malaysia has an abundance of natural resources, which significantly increase the GDP of the nation. All these factors contribute to making Malaysia a preferable destination for entrepreneurs to start their business.

Why to start a business in Malaysia?

Malaysia offers wide range of benefits to the businesses operating in its mainland, such as:

Tax Benefits: Malaysian governments have laid down corporate tax rates at quite low rates to make it feasible for businesses to expand and grow. If a resident company has paid-up capital of less than RM 2.5 million, income of less than RM 50 million, and does not directly or indirectly manage another company with paid-up capital of more than RM 2.5 million, it is liable to pay corporation tax at the rate of 17%. Other than the businesses mentioned above, resident companies and non-resident enterprises pay taxes at a CIT rate of 24 percent.

Skilled Workforce: Because the government encourages the development of human resources across all industries, the majority of Malaysian workers have advanced degrees. With cheaper expenses than other countries in the region, Malaysia has one of the best workforces in all of Asia. Education and training are highly valued in Malaysia, where a growing number of public training institutions, including technical schools, polytechnics, industrial training institutes, and skill development centers, have been established to meet the industry's increasing demand for certain qualifications.

Trade Agreements: Malaysia holds free trade agreements with many countries to offer an advanced economic atmosphere for businesses. A few such agreements include Malaysia-Japan Economic Partnership Agreement (MJEPA), Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA), Malaysia-New Zealand Free Trade Agreement (MNZFTA), Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA), Malaysia-Chile Free Trade Agreement (MCFTA), Malaysia-Australia Free Trade Agreement (MAFTA), Malaysia-Turkey Free Trade Agreement (MTFTA), etc.

Healthy Economy: According to The Heritage Foundation's Index of Economic Freedom, Malaysia has the 24th-freest economy in the world. According to the World Economic Forum's 2019 Global Competitiveness Report, Malaysia's economy ranks 27th in the world for competitiveness. When it comes to minority shareholder protection, Malaysia ranks second globally. Therefore, Malaysia tends to offer a healthy economic environment for businesses to flourish and grow, consequently attracting investors and businessmen from all over the world.

Government Policies: Malaysian government schemes and policies offer a premium environment for businesses to nurture and grow. Many of such schemes are for Startups such as Skim Usahawan Permulaan Bumiputera (SUPERB), Digital Content Grant (DCG), Malaysia Digital X-Port Grant (MDXG), Malaysia Digital Catalyst Grant (MDCG).

Types of Companies in Malaysia

Following are certain form of company structures available under Malaysian Legislation:

1. Sole Proprietorship: /In this form of business, the operations are run by one person called sole proprietor who are not considered to be separate from the entities. This means that the sole proprietor is responsible for all the activities taking place in the business, and the resulting profit and loss, therefore, his personal asset can also be subject to liability, if required. It is important to note that only the permanent resident and Malaysian citizen can register this form of business. Moreover, to renew the same every year, you have to pay a certain amount of fee to Suruhanjaya Syarikat Malaysia.

2. Partnership: /There must be at least two partners with the maximum cap of 20 in one partnership firm. The firm must have a partnership deed concluded between the partners which lay down the rules of operating the business such the rules, obligations, liabilities, profits sharing and losses. The firm is not liable for any taxes in the name of business, but the partners are eligible on their individual income. This form is an extension of sole proprietorship with the number of people coming together to trade.

3. Companies Limited by Shares: /A company limited by shares can either be a private limited company or a public limited company and does not hold more than 50 shareholders on deck. It is particularly not allowed to float its shares to public domain and even transfer of shares is also subject to allowance by the board collectively. As a result, this company also does not list itself on the stock exchange for public purchase.

4. Companies Limited by Guarantee: /As this form is quite similar to that of LLC, similarly, members also have limited responsibility, but do hold restricted liabilities which are guarantee-bound. Stated differently, guaranteed contributions must be more than fixed obligations. Charity organizations and foundations are examples of non-profit organizations that frequently use this type of corporate structure.

5. Unlimited Companies: /Members and shareholders of an unlimited company have infinite responsibility. The shareholders and members will bear personal liability in the event of any loss or debt incurred by the company. If an unlimited company passes a special resolution and files a notice of conversion with the SSM, it may become a limited company.

6. Limited Liability Partnership: /An LLP is the combination of a partnership and a company, which calls for two or more partners to come together to run a business. However, the liability of the partners is limited to the amount contributed by them. Therefore, they are considered separate from the company itself and cannot be held liable for any business debts beyond that.

7. Cooperative: /Increasing the economic relevance of its members in line with cooperative principles is the goal of a cooperative organization. To acquire information and guidance on the establishment and registration of co-ops, any group of people wishing to organize one should first get in touch with the Suruhanjaya Koperasi Malaysia (SKM) in their various regions.

Prerequisites for Company Registration in Malaysia

The following are certain mandatory prerequisites to be fulfilled for company registration in Malaysia:

Directors: There must be a minimum of 1 director who must be a resident of Malaysia for registering a private limited company and for a public limited company, the requirement extends to a minimum of two resident directors.

Shareholders: In order to register your company, you must have at least one shareholder on the list of your details.

Company Secretary: Your company must have a Malaysian Company Secretary whose primary and only residence is in Malaysia.

Registered Office address: you must have an address for the office which is required to be registered as well for further proceeding ahead with the registration process of your business

Taxes applicable in Malaysia

Before starting your business in Malaysia, you must know the following taxes:

Corporate Tax: Corporate Tax is applicable on all kinds of companies whether resident or non-resident companies operating in Malaysia at the rate of 24% which might vary depending on the type of company and its revenue generated.

Sales & Service Tax [SST]: To register your company, you must have at least one shareholder on the list of your details.

Withholding Tax: Withholding tax comes into play when the payer has to pay to a non-resident at different rates varying from 3% to 25%. The tax rates vary as per the nature of the payment that has to be made to the non-resident.

Stamp Duty: There are two types of stamp duty, fixed duty and ad valorem duty which are applicable on documents such as share transfer, property transfer, annuity sales, rental or lease agreements, etc.

Real Property Gain Tax: you must have an address for the office which is required to be registered as well for further proceeding ahead with the registration process of your business.

For more information, visit us on: https://www.registerkaro.in/

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