Joint ventures (incorporated and unincorporated) are a form of business vehicle used in Malaysia.
A joint venture (JV) is usually a joint effort between two or more parties who pool their resources to achieve desired business goals. In Malaysia, both incorporated joint ventures and unincorporated (contractual) joint ventures are common.
Foreign investors usually sign joint venture agreements with local partners to achieve specific business goals in Malaysia or abroad. The benefits of this include:
Knowledge, risk and cost sharing.
Increase the ease of working in foreign jurisdictions (in terms of language and cultural customs).
Shared contacts and markets.
The two types of joint ventures are:
Incorporated Joint Ventures (Companies)
These require the establishment of a joint venture company in Malaysia in accordance with the company regulations in which both parties purchase shares to reflect their ownership agreement. The company is usually a private limited company.
The two parties to a joint venture usually also sign a separate joint venture agreement to regulate the relationship (their rights and obligations) between the parties, although this is not a legal requirement under Malaysia law.
Incorporated joint ventures are advantageous because all parties enjoy the benefits of limited liability. Compared with unincorporated joint ventures, the main disadvantages of registered joint ventures are registration costs and the administrative burden of complying with disclosure requirements.
Unincorporated Joint Ventures
It is a purely contractual relationship between the parties to the joint venture. Generally, unincorporated joint ventures will be bound by the joint venture agreement and any required supporting documents. When a joint venture is an isolated project with a short duration, unincorporated joint ventures are usually used because they are easy to establish and require minimal disclosure. Unincorporated joint ventures can also be used in some cases so that the parties to the joint venture can apply more favorable tax treatment to their investments.
Apart from obtaining a business registration certificate before starting business in Malaysia, there are no other statutory requirements for the establishment of unincorporated joint ventures.
LLP
The LLP may be formed by any joint ventures to carry on any lawful business with the view to make profit. It is the most common form of joint ventures. Two companies can form an LLP.
How Bestar can Help
Bestar can help you establish a joint venture in Malaysia in a number of ways, including:
Providing professional advice on the different types of joint ventures available in Malaysia and the legal requirements for each.
Assisting you with the drafting of the joint venture agreement, which will set out the rights and obligations of the parties.
Helping you to register the joint venture company with the Malaysian Companies Commission.
Providing ongoing professional and compliance advice to ensure that your joint venture complies with Malaysian law.
In addition to these professional services, Bestar can also provide you with other support services, such as:
Market research and analysis to help you assess the feasibility of your joint venture.
Business planning and development assistance to help you launch and grow your joint venture.
Accounting and financial services to help you manage the financial affairs of your joint venture.
Human resources services to help you find and hire the right staff for your joint venture.
Bestar has a team of experienced accountants and business consultants who can help you establish and manage a successful joint venture in Malaysia. To learn more about how Bestar can help you, please contact us today.
Here are some of the specific services that Bestar can provide for establishing a joint venture in Malaysia:
Pre-establishment advisory services: This includes providing advice on the different types of joint ventures available in Malaysia, the legal requirements for each, and the tax implications of a joint venture.
Joint venture agreement drafting: Bestar can help you draft a comprehensive and legally binding joint venture agreement that sets out the rights and obligations of the parties.
Company registration: Bestar can assist you with the registration of your joint venture company with the Malaysian Companies Commission.
Ongoing professional and compliance advice: Bestar can provide you with ongoing professional and compliance advice to ensure that your joint venture complies with Malaysian law.
Other support services: Bestar can also provide you with other support services, such as market research, business planning, accounting, and human resources.
If you are considering establishing a joint venture in Malaysia, Bestar can help you every step of the way. Contact us today to learn more about our services.
